<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
File No. 2-10765
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
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Pre-Effective Amendment No.
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Post-Effective Amendment No. 102 X
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AND
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
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Amendment No. 102
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DELAWARE GROUP DELAWARE FUND, INC.
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(Exact Name of Registrant as Specified in Charter)
1818 Market Street, Philadelphia, Pennsylvania 19103
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (215) 751-2923
--------------
George M. Chamberlain, Jr., 1818 Market Street, Philadelphia, PA 19103
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(Name and Address of Agent for Service)
Approximate Date of Public Offering: November 29, 1995
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It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
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X on November 29, 1995 pursuant to paragraph (b)
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60 days after filing pursuant to paragraph (a)(1)
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on (date) pursuant to paragraph (a)(1)
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75 days after filing pursuant to paragraph (a)(2)
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on (date) pursuant to paragraph (a)(2) of Rule 485.
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Registrant has registered an indefinite amount of securities
under the Securities Act of 1933 pursuant to Section 24(f)
of the Investment Company Act of 1940. Registrant's 24f-2 Notice
for its most recent fiscal year was filed on December 30, 1994.
<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. 102 to Registration File No. 2-10765
includes the following:
1. Facing Page
2. Contents Page
3. Cross-Reference Sheet
4. Part A - Prospectuses and Supplement*
5. Part B - Statement of Additional Information
6. Part C - Other Information
7. Signatures
* The Registrant's Institutional Classes' Prospectus dated August 29,
1995 is incorporated into this filing by reference to the electronic
filing of that Prospectus made pursuant to Rule 497(e) on August 29,
1995.
<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
- -------- ----------- ------------
<S> <C> <C> <C>
A Classes/ Institutional
B Classes/ Classes
C Classes
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.
** The Registrant's Institutional Classes' Prospectus dated August 29, 1995 is
incorporated into this filing by reference to the electronic filing of that
Prospectus made pursuant to Rule 497(e) on August 29, 1995.
<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 PROSPECTUS
DEVON FUND November 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,
Philadelphia 215-988-1333
Information on Existing Accounts: (SHAREHOLDERS ONLY)
Nationwide 800-523-1918, Philadelphia 215-988-1241
Dealer Services: (BROKER/DEALERS ONLY)
Nationwide 800-362-7500, Philadelphia 215-988-1050
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"), the
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"), the
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 0.30%. 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 1.00% which
are assessed against the Class B Shares for approximately eight years after
purchase. See Automatic Conversion of Class B Shares under Buying Shares. Class
C Shares are subject to a CDSC which may be imposed on redemptions made within
twelve months of purchase and annual 12b-1 Plan expenses of 1.00%, which are
assessed against the Class C Shares for the life of the investment. See Summary
of Expenses. These alternatives permit an investor to choose the method of
purchasing shares that is most suitable for his or her needs. In choosing the
most suitable Class, an investor should consider the differences among the
classes, including the effects of sales charges and 12b-1 Plan expenses, given
the amount of the purchase, the length of time the investor expects to hold the
shares and other circumstances. See Buying Shares.
-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
November 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 respective Annual Report for the fiscal year ended October 31,
1994, and its Semi-Annual Report for the six months ended April 30, 1995, 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 Retirement Planning
Synopsis Buying Shares
Summary of Expenses Redemption and Exchange
Financial Highlights Dividends and Distributions
Investment Objectives and Policies Taxes
Investment Strategy Calculation of Offering Price and
Suitability Net Asset Value Per Share
The Delaware Difference Management of the Fund
Plans and Services Appendix A - Investment Illustrations
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 5.00% of the amount invested for the Delaware Fund A
Class and 4.99% 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
twelve months of purchase. Class C Shares are subject to annual 12b-1 Plan
expenses for the life of the investment. See Buying Shares and Distributions
(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
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.
-3-
<PAGE>
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 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 of the Investment Company Act of 1940 (the "1940
Act"). See Shares under Management of the Fund.
Investment Management Fees
The Manager furnishes investment management services to the Fund,
subject to the supervision and direction of the Board of Directors. Under the
Investment Management 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>
Delaware Fund
Annual Operating Expenses (as
a percentage of average daily Class A Class B Class C
net assets) Shares Shares Shares
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fees......................... 0.52% 0.52% 0.52%
12b-1 Expenses (including
service fees)........................... 0.16%***/+ 1.00%*** 1.00%+
Other Operating Expenses................ 0.29% 0.29%++ 0.29%++
----- ----- -----
Total Operating Expenses................ 0.97% 1.81% 1.81%
===== ===== =====
</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>
Devon Fund
Annual Operating Expenses (as
a percentage of average daily Class A Class B Class C
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.
-6-
<PAGE>
*With respect to Class A Shares, purchases of $1 million or more may be
made at net asset value; however, if in connection with any such purchase
certain dealer commissions are paid to the financial adviser through whom such
purchase is effected, a CDSC of 1% will be imposed on certain redemptions within
twelve months of purchase ("Limited CDSC"). Class B Shares are subject to a CDSC
of: (i) 4% if shares are redeemed within two years of purchase; (ii) 3% if
shares are redeemed during the third or fourth year following purchase; (iii) 2%
if shares are redeemed during the fifth year following purchase; (iv) 1% if
shares are redeemed during the sixth year following purchase; and (v) 0%
thereafter. Class C Shares are subject to a CDSC of 1% if shares are redeemed
within twelve months of purchase. See Contingent Deferred Sales Charge for
Certain Purchases of Class A Shares Made at Net Asset Value under Redemption and
Exchange; Deferred Sales Charge Alternative - Class B Shares and Level Sales
Charge Alternative Class C Shares under Buying Shares.
**CoreStates Bank, N.A. currently charges $7.50 per redemption for
redemptions payable by wire.
***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 December 31, 1995. 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 3.26% and 3.96% for the Devon
Fund A Class and Devon Fund B 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.
++"Other Operating Expenses" for Delaware Fund B Class and Delaware C
Class are estimates based on actual expenses incurred by Delaware Fund A Class
for the fiscal year ended October 31, 1994. "Other Operating Expenses" for the
Devon Fund B Class and Devon Fund C Class are estimates based on actual expenses
incurred by Devon Fund A Class during the fiscal year ended October 31, 1994,
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 $87 $118 $191(2)
Class C Shares $28 $57 $98 $213
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
-7-
<PAGE>
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 $57 $98 $191(2)
Class C Shares $18 $57 $98 $213
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
twelve months of purchase. See Contingent Deferred Sales
Charge for Certain Purchases of Class A Shares Made at Net
Asset Value under Redemption and Exchange.
(2) At the end of approximately eight years after purchase, Class
B Shares 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 from the years ended October 31, 1985 through
October 31, 1994 for Delaware Fund A Class, September 6, 1994 through October
31, 1994 for Delaware Fund B Class and Devon Fund B Class and December 29, 1993
through October 31, 1994 for Devon Fund A Class 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. Unaudited financial highlights for the
six months ended April 30, 1995 are also provided below for the Class A and
Class B Shares. The data should be read in conjunction with the financial
statements and related notes for the six months ended April 30, 1995, all of
which are incorporated by reference into Part B. Further information about the
Series' performance is contained in its Annual Report to shareholders for the
fiscal year ended October 31, 1994 and its Semi-Annual Report to shareholders
for the six months ended April 30, 1995. A copy of the Series' Annual Report
(including the report of Ernst & Young LLP) may be obtained from the Fund upon
request at no charge. Information regarding Class C Shares has not been included
in these tables because such shares were not offered to the public prior to the
date of this Prospectus.
- --------------------------------------------------------------------------------
-9-
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Period
11/1/94
through
4/30/95(2) Year Ended
(Unaudited) 10/31/94(1) 10/31/93(1) 10/31/92(1) 10/31/91 10/31/9
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $18.000 $19.430 $18.720 $18.810 $16.190 $17.480
Income From Investment Operations
Net Investment Income....................................... 0.327 0.615 0.631 0.660 0.757 0.856
Net Gains (Losses) on Securities
(both realized and unrealized)................... 0.653 (0.285) 1.509 1.490 3.033 (1.366)
----- ------- ----- ----- ----- -------
Total From Investment Operations...................... 0.980 0.330 2.140 2.150 3.790 (0.510)
----- ----- ----- ----- ----- -------
Less Distributions
Dividends (from net investment income)...................... (0.330) (0.600) (0.660) (0.700) (0.880) (0.780)
Distributions (from capital gains).......................... (0.250) (1.160) (0.770) (1.540) (0.290) none
Returns of Capital.......................................... none none none none none none
---- ---- ---- ---- ---- ----
Total Distributions................................... (0.580) (1.760) (1.430) (2.240) (1.170) (0.780)
------- ------- ------- ------- ------- ------
Net Asset Value, End of Period.............................. $18.400 $18.000 $19.430 $18.720 $18.810 $16.190
======= ======= ======= ======= ======= =======
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(3) ............................................ 5.65% 1.80% 11.91% 12.37% 24.32% (3.17%)
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (000's omitted)................... $469,897 $456,074 $507,528 $487,343 $453,449 $349,873
Ratio of Expenses to Average Daily Net Assets............... 1.00% .97% .89% .79% .71% .75%
Ratio of Net Investment Income to Average Daily Net Assets.. 3.73% 3.31% 3.27% 3.64% 4.29% 4.99%
Portfolio Turnover Rate..................................... 110% 142% 160% 144% 212% 147%
</TABLE>
- ------------
(1) Reflects 12b-1 distribution expenses beginning June 1, 1992.
(2) Ratios have been annualized but total return has not been annualized.
(3) Does not reflect any maximum sales charge that is or was in effect nor the
1% Limited CDSC that would apply in the event of certain redemptions within
twelve months of purchase. See Contingent Deferred Sales Charge for Certain
Purchases of Class A Shares Made at Net Asset Value.
<TABLE>
<CAPTION>
Delaware Fund A Class
----------------------------------------------------
Year Ended
<S> <C> <C> <C> <C> <C>
10/31/89 10/31/88 10/31/87 10/31/86 10/31/85
Net Asset Value, Beginning of Period....................... $15.250 $16.850 $23.200 $20.860 $19.070
Income From Investment Operations
Net Investment Income...................................... 0.796 0.551 0.331 0.554 0.717
Net Gains (Losses) on Securities
(both realized and unrealized).................. 2.384 2.259 (1.971) 4.486 2.883
----- ----- ------- ----- -----
Total From Investment Operations..................... 3.180 2.810 (1.640) 5.040 3.600
----- ----- ------- ----- -----
Less Distributions
Dividends (from net investment income)..................... (0.950) (0.320) (0.400) (0.700) (0.800)
Distributions (from capital gains)......................... none (4.090) (4.310) (2.000) (1.010)
Returns of Capital....................................... none none none none none
---- ---- ---- ---- ----
Total Distributions.................................. (0.950) (4.410) (4.710) (2.700) (1.810)
------- ------- ------- ------- -------
Net Asset Value, End of Period............................. $17.480 $15.250 $16.850 $23.200 $20.860
======= ======= ======= ======= =======
- ---------------------------------------------------------------------------------------------------------------------
Total Return(3) ........................................... 21.66% 22.03% (9.14%) 26.85% 20.47%
- ---------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (000's omitted).................. $361,625 $328,650 $320,854 $405,856 $341,269
Ratio of Expenses to Average Daily Net Assets.............. .76% .77% .73% .69% .75%
Ratio of Net Investment Income to Average Daily Net Assets. 4.73% 4.01% 1.64% 2.53% 3.71%
Portfolio Turnover Rate.................................... 129% 180% 205% 104% 132%
</TABLE>
-10-
<PAGE>
<TABLE>
<CAPTION>
Delaware Fund B Class
-------------------------------
Period
11/1/94 Period
through 9/6/94(1)
4/30/95(2) through
(Unaudited) 10/31/94
<S> <C> <C>
Net Asset Value, Beginning of Period....................... $17.980 $18.340
Income From Investment Operations
Net Investment Income...................................... 0.306 0.070
Net Gains (Losses) on Securities
(both realized and unrealized).................... 0.624 (0.280)
----- -------
Total From Investment Operations....................... 0.930 (0.210)
----- -------
Less Distributions
Dividends (from net investment income)..................... (0.270) (0.150)
Distributions (from capital gains)......................... (0.250) none
Returns of Capital......................................... none none
---- ----
Total Distributions.................................... (0.520) (0.150)
------- -------
Net Asset Value, End of Period............................. $18.390 $17.980
======= =======
- --------------------------------------------------------------------------------------------
Total Return(3)............................................ 5.30% (1.14%)
- --------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (000's omitted).................. $1,656 $568
Ratio of Expenses to Average Daily Net Assets ............. 1.83% 1.81%
Ratio of Net Investment Income to Average Daily Net Assets. 2.90% 2.47%
Portfolio Turnover Rate.................................... 110% 142%
</TABLE>
- -------------
(1) Date of initial public offering; ratios have been annualized but total
return has not been annualized.
(2) Ratios have been annualized but total return has not been annualized.
(3) Does not include any CDSC which varies from 1% - 4% depending upon the
holding period for Delaware Fund B Class.
-11-
<PAGE>
<TABLE>
<CAPTION>
Devon Fund A Class
-------------------------------
Period
11/1/94 Period
through 12/29/93(1)
4/30/95(2) through
(Unaudited) 10/31/94
<S> <C> <C>
Net Asset Value, Beginning of Period....................... $10.830 $10.000
Income From Investment Operations
Net Investment Income...................................... 0.099 0.136
Net Gains (Losses) on Securities
(both realized and unrealized)........................ 0.661 0.784
----- -----
Total From Investment Operations...................... 0.760 0.920
----- -----
Less Distributions
Dividends (from net investment income)..................... (0.140) (0.090)
Distributions (from capital gains)......................... (0.320) none
Returns of Capital......................................... none none
---- ----
Total Distributions................................... (0.460) (0.090)
------- -------
Net Asset Value, End of Period............................. $11.130 $10.830
======= =======
- --------------------------------------------------------------------------------------------
Total Return(3)............................................ 7.47% 11.09%
- --------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (000's omitted).................. $6,880 $4,600
Ratio of Expenses to Average Daily Net Assets.............. 1.25%(4) 1.25%(4)
Ratio of Net Investment Income to Average Daily Net Assets. 2.00%(5) 1.96%(5)
Portfolio Turnover Rate.................................... 122% 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) Ratios have been annualized but total return has not been annualized.
(3) 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 twelve 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 4 and 5.
(4) Ratio of expenses to average daily net assets prior to expense limitation
was 2.68% for the six months ended April 30, 1995 and 3.26% for the period
ended October 31, 1994.
(5) Ratio of net investment income (loss) to average daily net assets prior to
expense limitation was 0.57% for the six months ended April 30, 1995 and
(0.05%) for the period ended October 31, 1994.
-12-
<PAGE>
<TABLE>
<CAPTION>
Devon Fund B Class
-------------------------------
Period
11/1/94 Period
through 9/6/94(1)
4/30/95(2) through
(Unaudited) 10/31/94
<S> <C> <C>
Net Asset Value, Beginning of Period....................... $10.820 $10.900
Income From Investment Operations
Net Investment Income...................................... 0.094 0.027
Net Gains (Losses) on Securities
(both realized and unrealized).................... 0.626 (0.077)
----- -------
Total From Investment Operations....................... 0.720 (0.050)
----- -------
Less Distributions
Dividends (from net investment income)..................... (0.120) (0.030)
Distributions (from capital gains)......................... (0.320) none
Returns of Capital......................................... none none
------- -------
Total Distributions........................................ (0.440) (0.030)
------- -------
Net Asset Value, End of Period............................. $11.100 $10.820
======= =======
- -----------------------------------------------------------------------------
Total Return(3)............................................ 7.08% (0.46%)
- -----------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (000's omitted).................. $450 $115
Ratio of Expenses to Average Daily Net Assets.............. 1.95%(4) 1.95%(4)
Ratio of Net Investment Income to Average Daily Net Assets. 1.30%(5) 1.26%(5)
Portfolio Turnover Rate.................................... 122% 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) Ratios have been annualized but total return has not been annualized.
(3) 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 4 and 5.
(4) Ratio of expenses to average daily net assets prior to expense limitation
was 3.38% for the six months ended April 30, 1995 and 3.96% for the period
ended October 31, 1994. (5) Ratio of net investment loss to average daily
net assets prior to expense limitation was (0.13%) for the six months ended
April 30, 1995 and (0.75%) for the period ended October 31, 1994.
-13-
<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
Corporation ("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.
-14-
<PAGE>
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.
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.
-15-
<PAGE>
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.
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.
-16-
<PAGE>
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.
-17-
<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.
-18-
<PAGE>
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.
-19-
<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.
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.
-20-
<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.
-21-
<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, the
various service features and other funds in the Delaware Group.
Performance Information
During business hours, you can call the Investor Information Center to get
current performance information.
Delaphone Service
Delaphone is an account inquiry service for investors with Touch-Tone(R)
phone service. It enables you to get information on your account faster than the
mailed statements and confirmations. Delaphone is available seven days a week,
24 hours a day.
Statements and Confirmations
You will receive quarterly statements of your account summarizing all
transactions during the period. A confirmation statement will be sent following
all transactions other than those involving a reinvestment of distributions. 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.
-22-
<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. 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 to obtain. See
Buying Shares and Part B.
-23-
<PAGE>
12-Month Reinvestment Privilege
The 12-Month Reinvestment Privilege permits you to reinvest proceeds of
Class A Shares within one year of the date of redemption, without a front-end
sales charge. See Part B.
Delaware Group Asset Planner
Delaware Group Asset Planner is an asset allocation service that gives
investors, working with a professional financial adviser, the ability to more
easily design and maintain investments in a diversified selection of Delaware
Group mutual funds. The Asset Planner service offers a choice of four
predesigned Allocation Strategies (each with a different risk/reward profile)
made up of separate investments in predetermined percentages of Delaware Group
funds. With the guidance of a financial adviser, investors may also tailor a
Strategy that meets their personal needs and goals. See How to Buy Shares under
Buying Shares.
Financial Information about the 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.
-24-
<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.
-25-
<PAGE>
Prototype Profit Sharing or Money
Purchase Pension Plan
Offers self-employed individuals, partnerships and corporations a
tax-qualified plan which provides for the investment of contributions in Class A
Shares or Class C Shares. Class B Shares are not available for purchase by such
plans.
Prototype 401(k) Defined Contribution Plan
Permits employers to establish a tax- qualified plan based on salary
deferral contributions 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 (DF-ABC) 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.
-26-
<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 or Class C Shares by the plan. Minimum
purchase requirements do not apply to retirement plans other than IRAs for which
there is a minimum initial purchase of $250, and a minimum subsequent purchase
of $25, regardless of which class is selected.
Alternative Purchase Arrangements
Shares may be purchased at a price equal to the next determined
net asset value per share, subject to a sales charge which may be imposed, at
the election of the purchaser, at the time of the purchase with respect to Class
A Shares ("front-end sales charge alternative"), or on a contingent deferred
basis with respect to Class B Shares ("deferred sales charge alternative") or
Class C Shares ("level sales charge alternative").
Class A Shares. An investor who elects the front-end sales
charge alternative acquires Class A Shares. Class A Shares incur a sales charge
when they are purchased but generally are not subject to any sales charge when
they are redeemed. Class A Shares are subject to annual 12b-1 Plan expenses of
up to a maximum of .30% of average daily net assets of such shares. See
Contingent Deferred Sales Charge for Certain Purchases of Class A Shares Made at
Net Asset Value and Distribution (12b-1) and Service. Certain purchases of Class
A Shares qualify for reduced front-end sales charges. See Front-End Sales Charge
Alternative - Class A Shares, below.
Class B Shares. An investor who elects the deferred sales charge
alternative acquires Class B Shares. Class B Shares do not incur a front-end
sales charge when they are purchased, but are subject to a sales charge if they
are redeemed within six years of purchase and are subject to annual 12b-1 Plan
expenses of up to a maximum of 1% (.25% of which are service fees to be paid to
the Distributor, dealers or others for providing personal service and/or
maintaining shareholder accounts) of average daily net assets of such shares for
approximately eight years after purchase. Class B Shares permit all of the
investor's dollars to work from the time the investment is made. The higher
12b-1 Plan expenses paid by Class B Shares will cause such shares to have a
higher expense ratio and to pay lower dividends than those related to the Class
A Shares. At the end of approximately eight years after purchase, the Class B
Shares will automatically be converted into Class A Shares. See Automatic
Conversion of Class B Shares, below.
Class C Shares. An investor who elects the level sales charge
alternative acquires Class C Shares. Class C Shares do not incur a front-end
sales charge when they are purchased, but are subject to a sales charge if they
are redeemed within twelve months of purchase and are subject to annual 12b-1
Plan expenses of up to a maximum of 1% (.25% of which are service fees to be
paid to the Distributor, dealers or others for providing personal service and/or
maintaining shareholder accounts) of average daily net assets of such shares for
the life of the investment. The higher 12b-1 Plan expenses paid by Class C
Shares will cause such shares to have a higher expense ratio and to pay lower
dividends than those related to the Class A Shares. Unlike Class B Shares, Class
C Shares do not convert to another class.
-27-
<PAGE>
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 twelve months of purchase. In addition, investors
should consider the level of annual 12b-1 Plan expenses to which each of the
Classes is subject and, in comparing Class B Shares to Class C Shares, the
desirability of an automatic conversion feature, which is available only for
Class B Shares.
As an illustration, investors who qualify for significantly
reduced front-end sales charges on purchases of Class A Shares, as described
below, might elect the front-end sales charge alternative because similar sales
charge reductions are not available 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 for the
purchase amount at the time of purchase, investors who buy Class A Shares would
not have all 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 1% until the shares are
automatically converted into Class A Shares. Still other investors might
determine it to be more advantageous to purchase Class C Shares and have all of
their funds invested initially, recognizing that they would be subject to a CDSC
for just twelve months after purchase but that Class C Shares do not offer a
conversion feature, so their shares would be subject to annual 12b-1 Plan
expenses of up to 1% for the life of the investment. The higher 12b-1 Plan
expenses on Class B Shares and Class C Shares will be offset to the extent a
return is realized on the additional money initially invested under the deferred
sales charge alternative or the level sales charge alternative. However, there
can be no assurance as to the return, if any, that will be realized on such
additional money.
Prospective investors should refer to Appendix A to this
Prospectus for an illustration of the potential impact on a long-term
shareholder's investment in the Fund under each of the purchase options.
For the distribution and related services provided to, and the
expenses borne on behalf of, 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 AND CLASS C SHARES ARE THE SAME AS THOSE OF THE 12b-1 PLAN AND
THE FRONT-END SALES CHARGE APPLICABLE TO CLASS A SHARES IN THAT SUCH FEES AND
CHARGES PROVIDE FOR THE FINANCING OF THE DISTRIBUTION OF THE RESPECTIVE CLASSES.
See 12b-1 Distribution Plans - Class A, Class B And Class C Shares.
Dividends paid by the Series with respect to the Class A, Class
B and Class C Shares, to the extent any dividends are paid, will be calculated
in the same manner, at the same time, on the same day and will be in the same
amount, except that the additional amount of 12b-1 Plan expenses relating to the
Class B and Class C Shares will be borne exclusively by such shares. See
Calculation of Offering Price and Net Asset Value Per Share.
-28-
<PAGE>
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.
<TABLE>
<CAPTION>
Delaware Fund A Class and Devon Fund A Class
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dealer's
Front-End Sales Charge as % of Concession***
Amount of Purchase Offering Amount as % of
Price Invested** Offering Price
- -------------------------------------------------------------------------------------------------
Delaware Devon
Fund Fund
Less than $100,000 4.75% 5.00% 4.99% 4.00%
$100,000 but under $250,000 3.75 3.89 3.97 3.00
$250,000 but under $500,000 2.50 2.56 2.58 2.00
$500,000 but under $1,000,000* 2.00 2.06 2.03 1.60
</TABLE>
* There is no front-end sales charge on purchases of Class A Shares of
$1 million or more but, under certain limited circumstances, a 1%
Limited CDSC may apply upon redemption of such shares.
** Based 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.
- -------------------------------------------------------------------------------
-29-
<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 twenty-one years of age and any trust,
fiduciary or retirement account for the benefit of such family members.
It also permits you to use these combinations under a Letter of Intention.
A Letter of Intention allows you to make purchases over a 13-month period and
qualify the entire purchase for a reduction in front-end sales charges on Class
A Shares.
Combined purchases of $1,000,000 or more, including certain purchases made
at net asset value pursuant to a Right of Accumulation or under a Letter of
Intention, may trigger the payment of a dealer's commission and the
applicability of a Limited CDSC. Investors should consult their financial
advisers or the Shareholder Service Center about the operation of these
features. See Front-End Sales Charge Alternative Class A Shares under Buying
Shares.
-30-
<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 CDSC or other
redemption charge. Purchases of Class A Shares also may be made at net asset
value by bank employees who provide services in connection with agreements
between the bank and unaffiliated brokers or dealers concerning sales of Class A
Shares. Officers, directors and key employees of institutional clients of the
Manager or any of its affiliates may purchase Class A Shares at net asset value.
Moreover, purchases may be effected at net asset value for the benefit of the
clients of brokers, dealers and registered investment advisers affiliated with a
broker or dealer, if such broker, dealer or investment adviser has entered into
an agreement with the Distributor providing specifically for the purchase of
Class A Shares in connection with special investment products, such as wrap
accounts or similar fee based programs.
Investments in Class A Shares made by plan level and/or participant
retirement accounts that are for the purpose of repaying a loan taken from such
accounts will be made at net asset value. Loan repayments made to a Delaware
Group account in connection with loans originated from accounts previously
maintained by another investment firm will also be invested at net asset value.
See Investing by Exchange 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.
See Investing by Exchange for a description of net asset value purchases
for Allied Plans.
-31-
<PAGE>
Group Investment Plans
Group Investment Plans (e.g., SEP/IRA, SAR/SEP, Prototype Profit Sharing,
Pension and 401(k) Defined Contribution Plans) may also benefit from the reduced
front-end sales charges relating to the Class A Shares set forth in the table on
page __, 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
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 the 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 three 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.
All such automatic conversions of Class B Shares will constitute tax-free
exchanges for federal income tax purposes. See Taxes.
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Level Sales Charge Alternative - Class C
Shares
Class C Shares may be purchased at net asset value without the imposition
of a front-end sales charge and, as a result, the Fund will invest the full
amount of the investor's purchase payment. The Distributor currently anticipates
compensating dealers or brokers for selling Class C Shares at the time of
purchase from its own assets in an amount equal to no more than 1% of the dollar
amount purchased. As discussed below, however, Class C Shares are subject to
annual 12b-1 Plan expenses and, if redeemed within twelve months of purchase, a
CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to the
Distributor and others for 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 twelve
months of purchase may be subject to a CDSC of 1%. CDSCs are charged as a
percentage of the dollar amount subject to the CDSC. The charge will be assessed
on an amount equal to the lesser of the net asset value at the time of purchase
of the shares being redeemed or the net asset value of those shares at the time
of redemption. No CDSC will be imposed on increases in net asset value above the
initial purchase price. In addition, no CDSC will be assessed on redemptions of
shares received through reinvestments of dividends or capital gains
distributions. For purposes of this formula, the "net asset value at the time of
purchase" will be the net asset value at purchase of either the Class B Shares
or the Class C Shares of 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 the 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.
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In determining whether a CDSC is applicable to a redemption of Class B
Shares, it will be assumed that shares held for more than six years are redeemed
first, followed by shares acquired through the reinvestment of dividends or
distributions, and finally by shares held longest during the six-year period.
With respect to the Class C Shares, it will be assumed that shares held for more
than twelve months are redeemed first, followed by shares acquired through the
reinvestment of dividends or distributions, and finally by shares held for
twelve months or less. All investments made during a calendar month, regardless
of what day of the month the investment occurred, will age one month on the last
day of that month and each subsequent month.
The CDSC is waived on 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.
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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.
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).
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<PAGE>
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 the Statement of
Additional of Information.
Investors will receive a customized quarterly Strategy Report summarizing
all Delaware Group Asset Planner investment performance and account activity
during the prior period. Confirmation statements will be sent following all
transactions other than those involving a reinvestment of distributions.
Certain shareholder services are not available to investors using the Asset
Planner service, due to its special design. These include Delaphone,
Checkwriting, Wealth Builder Option and Letter of Intention. Systematic
Withdrawal Plans are available after the account has been open for two years.
Investing by Exchange
If you have an investment in another mutual fund in the Delaware Group, you
may write and authorize an exchange of part or all of your investment into
shares of the 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.
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Shareholders of Class A Shares may exchange all or part of their shares for
certain of the shares of other funds in the Delaware Group including other Class
A Shares but may not exchange their shares for Class B Shares or Class C Shares
of the Series or for Class B Shares or Class C Shares of any other fund in the
Delaware Group. Shareholders of Class B Shares of 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.
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.
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The Conditions of Your Purchase
The Fund reserves the right to reject any purchase order. If a purchase is
canceled because your check is returned unpaid, you are responsible for any loss
incurred. The Fund can redeem shares from your account(s) to reimburse itself
for any loss, and you may be restricted from making future purchases in any of
the funds in the Delaware Group. The Fund reserves the right to reject purchase
orders paid by third-party checks or checks that are not drawn on a domestic
branch of a United States financial institution. If a check drawn on a foreign
financial institution is accepted, you may be subject to additional bank charges
for clearance and currency conversion.
The Fund also reserves the right, following shareholder notification, to
charge a service fee on non-retirement accounts that have remained below the
minimum stated account balance for a period of three or more consecutive months.
Holders of such accounts may be notified of their insufficient account balance
and advised that they have until the end of the current calendar quarter to
raise their balance to the stated minimum. If the account has not reached the
minimum balance requirement by that time, the Fund will charge a $9 fee for that
quarter and each subsequent calendar quarter until the account is brought up to
the minimum balance. The service fee will be deducted from the account during
the first week of each calendar quarter for the previous quarter, and will be
used to help defray the cost of maintaining low-balance accounts. No fees will
be charged without proper notice and no CDSC will apply to such assessments.
The Fund also reserves the right, upon sixty days' written notice, to
redeem accounts that remain under a Class' minimum initial purchase amount as a
result of redemptions. An investor making the minimum initial investment may be
subject to involuntary redemption without the imposition of a CDSC or Limited
CDSC if he or she redeems any portion of his or her account.
REDEMPTION AND EXCHANGE
You can redeem or exchange your shares in a number of different ways. The
exchange service is useful if your investment requirements change and you want
an easy way to invest in other equity funds, tax-advantaged funds, bond funds
or money market funds. This service is also useful if you are anticipating a
major expenditure and want to move a portion of your investment into a fund that
has the checkwriting feature. Exchanges are subject to the requirements of each
fund and all exchanges of shares from one fund or class to another constitute
taxable events. See Taxes. Further, in order for an exchange to be processed,
shares of the fund being acquired must be registered in the state where the
acquiring shareholder resides. You may want to consult your financial adviser or
investment dealer to discuss which funds in the Delaware Group will best meet
your changing objectives, and the consequences of any exchange transaction. You
may also call the Delaware Group directly for fund information.
Your shares will be redeemed or exchanged at a price based on the net asset
value next determined after we receive your request in good order subject in the
case of a redemption, to any applicable CDSC or Limited CDSC. Redemption or
exchange requests received in good order after the time the offering price and
net asset value of shares are determined, as noted above, will be processed on
the next business day. See Purchase Price and Effective Date under Buying
Shares. A shareholder submitting a redemption request may indicate that he or
she wishes to receive redemption proceeds of a specific dollar amount. In the
case of such a request, and in the case of certain redemptions from retirement
plan accounts, the 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.
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Except as noted below, for a redemption request to be in "good order," you
must provide your account number, account registration, and the total number of
shares or dollar amount of the transaction. For exchange requests, you must also
provide the name of the fund you want to receive the proceeds. Exchange
instructions and redemption requests must be signed by the record owner(s)
exactly as the shares are registered. You may request a redemption or an
exchange by calling the Fund at 800-523- 1918 (in Philadelphia, 215-988-1241).
The Fund may suspend, terminate, or amend the terms of the exchange privilege
upon sixty days' written notice to shareholders.
The Fund will honor written redemption requests of shareholders who
recently purchased shares by check, but will not mail the proceeds until it is
reasonably satisfied that the purchase check has cleared, which may take up to
fifteen days from the purchase date. The Fund will not honor telephone
redemptions for shares recently purchased by check unless it is reasonably
satisfied that the purchase check has cleared. You can avoid this potential
delay if you purchase shares by wiring Federal Funds. The Fund reserves the
right to reject a written or telephone redemption request or delay payment of
redemption proceeds if there has been a recent change to the shareholder's
address of record.
There is no front-end sales charge or fee for exchanges made between shares
of funds which both carry a front-end sales charge. Any applicable front-end
sales charge will apply to exchanges from shares of funds not subject to a
front-end sales charge, except for transfers involving assets that were
previously invested in a fund with a front-end sales charge and/or transfers
involving the reinvestment of dividends.
Holders of Class B Shares or Class C Shares that exchange their shares
("Original Shares") for Class B Shares of other Class B Funds or Class C Shares
of other Class C Funds, as applicable (in each case, "New Shares") will not be
subject to a CDSC that might otherwise be due upon redemption of the Original
Shares. However, such shareholders will continue to be subject to the CDSC and,
in the case of Class B Shares, the automatic conversion schedule of the Original
Shares as described in this Prospectus and any CDSC assessed upon redemption
will be charged by the 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.
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All exchanges involve a purchase of shares of the fund into which the
exchange is made. As with any purchase, an investor should obtain and carefully
read that fund's prospectus before buying shares in an exchange. The prospectus
contains more complete information about the fund, including charges and
expenses.
Written Redemption
You can write to the Fund at 1818 Market Street, Philadelphia, PA 19103 to
redeem some or all of your shares. The request must be signed by all owners of
the account or your investment dealer of record. For redemptions of more than
$50,000, or when the proceeds are not sent to the shareholder(s) at the address
of record, the Fund requires a signature by all owners of the account and a
signature guarantee for each owner. Each signature guarantee must be supplied by
an eligible guarantor institution. The Fund reserves the right to reject a
signature guarantee supplied by an eligible institution based on its
creditworthiness. The Fund may require further documentation from corporations,
executors, retirement plans, administrators, trustees or guardians.
Payment is normally mailed the next business day, but no later than seven
days, after receipt of your redemption request. If your Class A Shares are in
certificate form, the certificate must accompany your request and also be in
good order. The Fund issues certificates for Class A Shares only if a
shareholder submits a specific request. The Fund does not issue certificates for
Class B or Class C Shares.
Written Exchange
You may also write to the Fund (at 1818 Market Street, Philadelphia, PA
19103) to request an exchange of any or all of your shares into another mutual
fund in the Delaware Group, subject to the same conditions and limitations as
other exchanges noted above.
Telephone Redemption and Exchange
To get the added convenience of the telephone redemption and exchange
methods, you must have the Transfer Agent hold your shares (without charge) for
you. If you choose to have your Class A Shares in certificate form, you may only
redeem or exchange by written request and you must return your certificates.
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The Telephone Redemption - Check to Your Address of Record Service and the
Telephone Exchange service, both of which are described below, are automatically
provided unless you notify the Fund in writing that you do not wish to have such
service available with respect to your account. The Fund reserves the right to
modify, terminate or suspend these procedures upon sixty days' written notice to
shareholders. It may be difficult to reach the Fund by telephone during periods
when market or economic conditions lead to an unusually large volume of
telephone requests.
Neither the Fund nor the Transfer Agent is responsible for any shareholder
loss incurred in acting upon written or telephone instructions for redemption or
exchange of Series shares which are reasonably believed to be genuine. With
respect to such telephone transactions, the Fund will follow reasonable
procedures to confirm that instructions communicated by telephone are genuine
(including verification of a form of personal identification) as, if it does
not, the Fund or the Transfer Agent may be liable for any losses due to
unauthorized or fraudulent transactions. Instructions received by telephone are
generally tape recorded, and a written confirmation will be provided for all
purchase, exchange and redemption transactions initiated by telephone. By
exchanging shares by telephone, you are acknowledging prior receipt of a
prospectus for the fund into which your shares are being exchanged.
Telephone Redemption--Check to Your
Address of Record
The Telephone Redemption feature is a quick and easy method to redeem
shares. You or your investment dealer of record can have redemption proceeds of
$50,000 or less mailed to you at your address of record. Checks will be payable
to the shareholder(s) of record. Payment is normally mailed the next business
day, but no later than seven days, after receipt of the request. This service is
only available to individual, joint and individual fiduciary-type accounts.
Telephone Redemption--Proceeds to Your
Bank
Redemption proceeds of $1,000 or more can be transferred to your
predesignated bank account by wire or by check. You should authorize this
service when you open your account. If you change your predesignated bank
account, the Fund requires an Authorization Form with your signature guaranteed.
For your protection, your authorization must be on file. If you request a wire,
your funds will normally be sent the next business day. CoreStates Bank, N.A.'s
fee (currently $7.50) will be deducted from your redemption. If you ask for a
check, it will normally be mailed the next business day, but no later than seven
days, after receipt of your request to your predesignated bank account. Except
for any CDSC which may be applicable to 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
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.
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Telephone Exchange
The Telephone Exchange feature is a convenient and efficient way to adjust
your investment holdings as your liquidity requirements and investment
objectives change. You or your investment dealer of record can exchange your
shares into any fund in the Delaware Group under the same registration, subject
to the same conditions and limitations as other exchanges noted above. As with
the written exchange service, telephone exchanges are subject to the
requirements of each fund, as described above. Telephone exchanges may be
subject to limitations as to amounts or frequency.
Systematic Withdrawal Plans
1. Regular Plans
This plan provides shareholders with a consistent monthly (or quarterly)
payment. This is particularly useful to shareholders living on fixed incomes,
since it can provide them with a stable supplemental amount. With accounts of at
least $5,000, you may elect monthly withdrawals of $25 (quarterly $75) or more.
The Fund does not recommend any particular monthly amount, as each shareholder's
situation and needs vary. Payments are normally made by check. You may elect to
have your payments transferred from your Series account to your predesignated
bank account through the Delaware Group's MoneyLine service. Your funds will
normally be credited to your bank account two business days after the payment
date. Except for the Limited CDSC which may be applicable to Class A Shares and
the CDSC which may be applicable to Class B 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 twelve 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 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.
The Systematic Withdrawal Plan is not available for Class B Shares. For
more information on Systematic Withdrawal plans, call the Shareholder Service
Center.
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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 also 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
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.
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Waiver of Limited CDSC - Class A Shares
The Limited CDSC for Class A Shares on which a dealer's commission has been
paid will be waived in the following instances: (i) redemptions that result from
the Series' right to liquidate a shareholder's account if the aggregate net
asset value of the shares held in the account is less than the then-effective
minimum account size; (ii) distributions to participants from a retirement plan
qualified under section 401(a) or 401(k) of the Internal Revenue Code of 1986,
as amended (the "Code"), or due to death of a participant in such a plan; (iii)
redemptions pursuant to the direction of a participant or beneficiary of a
retirement plan qualified under section 401(a) or 401(k) of the Code with
respect to that retirement plan; (iv) distributions from a section 403(b)(7)
Plan or an IRA due to death, disability, or attainment of age 59 1/2; (v)
returns of excess contributions to an IRA; (vi) distributions by other employee
benefit plans to pay benefits; (vii) distributions described in (ii), (iv), and
(vi) above pursuant to a systematic withdrawal plan; and (viii) redemptions by
the classes of shareholders who are permitted to purchase shares at net asset
value, regardless of the size of the purchase (see Buying at Net Asset Value),
under Buying Shares.
Waiver of CDSC - Class B and Class C
Shares
The CDSC on certain redemptions of Class B 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 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 share held in the account is less than the then-effective minimum account
size; (ii) returns of excess contributions to an IRA, 403(b)(7) Deferred
Compensation Plan, Profit Sharing Plan, Money Purchase Pension Plan or 401(k)
Defined Contribution Plan; (iii) required minimum distributions from an IRA,
403(b)(7) Deferred Compensation Plan, 457 Deferred Compensation Plan, Profit
Sharing Plan, Money Purchase Pension Plan, or 401(k) Defined Contribution Plan;
(iv) distributions from a 403(b)(7) Deferred Compensation Plan, 457 Deferred
Compensation Plan, Profit Sharing Plan, or 401(k) Defined Contribution Plan,
under hardship provisions of the plan; (v) distributions from a 403(b)(7)
Deferred Compensation Plan, 457 Deferred Compensation Plan, Profit Sharing Plan,
Money Purchase Pension Plan or a 401(k) Defined Contribution Plan upon
attainment of normal retirement age under the plan or upon separation from
service; (vi) distributions from an IRA on or after attainment of age 59 1/2;
and (vii) distributions from an account if the redemption results from the death
of all registered owners of the account (in the case of accounts established
under the Uniform Gifts to Minors or Uniform Transfers to Minors Acts or trust
accounts, the waiver applies upon the death of all beneficial owners) or a total
and permanent disability (as defined in Section 72 of the Code) of all
registered owners occurring after the purchase of the shares being redeemed.
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In addition, the CDSC will be waived on Class B and Class C Shares redeemed
in accordance with a Systematic Withdrawal Plan if the annual amount selected to
be withdrawn under the Plan does not exceed 12% of the value of the account on
the date that the Systematic Withdrawal Plan was established or modified.
DIVIDENDS AND DISTRIBUTIONS
Each Series will normally make payments from net investment income on a
quarterly basis. During the fiscal year ended October 31, 1994, dividends
totaling $0.600 and $0.150 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 $0.090 and $0.030 per share of the
Devon Fund A Class and the Devon Fund B Class, respectively, were paid from net
investment income. This amount included undistributed net investment income
earned by the Delaware Fund A Class 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, 1994, distributions totaling $1.160 per
share of the Delaware Fund A Class were paid from realized securities profits.
The Devon Fund A Class commenced operations on December 29, 1993 and the Class B
Shares of each Series commenced operations on September 6, 1994.
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 Plan for Class A Shares,
Class B Shares and Class C Shares under Redemption and Exchange for information
regarding authorization of this service. This service is not available for
retirement plans. (See The Delaware Difference for more information on
reinvestment options.)
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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, 1994, 52% and 45% 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 ninety days
of their purchase (for purposes of determining gain or loss upon sale of such
shares) if the sale proceeds are reinvested in the Series or in another fund in
the Delaware Group of funds and a sales charge that would otherwise apply to the
reinvestment is reduced or eliminated. Any portion of such sales charge excluded
from the tax basis of the shares sold will be added to the tax basis of the
shares acquired in the reinvestment.
The automatic conversion of Class B Shares into Class A Shares at the end
of approximately eight years after purchase will be tax-free for federal tax
purposes. See Automatic Conversion of Class B Shares under Buying Shares.
In addition to federal taxes, shareholders may be subject to state and
local taxes on distributions. Distributions of interest income and capital gains
realized from certain types of U.S. Government securities may be exempt from
state personal income taxes. Shares of the Series are exempt from Pennsylvania
county personal property taxes.
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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.
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CALCULATION OF OFFERING PRICE
AND NET ASSET VALUE PER SHARE
Class A Shares are purchased at the offering price per share, while Class B
Shares and Class C Shares are purchased at the net asset value ("NAV") per
share. The offering price per share of Class A Shares consists of the NAV per
share next computed after the order is received, plus any applicable front-end
sales charges. The offering price and NAV are computed as of the close of
regular trading on the New York Stock Exchange (ordinarily, 4 p.m., Eastern
time) on days when the Exchange is open.
The NAV per share is computed by adding the value of all securities and
other assets in the portfolio, deducting any liabilities (expenses and fees are
accrued daily) and dividing by the number of shares outstanding. Portfolio
securities for which market quotations are available are priced at market value.
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 sixty days are valued at amortized cost, which
approximates market value. All other securities are valued at their fair value
as determined in good faith and in a method approved by the Fund's Board of
Directors.
Each of 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.
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MANAGEMENT OF THE FUND
Directors
The business and affairs of the Fund are managed under the direction of its
Board of Directors. Part B contains additional information regarding the
directors and officers.
Investment Manager
The Manager furnishes investment management services to the Fund.
The Manager and its predecessors have been managing the funds in the
Delaware Group since 1938. On October 31, 1994, the Manager and its affiliate,
Delaware International Advisers Ltd., were managing in the aggregate more than
$25 billion in assets in the various institutional (approximately
$16,074,376,000) and investment company (approximately $9,525,500,000) 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 was executed following
shareholder approval.
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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, 1994 were 0.52% of average daily net assets. Investment
management fees earned by the Devon Fund from December 29, 1993 (date of initial
public offering) through October 31, 1994 were 0.60%, annualized, 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.
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 nineteen 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.
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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 160% for 1993 and
142% for 1994. For the period December 29, 1993 (date of initial public
offering) through October 31, 1994, Devon Fund's portfolio turnover rate was
180%, annualized.
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 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 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.
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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 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 Plan
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, 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
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.
-52-
<PAGE>
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 also 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 ratio of expenses to average
daily net assets for the Class A Shares of the Delaware Fund for the fiscal year
ended October 31, 1994 was 0.97%, inclusive of 12b-1 fees. The ratio of
operating expenses to average daily net assets for the Class A Shares of the
Devon Fund from December 29, 1993 (date of initial public offering) through
October 31, 1994 was 1.25% (annualized), inclusive of 12b-1 fees, after
voluntary fee waivers and expense reimbursements by the Manager. The Class B
Shares of each Series commenced operations on September 6, 1994. Based on
expenses incurred by the Class A Shares of the Delaware Fund during its fiscal
year ended October 31, 1994, the expenses of the Class B Shares of the Delaware
Fund are expected to be 1.81%, inclusive of 12b-1 fees, for the fiscal year
ending October 31, 1995. Based on the expenses incurred by the Class A Shares of
the Devon Fund during the period ended October 31, 1994, the expenses of the
Class B Shares of the Devon Fund are expected to be 1.95%, inclusive of 12b-1
fees, after voluntary fee waivers and expense reimbursements by the Manager
through December 31, 1995. The Fund anticipates that the expense ratio for Class
C Shares will be identical to the expense ratio for Class B Shares for each
Series. The ratio of each Class reflects the impact of its 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.
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.
-53-
<PAGE>
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 a 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.
-54-
<PAGE>
APPENDIX A
Illustrations of the Potential Impact on Investment Based on Purchase Option
$10,000 Purchase
<TABLE>
<CAPTION>
Scenario 1 Scenario 2
No Redemption Redeem 1st Year
- ------------------------------------------------------ --------------------------------------
Year Class A Class B Class C Class A Class B Class C
- ---- ------- ------- ------- ------- ------- -------
<C> <C> <C> <C> <C> <C> <C>
0 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+
2 11,525 11,946 11,946
3 12,678 13,058 13,058
4 13,946 14,272 14,272
5 15,340 15,599 15,599
6 16,874 17,050 17,050
7 18,562 18,636 18,636
8 20,418 20,369 20,369
9 22,459 22,405*+ 22,263
10 24,705 24,646* 24,333
</TABLE>
*This assumes that Class B Shares were converted to Class A shares at the
end of the eighth year.
<TABLE>
<CAPTION>
Scenario 3 Scenario 4
Redeem 3rd Year Redeem 5th Year
- ------------------------------------------------------ ---------------------------------------
Year Class A Class B Class C Class A Class B Class C
- ---- ------- ------- ------- ------- ------- -------
<C> <C> <C> <C> <C> <C> <C>
0 9,525 10,000 10,000 9,525 10,000 10,000
1 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
3 12,678 12,758 13,058+ 12,678 13,058 13,058
4 13,946 14,272 14,272
5 15,340 15,399 15,599+
6
7
8
9
10
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
$250,000 Purchase
Scenario 1 Scenario 2
No Redemption Redeem 1st Year
- ---------------------------------------------------- ------------------------------------------
Year Class A Class B Class C Class A Class B Class C
- ---- ------- ------- ------- --------- ------- -------
<C> <C> <C> <C> <C> <C> <C>
0 243,750 250,000 250,000 243,750 250,000 250,000
1 268,125 273,250 273,250 268,125 263,250 270,750+
2 294,938 298,662 298,662
3 324,431 326,438 326,438
4 356,874 356,797 356,797
5 392,562 389,979 389,979
6 431,818 426,247 426,247
7 475,000 465,888 465,888
8 522,500 509,215 509,215
9 574,750 560,137* 556,572
10 632,225 616,150* 608,333
</TABLE>
*This assumes that Class B Shares were converted to Class A shares at the
end of the eighth year.
<TABLE>
<CAPTION>
$250,000 Purchase
Scenario 3 Scenario 4
Redeem 3rd Year Redeem 5th Year
- ---------------------------------------------------- ---------------------------------------
Year Class A Class B Class C Class A Class B Class C
- ---- ------- ------- ------- ------- ------- -------
<C> <C> <C> <C> <C> <C> <C>
0 243,750 250,000 250,000 243,750 250,000 250,000
1 268,125 273,250 273,250 268,125 273,250 273,250
2 294,938 298,662 298,662 294,938 298,662 298,662
3 324,431 318,938 326,438+ 324,431 326,438 326,438
4 356,874 356,797 356,797
5 392,562+ 384,979 389,979
6
7
8
9
10
</TABLE>
- ---------
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.
-55-
<PAGE>
----------------------------------
DELAWARE FUND
DEVON FUND
----------------------------------
A CLASS
----------------------------------
B CLASS
The Delaware Group includes funds ----------------------------------
with a wide range of investment C CLASS
objectives. Stock funds, income ----------------------------------
funds, tax-free funds, money marke
funds, global and international funds
and closed-end equity funds give
investors the ability to create a
portfolio that fits their personal
financial goals. For more information,
contact your financial adviser or call
Delaware Group at 800-523-4640.
P R O S P E C T U S
---------------------------------
INVESTMENT MANAGER November 29, 1995
Delaware Management Company, Inc.
One Commerce Square
Philadelphia, PA 19103
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING AND
TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young
One Commerce Square
Philadelphia, PA 19103
INDEPENDENT AUDITORS
Ernst & Young LLP
Two Commerce Square
Philadelphia, PA 19103
CUSTODIAN
Chemical Bank
450 West 33rd Street
New York, NY 10001
DELAWARE
GROUP
--------
<PAGE>
Form N-1A
File No. 2-10765
Delaware Group Delaware Fund, Inc.
The Registrant's Institutional Classes' Prospectus dated August 29, 1995
is incorporated into this filing by reference to the electronic filing
of that Prospectus made pursuant to Rule 497(e) on August 29, 1995.
<PAGE>
November 29, 1995
DELAWARE GROUP DELAWARE FUND, INC.
Delaware Fund Institutional Class
Devon Fund Institutional Class
(Formerly Dividend Growth Fund
Institutional Class)
Supplement to Prospectus dated August 29, 1995
ADDITIONAL CLASSES
In addition to the Institutional Class offered by each Series, the
Delaware Fund offers the Delaware Fund A Class, the Delaware Fund B Class and
the Delaware Fund C Class of shares, and the Devon Fund offers the Devon Fund A
Class, the Devon Fund B Class and the Devon Fund C Class of shares (together,
the "Fund Classes"), which are described in a separate prospectus relating to
the Fund Classes. The Fund Classes have sales charges and other expenses that
are different from the Institutional Classes and that may affect the performance
of the Fund Classes. For a prospectus relating to the Fund Classes, write to
Delaware Distributors, L.P. at 1818 Market Street, Philadelphia, PA 19103, or
call at the following telephone number: 800-523-4640.
FINANCIAL HIGHLIGHTS
The following unaudited financial highlights for the Delaware Fund
Institutional Class and the Devon Fund Institutional Class are derived from the
unaudited financial statements of Delaware Group Delaware Fund, Inc. for the
six-month period ended April 30, 1995. The data should be read in conjunction
with the financial statements and related notes which are incorporated into Part
B by reference to the Fund's Semi-Annual Report for the six months ended April
30, 1995.
<TABLE>
<CAPTION>
Delaware Fund Institutional Class Devon Fund Institutional Class
--------------------------------- ------------------------------
Six Months Ended April 30, 1995 Six Months Ended April 30, 1995
(Unaudited)(1) (Unaudited)(1)
<S> <C> <C>
Net Asset Value, Beginning of Period........ $18.030 $10.860
Income From Investment Operations
- ---------------------------------
Net Investment Income....................... 0.344 0.148
Net Gains or Losses on Securities
(both realized and unrealized)............ 0.646 0.622
------- -------
Total From Investment Operations.......... 0.990 0.770
Less Distributions
- ------------------
Dividends (from net investment income)...... (0.360) (0.160)
Distributions (from capital gains).......... (0.250) (0.320)
------- -------
Total Distributions....................... (0.610) (0.480)
------- -------
Net Asset Value, End of Period.............. $18.410 $11.150
======= =======
Total Return................................ 5.71% 7.56%
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period (000's omitted)... $98,142 $2,312
Ratio of Expenses to Average Daily Net
Assets..................................... 0.83% 0.95%(2)
Ratio of Net Investment Income to Average
Daily Net Assets........................... 3.90% 2.30%(3)
Portfolio Turnover Rate..................... 110% 122%
- ------------
(1) Ratios have been annualized, but total return has not been annualized.
(2) Ratio of expenses to average daily net assets prior to expense limitation was 2.38% for the six months ended
April 30, 1995.
(3) Ratio of net investment income to average daily net assets prior to expense limitation was 0.87% for the six
months ended April 30, 1995.
</TABLE>
<PAGE>
INVESTMENT STRATEGY
The following supplements the information in the section entitled
Restricted and Illiquid Securities under Investment Strategy:
The Board has instructed the Manager to consider the following factors
in determining the liquidity of a Rule 144A Security: (i) the frequency of
trades and trading volume for the security; (ii) whether at least three dealers
are willing to purchase or sell the security and the number of potential
purchasers; (iii) whether at least two dealers are making a market in the
security; (iv) the nature of the security and the nature of the marketplace
trades (e.g., the time needed to dispose of the security, the method of
soliciting offers, and the mechanics of transfer).
If the Manager determines that a Rule 144A Security which was
previously determined to be liquid is no longer liquid and, as a result, a
Series' holdings of illiquid securities exceed the Series' limit noted in the
Prospectus on investments in such securities, the Manager will determine what
action to be take to ensure that the Series continues to adhere to such
limitation.
-2-
<PAGE>
- --------------------------------------------------------------------------------
PART B--STATEMENT OF ADDITIONAL INFORMATION
November 29, 1995
- --------------------------------------------------------------------------------
DELAWARE GROUP DELAWARE FUND, INC.
- --------------------------------------------------------------------------------
1818 Market Street
Philadelphia, PA 19103
- --------------------------------------------------------------------------------
For more information about the Delaware Fund Institutional Class and
the Devon Fund Institutional Class:
800-828-5052
For Prospectus and Performance of the Delaware Fund A Class,
Delaware Fund B Class, Devon Fund A Class and
Devon Fund B Class:
Nationwide 800-523-4640
Philadelphia 215-988-1333
Information on Existing Accounts of the Delaware Fund A Class,
Delaware Fund B Class, Devon Fund A Class and
Devon Growth Fund B Class:
(SHAREHOLDERS ONLY)
Nationwide 800-523-1918
Philadelphia 215-988-1241
Dealer Services:
(BROKER/DEALERS ONLY)
Nationwide 800-362-7500
Philadelphia 215-988-1050
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Cover Page
- --------------------------------------------------------------------------------
Investment 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
- --------------------------------------------------------------------------------
-1-
<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 twelve months of purchase and annual 12b-1
Plan expenses of up to 1%, which are assessed against the Class C Shares for the
life of the investment. All references to "shares" in this 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 November 29, 1995 and the current
Prospectus for the Institutional Classes dated August 29, 1995, and the
supplement thereto dated November 29, 1995 as they may be amended from time to
time. It should be read in conjunction with the respective Class' Prospectus.
Part B is not itself a prospectus but is, in its entirety, incorporated by
reference into each Class' Prospectus. A Prospectus relating to the Fund Classes
and a Prospectus relating to the Institutional 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.
-2-
<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.
-3-
<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.
-4-
<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.
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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.
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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.
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
Corporation ("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.
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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.
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.
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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.
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.
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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.
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.
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During the option period, a covered call option writer may be assigned an
exercise notice by the broker/dealer through whom such call option was sold
requiring the writer to deliver the underlying security against payment of the
exercise price. This obligation is terminated upon the expiration of the option
period or at such earlier time in which the writer effects a closing purchase
transaction. A closing purchase transaction cannot be effected with respect to
an option once the option writer has received an exercise notice for such
option.
With respect to both options on actual portfolio securities owned by the
Series and options on stock indices, the Series may enter into closing purchase
transactions. A closing purchase transaction is one in which the Series, when
obligated as a writer of an option, terminates its obligation by purchasing an
option of the same series as the option previously written.
Closing purchase transactions will ordinarily be effected to realize a
profit on an outstanding call option, to prevent an underlying security from
being called, to permit the sale of the underlying security or to enable the
Series to write another call option on the underlying security with either a
different exercise price or expiration date or both. The Series may realize a
net gain or loss from a closing purchase transaction depending upon whether the
net amount of the original premium received on the call option is more or less
than the cost of effecting the closing purchase transaction. Any loss incurred
in a closing purchase transaction may be partially or entirely offset by the
premium received from a sale of a different call option on the same underlying
security. Such a loss may also be wholly or partially offset by unrealized
appreciation in the market value of the underlying security. Conversely, a gain
resulting from a closing purchase transaction could be offset in whole or in
part by a decline in the market value of the underlying security.
If a call option expires unexercised, the Series will realize a
short-term capital gain in the amount of the premium on the option, less the
commission paid. Such a gain, however, may be offset by depreciation in the
market value of the underlying security during the option period. If a call
option is exercised, the Series will realize a gain or loss from the sale of the
underlying security equal to the difference between the cost of the underlying
security, and the proceeds of the sale of the security plus the amount of the
premium on the option, less the commission paid.
The market value of a call option generally reflects the market price of
an underlying security. Other principal factors affecting market value include
supply and demand, interest rates, the price volatility of the underlying
security and the time remaining until the expiration date.
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.
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The Series may sell a put option purchased on individual portfolio
securities or stock indices. Additionally, the Series may enter into closing
sale transactions. A closing sale transaction is one in which the Series, when
it is the holder of an outstanding option, liquidates its position by selling an
option of the same series as the option previously purchased.
Options on Stock Indices
A stock index assigns relative values to the common stocks included in
the index with the index fluctuating with changes in the market values of the
underlying common stock.
Options on stock indices are similar to options on stocks but have
different delivery requirements. Stock options provide the right to take or make
delivery of the underlying stock at a specified price. A stock index option
gives the holder the right to receive a cash "exercise settlement amount" equal
to (i) the amount by which the fixed exercise price of the option exceeds (in
the case of a put) or is less than (in the case of a call) the closing value of
the underlying index on the date of exercise, multiplied by (ii) a fixed "index
multiplier." Receipt of this cash amount will depend upon the closing level of
the stock index upon which the option is based being greater than (in the case
of a call) or less than (in the case of a put) the exercise price of the option.
The amount of cash received will be equal to such difference between the closing
price of the index and exercise price of the option expressed in dollars times a
specified multiple. The writer of the option is obligated, in return for the
premium received, to make delivery of this amount. Gain or loss to the Series on
transactions in stock index options will depend on price movements in the stock
market generally (or in a particular industry or segment of the market) rather
than price movements of individual securities.
As with stock options, the 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.
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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.
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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 of 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
with respect to Class A Shares, if
any, is deducted;
T = average annual total return;
n = number of years;
ERV = redeemable value of the hypothetical $1,000 purchase at the
end of the period after the deduction of the applicable CDSC,
if any, with respect to Class B Shares and Class C Shares.
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 one-, three-, five-, ten-, and fifteen-year periods ended April
30, 1995 and for the life of the fund for the Delaware Fund A Class and the
Delaware Fund Institutional Class, and for the life of the Devon Fund A Class
and the Devon Fund Institutional Class, 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 performance of Class B Shares, as shown
below, is the aggregate total return quotation for the period September 6, 1994
(date of initial public offering) through April 30, 1995. The aggregate total
return for Class B Shares including deferred sales charge reflects the deduction
of the applicable CDSC that would be paid if the shares were redeemed at April
30, 1995. The aggregate total return for Class B Shares excluding deferred sales
charge assumes the shares were not redeemed at April 30, 1995 and therefore does
not reflect the deduction of a CDSC. 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. Securities prices fluctuated
during the periods covered and past results should not be considered as
representative of future performance. Pursuant to applicable regulation, total
return shown for the 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.
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 will apply to Class B Shares or Class C Shares.
-14-
<PAGE>
Average Annual Total Return
Delaware Delaware Delaware
Fund Fund Fund
Class A Shares/1/ Class A Shares/1/ Institutional
(at Offer) (at NAV) Class/2/
1 year
ended
4/30/95 2.00% 7.08% 7.20%
3 years
ended
4/30/95 6.57% 8.32% 8.45%
5 years
ended
4/30/95 9.24% 10.31% 10.39%
10 years
ended
4/30/95 11.32% 11.86% 11.90%
15 years
ended
4/30/95 14.40% 14.77% 14.80%
Period
4/25/38/3/
through
4/30/95 10.72% 11.02% 11.02%
Aggregate Total Return
Delaware Fund Delaware Fund
Class B Shares Class B Shares
(Including Deferred (Excluding Deferred
Sales Charge) Sales Charge)
Period
9/6/94/4/
through
4/30/95 0.10% 4.10%
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.
2 Date of initial public offering was November 9, 1992.
3 Date of initial public offering for Delaware Fund.
4 Date of initial public offering; total return for this short a
time period may not be representative of longer-term
results.
-15-
<PAGE>
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
4/30/95 7.59% 12.99% 13.29%
Period
12/29/93/3/
through
4/30/95 8.71% 12.75% 13.06%
Aggregate Total Return/1/
Devon Fund Devon Fund
Class B Shares Class B Shares
(Including Deferred (Excluding Deferred
Sales Charge) Sales Charge)
Period
9/6/94/4/
through
4/30/95 2.59% 6.59%
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.
3 Date of initial public offering.
4 Date of initial public offering; total return for this short a time period
may not be representative of longer-term results.
Information regarding the performance of Class C Shares is not shown
because such shares were not offered to the public prior to the date of this
Part B.
From time to time, the respective Series may also quote each Class'
actual total return performance, dividend results and other performance
information, in advertising and other types of literature and may compare that
information to, or may separately illustrate similar information reported by,
the Standard & Poor's 500 Stock Index and the Dow Jones Industrial Average and
other unmanaged indices.
The Standard & Poor's 500 Stock Index and the Dow Jones Industrial
Average are industry-accepted unmanaged indices of generally- conservative
securities used for measuring general market performance. The total return
performance 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.
-16-
<PAGE>
The respective Series may also state total return performance of a Class
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 Fund. Any indices used are not
managed for any investment goal.
CDA Technologies, Inc., Lipper Analytical
Services, Inc. and Morningstar, Inc. are
performance evaluation services that maintain
statistical performance databases, as reported
by a diverse universe of independently-managed
mutual funds.
Ibbotson Associates, Inc. is a consulting firm that provides a variety of
historical data including total return, capital appreciation and income
on the stock market as well as other investment asset classes, and
inflation. With their permission, this information will be used primarily
for comparative purposes and to illustrate general financial planning
principles.
Interactive Data Corporation is a statistical access service that
maintains a database of various international industry indicators, such
as historical and current price/earning information, individual equity
and fixed income price and return information.
Compustat Industrial Databases, a service of Standard & Poor's, may also
be used in preparing performance and historical stock and bond market
exhibits. This firm maintains fundamental databases that provide
financial, statistical and market information covering more than 7,000
industrial and non-industrial companies.
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.
-17-
<PAGE>
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 the three months ended April 30, 1995,
for one-, three-, five-, ten- and fifteen year periods ended April 30, 1995 and
for the life of the fund for the Delaware Fund A Class and Delaware Fund
Institutional Class, and for the life of the Delaware Fund B Class, and for the
three and six month periods ended April 30, 1995 and for the life of the Devon
Fund A Class and the Devon Fund Institutional Class and for the life of the
Devon Fund B Class. 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, reflects maximum front-end
or contingent deferred sales charges, if any, paid on the purchase of shares, as
applicable, but not any income taxes payable by shareholders on the reinvested
distributions included in the calculations. 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 value of
the Fund fluctuates so shares, when redeemed, may be worth more or less than the
original investment and the Fund's results should not be considered as
representative of future performance. 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.
Information regarding the performance of Class C Shares is not shown
because such shares were not offered to the public prior to the date of this
Part B.
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
4/30/95 2.10% 7.23% 13.18% 10.11%
6 months
ended
4/30/95 0.62% 5.71% 12.13% 10.44%
9 months
ended
4/30/95 1.52% 6.71% 17.22% 14.67%
1 year
ended
4/30/95 2.00% 7.20% 20.00% 17.40%
3 years
ended
4/30/95 21.04% 27.56% 40.18% 35.02%
5 years
ended
4/30/95 55.55% 63.95% 89.72% 81.05%
10 years
ended
4/30/95 192.14% 207.92% 385.40% 296.75%
15 years
ended
4/30/95 652.69% 693.00% 885.17% 760.85%
Period
4/25/38/4/
through
4/30/95 36,797.24% 38,761.24% N/A N/A
-18-
<PAGE>
Delaware Delaware Dow Standard
Fund Fund Jones Poor's
Class B Class B Indus- 500/3/
Shares Shares trial/3/
(Includ- (Exclud-
ing ing
Deferred Deferred
Sales Sales
Charge) Charge)
3 months
ended
4/30/95 3.01% 7.01% 13.18% 10.11%
6 months
ended
4/30/95 1.30% 5.30% 12.13% 10.44%
Period
9/6/94/5/
through
4/30/95 0.10% 4.10% 12.81% 10.76%
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.
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; total return for this
short of a time period may not be representative
of longer-term results.
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
4/30/95 5.38% 10.69% 13.18% 10.11%
6 months
ended
4/30/95 2.37% 7.56% 12.13% 10.44%
9 months
ended
4/30/95 5.24% 10.72% 17.22% 14.67%
Period
12/29/93/3/
through
4/30/95 11.82% 17.83% 18.17% 13.52%
-19-
<PAGE>
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
4/30/95 6.42% 10.42% 13.18% 10.11%
6 months
ended
4/30/95 3.08% 7.08% 12.13% 10.44%
Period
9/6/94/5/
through
4/30/95 2.59% 6.59% 12.81% 10.76%
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.
3 Date of initial public offering.
4 Source--Lipper Analytical Services, Inc.
5 Date of initial public offering; total return for this short of a time
period may not be representative of longer-term results.
For additional performance information, see Appendix C.
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.
-20-
<PAGE>
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 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.
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, 1992, 1993 and 1994, the
aggregate dollar amounts of brokerage commissions paid by the Delaware Fund were
$1,079,095, $1,216,817 and $1,026,737, 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.
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.
-21-
<PAGE>
During the fiscal year ended October 31, 1994, portfolio transactions of
the Delaware Fund in the amount of $342,858,083, resulting in brokerage
commissions of $587,295, were directed to brokers for brokerage and research
services provided. During the period from December 29, 1993 (date of initial
public offering) through October 31, 1994, portfolio transactions of the Devon
Fund in the amount of $4,980,741, resulting in brokerage commissions of $9,901,
were directed to brokers for brokerage and research services.
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
the Manager which constitute in some part brokerage and research services used
by the Manager in connection with its investment decision-making process and
constitute in some part services used by the Manager in connection with
administrative or other functions not related to its investment decision-making
process. In such cases, the Manager will make a good faith allocation of
brokerage and research services and will pay out of its own resources for
services used by the Manager in connection with administrative or other
functions not related to its investment decision-making process. In addition, so
long as no fund is disadvantaged, portfolio transactions which generate
commissions or their equivalent are allocated to broker/dealers who provide
daily portfolio pricing services to the Fund and to other funds in the Delaware
Group. Subject to best price and execution, commissions allocated to brokers
providing such pricing services may or may not be generated by the funds
receiving the pricing service.
The Manager may place a combined order for two or more accounts or funds
engaged in the purchase or sale of the same security if, in its judgment, joint
execution is in the best interest of each participant and will result in best
price and execution. Transactions involving commingled orders are allocated in a
manner deemed equitable to each account or fund. When a combined order is
executed in a series of transactions at different prices, each account
participating in the order may be allocated an average price obtained from the
executing broker. It is believed that the ability of the accounts to participate
in volume transactions will generally be beneficial to the accounts and funds.
Although it is recognized that, in some cases, the joint execution of orders
could adversely affect the price or volume of the security that a particular
account or fund may obtain, it is the opinion of the Manager and the Fund's
Board of Directors that the advantages of combined orders outweigh the possible
disadvantages of separate transactions.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. (the "NASD"), and subject to seeking best price and
execution, the Fund may place orders with broker/dealers that have agreed to
defray certain 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 Fund's
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 Fund's 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 Fund shares.
During the past two fiscal years, the Delaware Fund's portfolio turnover
rates were approximately 160% for 1993 and 142% for 1994. During the period from
December 29, 1993 (date of initial public offering) through October 31, 1994,
the Devon Fund's portfolio turnover rate was 180%, annualized.
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.
-22-
<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 Class, 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 amendments to its Rules of Fair Practice relating
to investment company sales charges. The Fund and the Distributor intend to
operate in compliance with these rules.
Class A Shares are purchased at the offering price which reflects a
maximum front-end sales charge of 4.75%; however, lower front-end sales charges
apply for larger purchases. See the following table. 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 twelve months following purchase. Class
C Shares are also subject to annual 12b-1 Plan expenses for the life of the
investment which are equal to those to which Class B Shares are subject.
Institutional Class shares are purchased at the net asset value per
share without the imposition of a front-end sales charge, CDSC or 12b-1 Plan
expenses.
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
-23-
<PAGE>
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 twelve
months of purchase. Class B and Class C Shares are each subject to annual 12b-1
Plan expenses of up to a maximum of 1% (.25% of which are service fees to be
paid by the Fund to the Distributor, dealers or others for providing personal
service and/or maintaining shareholder accounts) of average daily net assets of
the respective Class. Class B Shares will automatically convert to Class A
Shares at the end of approximately eight years after purchase and, thereafter,
be subject to annual 12b-1 Plan expenses of up to a maximum of .30% of average
daily net assets of such shares. Unlike Class B Shares, Class C Shares do not
convert to another Class.
Class A Shares
Purchases of $100,000 or more of Class A Shares at the offering price
carry reduced front-end sales charges as shown in the accompanying table, and
may include a series of purchases over a 13-month period under a Letter of
Intention signed by the purchaser. See Special Purchase Features - Class A
Shares, below for more information on ways in which investors can avail
themselves of reduced front-end sales charges and other purchase features.
Delaware Fund A Class and Devon Fund A Class
- --------------------------------------------------------------------------------
Dealer's
Front-End Sales Charge as % of Concession***
Amount of Purchase Offering Amount as % of
Price Invested** Offering Price
- --------------------------------------------------------------------------------
Delaware Devon
Fund Fund
Less than $100,000 4.75% 5.00% 4.99% 4.00%
$100,000 but under $250,000 3.75 3.89 3.97 3.00
$250,000 but under $500,000 2.50 2.56 2.58 2.00
$500,000 but under $1,000,000* 1.00 2.06 2.03 1.60
* 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 (the "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.
-24-
<PAGE>
- --------------------------------------------------------------------------------
The Fund must be notified when a sale takes place which would qualify for
the reduced front-end sales charge on the basis of previous 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.
- --------------------------------------------------------------------------------
-25-
<PAGE>
Certain dealers who enter into an agreement to provide extra training and
information on Delaware Group products and services and who increase sales of
Delaware Group funds may receive an additional concession of up to .15% of the
offering price in connection with sales of Class A Shares. Such dealers must
meet certain requirements in terms of organization and distribution capabilities
and their ability to increase sales. The Distributor should be contacted for
further information on these requirements as well as the basis and circumstances
upon which the additional concession will be paid. Participating dealers may be
deemed to have additional responsibilities under the securities laws.
Dealer's Commission
For initial purchases of Class A Shares of $1,000,000 or more, a dealer's
commission may be paid by the Distributor to financial advisers through whom
such purchases are effected in accordance with the following schedule:
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 Distribution concerning the applicability
and calculation of the dealer's commission in the case of combined purchases.
An exchange from other Delaware Group funds will not qualify for payment
of the dealer's commission, unless such exchange is from a Delaware Group fund
with assets as to which a dealer's commission or similar payment has not been
previously paid. The schedule and program for payment of the dealer's commission
are subject to change or termination at any time by the Distributor in its
discretion.
Contingent Deferred Sales Charge - Class B Shares
and Class C Shares
Class B and Class C Shares are purchased without the imposition of a
front-end sales charge. Class B Shares redeemed within six years of purchase may
be subject to a CDSC at the rates set forth below, and Class C Shares redeemed
within twelve months of purchase may be subject to a CDSC of 1%. CDSC fees are
charged as a percentage of the dollar amount subject to the CDSC. The charge
will be assessed on an amount equal to the lesser of the net asset value at the
time of purchase of the shares being redeemed or the net asset value of those
shares at the time of redemption. No CDSC will be imposed on increases in net
asset value above the initial purchase price. In addition, no CDSC will be
assessed on 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.
-26-
<PAGE>
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
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.
-27-
<PAGE>
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.
On September 23, 1993, the Board of Directors set the fee for the Devon
Fund 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 Agreement. Continuation of the Plans and the Distribution
Agreement, as amended, must be approved annually by the Board of Directors in
the same manner as specified above.
Each year, the directors must determine whether continuation of the Plans
is in the best interest of shareholders of, respectively, Class A Shares, Class
B Shares and Class C Shares and that there is a reasonable likelihood of the
Plan relating to a Fund Class providing a benefit to that Class. The Plans and
the Distribution Agreement, as amended, may be terminated 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.
-28-
<PAGE>
For the fiscal year ended October 31, 1994, payments from the Delaware
Fund A Class pursuant to its Plan amounted to $775,445 and such amount was used
for the following purposes: $452 Advertising, $26,957 - Annual/Semi-Annual
Reports, $529,296 - Broker Trails, $58,310 Commission to Wholesalers, $19,793 -
Dealer Service Expenses, $24,327 - Promotional-Other, $30,452 -
Promotional-Broker Meetings, $13,513 Prospectus Printing, $6,991 - Telephone,
$39,807 Wholesaler Expenses and $25,547 - Retained For Future Expenses. For the
period December 29, 1993 (date of initial public offering) through October 31,
1994, payments from the Devon Fund A Class pursuant to its Plan amounted to
$8,293 and such amount was used for the following purposes: $650 -
Annual/Semi-Annual Reports, $4,942 Broker Trails, $2,301 - Commission to
Wholesalers, $226 - Promotional-Other, $35 - Promotional-Broker Meetings and
$139 - Prospectus Printing. For the period September 6, 1994 (date of initial
public offering) through October 31, 1994, payments from the Delaware Fund B
Class and the Devon Fund B Class pursuant to their respective Plans amounted to
$462 and $81, respectively and such amount was used for the following purposes:
$168 and $20, respectively - Broker Sales Charges, $106 and $11, respectively -
Broker Trails, $32 and $13, respectively - Commission to Wholesalers, and $156
and $37, respectively - Interest on Broker Sales Charges.
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.
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 purchased 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 affiliates
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 CDSC 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.
-29-
<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
twenty days following the expiration of the 13-month period, the Transfer Agent
will surrender an appropriate number of the escrowed shares for redemption in
order to realize the difference. Such purchasers may include the value (at
offering price at the level designated in their Letter of Intention) of all
their shares of the Fund and of any class of any of the other mutual funds in
the Delaware Group (except shares of any Delaware Group fund which do not carry
a front-end sales charge, CDSC or Limited CDSC other than shares of Delaware
Group Premium Fund, Inc. beneficially owned in connection with the ownership of
variable insurance products, unless they were acquired through an exchange from
a Delaware Group Fund which carried a front-end sales charge, CDSC or Limited
CDSC) previously purchased and still held as of the date of their Letter of
Intention toward the completion of such Letter. For purposes of satisfying an
investor's obligation under a Letter of Intention, Class B 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
the Fund and the corresponding class of shares of the other Delaware Group
funds.
Employers offering a Delaware Group retirement plan may also complete a
Letter of Intention to obtain a reduced front-end sales charge on investments of
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 a 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).
-30-
<PAGE>
The privilege also extends to all purchases made at one time by an
individual; or an individual, his or her spouse and their children under
twenty-one years of age; or a trustee or other fiduciary of trust estates or
fiduciary accounts for the benefit of such family members (including certain
employee benefit programs).
Right of Accumulation
In determining the availability of the reduced front-end sales charge
with respect to 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.
-31-
<PAGE>
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.
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.
-32-
<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. 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.
-33-
<PAGE>
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.
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.
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Each purchase of Class B Shares is subject to a maximum purchase
limitation of $250,000 for retirement plans. Each purchase of Class C Shares
must be in an amount that is less than $1,000,000 for such plans. The maximum
purchase limitations apply only to the initial purchase of shares by the
retirement plan.
Minimum investment limitations generally applicable to other investors do
not apply to retirement plans, other than Individual Retirement Accounts
("IRAs"), for which there is a minimum initial purchase of $250 and a minimum
subsequent purchase of $25 regardless of which Class is selected. Retirement
plans may be subject to plan establishment fees, annual maintenance fees and/or
other administrative or trustee fees. Fees are based upon the number of
participants in the plan as well as the services selected. Additional
information about fees is included in retirement plan materials. Fees are quoted
upon request. Annual maintenance fees may be shared by Delaware Management Trust
Company, the Transfer Agent, other affiliates of the Manager and others that
provide services to such plans.
Certain shareholder investment services available to non-retirement plan
shareholders may not be available to retirement plan shareholders. Certain
retirement plans may qualify to purchase shares of the Institutional Class. See
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 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.
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<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 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 twenty-five or fewer eligible employees can establish this
plan which permits employer contributions and salary deferral contributions in
Class A Shares and Class C Shares only.
Prototype 401(k) Defined Contribution Plan
Section 401(k) of the Code permits employers
to establish qualified plans based on salary deferral contributions. Plan
documents are available to enable employers to establish a plan. An employer may
also elect to make profit sharing contributions and/or matching contributions
with investments in only Class A Shares and Class C Shares or certain other
funds in the Delaware Group. Purchases under the plan may be combined for
purposes of computing the reduced front-end sales charge applicable to Class A
Shares as set forth in the table on page __.
Deferred Compensation Plan for Public Schools
and Non-Profit Organizations ("403(b)(7)")
Section 403(b)(7) of the Code permits public school systems and certain
non-profit organizations to use mutual fund shares held in a custodial account
to fund deferred compensation arrangements for their employees. A custodial
account agreement is available for those employers who wish to purchase any of
the Fund Classes in conjunction with such an arrangement. Applicable front-end
sales charges with respect to Class A Shares for such purchases are set forth in
the table on page __.
Deferred Compensation Plan for State and Local
Government Employees ("457")
Section 457 of the Code permits state and local governments, their
agencies and certain other entities to establish a deferred compensation plan
for their employees who wish to participate. This enables employees to defer a
portion of their salaries and any federal (and possibly state) taxes thereon.
Such plans may invest in shares of any of the Fund Classes. Although investors
may use their own plan, there is available a Delaware Group 457 Deferred
Compensation Plan. Interested investors should contact the Distributor or their
investment dealers to obtain further information. Applicable front-end sales
charges for such purchases of Class A Shares are set forth in the table on
page __.
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DETERMINING OFFERING PRICE AND NET
ASSET VALUE
Orders for purchases of Class A Shares are effected at the offering price
next calculated 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 next per share 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 the 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.
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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 does not issue
certificates for Class A Shares or Institutional Class shares unless a
shareholder specifically requests them. The Fund does not issue certificates for
Class B Shares or Class C Shares. If stock certificates have been issued for
shares being redeemed, they must accompany the written request. For redemptions
of $50,000 or less paid to the shareholder at the address of record, the Fund
requires a request signed by all owners of the shares or the investment dealer
of record, but does not require signature guarantees. When the redemption is for
more than $50,000, or if payment is made to someone else or to another address,
signatures of all record owners are required and a signature guarantee may be
required. Each signature guarantee must be supplied by an eligible guarantor
institution. The Fund reserves the right to reject a signature guarantee
supplied by an eligible institution based on its creditworthiness. The Fund may
request further documentation from corporations, retirement plans, executors,
administrators, trustees or guardians.
In addition to redemption of Series shares by the Fund, the Distributor,
acting as agent 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 twelve months
following purchase. See Contingent Deferred Sales Charge 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.
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<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
sixty days from the date of notice to make an additional investment to meet the
required minimum. See The Conditions of Your Purchase under Buying Shares in the
Series' Prospectuses. Any redemption in an inactive account established with a
minimum investment may trigger mandatory redemption. No CDSC or Limited CDSC
will apply to the redemptions described in this paragraph.
Effective November 29, 1995, the minimum initial investment in Class A
Shares was increased from $250 to $1,000. Class A accounts that were established
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 on
accounts with balances below the stated minimum nor subject to involuntary
redemption.
* * *
The Fund has available certain redemption privileges, as described below.
The Fund reserves the right to suspend or terminate these expedited payment
procedures upon sixty days' written notice to shareholders.
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<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 (in Philadelphia, 215-988-1241) 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.
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<PAGE>
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.
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 with respect to the
Institutional Classes.
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Wealth Builder Option
Shareholders of the Fund Classes may elect to invest in one or more of
the other mutual funds in the Delaware Group through our Wealth Builder Option.
Under this automatic exchange program, shareholders can authorize regular
monthly investments (minimum of $100 per fund) to be liquidated from their
account and invested automatically into other mutual funds in the Delaware
Group, subject to the conditions and limitations set forth in the Fund Classes'
Prospectus. See Wealth Builder Option and Redemption and Exchange in the
Prospectus for the Fund Classes.
The investment will be made on the 20th day of each month (or, if the
fund selected is not open that day, the next business day) at the public
offering price or net asset value, as applicable, of the fund selected on the
date of investment. No investment will be made for any month if the value of the
shareholder's account is less than the amount specified for investment.
Periodic investment through the Wealth Builder Option does not insure
profits or protect against losses in a declining market. The price of the fund
into which investments are made could fluctuate. Since this program involves
continuous investment regardless of such fluctuating value, investors selecting
this option should consider their financial ability to continue to participate
in the program through periods of low fund share prices. 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.
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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, 1994, dividends totaling $0.60, $0.15, $0.63, $0.09, $0.03 and $0.09
per share were paid from the net investment income of the Delaware Fund A Class,
the Delaware Fund B Class, the Delaware Fund Institutional Class, the Devon Fund
A Class, the Devon Fund B Class and the Devon Fund Institutional Class,
respectively. The amounts for Delaware Fund A Class and Delaware Fund
Institutional Class included undistributed net investment income earned by the
Series during the previous fiscal year. During the fiscal year ended October 31,
1994, distributions totaling $1.16 per share were paid from realized securities
profits of the Delaware Fund A Class and the Delaware Fund Institutional Class,
which included undistributed net investment income and realized securities
profits earned in fiscal year 1993.
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 ex- dividend 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
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.
-43-
<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, 1994, 52% and 45% of dividends paid from net
investment income to the Delaware Fund and the 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 $24,445,951 and $180,155, respectively, as of October 31, 1994.
-44-
<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,
1994 were approximately $9,525,500,000. Investment advisory services are also
provided to institutional accounts with assets on October 31, 1994 of
approximately $16,074,376,000.
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 sixty 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, 1994, the total net assets of
the Delaware Fund were $550,631,790 and the total net assets of the Devon Fund
were $7,231,142. 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 $2,394,902 for 1992, $2,785,383 for 1993 and $2,913,609 for
1994. 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. However, no fees were paid by this Series 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 ratio of expenses to average daily net assets for the Delaware Fund A Class
for the fiscal year ended October 31, 1994 was 0.97%, which reflects the impact
of its 12b-1 Plan. The ratio of expenses to average daily net assets for the
Delaware Fund Institutional Class for the same period was 0.81%. The ratios of
expenses to average daily net assets for the period December 29, 1993 (date of
initial public offering) through October 31, 1994 for the Devon Fund A Class and
the Devon Fund Institutional Class, were, annualized, 1.25% and 0.95%,
respectively, after voluntary fee waivers and expense reimbursements by the
Manager. The expenses for the Devon Fund A Class reflect the impact of its 12b-1
Plan. Based on expenses incurred by the Delaware Fund A Class during its fiscal
year ended October 31, 1994, the ratio of expenses to average daily net assets
of the Delaware Fund B Class is expected to be 1.81%, inclusive of 12b-1 fees,
for the fiscal year ending October 31, 1995. Based on the expenses incurred by
the Devon Fund A Class during the period ended October 31, 1994, the ratio of
expenses to average daily net assets of the Devon Fund B Class are expected to
be 1.95%, inclusive of 12b-1 fees, after the voluntary fee waivers and expense
reimbursements by the Manager through December 31, 1995. The ratio of expenses
to average daily net assets of each Series' Class B Shares reflects the impact
of the 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.
-45-
<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, in the case of
Devon Fund A Class, 12b-1 expenses), through December 31, 1994. Through December
31, 1994, the waiver and reimbursement noted in the previous sentence with
respect to the Devon Fund A Class was also applicable to the Devon Fund B Class.
This waiver and reimbursement applicable to each class of Devon Fund has been
extended through December 31, 1995.
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, 1994, 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 respective 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.
-46-
<PAGE>
OFFICERS AND DIRECTORS
The business and affairs of the Fund are managed under the direction of
its Board of Directors.
Certain officers and directors of the Fund hold identical positions in
each of the other funds in the Delaware Group. On October 31, 1995
the Fund's officers and directors owned less than 1% of the Delaware Fund's
shares outstanding and approximately 2.30% of Class A, less than 1% of Class B
and 49.59% of Class C of the Devon Fund's shares outstanding.
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 3,658,805 shares (67.20%) and South Trust Bank of Alabama,
Trust Thompson Tractor, P.O. Box 2554, Birmingham, AL 35290 held 493,739 shares
(9.06%) of the outstanding shares of the Delaware Fund Institutional Class.
Kurney B. Spaar and Pauline Spaar Trust, Kurney B. and Pauline Spaar Trst.,
UTD 12/29/93, 838 Gravel Pike, Palm, PA 18070 held 11,222 shares (6.59%) of the
outstanding shares of 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, 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 (8.70%) 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
183,483 (80.51%); Delaware Management Company, Inc. Employee Profit Sharing
Trust, FBO J. Michael Porkorny held 21,983 shares (9.64%); Delaware Management
Company, Inc. Employee Profit Sharing Trust, FBO Wayne A. Stork held 53,190
shares (23.33%); over and WCSEL Employees Pension Plan, 2200 Clarendon Blvd.,
13th Fl., Arlington, VA 22201 held 40,807 shares (17.90%); 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., P/S/P DTD 10/1/85, 3106 S. Broad Street,
Trenton, NJ 08610 held 3,762 shares (5.44%) and Kemper Clearing Corp., Cust.
FBO Rosemary Carro, IRA, A/C 2057-1776, 4224 Stonebridge Way, Lynnwood, WA 98037
held 3,479 shares (5.03%) of the outstanding shares of the Devon Fund B Class.
DMH Corp., Delaware Management Company, Inc., Delaware Distributors,
L.P., Delaware Distributors, Inc., Delaware Service Company, Inc., Delaware
Management Trust Company, Delaware International Holdings Ltd., Founders
Holdings, Inc., Delaware International Advisers Ltd. and Delaware Investment
Counselors, Inc. are direct or indirect, wholly-owned subsidiaries of Delaware
Management Holdings, Inc ("DMH").
-47-
<PAGE>
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.
*Wayne A. Stork (58)
Chairman, President, Chief Executive Officer, Director and/or Trustee of
the Fund, each of the other sixteen funds in the Delaware Group, Delaware
Management Holdings, Inc. and Delaware Investment Counselors, Inc.
Chairman, Chief Executive Officer, Chief Investment Officer and Director
of Delaware Management Company, Inc.
Chairman, Chief Executive Officer and Director of DMH Corp., Delaware
International Advisers Ltd., Delaware International Holdings Ltd. and
Founders Holdings, Inc.
Director of Delaware Distributors, Inc. and Delaware Service Company,
Inc.
During the past five years, Mr. Stork has served in various executive
capacities at different times within the Delaware organization.
- -------------
*Director affiliated with the investment manager of the Fund and considered an
"interested person" as defined in the Investment Company Act of 1940.
-48-
<PAGE>
Winthrop S. Jessup (50)
Executive Vice President of the Fund, fifteen other funds in the Delaware
Group (which excludes Delaware Pooled Trust, Inc.) and Delaware
Management Holdings, Inc.
President and Chief Executive Officer of Delaware Pooled Trust, Inc.
President and Director of Delaware Investment Counselors, Inc.
Executive Vice President and Director of DMH Corp., Delaware Management
Company, Inc., Delaware International Holdings Ltd. and Founders
Holdings, Inc.
Vice Chairman and Director of Delaware Distributors, Inc.
Vice Chairman of Delaware Distributors, L.P.
Director of Delaware Management Trust Company, Delaware Service Company,
Inc. and Delaware International Advisers Ltd.
During the past five years, Mr. Jessup has served in various executive
capacities at different times within the Delaware organization.
Richard G. Unruh, Jr. (6)
Executive Vice President of the Fund and each of the other sixteen funds
in the Delaware Group.
Executive Vice President and Director of Delaware Management Company,
Inc.
Senior Vice President of Delaware Management Holdings, Inc.
Director of Delaware International Advisers Ltd.
During the past five years, Mr. Unruh has served in various executive
capacities at different times within the Delaware organization.
Walter P. Babich (68)
Director and/or Trustee of the Fund and each of the other sixteen 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 (56)
Director and/or Trustee of the Fund and each of the other sixteen 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.
-49-
<PAGE>
Ann R. Leven (55)
Director and/or Trustee of the Fund and each of the other sixteen 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 sixteen funds
in the Delaware Group.
1617 John F. Kennedy Boulevard, Philadelphia, PA 19103.
Vice Chairman, Packquisition Corp., a financial printing, commercial
printing and information processing firm.
Philadelphia City Councilman.
President, MLW, Associates.
Director, Tasty Baking Company.
Director, Healthcare Services Group.
Charles E. Peck (69)
Director and/or Trustee of the Fund and each of the other sixteen 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.
David K. Downes (55)
Senior Vice President/Chief Administrative Officer/Chief Financial
Officer of the Fund, each of the other sixteen funds in the Delaware
Group and Delaware Management Company, Inc.
Chairman and Director of Delaware Management Trust Company.
Senior Vice President/Chief Administrative Officer/Chief Financial
Officer/Treasurer of Delaware Management Holdings, Inc.
Senior Vice President/Chief Financial Officer/Treasurer and Director of
DMH Corp.
Senior Vice President/Chief Administrative Officer/Chief Financial
Officer and Director of Delaware Service Company, Inc.
Senior Vice President/Chief Administrative Officer 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.
-50-
<PAGE>
George M. Chamberlain, Jr. (48)
Senior Vice President and Secretary of the Fund, each of the other
sixteen 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. and Delaware
Service Company, Inc.
Corporate Vice President, Secretary and Director of Founders Holdings,
Inc.
Secretary and Director of Delaware International Holdings Ltd.
Director of Delaware International Advisers Ltd.
Attorney.
During the past five years, Mr. Chamberlain has served in various
capacities at different times within the Delaware organization.
George H. Burwell (33)
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 (40)
Vice President/Senior Portfolio Manager of the Delaware Fund, of the nine
other income (including tax-exempt) funds in the Delaware Group and
of Delaware Management Company, Inc.
Vice President/Senior Portfolio Manager of Delaware Investment
Counselors, Inc.
During the past five years, Mr. Reed has served in such capacities within
the Delaware organization.
Joseph H. Hastings (45)
Vice President/Corporate Controller of the Fund, each of the other
sixteen funds in the Delaware Group, Delaware Management Holdings,
Inc., DMH Corp., Delaware Management Company, Inc., Delaware
Distributors, L.P., Delaware Distributors, Inc., Delaware Service
Company, Inc., Delaware Investment Counselors, Inc. and Founders
Holdings, Inc.
Executive Vice President/Treasurer/Chief Financial Officer of Delaware
Management Trust Company.
Assistant Treasurer of Founders CBO Corporation.
1818 Market Street, Philadelphia, PA 19103.
Before joining the Delaware Group in 1992, Mr. Hastings was Chief
Financial Officer for Prudential Residential Services, L.P., New York,
NY from 1989 to 1992. Prior to that, Mr. Hastings served as Controller
and Treasurer for Fine Homes International, L.P., Stamford, CT from
1987 to 1989.
Michael P. Bishof (33)
Vice President/Treasurer of the Fund, each of the other sixteen 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.
-51-
<PAGE>
The following is a compensation table listing for each director entitled
to receive compensation, the aggregate compensation received from the Fund and
the total compensation received from all Delaware Group funds for the fiscal
year ended November 30, 1994 and an estimate of annual benefits to be received
upon retirement under the Delaware Group Retirement Plan for Directors/Trustees
as of October 31, 1994.
<TABLE>
<CAPTION>
Pension or
Retirement Estimated Total
Benefits Annual Compensation
Aggregate Accrued Benefits from all 17
Compensation as Part of Upon Delaware
Name from Fund Fund Expenses Retirement* Group Funds
<S> <C> <C> <C> <C>
W. Thacher Longstreth $3,005.00 None $18,100 $39,960.02
Ann R. Leven $3,433.50 None $18,100 $44,960.02
Walter P. Babich $3,347.78 None $18,100 $43,960.03
Anthony D. Knerr $3,431.24 None $18,100 $43,962.29
Charles E. Peck $2,790.00 None $18,100 $36,824.07
</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, 1994, he or she would be entitled to annual payments totaling
$18,100, in the aggregate, from all of the funds in the Delaware Group, based
on the number of funds in the Delaware Group as of that date.
-52-
<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 reserves the right to reject exchange requests at any
time. The Fund may modify, terminate or suspend the exchange privilege upon
sixty days' notice to shareholders.
All exchanges involve a purchase of shares of the fund into which the
exchange is made. As with any purchase, an investor should obtain and carefully
read that fund's prospectus before buying shares in an exchange. The prospectus
contains more complete information about the fund, including charges and
expenses. A shareholder requesting an exchange will be sent a current prospectus
and an authorization form for any of the other mutual funds in the Delaware
Group. Exchange instructions must be signed by the record owner(s) exactly as
the shares are registered.
An exchange constitutes, for tax purposes, the sale of one fund and the
purchase of another. The sale may involve either a capital gain or loss to the
shareholder for federal income tax purposes.
In addition, investment advisers and dealers may make exchanges between
funds in the Delaware Group on behalf of their clients by telephone or other
expedited means. This service may be discontinued or revised at any time by the
Transfer Agent. Such exchange requests may be rejected if it is determined that
a particular request or the total requests at any time could have an adverse
effect on any of the funds. Requests for expedited exchanges may be submitted
with a properly completed exchange authorization form, as described above.
Telephone Exchange Privilege
Shareholders owning shares for which
certificates have not been issued or their investment dealers of record may
exchange shares by telephone for shares in other mutual funds in the Delaware
Group. This service is automatically provided unless the Fund receives written
notice from the shareholder to the contrary.
Shareholders or their investment dealers of record may contact the
Transfer Agent at 800-523-1918 (in Philadelphia, 215-988-1241) or, in the case
of shareholders of the Institutional 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.
-53-
<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 a
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.
-54-
<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).
-55-
<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 of 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
- ----- ----------- ---------- --------------
10/31/94 $892,170 $772,047 $120,123
10/31/93 1,714,010 1,484,018 229,992
10/31/92 1,111,168 1,005,296 105,872
Devon Fund
Class A Shares
Total
Amount
of
Fiscal Under- Amounts Net
Year writing Reallowed Commission
Ended Commissions to Dealers to Distributor
- ----- ----------- ---------- --------------
10/31/94* $90,136 $78,370 $11,766
* Date of initial public offering was December 29, 1993.
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 the Class A Shares of the Devon Fund.
Effective as of January 3, 1995, all such payments described above have
been paid to the Distributor.
-56-
<PAGE>
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.
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 Investment Company Act of 1940, 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 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.
-57-
<PAGE>
Prior to November 9, 1992, the Fund offered only one series, now known
as the Delaware Fund series and one class of shares, the Delaware Fund A Class.
Beginning November 9, 1992, the Delaware Fund series began offering the Delaware
Fund Institutional Class. Beginning December 29, 1993, the Fund offered the
Devon Fund series 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 the date of this Part B, the Fund
began offering the Class C 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, 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.
-58-
<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.
-59-
<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.
-60-
<PAGE>
$2,000 Invested Annually Assuming a 10% Annualized Return
15% Tax Bracket Single - $0-$22,750
---------------
Joint - $0-$38,000
<TABLE>
<CAPTION>
How Much You
End of Cumulative How Much You Have With Full
Year Investment Amount Have Without IRA IRA Deduction
<S> <C> <C> <C>
1 $ 2,000 $ 1,844 $ 2,200
5 10,000 10,929 13,431
10 20,000 27,363 35,062
15 30,000 52,074 69,899
20 40,000 89,231 126,005
25 50,000 145,103 216,364
30 60,000 229,114 361,887
35 70,000 355,438 596,254
40 80,000 545,386 973,704
</TABLE>
[Without IRA--investment of $1,700 ($2,000 less 15%) earning 8.5%
(10% less 15%)]
28% Tax Bracket Single - $22,751-$55,100
---------------
Joint - $38,001-$91,850
<TABLE>
<CAPTION>
End of Cumulative How Much You How Much You Have with Full IRA
Year Investment Amount Have Without IRA No Deduction Deduction
<S> <C> <C> <C> <C>
1 $ 2,000 $ 1,544 $ 1,584 $ 2,200
5 10,000 8,913 9,670 13,431
10 20,000 21,531 25,245 35,062
15 30,000 39,394 50,328 69,899
20 40,000 64,683 90,724 126,005
25 50,000 100,485 155,782 216,364
30 60,000 151,171 260,559 361,887
35 70,000 222,927 429,303 596,254
40 80,000 324,512 701,067 973,704
</TABLE>
[Without IRA--investment of $1,440 ($2,000 less 28%) earning 7.2% (10% less
28%)] [With IRA--No Deduction--investment of $1,440 ($2,000 less 28%) earning
10%]
-61-
<PAGE>
<TABLE>
<CAPTION>
31% Tax Bracket Single - $55,101-$115,000
---------------
Joint - $91,851-$140,000
End of Cumulative How Much You How Much You Have with Full IRA
Year Investment Amount Have Without IRA No Deduction Deduction
<S> <C> <C> <C> <C>
1 $ 2,000 $ 1,475 $ 1,518 $ 2,200
5 10,000 8,467 9,268 13,431
10 20,000 20,286 24,193 35,062
15 30,000 36,787 48,231 69,899
20 40,000 59,821 86,943 126,005
25 50,000 91,978 149,291 216,364
30 60,000 136,868 249,702 361,887
35 70,000 199,536 411,415 596,254
40 80,000 287,021 671,855 973,704
</TABLE>
[Without IRA--investment of $1,380 ($2,000 less 31%) earning 6.9% (10% less
31%)] [With IRA--No Deduction--investment of $1,380 ($2,000 less 31%) earning
10%]
<TABLE>
<CAPTION>
36% Tax Bracket* Single - $115,001-$250,000
---------------
Joint - $140,001-$250,000
End of Cumulative How Much You How Much You Have with Full IRA
Year Investment Amount Have Without IRA No Deduction Deduction
<S> <C> <C> <C> <C>
1 $ 2,000 $ 1,362 $ 1,408 $ 2,200
5 10,000 7,739 8,596 13,431
10 20,000 18,292 22,440 35,062
15 30,000 32,683 44,736 69,899
20 40,000 52,308 80,643 126,005
25 50,000 79,069 138,473 216,364
30 60,000 115,562 231,608 361,887
35 70,000 165,327 381,602 596,254
40 80,000 233,190 623,170 973,704
</TABLE>
[Without IRA--investment of $1,280 ($2,000 less 36%) earning 6.4% (10% less
36%)] [With IRA--No Deduction--investment of $1,280 ($2,000 less 36%) earning
10%]
-62-
<PAGE>
<TABLE>
<CAPTION>
39.6% Tax Bracket* Single - over $250,000
-----------------
Joint - over $250,000
End of Cumulative How Much You How Much You Have with Full IRA
Year Investment Amount Have Without IRA No Deduction Deduction
<S> <C> <C> <C> <C>
1 $ 2,000 $ 1,281 $ 1,329 $ 2,200
5 10,000 7,227 8,112 13,431
10 20,000 16,916 21,178 35,062
15 30,000 29,907 42,219 69,899
20 40,000 47,324 76,107 126,005
25 50,000 70,677 130,684 216,364
30 60,000 101,986 218,580 361,887
35 70,000 143,965 360,137 596,254
40 80,000 200,249 588,117 973,704
</TABLE>
[Without IRA--investment of $1,208 ($2,000 less 39.6%) earning 6.04% (10% less
39.6%)] [With IRA--No Deduction--investment of $1,208 ($2,000 less 39.6%)
earning 10%]
* For tax years beginning after 1992, a 36% tax rate applies to all taxable
income in excess of the maximum dollar amounts subject to the 31% tax rate.
In addition, a 10% surtax (not applicable to capital gains) applies to
certain high-income taxpayers. It is computed by applying a 39.6% rate to
taxable income in excess of $250,000. The above tables do not reflect the
personal exemption phaseout nor the limitations of itemized deductions that
may apply.
-63-
<PAGE>
$2,000 SINGLE INVESTMENT AT A RETURN OF 10% COMPOUNDED QUARTERLY
<TABLE>
<CAPTION>
TAXABLE - TAXABLE - TAXABLE - TAXABLE - TAXABLE - TAX
YEARS 39.6%* 36%* 31% 28% 15% DEFERRED
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10 $ 3,642 $ 3,774 $ 3,964 $ 4,083 $ 4,638 $ 5,370
15 4,915 5,184 5,581 5,833 7,062 8,800
20 6,633 7,121 7,857 8,334 10,755 14,419
30 12,081 13,436 15,572 17,012 24,939 38,716
40 22,001 25,352 30,865 34,720 57,831 103,956
</TABLE>
$2,000 INVESTED ANNUALLY AT A RETURN OF 10% COMPOUNDED QUARTERLY
<TABLE>
<CAPTION>
TAXABLE - TAXABLE - TAXABLE - TAXABLE - TAXABLE - TAX
YEARS 39.6%* 36%* 31% 28% 15% DEFERRED
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10 $ 28,226 $ 28,833 $ 29,702 $ 30,239 $ 32,699 $ 35,834
15 50,104 51,753 54,152 55,654 62,755 72,298
20 79,629 83,239 88,573 91,966 108,525 132,049
30 173,245 185,894 205,256 217,971 284,358 390,394
40 343,737 379,596 436,523 475,187 692,097 1,084,066
</TABLE>
* For tax years beginning after 1992, a 36% tax rate applies to all taxable
income in excess of the maximum dollar amounts subject to the 31% tax rate.
In addition, a 10% surtax (not applicable to capital gains) applies to
certain high-income taxpayers. It is computed by applying a 39.6% rate to
taxable income in excess of $250,000. The above tables do not reflect the
personal exemption phaseout nor the limitations of itemized deductions that
may apply.
-64-
<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!
[chart appears here]
8% Return 10% Return
--------- ----------
10 years $31,291 $35,062
20 years 98,846 126,005
30 years 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.
-65-
<PAGE>
APPENDIX C
Delaware Fund Performance Overview
The following table illustrates the total return on one share invested in
the Delaware Fund A Class1 during the 10-year period ended April 30, 1995. The
results reflect the reinvestment of all dividends and realized securities
profits distributions at the net asset value reported at the time of
distribution. No adjustment has been made for any income taxes payable by
shareholders on income dividends or realized securities profits distributions
accepted in shares.
<TABLE>
<CAPTION>
Delaware Fund A Class
Cumula-
tive net
asset
Net Asset value at
Maximum Value Distributions year-end Delaware Fund
offering ------------- -------------------- with all --------------------------------------------------
Year price at Begin- From From distribu- Maximum Offering Price Net Asset Value
ended begin- ning End invest- realized tions to Net Asset Value to Net Asset Value
April ning of of of ment securi- rein- --------------------------------------------------
30 year/2/ year year income ties profits vested Annual Cumulative/3/ Annual Cumulative/4/
- ----- -------- ---- ---- ------- ------------ ---------- -------- ------------ ------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1986 $20.14 $19.18 $23.90 $0.70 $2.00 $27.30 35.6% 35.6% 42.34% 42.3%
1987 25.09 23.90 21.72 0.50 4.31 31.16 8.7 54.7 14.13 62.5
1988 22.80 21.72 13.81 0.32 4.09 26.61 -18.7 32.1 -14.60 38.7
1989 14.50 13.81 16.15 0.75 0.00 32.71 17.1 62.5 22.94 70.6
1990 16.96 16.15 16.95 0.84 0.00 36.02 4.9 78.9 10.12 87.8
1991 17.80 16.95 17.92 0.88 0.29 40.78 7.8 102.5 13.21 112.6
1992 18.81 17.92 18.03 0.70 1.54 46.30 8.1 129.9 13.53 141.4
1993 18.93 18.03 18.79 0.66 0.77 52.10 7.2 158.7 12.52 171.6
1994 19.73 18.79 18.06 0.60 1.16 54.96 0.5 172.9 5.49 186.5
1995 18.96 18.06 18.40 0.63 0.25 58.85 2.0 192.21 7.08 206.8
Total Distributions $6.58 $14.41
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE CHANGES DURING YEAR
- -----------------------------------------------------------------------------------------------------------
Lipper
Balanced
Year Standard & Dow Jones Consumer Average
ended Poor's 500/5/ Industrial/5/ Price Index/5/ Index/5/
April -------------------------------------------------------------------------------------------------
30 Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative
- ----- ------ ---------- ------ ---------- ------ ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1986 36.2% 36.2% 48.1% 48.1% 1.6% 1.6% 32.3% 32.3%
1987 26.5 72.4 32.7 96.4 3.8 5.5 15.0 52.1
1988 -6.5 61.2 -8.1 80.6 3.9 9.6 -1.5 49.8
1989 22.9 98.0 23.8 123.6 5.1 15.2 14.1 70.9
1990 10.5 118.9 14.4 155.7 4.7 20.6 6.4 81.8
1991 17.6 157.4 12.8 188.5 4.9 26.5 15.4 109.8
1992 14.0 193.4 19.9 245.9 3.2 30.5 13.6 138.3
1993 9.2 220.4 5.2 263.9 3.2 34.8 10.9 164.2
1994 5.3 237.4 10.4 301.8 2.4 37.9 4.3 175.6
1995 17.4 296.3 20.7 385.0 3.1 42.1 8.8 199.9
</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 $20.14 on April 30, 1985
4 Reflects a net asset value of $19.18 on April 30, 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
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 April 30, 1995. The results reflect the reinvestment of
all dividends and realized securities profits distributions at the net asset
value reported at the time of distribution. No adjustment has been made for any
income taxes payable by shareholders on income dividends or realized securities
profits distributions accepted in shares.
<TABLE>
<CAPTION>
Delaware Fund B Class
Cumula-
tive net
asset
Net Asset value at
Maximum Value Distributions year-end Delaware Fund
offering -------------- --------------------- with all -------------------------------------------------
Period price at Begin- From From distribu- Returns Including Returns Excluding
ended begin- ning End invest- real tions CDSC/1/ CDSC/1/
April ning of of of ment securi- rein- --------------------------------------------------
30 period period period income ties profits vested Annual Cumulative/2/ Annual Cumulative/2/
- ----- ------- ------ ------ ------ ------------ ------ ------ ------------ ------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995 $18.34 $18.34 $18.39 $0.42 0.25 $19.97 N/A 0.10% N/A 4.10%
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE CHANGES DURING YEAR
- -------------------------------------------------------------------------------------------------------------------------
Lipper
Balanced
Period Standard & Dow Jones Consumer Average
ended Poor's 500/3/ Industrial/3/ Price Index/3/ Index/3/
April ---------------------------------------------------------------------------------------------------------------
30 Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative
- ----- ------ ---------- ------ ---------- ------ ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1995 10.2% 10.2% 12.5% 12.5% 2.0% 2.0% 5.1% 5.1%
</TABLE>
- -------------------
1 Total return provided is on an aggregate basis. Total return for this short
of a time period may not be representative of longer-term results.
2 Reflects a net asset value of $18.34 on September 2, 1994.
3 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
Delaware Fund Performance Overview
The following table illustrates the total return on one share invested in
the Delaware Fund Institutional Class1 during the 10-year period ended April 30,
1995. The results reflect the reinvestment of all dividends and realized
securities profits distributions at the net asset value reported at the time of
distribution. No adjustment has been made for any income taxes payable by
shareholders on income dividends or realized securities profits distributions
accepted in shares.
<TABLE>
<CAPTION>
Delaware Fund Institutional Class
Cumula-
tive net
asset
Net Asset value at
Value Distributions year-end Delaware Fund
-------------- ---------------------- with all ---------------------------------------------
Year Begin- From From distribu- Net Asset Value Standard &
ended ning End invest- realized tions to Net Asset Value Poor's 5003
April of of ment securi- rein- ---------------------------------------------
30 year Year income ties profits vested Annual Cumulative/2/ Annual Cumulative
- ----- ----- ----- -------- ------------ --------- ------ ------------ ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1986 $19.18 $23.90 $0.70 $2.00 $27.30 42.3% 42.3% 36.2% 36.2%
1987 23.90 21.72 0.50 4.31 31.16 14.1 62.5 26.5 72.4
1988 21.72 13.81 0.32 4.09 26.61 -14.6 38.7 -6.5 61.2
1989 13.81 16.15 0.75 0.00 32.71 22.9 70.6 22.9 98.0
1990 16.15 16.95 0.84 0.00 36.02 10.1 87.8 10.5 118.9
1991 16.95 17.92 0.88 0.29 40.78 13.2 112.6 17.6 157.4
1992 17.92 18.03 0.70 1.54 46.30 13.5 141.4 14.0 193.4
1993 18.03 18.81 0.66 0.77 52.15 12.6 171.9 9.2 220.4
1994 18.81 18.08 0.63 1.16 55.10 5.7 187.3 5.3 237.4
1995 18.08 18.41 0.66 0.25 59.06 7.2 207.9 17.4 296.3
Total Distributions $6.64 $14.41
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE CHANGES DURING YEAR
- -------------------------------------------------------------------------------
Lipper
Balanced
Year Dow Jones Consumer Average
ended Industrial/3/ Price Index/3/ Index/3/
April ----------------------------------------------------------------------
30 Annual Cumulative Annual Cumulative Annual Cumulative
- ----- ------ ---------- ------ ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
1986 48.1% 48.1% 1.6% 1.6% 32.3% 32.3%
1987 32.7 96.4 3.8 5.5 15.0 52.1
1988 -8.1 80.6 3.9 9.6 -1.5 49.8
1989 23.8 123.6 5.1 15.2 14.1 70.9
1990 14.4 155.7 4.7 20.6 6.4 81.8
1991 12.8 188.5 4.9 26.5 15.4 109.8
1992 19.9 245.9 3.2 30.5 13.6 138.3
1993 5.2 263.9 3.2 34.8 10.9 164.2
1994 10.4 301.8 2.4 37.9 4.3 175.6
1995 20.7 385.0 3.1 42.1 8.8 199.9
</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 $ 19.18 on April 30, 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
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 April 30, 1995. The results reflect the reinvestment of
all dividends and realized securities profits distributions at the net asset
value reported at the time of distribution. No adjustment has been made for any
income taxes payable by shareholders on income dividends or realized securities
profits distributions accepted in shares.
<TABLE>
<CAPTION>
Devon Fund A Class
Cumula-
tive net
asset
Maximum Net Asset value at
offering Value Distributions year-end Devon Fund
price ------------- ----------------- with all -----------------------------------------------------
Period at Begin- From From distribu- Maximum Offering Price Net Asset Value
ended begin- ning End invest- realized tions to Net Asset Value to Net Asset Value
April ning of of of ment securi- rein- -----------------------------------------------------
30 period/1/ period period income ties profits vested Annual Cumulative/2/ Annual Cumulative/3/
- ----- -------- ------ ------ ------ ------------ ---------- -------- ------------ ------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994 $10.00 $10.36 $0.03 $0.00 10.39 --- -1.0% --- 3.9%
1995 $10.36 $11.13 $0.20 $0.32 11.74 7.6% 11.8% 12.99% 17.4%
Total Distributions 0.23 0.32
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE CHANGES DURING YEAR
- -----------------------------------------------------------------------------------------------------------
Lipper
Growth &
Period Standard & Dow Jones Consumer Income
ended Poor's 500/4/ Industrial/4/ Price Index/4/ Index/4/
April -------------------------------------------------------------------------------------------------
30 Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative
- ----- ------ ---------- ------ ---------- ------ ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1994 --- -2.6% --- -1.0% --- 1.1% --- -2.5%
1995 17.4% 14.4% 20.7% 19.5% 3.1% 4.2% 12.0% 9.2%
</TABLE>
- --------------------------
1 Reflects a maximum sales charge of 5.75%. There are reduced sales charges
for investment of $100,000 or more.
2 Reflects an offering price of $10.61 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
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 April 30, 1995. The results reflect the reinvestment of
all dividends and realized securities profits distributions at the net asset
value reported at the time of distribution. No adjustment has been made for any
income taxes payable by shareholders on income dividends or realized securities
profits distributions accepted in shares.
<TABLE>
<CAPTION>
Devon Fund B Class
Cumula-
tive net
asset
Maximum Net Asset value at
offering Value Distributions year-end Devon Fund
price --------------- ----------------------- with all --------------------------------------------------
Period at Begin- From From distribu- Returns Including Returns Excluding
ended begin- ning End invest- realized tions CDSC/1/ CDSC/1/
April ning of of of ment securi- rein- --------------------------------------------------
30 period/1/ period period income ties profits vested Annual Cumulativ/2/ Annual Cumulative/3/
- ----- ------- ------ ------ ------ ------------ ------ ------- ----------- ------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995 $10.90 $11.10 $0.15 $0.32 $10.66 N/A 2.6% N/A 6.6%
Total Distributions
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE CHANGES DURING YEAR
- -------------------------------------------------------------------------------------------------------------------------
Lipper
Growth &
Period Standard & Dow Jones Consumer Income
ended Poor's 500/3/ Industrial/3/ Price Index/3/ Index/3/
April ---------------------------------------------------------------------------------------------------------------
30 Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative
- ----- ------ ---------- ------ ---------- ------ ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1995 --- 10.2% --- 12.5% --- 2.0% --- 6.4%
</TABLE>
- ----------------------------
1 Total return provided is on an aggregate basis. Total return for this short
of a time period may not be representative of longer-term results.
2 Reflects a net asset value of $10.90 on September 2, 1994.
3 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
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 April 30, 1995. The results reflect the
reinvestment of all dividends and realized securities profits distributions at
the net asset value reported at the time of distribution. No adjustment has been
made for any income taxes payable by shareholders on income dividends or
realized securities profits distributions accepted in shares.
<TABLE>
<CAPTION>
Devon Fund Institutional Class
Cumula-
tive net
asset
Net Asset value at
Value Distributions year-end Devon Fund
-------------- ---------------------- with all ---------------------------------------------
Period Begin- From From distribu- Net Asset Value Standard &
ended ning End invest- realized tions to Net Asset Value Poor's 500/2/
April of of ment securi- rein- ---------------------------------------------
30 period period income ties profits vested Annual Cumulative/1/ Annual Cumulative
- ----- ----- ----- -------- ------------ --------- ------ ----------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994 $10.00 $10.37 $0.03 $0.00 $10.40 --- 4.0% --- -2.6%
1995 $10.37 $11.15 $0.22 $0.32 $11.78 13.3% 17.8% 17.4% 14.4%
Total Distributions $0.25 $0.32
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE CHANGES DURING YEAR
- -------------------------------------------------------------------------------
Lipper
Growth &
Period Dow Jones Consumer Income
ended Industrial/2/ Price Index/2/ Index/2/
April ----------------------------------------------------------------------
30 Annual Cumulative Annual Cumulative Annual Cumulative
- ----- ------ ---------- ------ ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
1994 --- -1.0% --- 1.1% --- -2.5%
1995 20.7% 19.5% 3.1% 4.2% 12.0% 9.2%
</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
[chart appears here]
Hypothetical Corporate Life Cycle Chart shows in a line illustration, the
stages that a typical company would go through beginning with the emerging state
where sales growth continues at a steep pace to the mature phase where growth
levels off to the cyclical state where sales show more definitive highs and
lows.
The above chart illustrates the path traditionally followed by companies
that successfully survive the growth sequence.
<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, 1994, 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. Unaudited financial
statements and the notes relating thereto for the six-month period ended April
30, 1995 are also incorporated into this Part B by reference to the Fund's
Semi-Annual Report.
<PAGE>
---------------------------------
DELAWARE FUND
The Delaware Group includes funds --------------------------------
with a wide range of investment
objectives. Stock funds, income funds, A CLASS
tax-free funds, money market funds, --------------------------------
global and international funds and
closed-end equity funds give investors B CLASS
the ability to create a portfolio that --------------------------------
fits their personal financial goals.
For more information, shareholders of INSTITUTIONAL CLASS
the Fund Classes should contact their --------------------------------
financial adviser or call Delaware Group
at 800-523-4640, in Philadelphia call DEVON FUND
215-988-1333 and shareholders of the
Institutional Classes should contact (FORMERLY DIVIDEND GROWTH FUND)
Delaware Group at 800-828-5052. --------------------------------
A CLASS
--------------------------------
INVESTMENT MANAGER
Delaware Management Company, Inc. B CLASS
One Commerce Square --------------------------------
Philadelphia, PA 19103
NATIONAL DISTRIBUTOR INSTITUTIONAL CLASS
Delaware Distributors, L.P. --------------------------------
1818 Market Street
Philadelphia, PA 19103 CLASSES OF DELAWARE GROUP
SHAREHOLDER SERVICING, DELAWARE FUND, INC.
DIVIDEND DISBURSING --------------------------------
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
LEGAL COUNSEL PART B
Stradley, Ronon, Stevens & Young
One Commerce Square STATEMENT OF
Philadelphia, PA 19103 ADDITIONAL INFORMATION
INDEPENDENT AUDITORS --------------------------------
Ernst & Young LLP
Two Commerce Square November 29, 1995
Philadelphia, PA 19103
CUSTODIAN
Chemical Bank
450 West 33rd Street
New York, NY 10001
DELAWARE
GROUP
--------
<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, 1994 which are included herein
as an Exhibit. In addition, the unaudited
financial statements for the six-month period
ended April 30, 1995 for Delaware Fund and Devon
Fund are incorporated by reference into Part B
from the Registrant's Semi-Annual Reports. The
Registrant's Semi-Annual Reports were
electronically filed with the Commission on July
5, 1995.
(b) Exhibits:
(1) Articles of Incorporation.
(a) Articles of Incorporation, as amended
and supplemented to date, attached as
Exhibit.
(b) Form of Articles Supplementary
(November 1995) attached as Exhibit.
(2) By-Laws. By-Laws, as amended to date, attached
as Exhibit.
(3) Voting Trust Agreement. Inapplicable.
i
<PAGE>
Form N-1A
File No. 2-10765
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.
Article Second of Articles
Supplementary (September 6, 1994),
Article Fifth of Articles Supplementary
(November 30, 1993), Article Fifth of
Articles of Incorporation (March 4,
1983) and Article Eleventh of Articles
of Amendment (May 2, 1985) attached as
Exhibit 24(b)(1)(a) and Form of
Articles Supplementary (November 1995)
attached as Exhibit 24(b)(1)(b).
(b) By-Laws. Article II, Article III, as
amended, and Article XIII, which was
subsequently redesignated as Article
XIV, attached as Exhibit 24(b)(2).
(5) Investment Management Agreements. Investment
Management Agreements between Delaware
Management Company, Inc. and the Registrant on
behalf of each Series dated April 3, 1995
attached as Exhibit.
(6) (a) Distribution Agreements.
(i) Form of Distribution Agreement
(April 1995) included as
Module.
(ii) Form of Amendment No. 1 to
Distribution Agreement
(November 1995) included as
Module.
(b) Administration and Service Agreement.
Form of Administration and Service
Agreement (as amended November 1995)
included as Module.
(c) Dealer's Agreement. Form of Dealer's
Agreement (as amended November 1995)
included as Module.
(d) Form of Mutual Fund Agreement for the
Delaware Group of Funds included as
Module.
(7) Bonus, Profit Sharing, Pension Contracts.
Amended and Restated Profit Sharing Plan
included as Module.
(8) Custodian Agreements. Incorporated into this
filing by reference to Post-Effective
Amendment No. 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.
ii
<PAGE>
Form N-1A
File No. 2-10765
Delaware Group Delaware Fund, Inc.
(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. Filed with letter relating
to Rule 24f-2 on December 30, 1994.
(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.
Amended Model Plans included as Module.
**(15) Plans under Rule 12b-1.
(a) Form of Plan under Rule 12b-1 for
Class A (November 1995) included as
Module.
(b) Form of Plan under Rule 12b-1 for
Class B (November 1995) included as
Module.
(c) Form of Plan under Rule 12b-1 for
Class C (November 1995) included as
Module.
(16) Schedules of Computation for each Performance
Quotation. Attached as Exhibit.
(17) Financial Data Schedules. Attached as Exhibit.
(18) Plan under Rule 18f-3. Form of Plan under Rule
18f-3 (November 1995) included as Module.
(19) Other: Directors' Powers of Attorney. Attached
as Exhibit.
(20) Other: Financial Statements. The Registrant's
Annual Reports for the fiscal year ended
October 31, 1994 attached as Exhibit.
**Relates to the Class A, B and C Shares of each Series of the Registrant.
Item 25. Persons Controlled by or under Common Control with Registrant.
None.
iii
<PAGE>
Form N-1A
File No. 2-10765
Delaware Group Delaware Fund, Inc.
Item 26. Number of Holders of Securities.
<TABLE>
<CAPTION>
(1) (2)
Number of
Title of Class Record Holders*
-------------- ---------------
<S> <C> <C>
Delaware Group Delaware Fund, Inc.'s
Delaware Fund series:
Delaware Fund A Class
Common Stock Par Value 26,135 Accounts as of
$1.00 Per Share October 31, 1995
Delaware Fund B Class
Common Stock Par Value 281 Accounts as of
$1.00 Per Share October 31, 1995
Delaware Fund C Class
Common Stock Par Value 0 Accounts as of
$1.00 Per Share October 31, 1995
Delaware Fund Institutional Class
Common Stock Par Value 44 Accounts as of
$1.00 Per Share October 31, 1995
Delaware Group Delaware Fund, Inc.'s
Devon Fund series:
Devon Fund A Class
Common Stock Par Value 809 Accounts as of
$1.00 Per Share October 31, 1995
Devon Fund B Class
Common Stock Par Value 119 Accounts as of
$1.00 Per Share October 31, 1995
Devon Fund C Class
Common Stock Par Value 0 Accounts as of
$1.00 Per Share October 31, 1995
</TABLE>
* Delaware Fund C Class and Devon Fund C Class were not offered prior to
the effective date of this Registration Statement.
iv
<PAGE>
Form N-1A
File No. 2-10765
Delaware Group Delaware Fund, Inc.
<TABLE>
<CAPTION>
Number of
Title of Class Record Holders
-------------- --------------
<S> <C> <C>
Devon Fund Institutional Class
Common Stock Par Value 4 Accounts as of
$1.00 Per Share October 31, 1995
</TABLE>
Item 27. Indemnification. Incorporated into this filing by reference to
Post-Effective Amendment No. 78 filed October 26, 1983 and
Article III, as amended, attached as Exhibit 24(b)(2).
Item 28. Business and Other Connections of Investment Adviser.
Delaware Management Company, Inc. (the "Manager") or its
affiliate, Delaware International Advisers Ltd., also serves as investment
manager to the other funds in the Delaware Group (Delaware Group 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:
v
<PAGE>
Form N-1A
File No. 2-10765
Delaware Group Delaware Fund, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
<S> <C>
Wayne A. Stork Chairman of the Board, Chief Executive Officer, Chief Investment Officer
and Director of Delaware Management Company, Inc.; President, Chief
Executive Officer, Chairman of the Board and Director of the Registrant, and
with the exception of Delaware Pooled Trust, Inc., each of the other funds in
the Delaware Group and Delaware Management Holdings, Inc.; Chairman of
the Board and Director of Delaware Pooled Trust, Inc. and Delaware
Investment Counselors, Inc.; Chairman, Chief Executive Officer and Director
of DMH Corp., Delaware International Advisers Ltd., Delaware International
Holdings Ltd. and Founders Holdings, Inc.; and Director of Delaware
Distributors, Inc. and Delaware Service Company, Inc.
Winthrop S. Jessup Executive Vice President and Director of Delaware Management Company,
Inc., DMH Corp., Delaware International Holdings Ltd. and Founders
Holdings, Inc.; Executive Vice President of the Registrant and, with the
exception of Delaware Pooled Trust, Inc., each of the other funds in the
Delaware Group and Delaware Management Holdings, Inc.; President and
Chief Executive Officer of Delaware Pooled Trust, Inc.; Vice Chairman of
Delaware Distributors, L.P.; Vice Chairman and Director of Delaware
Distributors, Inc.; Director of Delaware Service Company, Inc., Delaware
Management Trust Company and Delaware International Advisers Ltd.; and
President and Director of Delaware Investment Counselors, Inc.
Richard G. Unruh, Jr. Executive Vice President and Director of Delaware Management Company,
Inc.; Executive Vice President of the Registrant and each of the other
funds in the Delaware Group; Senior Vice President of Delaware Management
Holdings, Inc.; and Director of Delaware International Advisers Ltd.
Board of Directors, Chairman of Finance Committee, Keystone Insurance
Company since 1989, 2040 Market Street, Philadelphia, PA; Board of
Directors, Chairman of Finance Committee, Mid Atlantic, Inc., since 1989,
2040 Market Street, Philadelphia, PA.
Paul E. Suckow Senior Vice President/Chief Investment Officer, Fixed Income of Delaware
Management Company, Inc., the Registrant, each of the other funds in
the Delaware Group and Delaware Management Holdings, Inc.; Senior Vice
President and Director of Founders Holdings, Inc.; and Director of
Founders CBO Corporation.
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
vi
<PAGE>
Form N-1A
File No. 2-10765
Delaware Group Delaware Fund, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
<S> <C>
David K. Downes Senior Vice President, Chief Administrative Officer and Chief Financial
Officer of Delaware Management Company, Inc., the Registrant and each of
the other funds in the Delaware Group; Chairman and Director of Delaware
Management Trust Company; Senior Vice President, Chief Administrative
Officer, Chief Financial Officer and Treasurer of Delaware Management
Holdings, Inc.; Senior Vice President, Chief Financial Officer, Treasurer and
Director of DMH Corp.; Senior Vice President, Chief Administrative Officer
and Director of Delaware Distributors, Inc.; Senior Vice President and Chief
Administrative Officer of Delaware Distributors, L.P.; Senior Vice President,
Chief Administrative Officer, Chief Financial Officer and Director of
Delaware Service Company, Inc.; Chief Financial Officer and Director of
Delaware International Holdings Ltd.; Senior Vice President, Chief Financial
Officer and Treasurer of Delaware Investment Counselors, Inc.; Senior Vice
President and Director of Founders Holdings, Inc.; and Director of Delaware
International Advisers Ltd.
George M. Chamberlain, Jr. Senior Vice President, Secretary and Director of Delaware Management
Company, Inc., DMH Corp., Delaware Distributors, Inc. and Delaware
Service Company, Inc.; Senior Vice President and Secretary of the
Registrant, each of the other funds in the Delaware Group, Delaware
Distributors, L.P., Delaware Investment Counselors, Inc. and Delaware
Management Holdings, Inc.; Executive Vice President, Secretary and
Director of Delaware Management Trust Company; Corporate Vice
President, Secretary and Director of Founders Holdings, Inc.; Secretary and
Director of Delaware International Holdings Ltd.; and Director of Delaware
International Advisers Ltd.
Director of ICI Mutual Insurance Co. since 1992, P.O. Box 730, Burlington,
VT.
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
vii
<PAGE>
Form N-1A
File No. 2-10765
Delaware Group Delaware Fund, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
<S> <C>
Richard J. Flannery Managing Director/Corporate Tax & Affairs of Delaware Management
Company, Inc., Delaware Management Holdings, Inc., DMH Corp.,
Delaware Distributors, L.P., Delaware Distributors, Inc., Delaware Service
Company, Inc., Delaware Management Trust Company, Delaware
International Holdings Ltd., Delaware Investment Counselors, Inc. and
Founders CBO Corporation; Vice President of the Registrant and each of the
other funds in the Delaware Group; Managing Director/Corporate Tax &
Affairs and Director of Founders Holdings, Inc.; and Director of Delaware
International Advisers Ltd.
Limited Partner of Stonewall Links, L.P. since 1991, Bulltown Rd., Elverton,
PA; Director and Member of Executive Committee of Stonewall Links, Inc.
since 1991, Bulltown Rd., Elverton, PA.
Michael P. Bishof\1 Vice President and Treasurer of Delaware Management Company, Inc., the
Registrant, each of the other funds in the Delaware Group, Delaware Management
Holdings, Inc., DMH Corp., Delaware Distributors, L.P., Delaware Distributors,
Inc., Delaware Service Company, Inc., Founders Holdings, Inc. and Founders CBO
Corporation.
Eric E. Miller Vice President and Assistant Secretary of Delaware Management Company, Inc.,
the Registrant, each of the other funds in the Delaware Group, Delaware
Management Holdings, Inc., DMH Corp., Delaware Distributors, L.P., Delaware
Distributors, Inc., Delaware Service Company, Inc., Delaware Management Trust
Company, Founders Holdings, Inc. and Delaware Investment Counselors, Inc.
Richelle S. Maestro Vice President and Assistant Secretary of Delaware Management Company,
Inc., the Registrant, each of the other funds in the Delaware Group,
Delaware Management Holdings, Inc., Delaware Distributors, L.P., Delaware
Distributors, Inc., Delaware Service Company, Inc., DMH Corp., Delaware
Management Trust Company, Delaware Investment Counselors, Inc. and
Founders Holdings, Inc.; and Assistant Secretary of Founders CBO
Corporation.
General Partner of Tri-R Associates since 1989, 10001 Sandmeyer Ln.,
Philadelphia, PA.
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
viii
<PAGE>
Form N-1A
File No. 2-10765
Delaware Group Delaware Fund, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
<S> <C>
Joseph H. Hastings Vice President/Corporate Controller of Delaware Management Company,
Inc., the Registrant, each of the other funds in the Delaware Group,
Delaware Management Holdings, Inc., DMH Corp., Delaware Distributors,
L.P., Delaware Distributors, Inc., Delaware Service Company, Inc., Delaware
Investment Counselors, Inc. and Founders Holdings, Inc.; Executive Vice
President, Chief Financial Officer and Treasurer of Delaware Management
Trust Company; and Assistant Treasurer of Founders CBO Corporation.
Bruce A. Ulmer Vice President/Director of Internal Audit of Delaware Management
Company, Inc., the Registrant, each of the other funds in the Delaware
Group, Delaware Management Holdings, Inc., DMH Corp. and Delaware
Management Trust Company.
Lisa O. Brinkley\2 Vice President/Compliance of Delaware Management Company, Inc., the
Registrant, each of the other funds in the Delaware Group, DMH Corp.,
Delaware Distributors, L.P., Delaware Distributors, Inc., Delaware
Service Company, Inc., Delaware Management Trust Company and
Delaware Investment Counselors, Inc.
Rosemary E. Milner Vice President/Legal of Delaware Management Company, Inc., the
Registrant, each of the other funds in the Delaware Group, Delaware
Distributors, L.P. and Delaware Distributors, Inc.
Douglas L. Anderson\3 Vice President/Operations of Delaware Management Company, Inc. and
Delaware Service Company, Inc.; and Vice President/Operations and
Director of Delaware Management Trust Company.
Michael T. Taggart\4 Vice President/Facilities Management and Administrative Services of
Delaware Management Company, Inc.
Gerald T. Nichols Vice President/Senior Portfolio Manager of Delaware Management Company,
Inc., each of the tax-exempt funds, the fixed income funds and the
closed-end funds in the Delaware Group; Vice President of Founders
Holdings, Inc.; and Treasurer and Director of Founders CBO Corporation.
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.
</TABLE>
*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.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
<S> <C>
Gary A. Reed Vice President/Senior Portfolio Manager of Delaware Management
Company, Inc., each of the tax-exempt funds and the fixed income
funds in the Delaware Group and Delaware Investment Counselors, Inc.
Paul A. Matlack Vice President/Senior Portfolio Manager of Delaware Management Company,
Inc., each of the tax-exempt funds, the fixed income funds and the
closed-end funds in the Delaware Group; Vice President of Founders
Holdings, Inc.; and Secretary and Director of Founders CBO Corporation.
James R. Raith, Jr. Vice President/Senior Portfolio Manager of Delaware Management
Company, Inc., each of the tax-exempt funds, the fixed income funds and the
closed-end funds in the Delaware Group; Vice President of Founders
Holdings, Inc.; and President and Director of Founders CBO Corporation.
Patrick P. Coyne Vice President/Senior Portfolio Manager of Delaware Management Company, Inc.,
each of the tax-exempt funds and the fixed income funds in the Delaware Group.
Roger A. Early\5 Vice President/Senior Portfolio Manager of Delaware Management Company, Inc.,
each of the tax-exempt funds and the fixed income funds in the Delaware Group.
Edward N. Antoian Vice President/Senior Portfolio Manager of Delaware Management
Company, Inc., the Registrant and each of the other equity funds in the
Delaware Group.
George H. Burwell Vice President/Senior Portfolio Manager of Delaware Management
Company, Inc., the Registrant and each of the other equity funds in the
Delaware Group.
John B. Fields Vice President/Senior Portfolio Manager of Delaware Management Company,
Inc., the Registrant, each of the other equity funds in the Delaware Group
and Delaware Investment Counselors, Inc.
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.
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
x
<PAGE>
Form N-1A
File No. 2-10765
Delaware Group Delaware Fund, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
<S> <C>
David C. Dalrymple Vice President/Senior Portfolio Manager of Delaware Management
Company, Inc., the Registrant and each of the other equity funds in the
Delaware Group.
</TABLE>
\1 VICE PRESIDENT/GLOBAL INVESTMENT MANAGEMENT OPERATIONS,
Bankers Trust and VICE PRESIDENT, CS First Boston Investment
Management prior to June, 1995.
\2 VICE PRESIDENT AND COMPLIANCE OFFICER, Banc One Securities
Corporation prior to June, 1994 and ASSISTANT VICE PRESIDENT
AND COMPLIANCE OFFICER, Aetna Life and Casualty prior to
March, 1993.
\3 VICE PRESIDENT OF OPERATIONS, Supervised Service Company
prior to March, 1994.
\4 ASSISTANT VICE PRESIDENT/ADMINISTRATIVE SERVICES, United
Pacific Life Insurance prior to January 1994.
\5 SENIOR VICE PRESIDENT AND PORTFOLIO MANAGER, Federated
Investors prior to July, 1994.
Item 29. Principal Underwriters.
(a) Delaware Distributors, L.P. serves as principal
underwriter for all the mutual funds in the Delaware
Group.
(b) Information with respect to each director, officer or
partner of principal underwriter:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ------------------ --------------------- ---------------------
<S> <C> <C>
Delaware Distributors, Inc. General Partner None
Delaware Management
Company, Inc. Limited Partner Investment Manager
Delaware Investment
Counselors, Inc. Limited Partner None
Winthrop S. Jessup Vice Chairman Executive Vice President
Keith E. Mitchell President and Chief None
Executive Officer
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
xi
<PAGE>
Form N-1A
File No. 2-10765
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>
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
Minette van Noppen Senior Vice President/ None
Retirement Services
Richard J. Flannery Managing Director/Corporate Vice President
& Tax Affairs
Eric E. Miller Vice President/ Vice President/
Assistant Secretary Assistant Secretary
Richelle S. Maestro Vice President/ Vice President/
Assistant Secretary Assistant Secretary
Joseph H. Hastings Vice President/ Vice President/
Corporate Controller Corporate Controller
Michael P. Bishof Vice President/Treasurer Vice President/Treasurer
Rosemary E. Milner Vice President/Legal Vice President/Legal
Lisa O. Brinkley Vice President/ Vice President/
Compliance Compliance
</TABLE>
*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.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ------------------ --------------------- ---------------------
<S> <C> <C>
Diane M. Anderson Vice President/ None
Retirement Services
Denise F. Guerriere Vice President/Client Services None
Julia R. Vander Els Vice President/ None
Retirement Services
Jerome A. Alrutz Vice President/ None
Retirement Services
Martin J. Cole Vice President/ None
Retirement Services
Joanne A. Mettenheimer Vice President/ None
National Accounts
Christopher H. Price Vice President/Annuity None
Marketing 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
</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>
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
Dion D. Rooney Vice President/Wholesaler None
Michael W. Rose Vice President/Wholesaler None
Thomas E. Sawyer Vice President/Wholesaler None
Sanford G. Simmons, Jr. Vice President/Wholesaler None
Robert E. Stansbury Vice President/Wholesaler None
Larry D. Stone Vice President/Wholesaler None
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
(c) Not Applicable.
Item 30. Location of Accounts and Records.
All accounts and records are maintained in Philadelphia at 1818
Market Street, Philadelphia, PA 19103 or One Commerce Square,
Philadelphia, PA 19103.
Item 31. Management Services. None.
Item 32. Undertakings.
(a) Not Applicable.
(b) Not Applicable.
xiv
<PAGE>
Form N-1A
File No. 2-10765
Delaware Group Delaware Fund, Inc.
(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.
xv
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, this Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in this City of Philadelphia and Commonwealth of Pennsylvania on
this 20th day of November, 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 November 20, 1995
- --------------------------------------------
Wayne A. Stork
Senior Vice President/Chief Financial Officer/
Chief Administrative Officer (Principal
Financial Officer and Principal
/s/ David K. Downes Accounting Officer) November 20, 1995
- --------------------------------------------
David K. Downes
/s/ Walter P. Babich *
- -------------------------------------------- Director November 20, 1995
Walter P. Babich
/s/ Anthony D. Knerr * Director November 20, 1995
- --------------------------------------------
Anthony D. Knerr
/s/ Ann R. Leven * Director November 20, 1995
- --------------------------------------------
Ann R. Leven
/s/ W. Thacher Longstreth * Director November 20, 1995
- --------------------------------------------
W. Thacher Longstreth
/s/ Charles E. Peck * Director November 20, 1995
- --------------------------------------------
Charles E. Peck
</TABLE>
*By /s/ Wayne A. Stork
----------------------
Wayne A. Stork
as Attorney-in-Fact for
each of the persons indicated
<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.B1A Articles of Incorporation, as amended and
supplemented to date.
EX-99.B1B Form of Articles Supplementary (November 1995).
EX-99.B2 By-Laws, as amended to date.
EX-99.B5 Investment Management Agreements (April 3, 1995).
EX-99.B6AI Forms of Distribution Agreements (April 1995).
(Module Name
DIS_AGR_NON_MON)
EX-99.B6AII Forms of Amendment No. 1 to Distribution Agreements
(Module Name (November 1995).
AMD_DIS_AGR_NON)
EX-99.B6B Form of Administration and Service Agreement (as
(Module Name amended November 1995).
ADMIN_SER_AGREE)
EX-99.B6C Form of Dealer's Agreement (as amended November
(Module Name 1995).
DEALERS_AGREE)
EX-99.B6D Form of Mutual Fund Agreement for the Delaware Group
(Module Name of Funds.
MUTUAL_FUND_AGR)
EX-99.B7 Amended and Restated Profit Sharing Plan.
(Module Name
PROF_SHARE_PLAN)
EX-99.B11 Consent of Auditors.
EX-99.B14 Amended Model Plans.
(Module Name
MODEL_PLAN)
EX-99.B15A Form of Plan under Rule 12b-1 for Class A
(Module Name (November 1995).
CL_A_SHARE_NON)
EX-99.B15A Form of Plan under Rule 12b-1 for Class B
(Module Name (November 1995).
CL_B_SHARE_ALL)
<PAGE>
Exhibit No. Exhibit
- ----------- -------
EX-99.B15A Form of Plan under Rule 12b-1 for Class C
(Module Name (November 1995).
CL_C_SHARE_ALL)
EX-99.B16 Schedules of Computation for each Performance
Quotation for each Series.
EX-99.B18 Form of Plan under Rule 18f-3 (November 1995).
(Module Name
PLAN)
EX-99.B19 Directors' Powers of Attorney.
EX-99.B20 Financial Statements: The Registrant's Annual
Reports for the fiscal year ended October 31, 1994.
EX-27 Financial Data Schedules.
DELAWARE GROUP DELAWARE FUND, INC.
ARTICLES OF AMENDMENT
DELAWARE GROUP DELAWARE FUND, INC., a Maryland corporation
having its principal office in Maryland in Baltimore City (hereinafter called
the "Corporation"), hereby certifies to the State Department of Assessments and
Taxation that:
FIRST: The Corporation is registered as an open-end management
company under the Investment Company Act of 1940.
SECOND: The Articles of Incorporation of the Corporation, as
amended and supplemented, are hereby amended by changing the name of one series
of the Corporation's shares (the "Series") from the Dividend Growth Fund series
to the Devon Fund series, and by deleting the old series name from the Articles
of Incorporation, and inserting in lieu thereof the new series name as changed
hereby.
THIRD: The Articles of Incorporation of the Corporation, as
amended and supplemented, are further amended by changing the name of each of
the following classes (sub-series) of stock of the Series as hereinafter
provided and by deleting the old name of each such class from the Articles of
Incorporation, and inserting in lieu thereof the new name of such class as
changed hereby:
(1) The Dividend Growth Fund class is hereby changed to Devon
Fund A Class;
(2) The Dividend Growth Fund B Class is hereby changed to
Devon Fund B Class; and
(3) The Dividend Growth Fund (Institutional) class is hereby
changed to Devon Fund Institutional Class.
FOURTH: The amendments to the Articles of Incorporation of the
Corporation as set forth above have been duly approved by a majority of the
entire Board of Directors of the Corporation as required by law and are limited
to changes permitted by Section 2-605(a)(4) of the Maryland General Corporation
Law to be made without action by the stockholders of the Corporation.
<PAGE>
FIFTH: The amendments to the Articles of Incorporation of the
Corporation as set forth above do not change the preferences, conversion or
other rights, voting powers, restrictions, limitations as to dividends,
qualifications, or terms or conditions of redemption of the shares that are the
subject of the name changes.
SIXTH: The Articles of Amendment shall become effective at
5:00 P.M. on August 28, 1995.
IN WITNESS WHEREOF, DELAWARE GROUP DELAWARE FUND, INC. has
caused these Articles of Amendment to be signed in its name and on its behalf by
its Senior Vice President/Secretary and attested by its Assistant Secretary on
August 18, 1995.
DELAWARE GROUP DELAWARE FUND, INC.
By: /s/George M. Chamberlain, Jr.
------------------------------
George M. Chamberlain, Jr.
Attest:
/s/ Richelle S. Maestro
-----------------------------
Richelle S. Maestro
THE UNDERSIGNED, Senior Vice President/Secretary of DELAWARE
GROUP DELAWARE FUND, INC., who executed on behalf of said Corporation the
foregoing Articles of Amendment, of which this certificate is made a part,
hereby acknowledges, in the name and on behalf of said Corporation, the
foregoing Articles of Amendment to be the corporate act of said Corporation and
further certifies that, to the best of his knowledge, information and belief,
the matters and facts set forth therein with respect to the approval thereof are
true in all material respects, under the penalties of perjury.
/s/ George M. Chamberlain, Jr.
------------------------------
George M. Chamberlain, Jr.
<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 Board of Directors of the Corporation has adopted a
resolution taking the following actions:
1. classifying a third class of shares of the Common Stock
series as the Delaware Fund B Class and classifying 50,000,000
shares of authorized, unissued and unclassified Common Stock
of the Corporation, par value $1.00 per share, to the Delaware
Fund B Class;
2. classifying a third class of shares of the Dividend Growth
Fund series of the Corporation as the Dividend Growth Fund B
Class and classifying 50,000,000 shares of authorized,
unissued and unclassified Common Stock of the Corporation, par
value $1.00 per share, to the Dividend Growth Fund B Class;
and
SECOND: The shares of the Delaware Fund B Class and the
Dividend Growth Fund B Class (each referred to herein as a "B Class") shall
represent proportionate interests in the same portfolio of investments as the
shares of the existing classes of Common Stock of the Delaware Fund
(Institutional) class and the Delaware Fund class of the Corporation, and the
Dividend Growth Fund (Institutional) class and the Dividend Growth Fund class of
the Corporation, respectively. The shares of a B 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 and the
Delaware Fund class, and the Dividend Growth Fund (Institutional) class and the
Dividend Growth Fund class, respectively, all as set forth in the Articles of
Incorporation of the Corporation, except for the differences hereafter set
forth:
1. The dividends and distributions of investment income and
capital gains with respect to a B Class of shares of Common
Stock of a series shall be in such amounts as may be declared
<PAGE>
from time to time by the Board of Directors, and such
dividends and distributions may vary with respect to such
class from the dividends and distributions of investment
income and capital gains with respect to other classes of
Common Stock of that series to reflect differing allocations
of the expenses of the Corporation among the classes and any
resultant difference among the net asset values per share of
the classes, to such extent and for such purposes as the Board
of Directors may deem appropriate. The allocation of
investment income and capital gains and expenses and
liabilities of each series among its three classes of Common
Stock shall be determined by the Board of Directors in a
manner that is consistent with the order, as applicable, dated
November 9, 1992 (Investment Company Act of 1940 Release No.
19086) issued by the Securities and Exchange Commission, and
any future order or any rule or interpretation under the
Investment Company Act of 1940, as amended, that modifies or
supersedes such order;
2. Except as may otherwise be required by law pursuant to any
applicable order, rule or interpretation issued by the
Securities and Exchange Commission, or otherwise, the holders
of B Class shares shall have (i) exclusive voting rights with
respect to any matter submitted to a vote of stockholders that
affects only holders of B Class shares, including without
limitation, the provisions of any Distribution Plan adopted
pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended, (a "Distribution Plan") applicable to that B
Class and (ii) no voting rights with respect to the provisions
of any Distribution Plan applicable to the existing classes of
a series or with regard to any other matter submitted to a
vote of stockholders which does not affect holders of the B
Class shares.
3. (a) Other than shares described in paragraph (3)(b) herein,
each share of the Delaware Fund B Class and the Dividend
Growth Fund B Class shall be converted automatically, and
without any action or choice on the part of the holder
thereof, into shares of, respectively, the Delaware Fund class
and the Dividend Growth Fund class on the Conversion Date. The
term "Conversion Date" when used herein shall mean (i) a date
set forth in the prospectus of the B Class, as such prospectus
may be amended from time to time, that is no later than three
months after either (i) the date on which the eighth
anniversary of the date of issuance of the share occurs, or
(ii) any such other anniversary date as may be determined by
the Board of Directors and set forth in the prospectus of
<PAGE>
the B Class, as such prospectus may be amended from time to
time; provided that any such other anniversary date determined
by the Board of Directors shall be a date that will occur
prior to the anniversary date set forth in clause (i) and any
such other date theretofore determined by the Board of
Directors pursuant to this clause (ii); but further provided
that, subject to the provisions of the next sentence, for any
shares of a B Class acquired through an exchange, or through a
series of exchanges, as permitted by the Corporation as
provided in the prospectus of the B Class, as such prospectus
may be amended from time to time, from another investment
company or another series of the Corporation (an "eligible
investment company"), the Conversion Date shall be the
conversion date applicable to the shares of stock of the
eligible investment company originally subscribed for in lieu
of the Conversion Date of any stock acquired through exchange
if such eligible investment company issuing the stock
originally subscribed for had a conversion feature, but not
later than the Conversion Date determined under (i) or (ii)
above. For the purpose of calculating the holding period
required for conversion, the date of issuance of a share of a
B Class shall mean (i) in the case of a share of a B Class
obtained by the holder thereof through an original
subscription to the Corporation, the date of the issuance of
such share of a B Class, or (ii) in the case of a share of a B
Class obtained by the holder thereof through an exchange, or
through a series of exchanges, from an eligible investment
company, the date of issuance of the share of the eligible
investment company to which the holder originally subscribed.
(b) Each share of a B Class (i)
purchased through the automatic reinvestment of a dividend or
distribution with respect to that B Class or the corresponding
B Class of any other investment company or any other series of
the Corporation issuing such class of shares or (ii) issued
pursuant to an exchange privilege granted by the Corporation
in an exchange or series of exchanges for shares originally
purchased through the automatic reinvestment of a dividend or
distribution with respect to shares of capital stock of an
eligible investment company shall be segregated in a separate
sub-account on the stock records of the Corporation for each
of the holders of record thereof. On any Conversion Date, a
number of the shares held in the separate sub-account of the
holder of record of the share or shares being converted,
calculated in accordance with the next following sentence,
shall be converted automatically, and without any action or
<PAGE>
choice on the part of the holder, into shares of the Delaware
Fund class in the case of shares of the Delaware Fund B Class
or the Dividend Growth Fund class in the case of shares of the
Dividend Growth Fund B Class. The number of shares in the
holder's separate sub-account so converted shall (i) bear the
same ratio to the total number of shares maintained in the
separate sub-account on the Conversion Date (immediately prior
to conversion) as the number of shares of the holder converted
on the Conversion Date pursuant to paragraph (3)(a) hereof
bears to the total number of B Class shares of the holder on
the Conversion Date (immediately prior to conversion) after
subtracting the shares then maintained in the holder's
separate sub-account, or (ii) be such other number as may be
calculated in such other manner as may be determined by the
Board of Directors and set forth in the prospectus of the B
Class, as such prospectus may be amended from time to time.
(c) The number of shares of the
Delaware Fund class or the Dividend Growth Fund class, as the
case may be, into which a share of a B Class is converted
pursuant to paragraphs 3(a) and 3(b) hereof shall equal the
number (including for this purpose fractions of a share)
obtained by dividing the net asset value per share of such B
Class for purposes of sales and redemption thereof on the
Conversion Date by the net asset value per share of the
Delaware Fund class or the Dividend Growth Fund class, as the
case may be, for purposes of sales and redemption thereof on
the Conversion Date.
(d) On the Conversion Date, the
shares of a B Class converted into shares of Delaware Fund
class or the Dividend Growth Fund class, as the case may be,
will no longer be deemed outstanding and the rights of the
holders thereof (except the right to receive (i) the number of
shares of the Delaware Fund class or the Dividend Growth Fund
class into which the shares of the B Class have been converted
and (ii) declared but unpaid dividends to the Conversion Date
or such other date set forth in the prospectus of the B Class,
as such prospectus may be amended from time to time and (iii)
the right to vote converting shares of the B Class held as of
any record date occurring on or before the Conversion Date and
theretofore set with respect to any meeting held after the
Conversion Date) will cease. Certificates representing shares
of the Delaware Fund class or the Dividend Growth Fund class
resulting from the conversion need not be issued until
certificates representing shares of the relevant B Class
<PAGE>
converted, if issued, have been received by the Corporation or
its agent duly endorsed for transfer.
(e) The automatic conversion of a B
Class into the Delaware Fund class or the Dividend Growth Fund
class, as the case may be, as set forth in paragraphs 3(a) and
3(b) of this Article SECOND shall be suspended at any time
that the Board of Directors determines (i) that there is not
available a reasonably satisfactory opinion of counsel to the
effect that (x) the assessment of the higher fee under the
Distribution Plan with respect to the B Class does not result
in the Corporation's dividends or distributions constituting a
"preferential dividend" under the Internal Revenue Code of
1986, as amended, and (y) the conversion of the B Class does
not constitute a taxable event under federal income tax law,
or (ii) any other condition to conversion set forth in the
prospectus of the B Class, as such prospectus may be amended
from time to time, is not satisfied.
(f) The automatic conversion of a B
Class into the Delaware Fund class or the Dividend Growth Fund
class, as the case may be, as set forth in paragraphs 3(a) and
3(b) hereof may also be suspended by action of the Board of
Directors at any time that the Board of Directors determines
such suspension to be appropriate in order to comply with, or
satisfy the requirements of the Investment Company Act of
1940, as amended, and in effect from time to time, or any
rule, regulation or order issued thereunder relating to voting
by the holders of the B Class on any Distribution Plan with
respect to the Delaware Fund class, or the Dividend Growth
Fund class, and in effect from time to time, and in connection
with, or in lieu of, any such suspension, the Board of
Directors may provide holders of the B Class with alternative
conversion or exchange rights into other classes of stock of
the Corporation in a manner consistent with the law, rule,
regulation or order giving rise to the possible suspension of
the conversion right.
THIRD: The shares of the Delaware Fund B Class and the
Dividend Growth Fund B Class have been classified by the Board of Directors
pursuant to authority contained in the Articles of Incorporation of the
Corporation.
IN WITNESS WHEREOF, Delaware Group Delaware Fund, Inc. has
caused these Articles Supplementary to be signed in its name and on its behalf
this 2nd day of September, 1994.
<PAGE>
DELAWARE GROUP DELAWARE FUND, INC.
By:/s/George M. Chamberlain, Jr.
-----------------------------
George M. Chamberlain, Jr.
Senior Vice President
ATTEST:
/s/Eric E. Miller
- --------------------
Eric E. Miller
Assistant Secretary
THE UNDERSIGNED, Senior Vice President of DELAWARE GROUP
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.
ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
Delaware Group Delaware Fund, Inc., a Maryland corporation
having its principal office in Baltimore, Maryland (the "Corporation") and
registered under the Investment Company Act of 1940 as an open-end management
company, hereby certifies in accordance with Sections 2-208 and 2-208.1 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 One
Hundred Million (100,000,000) shares of common stock, with a par value of One
Dollar ($1.00) per share, having an aggregate par value of One Hundred Million
Dollars ($100,000,000), Sixty-Five Million Three Hundred Three Thousand One
Hundred (65,303,100) shares of which have been allocated to the Common Stock
series, Delaware Fund class and Twenty-Five Million (25,000,000) shares of which
have been allocated to the Common Stock series, Delaware Fund (Institutional)
class. The Board of Directors of the Corporation, at a meeting held on September
23, 1993 and in accordance with Section 2-105(c) of the Maryland General
Corporation Law, adopted a resolution increasing the aggregate number of shares
of common stock that the Corporation has authority to issue to Five Hundred
Million (500,000,000).
SECOND: The Board of Directors of the Corporation, at a
meeting held on September 23, 1993, adopted resolutions designating a second
series of common stock of the Corporation as the Dividend Growth Fund series,
designating two classes of the Dividend Growth Fund series as the Dividend
Growth Fund class and the Dividend Growth Fund (Institutional) class, and
classifying and allocating Fifty Million (50,000,000) shares of the authorized,
unissued and unallocated common stock of the Corporation, with a par value of
One Dollar ($1.00) per share and an aggregate par value of Fifty Million Dollars
($50,000,000), to the Dividend Growth Fund series, Dividend Growth Fund class,
and classifying and allocating Twenty-Five Million (25,000,000) shares of the
authorized, unissued and unallocated common stock of the Corporation, with a par
value of One Dollar ($1.00) per share and an aggregate par value of Twenty-Five
Million Dollars ($25,000,000), to the Dividend Growth Fund series, Dividend
Growth Fund (Institutional) class.
THIRD: The Board of Directors of the Corporation, at a meeting
held on September 23, 1993, adopted a resolution classifying and allocating
<PAGE>
Thirty-Four Million Six Hundred Ninety-Six Thousand Nine Hundred (34,696,900)
shares of the authorized, unissued and unallocated common stock of the
Corporation, with a par value of One Dollar ($1.00) per share and an aggregate
par value of Thirty-Four Million Six Hundred Ninety-Six Thousand Nine Hundred
Dollars ($34,696,900) to the Common Stock series, Delaware Fund class and
classifying and allocating Twenty-Five Million (25,000,000) shares of the
authorized, unissued and unallocated shares of common stock of the Corporation,
with a par value of One Dollar ($1.00) per share and an aggregate par value of
Twenty-Five Million Dollars ($25,000,000) to the Common Stock series, Delaware
Fund (Institutional) class, so that there now exists a total of One Hundred
Million (100,000,000) shares allocated to the Common Stock series, Delaware Fund
class and a total of Fifty Million (50,000,000) shares allocated to the Common
Stock series, Delaware Fund (Institutional) class.
FOURTH: (a) The total number of shares of common stock which
the Corporation was authorized to issue prior to the aforesaid actions was One
Hundred Million (100,000,000) shares, with a par value of One Dollar ($1.00) per
share and an aggregate par value of One Hundred Million Dollars ($100,000,000).
One series of shares was designated as the Common Stock series. One class of the
Common Stock series had been designated as the Delaware Fund class, and
Sixty-Five Million Three Hundred Three Thousand One Hundred (65,303,100) shares
had been allocated to the Delaware Fund class, with an aggregate par value of
Sixty-Five Million Three Hundred Three Thousand One Hundred Dollars
($65,303,100). A second class of the Common Stock series had been designated as
the Delaware Fund (Institutional) class, and Twenty-Five Million (25,000,000)
shares had been allocated to the Delaware Fund (Institutional) class, with an
aggregate par value of Twenty-Five Million Dollars ($25,000,000);
(b) The total number of shares of common stock which the
Corporation is authorized to issue following the aforesaid actions is Five
Hundred Million (500,000,000) shares, with a par value of One Dollar ($1.00) per
share and an aggregate par value of Five Hundred Million Dollars ($500,000,000).
One series of shares is designated as the Common Stock series and a second
series of shares is designated as the Dividend Growth Fund series. Two classes
of the Common Stock series have been designated as (i) the Delaware Fund class,
and One Hundred Million (100,000,000) shares of common stock (par value $1.00
per share) have been allocated to the Common Stock series, Delaware Fund class,
with an aggregate par value of One Hundred Million Dollars ($100,000,000), and
(ii) the Delaware Fund (Institutional) class, and Fifty Million (50,000,000)
shares of common stock (par value $1.00 per share) have been allocated to the
Common Stock series, Delaware Fund (Institutional) class, with an aggregate
<PAGE>
par value of Fifty Million Dollars ($50,000,000). Two classes of the Dividend
Growth Fund series have been designated as (i) the Dividend Growth Fund class,
and Fifty Million (50,000,000) shares of common stock (par value $1.00 per
share) have been classified and allocated to the Dividend Growth Fund series,
Dividend Growth Fund class, with an aggregate par value of Fifty Million Dollars
($50,000,000), and (ii) the Dividend Growth Fund (Institutional) class, and
Twenty-Five Million (25,000,000) shares of common stock (par value $1.00 per
share) have been classified and allocated to the Dividend Growth Fund series,
Dividend Growth Fund (Institutional) class, with an aggregate par value of
Twenty-Five Million Dollars ($25,000,000).
FIFTH: The shares of the Dividend Growth Fund series, Dividend
Growth Fund class and the Dividend Growth Fund series, Dividend Growth Fund
(Institutional) class shall represent proportionate interests in the same
portfolio of investments of the Dividend Growth Fund series. The shares of the
Dividend Growth Fund series, Dividend Growth Fund class and the Dividend Growth
Fund series, Dividend Growth Fund (Institutional) class of the of the
Corporation shall have the same rights and privileges, and shall be subject to
the same limitations and priorities, all as set forth in the Articles of
Incorporation of the Corporation, provided that dividends paid on the shares of
the Dividend Growth Fund (Institutional) class of shares shall not reflect any
reduction for payment of fees under the Distribution Plan of the Dividend Growth
Fund class adopted pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended, and provided further, that the shares of the Dividend Growth
Fund (Institutional) class shall not vote upon or with respect to any matter
relating to or arising from any such Distribution Plan.
SIXTH: Shares of the Common Stock series, Delaware Fund class
and Delaware Fund (Institutional) class and shares of the Dividend Growth Fund
series, Dividend Growth Fund class and Dividend Growth Fund (Institutional)
class have been classified by the Board of Directors pursuant to authority
contained in the Articles of Incorporation of the Corporation.
IN WITNESS WHEREOF, Delaware Group Delaware Fund, Inc. has
caused these Articles Supplementary to be signed in its name and on its behalf
this 18th day of November, 1993.
DELAWARE GROUP DELAWARE FUND, INC.
<PAGE>
By: /s/ George M. Chamberlain, Jr.
-----------------------------------
George M. Chamberlain, Jr.
Senior Vice President/Secretary
ATTEST:
/s/ Richelle S. Maestro
- ---------------------------
Richelle S. Maestro
Assistant Secretary
THE UNDERSIGNED, Vice President of DELAWARE GROUP DELAWARE
FUND, INC., who executed on behalf of said Corporation the foregoing Articles
Supplementary, of which this instrument is made a part, hereby acknowledges, in
the name and on behalf of said Corporation, said Articles Supplementary to be
the Corporate act of said Corporation, and further certifies that, to the best
of his knowledge, information and belief, the matters and facts set forth
therein with respect to approval thereof are true in all material respects,
under the penalties of perjury.
/s/ George M. Chamberlain, Jr.
- ---------------------------------
George M. Chamberlain, Jr.
Dated: November 18, 1993
<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 Board of Directors of the Corporation at a meeting
duly convened and held on January 16, 1992, adopted a resolution designating the
Delaware Fund (Institutional) class of shares (as distinguished from the
existing Delaware Fund class of shares) as the second class of the Common Stock
series of the Corporation and allocating Twenty-Five Million (25,000,000) and
Forty Million (40,000,000) shares of authorized and unissued shares of the
Common Stock series, with a par value of One Dollar ($1.00) per share, to the
Delaware Fund (Institutional) class and Delaware Fund class, respectively.
SECOND: The shares of the Delaware Fund (Institutional) class
and the Delaware Fund class shall represent proportionate interests in the same
portfolio of investments of the Common Stock series. The shares of the Delaware
Fund (Institutional) class of the existing series of the Corporation shall have
the same rights and privileges, and shall be subject to the same limitations and
priorities as the shares of the Delaware Fund class of the existing series, all
as set forth in the Articles of Incorporation of the Corporation, provided that
dividends paid on the shares of the Delaware Fund (Institutional) class of
shares shall not reflect any reduction for payment of fees under the
Distribution Plan of the Delaware Fund class adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended, and provided further, that
the shares of the Delaware Fund (Institutional) class shall not vote upon or
with respect to any matter relating to or arising from any such Distribution
Plan.
THIRD: The shares of each such class of the Corporation have
been classified by the Board of Directors pursuant to authority contained in the
Articles of Incorporation of the Corporation.
IN WITNESS WHEREOF, Delaware Group Delaware Fund, Inc. has
caused these Articles Supplementary to be signed in its name and on its behalf
this 22nd day of May, 1992.
<PAGE>
DELAWARE GROUP DELAWARE FUND, INC.
By: /s/ George M. Chamberlain, Jr.
--------------------------------
George M. Chamberlain, Jr.
Vice President
ATTEST:
/s/Eric E. Miller
- ----------------------
Eric E. Miller
Assistant Secretary
THE UNDERSIGNED, Vice President of DELAWARE GROUP DELAWARE
FUND, INC., who executed on behalf of said Corporation the foregoing Articles
Supplementary, of which this instrument is made a part, hereby acknowledges, in
the name of and on behalf of said Corporation, said Articles Supplementary to be
the corporate act of said Corporation and further certifies that, to the best of
his knowledge, information and belief, the matters and facts set forth therein
with respect to the approval thereof are true in all material respects, under
the penalties of perjury.
/s/ George M. Chamberlain, Jr.
-----------------------------------
George M. Chamberlain, Jr.
<PAGE>
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
DELAWARE FUND, INC.
DELAWARE FUND, INC., a Maryland corporation having its
principal office in Baltimore City, Maryland (the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of Maryland, that:
ONE: ARTICLE SECOND of the Articles of Incorporation is hereby
amended in its entirety to read as follows:
SECOND: The name of the corporation is Delaware Group Delaware
Fund, Inc.
The Corporation expressly agrees
and acknowledges that the name "Delaware Group" is the sole
property of Delaware Management Company, Inc. ("DMC"), that
similar names are used by affiliated funds in the investment
business with the permission of DMC, and that the
Corporation's use of such name is with the permission of DMC.
The Corporation further expressly agrees and acknowledges that
its use of "Delaware Group" in its name may be terminated by
DMC if the Corporation ceases to use Delaware Management
Company, Inc. as its investment adviser or Delaware
Distributors, Inc. ("DDI") as its principal underwriter (or to
use affiliates of DMC and DDI for such purposes). The
Corporation further expressly agrees and acknowledges that in
such event DMC may require the Corporation to present to its
shareholders, at the next annual or special meeting of the
Corporation held after such request, a proposal to change the
name of the Corporation to delete reference to the name
"Delaware Group." The Corporation further expressly agrees and
acknowledges in such event to use its best efforts to promptly
comply with such request to change its name and that the Board
of Directors of the Corporation shall recommend such a
proposal to its shareholders. The Corporation further
expressly acknowledges and agrees, upon shareholder approval
of such a proposal, to make and cause to be made such filings
to effect the change of name as may be necessary with the
State of Maryland, the United States Securities and Exchange
Commission, or other regulatory authorities.
TWO: Pursuant to Section 2-604(b) of the Maryland General
Corporation Law, the board of directors of the Corporation on April 7, 1988 duly
adopted a resolution setting forth the foregoing amendment to the Articles of
<PAGE>
Incorporation, declaring said amendment to the Articles of Incorporation
advisable and directing that it be submitted for consideration by the
shareholders of the Corporation at the annual meeting to be held on June 14,
1988.
THIRD: Notice setting forth said amendment to the Articles of
Incorporation and stating that a purpose of the meeting of the shareholders
would be to take action thereon was given, as required by law, to all
shareholders entitled to vote thereon. The amendment to the Articles of
Incorporation was approved by the stockholders of the Corporation at said
meeting by the affirmative vote of a majority of all the votes entitled to be
cast thereon. (Approval by a majority of all of the votes entitled to be cast on
the matter is authorized pursuant to the Articles of Incorporation of the
Corporation.)
FOURTH: The amendment to the Articles of Incorporation as
hereinabove set forth has been duly advised by the board of directors and
approved by the shareholders of the Corporation.
FIFTH: The amendment to the Articles of Incorporation set
forth shall be duly filed with Maryland Department of Assessments and Taxation
on June 15, 1988, the effective time being 5:00 p.m. on that date.
IN WITNESS WHEREOF, Delaware Fund, Inc. has caused these
Articles of Amendment to be signed by its President and attested by its
Secretary on June 14, 1988.
DELAWARE FUND, INC.
By: /s/ John H. Durham
-----------------------
John H. Durham
President
Attest:
/s/ George M. Chamberlain, Jr.
- ---------------------------------
George M. Chamberlain, Jr.
Secretary
THE UNDERSIGNED, President of Delaware Fund, Inc., who
executed on behalf of said Corporation the foregoing Articles of Amendment, of
which this certificate is made a part, hereby acknowledges, in the name and on
behalf of said Corporation, the foregoing Articles of Amendment to be the
<PAGE>
corporate act of said Corporation and further certifies that, to the best of his
knowledge, information and belief, the matters and facts set forth therein with
respect to the approval thereof are true in all material respects, under the
penalties of perjury.
/s/ John H. Durham
-------------------------
John H. Durham
President
<PAGE>
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
DELAWARE FUND, INC.
DELAWARE FUND, INC., a Maryland corporation having its
principal office in Baltimore City, Maryland (the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of Maryland, that:
ONE: ARTICLE ELEVENTH of the Articles of Incorporation is
hereby amended in its entirety to read as follows:
ELEVENTH: Subject to the Investment
Company Act of 1940, as amended, each of the following
actions, to the extent required to be approved by the
shareholders under the Maryland General Corporation Law, shall
be approved by a majority of all votes entitled to be cast on
the matter:
(i) Amendment or amendment and
restatement of the Articles;
(ii) Reduction of stated capital;
(iii) Consolidation, merger, share
exchange or transfer of assets;
(iv) Distribution in partial
liquidation; or
(v) Voluntary dissolution.
TWO: The board of directors of the Corporation on February 21,
1985 duly adopted a resolution setting forth the foregoing amendment of the
Articles of Incorporation, declaring said amendment of the Articles of
Incorporation advisable and directing that it be submitted for consideration by
the stockholders of the Corporation at the annual meeting to be held on April
16, 1985.
THIRD: Notice setting forth said amendment to the Articles of
Incorporation and stating that a purpose of the meeting of the stockholders
would be to take action thereon, was given, as required by law, to all
stockholders entitled to vote thereon. The amendment to the Articles of
Incorporation was approved by the stockholders of the Corporation at said
meeting by the affirmative vote of a majority of all the votes entitled to be
cast thereon. (Approval by a majority of all of the votes entitled to be
<PAGE>
cast on the matter is authorized pursuant to the Articles of Incorporation of
the Corporation.)
FOURTH: The Amendment to the Articles of Incorporation as
hereinabove set forth has been duly advised by the board of directors and
approved by the stockholders of the Corporation.
IN WITNESS WHEREOF, Delaware Fund, Inc. has caused these
Articles of Amendment to be signed by its President or Vice President and
attested by its Secretary or Assistant Secretary on April 26, 1985.
Attest: DELAWARE FUND, INC.
/s/ Donald M. Allen By: William P. Brady
- ---------------------- -------------------------
Donald M. Allen William P. Brady
Secretary Executive Vice President
THE UNDERSIGNED, Executive Vice President of DELAWARE FUND,
INC., who executed on behalf of said corporation the foregoing Articles of
Amendment, of which this certificate is made a part, hereby acknowledges, in the
name and on behalf of said corporation, the foregoing Articles of Amendment to
be the corporate act of said corporation and further certifies that, to the best
of his knowledge, information and belief, the matters and facts set forth
therein with respect to the approval thereof are true in all material respects,
under the penalties of perjury.
/s/ William P. Brady
---------------------------
William P. Brady
<PAGE>
AGREEMENT AND ARTICLES OF MERGER
AGREEMENT AND ARTICLES OF MERGER, dated as of the 4th day of
March, 1983 (hereinafter referred to as the "Agreement"), by and between
DELAWARE FUND, INC., a Maryland Corporation (hereinafter referred to as
"Maryland Corporation" or the "Surviving Corporation"), and DELAWARE FUND, INC.,
a Delaware Corporation (hereinafter referred to as "Delaware Corporation"), said
corporations being hereinafter sometimes collectively referred to as the
"Constituent Corporations."
BACKGROUND
Maryland Corporation is a corporation duly organized and
existing under the laws of the State of Maryland, having been incorporated on
March 4, 1983 under the General Corporation Law of the State of Maryland, and
has authorized capital stock consisting of 100,000,000 common shares, par value
$1.00 per share, with an aggregate par value of $100,000,000.
Delaware Corporation is a corporation duly organized and
existing under the laws of the State of Delaware, having been incorporated on
December 30, 1937 under the General Corporation Law of the State of Delaware,
and has authorized capital stock consisting of 100,000,000 shares of common
stock, par value $1.00 per share, with an aggregate par value of $100,000,000.
The principal office of Maryland Corporation in the State of
Maryland is located in Baltimore City. Delaware Corporation has no principal
office in the State of Maryland and is not registered or qualified to do
business in the State of Maryland. Delaware Corporation does not possess any
interest in real property situated in the State of Maryland, the title to which
could be affected by recording an instrument in the Maryland land records.
The Boards of Directors of each of the Constituent
Corporations have adopted this Agreement as a Plan of Reorganization intended to
qualify as such under the provisions of Section 368(a)(1)(F) of the Internal
Revenue Code of 1954, as amended.
The Board of Directors of Maryland Corporation and the Board
of Directors of Delaware Corporation have, by resolutions duly adopted, approved
this Agreement and the merger of the Delaware Corporation into Maryland
Corporation as being advisable and in the best interests of their respective
corporations and stockholders, and have directed the submission of this
Agreement to their respective stockholders.
<PAGE>
NOW THEREFORE, in consideration of the premises and the mutual
covenants and conditions hereinafter contained, and intending to be legally
bound, the parties hereto agree as follows:
ARTICLE I
1.1 Delaware Corporation and Maryland Corporation agree that
Delaware Corporation shall be merged into Maryland Corporation (hereinafter the
"Merger"). Maryland Corporation shall be the Surviving Corporation and shall be
governed by the laws of the State of Maryland. The terms and conditions of the
Merger and the mode of carrying the same into effect are as herein set forth in
this Agreement.
1.2 The Articles of Incorporation of Maryland Corporation as
they shall exist on the Effective Date of the Merger (as hereinafter defined)
shall constitute the Articles of Incorporation of the Surviving Corporation.
1.3 The By-laws of Maryland Corporation as they exist on the
Effective Date of the Merger shall constitute the By-laws of the Surviving
Corporation.
1.4 The Directors of Delaware Corporation on the Effective
Date of the Merger shall constitute the Board of Directors of the Surviving
Corporation and shall hold office until their terms expire at the annual meeting
of stockholders of the Surviving Corporation in 1984, and until their successors
are elected and shall qualify.
1.5 Arthur Young & Company shall continue as auditors to
report upon the financial condition of the Surviving Corporation for the fiscal
year ending October 31, 1983 provided the appointment of Arthur Young & Company
for the Delaware Corporation is approved by the stockholders of Delaware
Corporation.
ARTICLE II
2.1 The manner and basis of converting the issued and
outstanding shares of the common stock of Delaware Corporation into the shares
of common stock of the Maryland Corporation shall be as follows:
Each share or fraction thereof of common stock of
Delaware Corporation issued and outstanding on the
Effective Date of the Merger (excluding any Treasury
shares of Delaware Corporation which shares shall cease
to exist) shall thereupon be converted into an equal
<PAGE>
number of whole and fractional shares of common stock
of Maryland Corporation and each certificate
representing shares of Delaware Corporation shall
represent the same number of shares of Maryland
Corporation. Each holder of a Delaware Corporation
stock certificate representing shares of Maryland
Corporation shall at any time thereafter have the right
to surrender the same to Maryland Corporation and to
receive in exchange a certificate representing equal
number of shares of common stock of Maryland
Corporation.
2.2 Each of the shares of Maryland Corporation common stock
outstanding on the Effective Date of the Merger shall be retired and restored to
the status of authorized but unissued.
ARTICLE III
3.1 The Merger shall become effective when, subject to the
terms and conditions hereof, the following actions shall have in all respects
been completed:
(i) this Agreement shall have been adopted by the stockholders
of Maryland Corporation and Delaware Corporation in accordance
with the requirements of the laws of the States of Maryland
and Delaware, respectively, which adoption shall have been
certified hereon by the Secretary or an Assistant Secretary of
Delaware Corporation, and
(ii) this Agreement, certified as aforesaid, shall have been
executed, acknowledged and filed in accordance with the
requirements of the laws of the States of Maryland and
Delaware.
The date and time when the Merger shall become effective as
aforesaid is herein referred to as the "Effective Date of the Merger." As soon
as practicable after the Effective Date of the Merger, the Surviving Corporation
shall, pursuant to Section 103(c)(5) of the General Corporation Law of the State
of Delaware, cause a copy of this Agreement, certified by the Secretary of State
of the State of Delaware, to be recorded in the Office of the Recorder of the
County of New Castle, Delaware.
<PAGE>
3.2 On the Effective Date of the Merger, the separate
existence of Delaware Corporation shall cease, except to the extent, if any,
continued by statute. All the assets, rights, privileges, powers and franchises
of Delaware Corporation and all debts due on whatever account to it, shall be
taken and deemed to be transferred to and vested in the Surviving Corporation
without further act or deed; and all such assets, rights, privileges, powers and
franchises, and all and every other interest of Delaware Corporation shall be
thereafter as effectually the property of the Surviving Corporation as they were
of Delaware Corporation; and the title to and interest in any real estate vested
by deed, lease or otherwise, unto either of the Constituent Corporations, shall
not revert or be in any way impaired. The Surviving Corporation shall be
responsible for all the liabilities and obligations of Delaware Corporation, but
the liabilities of the Constituent Corporations or of their stockholders,
directors, or officers shall not be affected by the Merger, nor shall the right
of the creditors thereof or any persons dealing with such corporations, or any
liens upon the property of such corporations, be impaired by the Merger, and any
claim existing or action or proceeding pending by or against either of such
corporations may be prosecuted to judgment as if the Merger had not taken place,
or the Surviving Corporation may be proceeded against or substituted in place of
Delaware Corporation. Except as otherwise specifically set forth in this
Agreement, the identity, existence, purposes, powers, franchise, rights,
immunities and liabilities of Maryland Corporation shall continue unaffected and
unimpaired by the Merger.
3.3 All corporate acts, plans, policies, resolutions,
approvals, and authorizations of the stockholders, Board of Directors,
committees of the Board of Directors and agents of Delaware Corporation, which
were effective immediately prior to the Effective Date of the Merger shall be
taken for all purposes as the acts, plans, policies, resolutions, approvals and
authorizations of the Surviving Corporation and shall be as effective and
binding thereon as the same were with respect to Delaware Corporation.
3.4 Prior to the Effective Date of the Merger the Constituent
Corporations shall take such action as shall be necessary or appropriate in
order to effect the Merger. In case at any time after the Effective Date of the
Merger the Surviving Corporation shall determine that any further conveyance,
assignment or other documents or any further action is necessary or desirable to
vest in or confirm to the Surviving Corporation full title to all the
properties, assets, rights, privileges, and franchises of the Constituent
Corporations, the officers and directors of the Constituent Corporations, at the
expense of the Surviving Corporation, shall execute and deliver all such
instruments and take all such action as the Surviving Corporation may
<PAGE>
determine to be necessary or desirable in order to vest in and confirm to the
Surviving Corporation title to and possession of all such cash and securities
and other properties, assets, rights, privileges and franchises, and otherwise
to carry out the purpose of this Agreement.
3.5 The Surviving Corporation hereby (1) agrees that it may be
served with process in the State of Delaware in any proceeding for the
enforcement of any obligation of Delaware Corporation as well as for the
enforcement of any obligation of the Surviving Corporation arising from the
Merger, including any suit or other proceeding to enforce the right of any
stockholder as determined in appraisal proceedings pursuant to the provisions of
Section 262 of the General Corporation Law of the State of Delaware, (2)
irrevocably appoints the Secretary of State of the State of Delaware as its
agent to accept service of process in any such suit or other proceedings, and
(3) specifies the following as the address to which a copy of such process shall
be mailed by the Secretary of State of the State of Delaware: Donald M. Allen,
Corporate Vice President and Secretary, Delaware Fund, Inc., Ten Penn Center
Plaza, Philadelphia, PA 19103.
ARTICLE IV
4.1 Each of the Constituent Corporations represents and
warrants to the other that:
(a) Such corporation is duly organized and existing in good
standing under the laws of its jurisdiction of incorporation.
(b) It has full power and authority to carry on its business
as it is presently being conducted and to enter into the Merger.
(c) There is no suit, action or legal or administrative
proceeding pending, or to its knowledge threatened, against it which, if
adversely determined, might materially and adversely affect its financial
condition or the conduct of its business.
(d) At the Effective Date of the Merger, consummation of the
transactions contemplated hereby will not result in the breach of or constitute
a default under any agreement or instrument by which it is bound.
(e) All of its presently outstanding shares are validly
issued, fully paid and non-assessable.
(f) Immediately prior to the Effective Date of the Merger such
corporation will have valid and unencumbered title to its cash, securities, and
other assets, if any.
<PAGE>
ARTICLE V
5.1 The obligations of each of the Constituent Corporations to
consummate the Merger shall be subject to the following conditions:
(a) The representations and warranties of the other
corporation contained herein shall be true as of and at the Effective Date of
the Merger with the same effect as though made at such date and such other
Constituent Corporation shall have performed all obligations required by this
Agreement to be performed by it prior to the Effective Date;
(b) Such authority and orders from the Securities and Exchange
Commission (the "Commission") and state securities commissions as may be
necessary to permit the parties to carry out the transactions contemplated by
this Agreement shall have been received;
(c) One or more post-effective amendments to the Delaware
Corporation's Registration Statement on Form N-1 under the Securities Act of
1933 and the Investment Company Act of 1940, containing (i) such amendments to
such Registration Statement as are determined by the Maryland Corporation to be
necessary and appropriate as a result of the Merger, and (ii) the adoption by
the Maryland Corporation as its own of such Registration Statement, as so
amended, shall have been filed with the Commission, and such post-effective
amendment or amendments to the Registration Statement shall have become
effective, and no stop-order suspending the effectiveness of the Registration
Statement shall have been issued, and no proceeding for that purpose shall have
been initiated or threatened by the Commission (other than any such stop-order,
proceeding or threatened proceeding which shall have been withdrawn or
terminated);
(d) Confirmation shall have been received from the Commission
or the staff thereof that the Maryland Corporation shall, effective upon or
before the Effective Date of the Merger, be duly registered as a diversified,
open-end management investment company under the Investment Company Act of 1940,
as amended;
(e) Each party shall have received an opinion of Stradley,
Ronon, Stevens & Young, Philadelphia, Pennsylvania, to the effect that the
Merger contemplated by this Agreement qualifies as a "reorganization" under
Section 368(a)(1)(F) of the Internal Revenue Code of 1954, as amended, and as
such no gain or loss will be recognized by either Constituent Corporation or to
the stockholders thereof;
<PAGE>
(f) Each party shall have received an opinion from Stradley,
Ronon, Stevens & Young in form and substance satisfactory to it, relating to its
authority to engage in the transactions contemplated hereby and to the effect
(i) that this Agreement has been duly authorized, executed and delivered by the
Constituent Corporations and constitutes a legal, valid and binding agreement of
each such party in accordance with its terms; (ii) the shares of common stock of
the Maryland Corporation to be issued pursuant to the terms of this Agreement,
have been duly authorized and, when issued and delivered as provided in this
Agreement, will have been validly issued and fully paid and will be
nonassessable; (iii) the Maryland Corporation is duly organized and validly
existing under the laws of the State of Maryland.
(g) The shares of common stock of the Maryland Corporation
shall have been duly qualified for offering to the public in those states of the
United States and jurisdictions in which they are presently qualified, so as to
permit the transfers contemplated by this Agreement to be consummated;
(h) The holders of at least a majority of the outstanding
shares of common stock of Delaware Corporation and of Maryland Corporation shall
have each voted in favor of the adoption of this Agreement and the Merger at an
annual or special meeting or any adjournment thereof.
ARTICLE VI
Each of the Constituent Corporations agree that each shall
bear such expenses as have been incurred by it in connection with the Merger.
ARTICLE VII
7.1 Anything contained in this Agreement to the contrary
notwithstanding, this Agreement may be terminated and the Merger abandoned at
any time (whether before or after adoption hereof by the stockholders of the
Constituent Corporations) prior to the Effective Date of the Merger:
(a) by mutual consent of the Constituent Corporations; or
(b) by either of the Constituent Corporations if any condition
set forth in Article V hereof has not been fulfilled or waived by it.
7.2 An election by a Constituent Corporation to terminate this
Agreement and abandon the Merger shall be exercised by its Board of Directors.
<PAGE>
7.3 At any time prior to the filing of this Agreement, any of
the terms or conditions of this Agreement may be waived by the Constituent
Corporation entitled to the benefit thereof by action taken by its Board of
Directors or its President if, in the judgment of the Board of Directors or
President taking such action, such waiver will not have a material adverse
effect on the benefits intended under this Agreement to the stockholders of the
Constituent Corporation on behalf of which such action is taken.
ARTICLE VIII
The respective representations and warranties of the
Constituent Corporations contained in Article IV hereof shall expire with, and
be terminated by, the Merger and neither the respective Constituent Corporations
nor any of their directors or officers shall be under any liability with respect
to any such representations or warranties after the Effective Date of the
Merger. This provision shall not protect any director or officer of either of
the Constituent Corporations against any liability to such corporation or to its
stockholders to which he would otherwise be subject.
ARTICLE IX
9.1 This Agreement constitutes the entire agreement between
the parties and there are no agreements, understandings, restrictions or
warranties between the parties other than those set forth herein or herein
provided for.
9.2 This Agreement may be executed in any number of
counterparts each of which shall be deemed to be an original but all of such
counterparts together shall constitute but one instrument.
IN WITNESS WHEREOF, each of the Constituent Corporations has
caused this Agreement and Articles of Merger to be executed on its behalf by its
President and its corporate seal to be affixed thereto and attested by its
Secretary all as of the day and year first above written.
Attest: DELAWARE FUND, INC.,
a Maryland Corporation
/s/ Donald M. Allen By: /s/ John H. Durham
- --------------------- -----------------------
Donald M. Allen John H. Durham
Secretary President
DELAWARE FUND, INC.,
Attest: a Delaware Corporation
/s/Donald M. Allen By: /s/ John H. Durham
- -------------------- -----------------------
Donald M. Allen John H. Durham
Secretary President
<PAGE>
CERTIFICATION OF ADOPTION
OF
AGREEMENT AND ARTICLES OF MERGER
The undersigned hereby certify that the terms and conditions
of the merger as set forth in the foregoing Agreement and Articles of Merger
were advised, authorized and approved by each of the constituent corporations in
the manner and by the vote required by its charter and the laws of the state
where it is organized, to wit, by the Board of Directors and stockholders of
Delaware Corporation and Maryland Corporation.
DELAWARE FUND, INC.,
Attest: a Maryland Corporation
/s/ Donald M. Allen By: /s/ John H. Durham
- --------------------- ---------------------
Donald M. Allen John H. Durham
Secretary President
DELAWARE FUND, INC.,
Attest: a Delaware Corporation
/s/ Donald M. Allen By: /s/ John H. Durham
- --------------------- ----------------------
Donald M. Allen John H. Durham
Secretary President
THE UNDERSIGNED, President of DELAWARE FUND, INC., a Maryland
corporation, who executed on behalf of said corporation the foregoing Agreement
and Articles of Merger and the Certification of Adoption of Agreement and
Articles of Merger, hereby acknowledges, in the name and on behalf of said
corporation, the foregoing Agreement and Articles of Merger and Certificate of
Adoption of Agreement and Articles of Merger to be the corporate act of said
corporation and further certifies that, to the best of his knowledge,
information and belief, the matters and facts set forth therein are true in all
material respects, under the penalties of perjury.
/s/ John H. Durham
-------------------
John H. Durham
<PAGE>
THE UNDERSIGNED, President of DELAWARE FUND, INC., a
Delaware corporation, who executed on behalf of said corporation the foregoing
Agreement and Articles of Merger and the Certification of Adoption of Agreement
and Articles of Merger, hereby acknowledges, in the name and on behalf of said
corporation, the foregoing Agreement and Articles of Merger and Certificate of
Adoption of Agreement and Articles of Merger to be the corporate act of said
corporation and further certifies that, to the best of his knowledge,
information and belief, the matters and facts set forth therein with respect to
the approval thereof are true in all material respects, under the penalties of
perjury.
/s/ John H. Durham
-------------------
John H. Durham
I, DONALD M. ALLEN, Secretary of DELAWARE FUND, INC., a
Delaware corporation, hereby certify that a majority of the outstanding shares
of capital stock of said corporation entitled to vote hereon voted for the
adoption of this Agreement and Articles of Merger.
/s/ Donald M. Allen
---------------------
Donald M. Allen
<PAGE>
ARTICLES OF INCORPORATION
OF
DELAWARE FUND, INC.
FIRST: The undersigned, George M. Chamberlain, Jr. whose post
office address is Ten Penn Center Plaza, Philadelphia, Pennsylvania 19103, and
being at least eighteen years of age, does hereby cause to be filed these
Articles of Incorporation for the purpose of forming a corporation under the
General Corporation Law of the State of Maryland.
SECOND: The name of the corporation is Delaware Fund, Inc.
THIRD: The nature of the business, objects and purposes
proposed to be transacted, promoted and carried on by the corporation is to do
any and all of the things herein set forth, as fully and to the same extent as
natural persons might or could do, and in any part of the world, viz:
1. To purchase, become interested in, receive, own, hold,
invest and reinvest in, sell, negotiate, exchange, transfer, assign, mortgage,
pledge, turn to account, realize upon, and otherwise acquire and dispose of
securities of every kind, character and description, issued or created by, or
secured upon the property, income or revenues of individuals, associations,
public and private corporations, the United States of America, its agencies and
instrumentalities, or any territory, state, county, city, town, district or
other political sub-division, or any foreign government or any political
sub-division thereof; and to acquire or become interested in any such securities
by original subscription, underwriting, participation in syndicates, purchase,
exchange, or otherwise. The term "securities," whenever used herein, shall,
consistent with the context, and without limiting the generality of the
foregoing, include shares of stock (preferred, common and debenture), scrip,
purchase or subscription warrants or other rights, voting trust certificates,
certificates of interest or participation in any profit sharing agreement,
pre-organization certificates or subscriptions, fractional or undivided
interests in oil, gas or other mineral rights, investment contracts, evidences
of interest, ownership, or indebtedness, call or time loans, notes, acceptances,
bills of exchange, commercial paper, choses in action, bonds, debentures,
mortgages, collateral trust certificates, and in general any interests or
instruments commonly known as securities, or any certificate of interest or
participation in, any temporary or interim certificate for, or receipt for, any
of the foregoing, and any securities, negotiable or non-negotiable, secured or
unsecured, and however described.
<PAGE>
2. To exercise all rights, powers and privileges with
reference to or incident to ownership, use and enjoyment of any of such
securities, including, but without limitation, the right, power and privilege to
own, vote, hold, purchase, sell, negotiate, assign, exchange, transfer,
mortgage, pledge or otherwise deal with, dispose of, use, exercise or enjoy any
rights, title, interest, powers or privileges under or with reference to any of
such securities; and to do any and all acts and things for the preservation,
protection, improvement and enhancement in value of any such securities, or
designed to accomplish any such purpose.
3. To purchase or otherwise acquire, own, hold, sell,
exchange, assign, transfer, mortgage, pledge or otherwise dispose of, property
of all kinds, including, but without limitation, specie, money, and foreign
exchange, to the extent permitted by law except that the corporation shall not
purchase, own, or sell commodities or future contracts for delivery of
commodities.
4. To buy, sell, mortgage, encumber, hold, own, exchange, rent
or otherwise acquire and dispose of, and to develop, improve, manage, subdivide,
and generally to deal and trade in real property, improved and unimproved, and
wheresoever situate; and to build, erect, construct, alter and maintain
buildings, structures, and other improvements on real property.
5. To borrow or raise moneys for any of the purposes of the
corporation, and from time to time, without limit as to amount, to draw, make,
accept, endorse, execute and issue bonds, debentures, notes, drafts,
acceptances, bills of exchange, warrants and other negotiable or non-negotiable
instruments and evidences of indebtedness and other securities; and to secure
the payment thereof and of the interest thereon by mortgage upon or pledge of,
or by conveyance or assignment in trust of, the whole or any part of the
property and franchises of the corporation, real, personal, and mixed, tangible
or intangible, and wheresoever situate, whether at the time owned or thereafter
acquired, and to issue, sell, negotiate, pledge, or otherwise dispose of such
bonds or other obligations of the corporation for its corporate purposes.
6. To acquire all or any part of the good will, rights,
property, and business of any individual, association or corporation; to pay for
the same in cash or in shares of stock, bonds, notes or other obligations of the
corporation, or otherwise. To hold, utilize, operate, reorganize, liquidate, and
in any manner dispose of the whole or any part of the good will, rights,
property and business so acquired; to assume in connection therewith the whole
or any part of the liabilities and obligations of any such person,
<PAGE>
association or corporation; and to conduct in any lawful manner the whole or any
part of the business thus acquired.
7. To enter into, make, perform and carry out contracts and
undertakings of every kind for any lawful purpose, without limit as to amount,
with any individual, association or corporation.
8. To purchase, sell and transfer, reacquire, hold, trade and
deal in, the bonds, debentures and other securities of the corporation, from
time to time, to such extent and in such manner and upon such terms as the Board
of Directors shall, consistent with the provisions of these Articles of
Incorporation, determine; and to purchase and re-acquire, from time to time, the
shares of its own capital stock; provided, however, that the corporation shall
not have power to trade or deal in the shares of its own Common Stock.
9. To conduct its business and maintain offices both within
and without the State of Maryland, and in all other states and territories and
the District of Columbia, in all dependencies, colonies or possessions of the
United States and any foreign countries and places, and to purchase or otherwise
acquire, hold, possess, convey, transfer or otherwise dispose of real and
personal property in all thereof to the extent that the same may be permissible
under their respective laws.
10. To carry out all or any part of the foregoing objects and
purposes, and to exercise any and all of the foregoing rights and powers, and to
do any and all of the foregoing acts and things, as principal, factor, agent,
contractor or otherwise, either alone or through or in conjunction with, or
jointly with, any individual, association or corporation.
11. In general to carry on any other business in connection
with the foregoing, and to have and exercise all the powers conferred by the
laws of the State of Maryland upon corporations formed under the General
Corporation Law thereof.
The foregoing clauses shall each be construed as purposes,
objects and powers, and it is hereby expressly provided that the foregoing
enumeration of specific purposes, objects and powers shall not be held to limit
or restrict in any manner the powers of the corporation, and that they are in
furtherance of, and in addition to, and not in limitation of, the general powers
conferred upon the corporation by the laws of the State of Maryland or
otherwise; nor shall the enumeration of one thing be deemed to exclude another,
although it be of like nature, not expressed.
<PAGE>
It is the intention that the purposes, objects and powers
specified in this Article Third, and all subdivisions thereof, shall, except as
otherwise expressly provided, in no wise be limited or restricted by reference
to or inference from the terms of any other clause or subdivision of this
Article Third, and that each of the purposes, objects and powers specified in
this Article Third shall be regarded as independent purposes, objects and
powers.
FOURTH: The post office address of the principal office of the
corporation in the State of Maryland is:
c/o The Corporation Trust, Incorporated
32 South Street
Baltimore, Maryland 21202
The name and post office address of the initial resident agent
of the corporation in the State of Maryland is:
The Corporation Trust, Incorporated
32 South Street
Baltimore, Maryland 21202
FIFTH: The total number of shares of stock which the
Corporation shall have authority to issue is One Hundred Million (100,000,000)
shares of stock, with a par value of One Dollar ($1.00) per share, to be known
and designated as Common Stock, such shares of Common Stock having an aggregate
par value of One Million Dollars ($1,000,000).
The Board of Directors of the corporation shall have the power
to issue shares in one or more series which together with the issued shares of
stock of the corporation shall have such designations as the Board may determine
and (subject to any applicable rule, regulation or order of the Securities and
Exchange Commission or other applicable law or regulation) shall have such
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, terms and conditions of redemption
and other characteristics as the Board may determine (or in the absence of
contrary determination, such as set forth herein). At any time when there are no
shares outstanding or subscribed for a particular series previously established
and designated by the Board of Directors, the series may be liquidated by
similar means. If the Board so determines, one or more series of stock may be
treated for all purposes other than dividends as if all shares of such series
were shares of one series. The dividends payable to the holders of any series
(subject to any applicable rule, regulation or order of the Securities and
Exchange Commission or any other applicable law or regulation) shall be
determined by the Board and need not be individually declared, but may be
<PAGE>
declared and paid in accordance with a formula adopted by the Board. Except as
otherwise provided herein, all references in these Articles of Incorporation to
Common Stock or series of stock shall apply without discrimination to the shares
of each series of stock.
The holders of each share of stock of the corporation shall be
entitled to one vote for each full share, and a fractional vote for each
fractional share of stock, irrespective of the series then standing in his or
her name in the books of the corporation. On any matter submitted to a vote of
shareholders, all shares of the corporation then issued and outstanding and
entitled to vote, irrespective of the series, shall be voted in the aggregate
and not by series except (1) when otherwise expressly provided by the Maryland
General Corporation Law, or (2) when required by the Investment Company Act of
1940, as amended, shares shall be voted by individual series; and (3) when the
matter does not affect any interest of a particular series, then only
shareholders of the affected series shall be entitled to vote thereon.
Each series of stock of the corporation shall have the
following powers, preferences and participating, voting, or other special rights
and the qualifications, restrictions, and limitations thereof shall be as
follows:
1. All consideration received by the corporation for the issue
or sale of stock of each series, together with all income, earnings, profits,
and proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation thereof, and any funds or payments derived from any reinvestment of
such proceeds in whatever form the same may be, shall irrevocably belong to the
series of shares of stock with respect to which such assets, payments or funds
were received by the corporation for all purposes, subject only to the rights of
creditors, and shall be so handled upon the books of account of the corporation.
Such assets, income, earnings, profits and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation thereof and any assets
derived from any reinvestment of such proceeds, in whatever form the same may
be, are herein referred to as "assets belonging to" such series.
2. The Board of Directors may from time to time declare and
pay dividends or distributions, in stock or in cash, on any or all series of
stock; provided, such dividends or distributions on shares of any series of
stock shall be paid only out of earnings, surplus, or other lawfully available
assets belonging to such series.
3. The Board of Directors shall have the power in its
discretion to distribute in any fiscal year as dividends, including dividends
<PAGE>
designated in whole or in part as capital gain distributions, amounts
sufficient, in the opinion of the Board of Directors, to enable the corporation
to qualify as a "regulated investment company" under the Internal Revenue Code
of 1954, as amended, or any successor or comparable statute thereto, and
regulations promulgated thereunder, and to avoid liability for the corporation
for Federal income tax in respect of that year and to make other appropriate
adjustments in connection therewith.
4. In the event of the liquidation of dissolution of the
corporation, shareholders of each series shall be entitled to receive, as a
series, out of the assets of the corporation available for distribution to
shareholders, but other than general assets not belonging to any particular
series of stock, the assets belonging to such series, and the assets so
distributable to the shareholders of any series shall be distributed among such
shareholders in proportion to the number of shares of such series held by them
and recorded on the books of the corporation. In the event that there are any
general assets not belonging to any particular series of stock and available for
distribution, such distribution shall be made to the holders of stock of all
series in proportion to the net asset value of the respective series determined
as hereinafter provided.
5. The assets belonging to any series of stock shall be
charged with the liabilities in respect to such series, and shall also be
charged with its share of the general liabilities of the corporation, in
proportion to the asset value of the respective series determined as hereinafter
provided. The determination of the Board of Directors shall be conclusive as to
the amount of liabilities, including accrued expenses and reserves, as to the
allocation of the same as to a given series, and as to whether the same or
general assets of the corporation are allocable to one or more series.
The Board of Directors may provide for a holder of any series
of stock of the corporation, who surrenders his certificate in good form for
transfer to the corporation or, if the shares in question are not represented by
certificates, who delivers to the corporation a written request in good order
signed by the shareholder, to convert the shares in question on such basis as
the Board may provide, into shares of stock of any other series of the
corporation.
The net asset value per share of a series of the corporation's
common stock shall be determined in accordance with the Investment Company Act
of 1940, as amended, and with generally accepted accounting principles, by
adding the market or appraised value of all securities, cash and other assets of
the corporation pertaining to that series, subtracting the liabilities
<PAGE>
determined by the Board of Directors to be applicable to that series, allocating
any general assets and general liabilities to that series, and dividing the net
result by the number of shares of that series outstanding. Securities and other
investments and assets will be valued at fair value as determined in good faith
by the Board of Directors.
The holders of the shares of Common Stock of the corporation
shall have no preemptive rights to subscribe to further or additional shares of
its Common Stock.
Without action or consent of the stockholders of the
corporation, the Board of Directors shall have authority, subject to the
provisions of these Articles of Incorporation, to issue shares of Common Stock
of the Corporation, from time to time, for such consideration, not less than the
par value thereof, as may be fixed from time to time by the Board of Directors.
SIXTH: The number of directors of the Corporation shall be
three, or such other number as may from time to time be fixed by the By-Laws of
the corporation or pursuant to authorization contained in such By-Laws, but the
number of directors shall never be less than three; provided, notwithstanding
anything herein to the contrary, the board of directors shall initially consist
of one director. The name of the director who shall act as such until successors
are duly chosen and qualify is: James P. Schellenger.
SEVENTH: The corporation is to have perpetual existence.
EIGHTH: The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.
NINTH: In furtherance, and not in limitation of the powers
conferred by statute, the Board of Directors of the corporation is expressly
authorized:
1. To make, alter and amend the By-Laws of the corporation, to
fix the amount to be reserved as working capital over and above its capital
stock paid in, and to authorize and cause to be executed mortgages and liens
upon the real and personal property of the corporation.
2. By resolution or resolutions passed by a majority of the
whole board, to designate one or more committees, each committee to consist of
two or more of the directors of the corporation, which, to the extent permitted
in such resolution or resolutions, or in the By-Laws of the corporation, shall
have and may exercise the powers of the Board of Directors in the management of
the business and affairs of the corporation, and may have the power to
<PAGE>
authorize the seal of the corporation to be affixed to all papers which may
require it. Such committee or committees shall have such name or names as may be
provided for in the By-Laws of the corporation, or as may be determined from
time to time by resolution adopted by the Board of Directors.
3. Pursuant to the affirmative vote of the holders of at least
a majority of the shares of the capital stock of the corporation issued and
outstanding, given at a meeting of the stockholders duly called for that
purpose, or when authorized by the written consent of the holders of a majority
of the shares of the capital stock of the corporation issued and outstanding,
the Board of Directors shall have power and authority at any meeting to
authorize the sale, lease or exchange of all of the property and assets of the
corporation, including its good will and its corporate franchises, upon such
terms and conditions as the Board of Directors may deem expedient and for the
best interests of the corporation.
4. The corporation may in its By-Laws confer powers upon its
Board of Directors in addition to the foregoing, and in addition to the powers
and authorities expressly conferred upon them by statute.
5. The Board of Directors shall have power generally to
exercise all such powers and do all such acts and things as may be exercised or
done by the corporation, subject, nevertheless, to the provisions of the
statutes of the State of Maryland and of these Articles of Incorporation,
including any amendments thereof, and of the By-Laws of the corporation.
TENTH: The following provisions are inserted for the
management of the business and for the conduct of the affairs of the
corporation:
1. The Board of Directors shall have power to fix an initial
offering price which shall yield to the corporation not less than the par value
thereof, at which the shares of the Common Stock of the corporation shall be
offered for sale, and to determine from time to time thereafter the offering
price which shall yield to the corporation not less than the par value thereof,
of the shares of its Common Stock; provided, however, that no shares of the
Common Stock of the corporation shall be issued or sold for a consideration
which shall be less than the liquidation value of such shares, determined as
hereinafter provided, as of the close of business on the business day preceding
the business day on which such shares are sold, except in the case of shares of
such Common Stock issued in payment of a dividend properly declared and payable.
<PAGE>
The liquidation value of the property and assets of the
corporation shall be determined by or under the director of the Board of
Directors of the corporation, as of the close of business on each business day,
by deducting from the total appraised value of all of the property and assets of
the corporation, determined in the manner hereinafter provided, all debts,
obligations and liabilities of the corporation (including, but without
limitation of the generality of any of the foregoing, any or all debts,
obligations, liabilities or claims of any and every kind and nature, whether
fixed, accrued, or unmatured, and any reserves or charges, determined in
accordance with sound accounting practice, for any or all thereof, whether for
taxes, including estimated taxes or unrealized book profits, expenses,
contingencies or otherwise) and a reasonable approximation of brokers'
commissions, taxes, stock transfer fees and other costs which would be incurred
in liquidating all of the property and assets of the corporation.
In determining the total appraised value of all the property
and assets of the corporation:
(a) Securities owned shall be valued at market value, or in
the absence of readily available market quotations at fair value, both as
determined pursuant to methods approved by the Board of Directors and in
accordance with applicable statutes and regulations.
(b) Dividends declared but not yet received, or rights, in
respect of securities which are quoted ex-dividend or ex-rights, shall be
included in the value of such securities as determined by or pursuant to the
direction of the Board of Directors on the day the particular securities are
first quoted ex-dividend or ex-rights, and on each succeeding day until the said
dividends or rights are received and become part of the assets of the
corporation.
(c) The value of any other assets of the corporation (and any
of the assets mentioned in paragraphs (a) or (b), in the event of a national
financial emergency determined to be such by the Board of Directors, in their
discretion) shall be determined in such manner as may be approved from time to
time by or pursuant to the direction of the Board of Directors.
The liquidation value of each share of the Common Stock of the
corporation shall be determined by dividing the total liquidation value of the
property and assets of the corporation by the total number of shares of its
Common Stock then issued and outstanding, including any shares sold by the
corporation up to and including the date as of which such liquidation value is
to be determined whether or not certificates therefor have actually been issued.
In case the liquidation value of each share so determined shall include a
fraction of one cent, such liquidation value of each share shall be adjusted to
the nearest full cent.
<PAGE>
2. To the extent permitted by law, and except in the case of a
national financial emergency determined to be such by the Board of Directors in
their discretion, the corporation shall repurchase shares of its Common Stock
from its stockholders upon request of the holder thereof received by the
corporation or its designated agent during business hours of any business day,
provided such request must be followed promptly by surrender of the certificate
or certificates for such shares in form for transfer, together with such proof
of the authenticity of signatures as may be reasonably required by, or pursuant
to the direction of the Board of Directors of the corporation, and accompanied
by proper stock transfer stamps. Shares repurchased upon any such request shall
be purchased by the corporation at a price not less than the liquidation value
of such shares determined in the manner provided in Paragraph (1) of this
Article Tenth, as of the close of business on the day following the day which
such request was received by the corporation on which the New York Stock
Exchange shall be open for trading for its entire business day, unless the
corporation and the holder of such shares shall agree that the purchase price of
such shares shall be determined as of the time prior thereto, but which shall
not be earlier than the close of business on the day on which the New York Stock
Exchange shall have been open for trading during its entire business day
preceding the day during which such request shall have been received by the
corporation. If the time so agreed upon for determining such purchase price
shall be an intermediate time other than the close of business on a business
day, then the purchase price to be paid for such shares shall be an amount not
less than the liquidation value of such shares as of the close of business on
the preceding day on which the New York Stock Exchange shall be open for trading
for its entire business day, plus or minus such amount, if any, as the
corporation shall estimate properly to reflect the fluctuation in the value of
the corporation's assets between the close of business on such preceding day and
the time so agreed upon, as measured by the Dow-Jones Averages, or other similar
market averages. In no case shall the price paid by the corporation for such
repurchased shares exceed asset value per share, which shall be defined as the
value per share of the corporation's assets, appraised as set forth in Paragraph
(1) above, less all liabilities, but without making deduction for brokers'
commissions, taxes, stock transfer fees and other costs which would be incurred
in liquidating all of the property and assets of the corporation.
After receipt of any such request from a stockholder, the
corporation shall mail to such stockholder a written confirmation of the
repurchase of such shares, which shall state the number of shares to be
repurchased by the corporation, the time as of which the purchase price of
such shares is to be determined, and the purchase price of such shares.
<PAGE>
Payments for shares of its Common Stock so repurchased by the
corporation shall be made in cash, except in the event that the Board of
Directors shall adopt a special resolution (notice of which shall be given
forthwith to all stockholders of the corporation in the manner provided in the
By-Laws) authorizing, during such period of time as the board may fix, payment
of such shares by the delivery to stockholders whose shares shall be repurchased
by the corporation of any assets of the corporation of a value equivalent to the
purchase price of the shares of its Common Stock so purchased by the
corporation, or, at the option of the corporation, by the payment to such
stockholder of such equivalent value partly in cash and partly by the delivery
of such assets. The value of any part of such purchase price paid by the
delivery of assets of the corporation shall be determined as provided in
sub-paragraphs (a), (b) and (c) of paragraph (1) of this Article Tenth. In order
to avoid delivering securities in kind in unreasonably small denominations (that
is, less than ten shares in the case of stocks and $1,000 principal amount in
the case of bonds, etc.) the corporation may adjust any interest in any security
so to be delivered to any such stockholder to somewhat more or less than such
stockholder's arithmetical proportion of such security, and may adjust
fractional differences in cash or in securities, and any such adjustment made by
the corporation in good faith shall be binding upon such stockholder and upon
all other stockholders of the corporation, past, present or future.
Payment for shares of its Common Stock so repurchased by the
corporation shall be made by the corporation as provided above within three
business days on which New York Stock Exchange shall be open for trading during
its entire business day after the receipt of the request from a stockholder for
the purchase of such shares, but in any event within sixty days after the
receipt of such request by the corporation; provided, however, that if payment
shall be made by delivery of assets of the corporation, as provided above, any
securities to be delivered as part of such payment shall be delivered as
promptly as any necessary transfers of such securities on the books of the
several corporations whose securities are to be delivered may be made, but not
necessarily within such sixty day period. Anything contained in this paragraph
to the contrary notwithstanding, the corporation shall not be required to make
payment for any shares so repurchased unless and until the stockholder
requesting such purchase shall have surrendered the certificate or certificates
for such shares in form for transfer and accompanied by proper stock transfer
stamps, as set forth above.
<PAGE>
The right of any holder of shares of the Common Stock of the
corporation to receive dividends thereon and all other rights of such
stockholder with respect to the shares so repurchased by the corporation shall
cease and determine from and after the time as of which the purchase price of
such shares shall be fixed, as provided above, except the right of such
stockholder to receive payment for such shares as provided for herein. Payment
for shares of its Common Stock so repurchased by the corporation, either in cash
or by delivery of assets of the corporation as provided for above, shall be
binding and effective, upon receipt and acceptance thereof by any stockholder
whose shares shall be repurchased by the corporation, as a discharge and
release, as of the time when the purchase price of such shares shall be fixed,
as provided above, to the corporation, to the Board of Directors, and to all
holders of other shares of the Common Stock of the corporation, past, present
and future, in respect of any liability hereunder, except for willful
misfeasance, gross negligence or fraud.
3. Anything contained in these Articles of Incorporation to
the contrary notwithstanding, the corporation shall not purchase securities of
any one individual, association, private corporation, public corporation or
government (except bonds or other obligations of the United States of America
and its own capital stock) in excess of ten percent (10%) of the total property
and assets of the corporation; and as long as the investments of the corporation
in the securities of any one individual, association, private corporation,
public corporation or government (except bonds or other obligations of the
United States of America and its own capital stock) shall amount to ten percent
(10%) of the total property and assets of the corporation, no further
investments in the securities of such individual, association, private
corporation, public corporation or government shall be made.
4. The corporation shall not purchase or acquire any property
from any of its directors or officers, or from any partnership of which any of
its directors or officers shall be a member, or from any association or
corporation of which any one or more of its directors or officers shall own
twenty-five percent (25%) or more of the outstanding shares of the capital stock
or of the beneficial interest therein, nor shall the corporation acquire any
securities issued by any such association or corporation.
5. Meetings of stockholders may be held without the State of
Maryland, if the By-Laws so provide. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside of the State of
Maryland at such place or places as may be from time to time designated by the
Board of Directors.
<PAGE>
6. The corporation shall not voluntarily incur an aggregate
amount of indebtedness at any time exceeding 25% of the total appraised value of
all the property and assets of the corporation, excepting that, in the event of
an emergency and by affirmative vote of not less than two-thirds in number of
all directors of the corporation, the Board of Directors may authorize the
corporation voluntarily to incur for a period not exceeding one year, an
aggregate amount of indebtedness exceeding 25%, but not exceeding 40%, of the
total appraised value of all the property and assets of the corporation.
7. Notwithstanding any of the powers hereinbefore granted,
the corporation shall not acquire control of or operate any business other than
that of an investment company, except insofar as this may be deemed necessary to
protect investments already made; not shall it acquire an interest in or
purchase any securities of any business enterprise (not the business of an
investment company) whose securities do not have an established public market.
8. Notwithstanding any of the powers hereinbefore granted, the
corporation shall not make any investment in real estate except as provided in
this paragraph. The corporation may acquire real estate for its own use for
business offices exclusively and may acquire real estate as a result of the
foreclosure of mortgages securing the payment of securities then owned by the
corporation, or as a result of any reorganization or other readjustment in
connection with any securities then owned by the corporation, or otherwise for
the purpose of the proper administration of the investments of the corporation
in securities. Nothing contained in this paragraph shall be construed to
restrict the power of the corporation, subject to all other restrictions and
limitations contained in these Articles of Incorporation, to invest in
securities, as defined in paragraph 1 of Article Third of these Articles of
Incorporation, whether or not any such security shall be deemed to be an
interest in real estate.
9. The corporation shall not sell any security or other
property which it shall not own at the time of sale, or for the acquisition of
which it shall not have at the time of sale an option or agreement acquired in
the operation of its business as an investment company.
10. The corporation shall make no loans, whether of cash or of
other assets of the corporation, to any of its officers, directors, or
employees, or to any other person concerned in the management of the
corporation, or to any partnership or association in which any of its officers,
directors, or employees is a partner, or to any corporation of which any one or
more of its officers, directors, or employees own in the aggregate ten percent
(10%) or more of the stock or beneficial interest.
<PAGE>
ELEVENTH: Subject to the Investment Company Act of 1940, as
amended, the corporation may take or authorize any action upon the concurrence
of such proportion of votes entitled to be cast thereon as specified in the
by-laws of the corporation, notwithstanding any provision of the Maryland
General Corporation Law requiring a greater proportion, provided that such
provisions of law allow a corporation to act by a lesser proportion.
IN WITNESS WHEREOF, the undersigned incorporator of Delaware
Fund, Inc. who executed the foregoing Articles of Incorporation hereby
acknowledged the same to be his act and further acknowledge that, to the best of
his knowledge the matters and facts set forth therein are true and all material
respects under the penalties of perjury.
Dated the 4th day of March, 1983.
/s/ George M. Chamberlain, Jr.
-------------------------------
George M. Chamberlain, Jr.
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.
<PAGE>
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.
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-
<PAGE>
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.
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
-3-
<PAGE>
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.
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.
IN WITNESS WHEREOF, Delaware Group Delaware Fund, Inc.
-4-
<PAGE>
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: GEORGE M. CHAMBERLAIN, JR.
--------------------------------
George M. Chamberlain, Jr.
Senior Vice President
ATTEST:
RICHELLE S. MAESTRO
- -------------------------------
Assistant Secretary
-5-
<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.
GEORGE M. CHAMBERLAIN, JR.
-----------------------------------
George M. Chamberlain, Jr.
Senior Vice President
-6-
DELAWARE GROUP DELAWARE FUND, INC.
CERTIFICATION OF AMENDMENT TO BY-LAWS
AMENDING SECTION 7 OF ARTICLE III
JANUARY 28, 1995
The Undersigned Secretary of Delaware Group Delaware Fund,
Inc. does hereby certify that at the Board of Directors of the Fund at a meeting
duly called and held on January 28, 1995 did adopt the following resolution
amending Section 7 of Article III of the Fund's by-laws:
RESOLVED, that Article III, Section 7, be amended in its
entirely to read as follows:
Section 7. At any meeting of the stockholders of the
Corporation every stockholder having the right to vote shall
be entitled, in person or by proxy appointed by an instrument
in writing subscribed by such stockholder or by his duly
authorized attorney-in-fact and bearing a date not more than
eleven months prior to said meeting unless such instrument
provides for a longer period, to one vote for each share of
stock having voting power registered in his name on the books
of the Corporation.
IN WITNESS WHEREOF, I have hereto subscribed my name this 28th
day of January, 1995.
/s/ George M. Chamberlain, Jr.
----------------------------------
George M. Chamberlain, Jr.
Secretary
<PAGE>
DELAWARE GROUP DELAWARE FUND, INC.
CERTIFICATION OF AMENDMENT TO BY-LAWS
AMENDING SECTION 2 OF ARTICLE VI
NOVEMBER 21, 1991
The undersigned Secretary of Delaware Group Delaware Fund,
Inc. does hereby certify that at the Board of Directors of the Fund at a meeting
duly called and held on November 21, 1991 did adopt the following resolution
amending Section 2 of Article VI of the Fund's by-laws:
RESOLVED, that Article VI, Section 2 of the Fund's by-laws be
amended to read in its entirely as follows:
Section 2. The Chairman of the Board shall be elected from the
membership of the Board of Directors, but other officers need
not be members of the Board of Directors. Any two or more
offices may be held by the same person except the offices of
President and Vice President. All officers of the Corporation
shall serve for one year and until their successors shall have
been duly elected and shall have qualified; provided, however,
that any officer may be removed at any time, either with or
without cause, by action by the Board of Directors.
AND FURTHER RESOLVED, that the appropriate officers of the
Fund are hereby authorized to take such other steps as may be
necessary to implement the aforesaid amendment.
IN WITNESS WHEREOF, I have hereto subscribed my name this 21st
day of November, 1991.
/s/ George M. Chamberlain, Jr.
-----------------------------------
George M. Chamberlain, Jr.
<PAGE>
DELAWARE GROUP DELAWARE FUND, INC.
CERTIFICATION OF AMENDMENT TO BY-LAWS
AMENDING SECTION 8 OF ARTICLE IV
JULY 22, 1991
The Undersigned Secretary of Delaware Group Delaware Fund,
Inc. does hereby certify that at the Board of Directors of the Fund at a meeting
duly called and held on July 22, 1991 did adopt the following resolution
amending Section 8 of Article IV of the Fund's by-laws:
RESOLVED, that Article IV, Section 8, be amended in its
entirely to read as follows:
Section 8. The Board of Directors may hold their meetings and
keep the books of the Corporation outside of the State of
Maryland at such place or places as it may from time to time
determine.
AND FURTHER RESOLVED, that the Secretary of the Fund is hereby
authorized and directed to include a certified copy of this
Amendment with the corporate records of the Fund; and further
RESOLVED, that the books and records of the Fund shall be
maintained at the offices of the Fund in the City of
Philadelphia.
IN WITNESS WHEREOF, I have hereto subscribed my name this 22nd
day of July, 1991.
/s/ George M. Chamberlain, Jr.
----------------------------------
George M. Chamberlain, Jr.
<PAGE>
DELAWARE GROUP DELAWARE FUND, INC.
CERTIFICATION OF AMENDMENT TO BY-LAWS
AMENDING SECTION 2 OF ARTICLE III
JANUARY 17, 1991
The Undersigned Secretary of Delaware Group Delaware Fund,
Inc. does hereby certify that at the Board of Directors of the Fund at a meeting
duly called and held on January 17, 1991 did adopt the following resolution
amending Section 2 of Article III of the Fund's by-laws:
WHEREAS, the Board of Directors of the Fund deems it to be in
the best interests of the Fund to amend the By-Laws of the
Fund to provide that holders of at least 10% of the Fund's
shares be permitted, at the Fund's cost, to call a special
stockholders meeting for any purpose, in order to enable the
Fund's shares to be qualified and sold in the State of
California; and therefore be it
RESOLVED, that the By-Laws of the Fund are hereby amended by
inserting, as amended Section 2 of ARTICLE III, the following:
Section 2. Special meetings of the stockholders may be called
at any time by the Chairman, President or a majority of the
members of the Board of Directors and shall be called by the
Secretary upon the written request of the holders of at least
ten percent of the shares of the capital stock of the
Corporation issued and outstanding and entitled to vote at
such meeting. Upon receipt of a written request from such
holders entitled to call a special meeting, which shall state
the purpose of the meeting and the matter proposed to be acted
on at it, the Secretary shall issue notice of such meeting.
The cost of preparing and mailing the notice of a special
meeting of stockholders shall be borne by the Corporation.
Special meetings of the stockholders shall be held at the
principal office of the Corporation, or at such other place
within or without the State of Maryland as the Board of
Directors may from time to time direct, or at such place
within or without the State of Maryland as shall be specified
in the notice of such meeting.
<PAGE>
IN WITNESS WHEREOF, I have hereto subscribed my name this 17th
day of January, 1991.
/s/ George M. Chamberlain, Jr.
--------------------------------
George M. Chamberlain, Jr.
<PAGE>
DELAWARE GROUP DELAWARE FUND, INC.
CERTIFICATION OF AMENDMENT TO BY-LAWS
INSERTING A NEW ARTICLE VII AND RENUMBERING THE SUBSEQUENT
ARTICLES
FEBRUARY 16, 1989
The Undersigned Secretary of Delaware Group Delaware, Fund,
Inc. does hereby certify that the Board of Directors of the Fund at a meeting
duly called and held on February 16, 1989 did adopt the following resolutions
inserting a new Article VII and renumbering the subsequent articles of the
Fund's by-laws:
WHEREAS, the Board of Directors of the Fund deems it to be in
the best interests of the Fund to amend the By-Laws of the Fund to allow
indemnification of officers and directors to the full extent provided by
Maryland law;
NOW THEREFORE, BE IT RESOLVED, that the By-Laws of the Fund
are hereby amended by renumbering ARTICLES VIII, IX, X, XI, XII AND XIII as
ARTICLES IX, X, XI, XII, XIII AND XIV, and by inserting as ARTICLE VII, the
following:
"INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 1. The Corporation shall indemnify each Officer and
Director made party to a proceeding, by reason of service in
such capacity, to the fullest extent, and in the manner
provided, under Section 2- 418 of the Maryland General
Corporation Law: (i) unless it is proved that the person
seeking indemnification did not meet the standard of conduct
set forth in subsection (b)(1) of such section; and (ii)
provided, that the Corporation shall not indemnify any Officer
or Director for any liability to the Corporation or its
security holders arising from the wilful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of such person's office.
Section 2. The provisions of clause (i) of Section 1 herein
notwithstanding, the Corporation shall indemnify each Officer
and Director against reasonable expenses incurred in
connection with the successful defense of any proceeding to
which each such Officer or Director is a party by reason of
service in such capacity.
<PAGE>
Section 3. The Corporation, in the manner and to the extent
provided by applicable law, shall advance to each Officer and
Director who is made party to a proceeding by reason of
service in such capacity the reasonable expenses incurred by
such person in connection therewith."
IN WITNESS WHEREOF, I have hereto subscribed my name this 16th
day of February, 1989.
/s/ George M. Chamberlain, Jr.
- ----------------------------------
George M. Chamberlain, Jr.
Secretary
<PAGE>
DELAWARE GROUP DELAWARE FUND, INC.
CERTIFICATION OF AMENDMENT TO BY-LAWS
ARTICLE 3, SECTION 2
JUNE 16, 1988
The undersigned Secretary of Delaware Group Delaware Fund,
Inc. does hereby certify that the Board of Directors of the Fund at a meeting
duly called and held on June 16, 1988 did adopt the following resolution
amending Article 3, Section 2 of the Fund's by-laws:
RESOLVED, that Article III, Section 2 of the By-Laws of the
Fund be amended to read as follows:
Section 2. Special meetings of the stockholders may be called
at any time by the Chairman, President or a majority of the
members of the Board of Directors and shall be called by the
Secretary upon the written request of the holders of at least
twenty-five percent of the shares of the capital stock of the
Corporation issued and outstanding and entitled to vote at
such a meeting; provided, if the matter proposed to be acted
on is substantially the same as a matter voted on at any
special meeting held during the preceding twelve months, such
written request shall be made by holders of at least a
maturity of the capital stock of the Corporation issued and
outstanding and entitled to vote at such meetings. A special
meeting of the stockholders shall also be called by the
Secretary upon the written request of at least ten percent of
the shares of the capital stock of the Corporation issued and
outstanding and entitled to vote at such meeting, for the
express purpose of voting upon the question of removal of a
director or directors. Upon receipt of a written request from
such holders entitled to call a special meeting, which shall
state the purpose of the meeting and the matter proposed to be
acted on at it, the Secretary shall inform the holders who
made such request of the reasonably estimated cost of
preparing and mailing a notice of a meeting and upon payment
of such costs to the Corporation the Secretary shall issue
notice of such meeting. Special meetings of the stockholders
<PAGE>
shall be held at the principal office of the Corporation, or
at such other place within or without the state of Maryland as
the Board of Directors may from time to time direct, or at
such place within or without the state of Maryland as shall be
specified in the notice of such meeting.
IN WITNESS WHEREOF, I have hereto subscribed may name this
16th day of June, 1988.
/s/ George M. Chamberlain, Jr.
----------------------------------
George M. Chamberlain, Jr.
Secretary
<PAGE>
DELAWARE GROUP DELAWARE FUND, INC.
CERTIFICATION OF AMENDMENT TO BY-LAWS
ARTICLE 3, SECTION 1
AND
ARTICLE 4, SECTION 2 AND 4
JUNE 14, 1988
The Undersigned Secretary of Delaware Group Delaware Fund,
Inc. does hereby certify that the Shareholders of the Fund at a meeting duly
called and held on June 14, 1988 did adopt the following resolution amending
Article 3, Section 1 and Article 4, Section 2 and 4 of the Fund's by-laws:
ARTICLE III
Section 1. An annual meeting of the shareholders of the
Corporation for the election of directors and for the
transaction of general business shall not be required to be
held in any year except that an annual meeting must be held in
any year if any of the following items is required to be acted
upon by shareholders under the Investment Company Act of 1940;
election of directors, approval of the investment advisory
agreement, ratification of the selection of independent public
accountants, or approval of a distribution agreement. Any such
meeting shall be held at the principal office of the
Corporation, or at such other place within or without the
State of Maryland as the Board of Directors may from time to
time prescribe, on the third Tuesday in April at 10:00 a.m. or
at such other date and time as the Board of Directors may from
time to time prescribe. A notice of any change in the place of
the annual meeting shall be given to each shareholder not less
than ten days before the election is held.
ARTICLE IV
* * *
Section 2. The directors shall be elected by the shareholders
of the Corporation at an annual meeting, if held, or at a
special meeting called for such purpose, and shall hold office
until their successors shall be duly elected and qualified.
<PAGE>
* * *
Section 4. The Board of Directors shall have power to fill
vacancies occurring on the Board, whether by death,
resignation or otherwise. A vacancy on the Board of Directors
resulting from any cause except an increase in the number of
directors may be filled by a vote of the majority of the
remaining members of the Board, though less than a quorum. A
vacancy on the Board of Directors resulting from an increase
in the number of directors may be filled by a majority of the
entire Board of Directors. A director elected by the Board of
Directors to fill a vacancy shall serve until the next annual
meeting, whenever held, or special meeting called for that
purpose, and until his successor is elected and qualifies.
IN WITNESS WHEREOF, I have hereto subscribed my name this 14th
day of June 1988.
/s/ George M. Chamberlain, Jr.
--------------------------------
George M. Chamberlain, Jr.
Secretary
<PAGE>
DELAWARE FUND, INC.
BY-LAWS
ARTICLE I
OFFICES
Section 1. The principal office of the Corporation shall be in
the City of Baltimore, State of Maryland. The Corporation shall also have
offices at such other places as the Board of Directors may from time to time
determine or the business of the Corporation may require.
ARTICLE II
STOCKHOLDERS AND STOCK CERTIFICATES
Section 1. Every stockholder of record shall be entitled to a
stock certificate representing the shares owned by him. Stock certificates shall
be in such form as may be required by law and as the Board of Directors shall
prescribe. Every stock certificate shall be signed by the Chairman or the
President or a Vice President and by the Treasurer or an Assistant Treasurer, or
the Secretary or an Assistant Secretary and sealed with the corporate seal,
which may be a facsimile, either engraved or printed. Stock certificates may
bear the facsimile signatures of the officers authorized to sign such
certificates.
Section 2. Shares of the capital stock of the Corporation
shall be transferable only on the books of the Corporation by the person in
whose name such shares are registered, or by his duly authorized attorney or
representative. In all cases of transfer by an attorney-in-fact, the original
power of attorney, or an official copy thereof duly certified, shall be
deposited and remain with the Corporation or its duly authorized transfer agent.
In case of transfers by executors, administrators, guardians or other legal
representatives, duly authenticated evidence of their authority shall be
produced, and may be required to be deposited and remain with the Corporation or
its duly authorized transfer agent. No transfer shall be made unless and until
the certificate issued to the transferor shall be delivered to the Corporation
or its duly authorized transfer agent, properly endorsed.
Section 3. Any person desiring a certificate for shares of the
capital stock of the Corporation to be issued in lieu of one lost or destroyed
shall make an affidavit or affirmation setting forth the loss or destruction of
such stock certificate, and shall advertise such loss or destruction in such
manner as the Board of Directors may require, and shall, if the Board of
Directors shall so require, give the Corporation a bond or indemnity, in
<PAGE>
such form and with such security as may be satisfactory to the Board,
indemnifying the Corporation against any loss that may result upon the issuance
of a new stock certificate. Upon receipt of such affidavit and proof of
publication of the advertisement of such loss or destruction, and the bond, if
any, required by the Board of Directors, a new stock certificate may be issued
of the same tenor and for the number of shares as the one alleged to have been
lost or destroyed.
Section 4. The Corporation shall be entitled to treat the
holder of record of any share or shares of its capital stock as the owner
thereof and, accordingly, shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not the Corporation shall have express or other notice thereof.
ARTICLE III
MEETINGS OF STOCKHOLDERS
Section 1. The annual meeting of the stockholders of the
Corporation for the election of Directors and for the transaction of general
business shall be held at the principal office of the Corporation, or at such
other place within or without the State of Maryland as the Board of Directors
may from time to time prescribe, on the third Tuesday in April at 10:00 a.m. in
each year after the year 1985, unless that day shall be duly designated as a
legal holiday, in which event the annual meeting of the stockholders shall be
held on the first day following which is not a legal holiday. A notice of any
change in the place of the annual meeting shall be given to each stockholder not
less than ten days before the election is held.
Section 2. Special meetings of the stockholders may be called
at any time by the Chairman, President or a majority of the members of the Board
of Directors and shall be called by the Secretary upon the written request of
the holders of at least twenty-five percent of the shares of the capital stock
of the Corporation issued and outstanding and entitled to vote at such meeting;
provided, if the matter proposed to be acted on is substantially the same as a
matter voted on at any special meeting held during the preceding twelve months,
such written request shall be made by holders of at least a majority of the
capital stock of the Corporation issued and outstanding and entitled to vote at
such meetings. Upon receipt of a written request from such holders entitled to
call a special meeting, which shall state the purpose of the meeting and the
matter proposed to be acted on at it, the Secretary shall inform the holders who
made such request of the reasonably estimated cost of preparing and mailing
<PAGE>
a notice of a meeting and upon payment of such costs to the Corporation the
Secretary shall issue notice of such meeting. Special meetings of the
stockholders shall be held at the principal office of the Corporation, or at
such other place within or without the State of Maryland as the Board of
Directors may from time to time direct, or at such place within or without the
State of Maryland as shall be specified in the notice of such meeting.
Section 3. Notice of the time and place of the annual or any
special meeting of the stockholders shall be given to each stockholder entitled
to notice of such meeting not less than ten days nor more than ninety days prior
to the date of such meeting. In the case of special meetings of the
stockholders, the notice shall specify the object or objects of such meeting,
and no business shall be transacted at such meeting other than that mentioned in
the call.
Section 4. The Board of Directors may close the stock transfer
books of the Corporation for a period not exceeding twenty days preceding the
date of any meeting of stockholders, or the date for payment of any dividend, or
the date for the allotment of rights, or the date when any change or conversion
or exchange of capital stock shall go into effect, or for a period of not
exceeding twenty days in connection with the obtaining of the consent of
stockholders for any purpose; provided, however, that in lieu of closing the
stock transfer books as aforesaid, the Board of Directors may fix in advance a
date, not exceeding ninety days preceding the date of any meeting of
stockholders, or the date for payment of any dividend, or the date for the
allotment of rights, or the date when any change or conversion or exchange of
capital stock shall go into effect, or a date in connection with obtaining such
consent, as a record date for the determination of the stockholders entitled to
notice of, and to vote at any such meeting and any adjournment thereof, or
entitled to receive payment of any such dividend, or to any such allotment of
rights, or to exercise the rights in respect of any such change, conversion or
exchange of capital stock or to give such consent, and in such case such
stockholders and only such stockholders as shall be stockholders of record on
the date so fixed shall be entitled to such notice of, and to vote at, such
meeting and any adjournment thereof, or to receive payment of such dividend or
the receive such allotment of rights or to exercise such rights, or to give such
consent, as the case may be, notwithstanding any transfer of any stock on the
books of the Corporation after any such record date fixed as aforesaid.
Section 5. At all meetings of the stockholders a quorum shall
consist of the holders of a majority of the outstanding shares of the capital
stock of the Corporation entitled to vote at such meeting. In the absence of a
quorum no business shall be transacted except that the stockholders present
<PAGE>
in person or by proxy and entitled to vote at such meeting shall have power to
adjourn the meeting from time to time to a date not more than one hundred twenty
days after the original record date without further notice other than
announcement at the meeting. At any such adjourned meeting at which a quorum
shall be present any business may be transacted which might have been transacted
at the meeting on the date specified in the original notice. If a quorum is
present at any meeting, the holders of a majority of the shares of capital stock
of the Corporation issued and outstanding and entitled to vote at the meeting
who shall be present in person or by proxy at such meeting who shall have power
to approve any matter properly before the meeting, except a plurality of all
votes cast at a meeting at which a quorum is present shall be sufficient for the
election of a director. The holders of such majority shall also have power to
adjourn the meeting at any specific time or times, and no notice of any such
adjourned meeting need be given to stockholders absent or otherwise.
Section 6. At all meetings of the stockholders the following
order of business shall be substantially observed, as far as it is consistent
with the purpose of the meeting:
Election of Directors;
Ratification of Selection of Auditors;
New business.
Section 7. At any meeting of the stockholders of the
Corporation every stockholder having the right to vote shall be entitled, in
person or by proxy appointed by an instrument in writing subscribed by such
stockholder and bearing a date not more than eleven months prior to said meeting
unless such instrument provides for a longer period, to one vote for each share
of stock having voting power registered in his name on the books of the
Corporation.
ARTICLE IV
DIRECTORS
Section 1. The Board of Directors shall consist of not less
than three nor more than twelve members. The Board of Directors may by a vote of
the entire board increase or decrease the number of directors without a vote of
the stockholders; provided, that any such decrease shall not affect the tenure
of office of any director. Directors need not hold any shares of the capital
stock of the Corporation.
Section 2. The directors shall be elected annually by the
stockholders of the Corporation at their annual meeting, and shall hold office
for the term of one year and until their successors shall be duly elected and
shall qualify.
<PAGE>
Section 3. The Board of Directors shall have the control and
management of the business of the Corporation, and in addition to the powers and
authority by these By-Laws expressly conferred upon them, may exercise, subject
to the provisions of the laws of the State of Maryland and of the Articles of
Incorporation of the Corporation, all such powers of the Corporation and do all
such acts and things are not required by law or by the Articles of Incorporation
to be exercised or done by the stockholders.
Section 4. The Board of Directors shall have power to fill
vacancies occurring on the Board, whether by death, resignation or otherwise. A
vacancy of the Board of Directors resulting from any cause except an increase in
number of directors may be filled by a vote of the majority of the remaining
members of the Board, though less than a quorum. A vacancy on the Board of
Directors resulting from an increase in the number of directors may be filled by
a majority of the entire Board of Directors. A director elected by the Board of
Directors to fill a vacancy shall serve until the next annual meeting of
stockholders and until his successor is elected and qualifies. If less than a
majority of the directors in office shall have been elected by the stockholders,
a meeting of stockholders shall be called as required under the Investment
Company Act of 1940, as amended.
Section 5. The Board of Directors shall have power to appoint,
and at its discretion to remove or suspend, any officers, managers,
superintendents, subordinates, assistants, clerks, agents and employees,
permanently or temporarily, as the Board may think fit, and to determine their
duties and to fix, and from time to time to change, their salaries or
emoluments, and to require security in such instances and in such amounts as it
may deem proper.
Section 6. In case of the absence of an officer of the
Corporation, or for any other reason which may seem sufficient to the Board of
Directors, the Board may delegate his powers and duties for the time being to
any other officer of the Corporation or any director.
Section 7. The Board of Directors may, by resolution or
resolutions passed by a majority of the whole Board, designate one or more
committees, each committee to consist of two or more of the directors of the
Corporation which, to the extent provided in such resolution or resolutions and
by applicable law, shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the Corporation. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the Board of Directors. Any such
<PAGE>
committee shall keep regular minutes of its proceedings, and shall report the
same to the Board when required.
Section 8. The Board of Directors may hold their meetings and
keep the books of the Corporation, except the original or a duplicate stock
ledger and the original or a certified copy of these By-Laws, outside of the
State of Maryland, at such place or places as they may from time to time
determine.
Section 9. The Board of Directors shall have power to fix, and
from time to time to change the compensation, if any, of the directors of the
Corporation.
Section 10. Upon retirement of a Director, the Board may elect
him or her to the position of Director Emeritus. Said Director Emeritus shall
serve for one year and may be re-elected by the Board from year to year
thereafter. Said Director Emeritus shall not vote at meetings of Directors and
shall not be held responsible for actions of the Board but shall receive fees
paid to Board members for serving as such.
ARTICLE V
DIRECTORS MEETINGS
Section 1. The first regular meeting of the Board of Directors
shall be held each year within seven business days following the annual meeting
of stockholders at which the Directors are elected. Regular meetings of the
Board of Directors shall also be held without notice at such times and places as
may be from time to time prescribed by the Board.
Section 2. Special meetings of the Board of Directors may be
called at any time by the Chairman, and shall be called by the Chairman upon
written request of a majority of the members of the Board of Directors. Unless
notice is waived by all the members of the Board of Directors, notice of any
special meeting shall be given to each director at least twenty-four hours prior
to the date of such meeting, and such notice shall provide the time and place of
such special meeting.
Section 3. One-third of the entire Board of Directors shall
constitute a quorum for the transaction of business at any meeting; except that
if the number of directors on the Board is less than six, two members shall
constitute a quorum for the transaction of business at any meeting. The act of a
majority of the directors present at any meeting where there is a quorum shall
be the act of the Board of Directors except as may be otherwise.
Section 4. The order of business at meetings of the Board of
Directors shall be prescribed from time to time by the Board.
<PAGE>
ARTICLE VI
OFFICERS AND AGENTS
Section 1. At the first meeting of the Board of Directors
after the election of Directors in each year, the Board shall elect a Chairman,
a President and Chief Executive Officer, one or more Vice Presidents, a
Secretary and a Treasurer and may elect or appoint one or more Assistant
Secretaries, one or more Assistant Treasurers, and such other officers and
agents as the Board may deem necessary and as the business of the Corporation
may require.
Section 2. The Chairman of the Board and the President shall
be elected from the membership of the Board of Directors, but other officers
need not be members of the Board of Directors. Any two or more offices may be
held by the same person except the offices of President and Vice President. All
officers of the Corporation shall serve for one year and until their successors
shall have been duly elected and shall have qualified; provided, however, that
any officer may be removed at any time, either with or without cause, by action
by the Board of Directors.
ARTICLE VII
DUTIES OF OFFICERS
CHAIRMAN OF THE BOARD
Section 1. The Chairman of the Board shall preside at all
meetings of the stockholders and the Board of Directors and shall be a member ex
officio of all standing committees. He shall have those duties and
responsibilities as shall be assigned to him by the Board of Directors. In the
absence, resignation, disability or death of the President, the Chairman shall
exercise all the powers and perform all the duties of the President until his
return, or until such disability shall be removed or until a new President shall
have been elected.
PRESIDENT
Section 2. The President shall be the Chief Executive Officer
and head of the Corporation, and in the recess of the Board of Directors shall
have the general control and management of its business and affairs, subject,
however to the regulations of the Board of Directors.
The President shall, in the absence of the Chairman, preside
at all meetings of the stockholders and the Board of Directors. In the event of
the absence, resignation, disability or death of the Chairman, the President
<PAGE>
shall exercise all powers and perform all duties of the Chairman until his
return, or until such disability shall have been removed or until a new Chairman
shall have been elected.
VICE PRESIDENTS
Section 1. The Executive Vice President, and the Vice
Presidents, shall have those duties and responsibilities as shall be assigned to
them by the Chairman or the President. In the event of the absence, resignation,
disability or death of the Chairman and President, the Executive Vice President
shall exercise all the powers and perform all the duties of the President until
his return, or until such disability shall be removed or until a new President
shall have been elected.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 4. The Secretary shall attend all meetings of the
stockholders and shall record all the proceedings thereof in a book to be kept
for that purpose, and he shall be the custodian of the corporate seal of the
Corporation. In the absence of the Secretary, an Assistant Secretary or any
other person appointed or elected by the Board of Directors, as is elsewhere in
these Bylaws provided, may exercise the rights and perform the duties of the
Secretary.
Section 5. The Assistant Secretary, or, if there be more than
one Assistant Secretary, then the Assistant Secretaries in the order of their
seniority, shall, in the absence or disability of the Secretary, perform the
duties and exercise the powers of the secretary. Any Assistant Secretary elected
by the Board shall also perform such other duties and exercise such other powers
as the Board of Directors shall from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 6. The Treasurer shall keep full and correct accounts
of the receipts and expenditures of the Corporation in books belonging to the
Corporation, and shall deposit all monies and valuable effects in the name and
to the credit of the Corporation and in such depositories as may be designated
by the Board of Directors, and shall, if the Board shall so direct, give bond
with sufficient security and in such amount as may be required by the Board of
Directors for the faithful performance of his duties.
He shall disburse funds of the Corporation as may be ordered
by the Board of Directors, taking proper vouchers for such disbursements, and
shall render to the President and Board of Directors at the regular meetings
<PAGE>
of the Board, or whenever they may require it, an account of all his
transactions as the chief fiscal officer of the Corporation and of the financial
condition of the Corporation, and shall present each year before the annual
meeting of stockholders a full financial report of the preceding fiscal year.
Section 7. The Assistant Treasurer, or, if there be more than
one Assistant Treasurer, then the Assistant Treasurers in the order of their
seniority, shall, in the absence or disability of the Treasurer, perform the
duties and exercise the powers of the Treasurer. Any Assistant Treasurer elected
by the board shall also perform such duties and exercise such powers as the
Board of Directors shall from time to time prescribe.
ARTICLE VIII
CHECKS, DRAFTS, NOTES, ETC.
Section 1. All checks shall bear the signature of such person
or persons as the Board of Directors may from time to time direct.
Section 2. All notes and other similar obligations and
acceptances of drafts by the Corporation shall be signed by such person or
persons as the Board of Directors may from time to time direct.
Section 3. Any officer of the Corporation or any other
employee, as the Board of Directors may from time to time direct, shall have
full power to endorse for deposit all checks and all negotiable paper drawn
payable to his or their order or to the order of the Corporation.
ARTICLE IX
CORPORATE SEAL
Section 1. The corporate seal of the Corporation shall have
inscribed thereon the name of the Corporation, the year of its organization, and
the words "Corporate Seal, Maryland." Such seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE X
DIVIDENDS
Section 1. Dividends upon the shares of the capital
stock of the Corporation may, subject to the provisions of the Articles of
<PAGE>
Incorporation of the Corporation, if any, be declared by the Board of Directors
at any regular or special meeting, pursuant to law. Dividends may be paid in
cash, in property, or in shares of the capital stock of the Corporation.
Section 2. Before payment of any dividend there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the Board of Directors may, from time to time, in their absolute
discretion, think proper as a reserve fund to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for such other purpose as the Board of Directors shall deem to
be for the best interests of the Corporation, and the Board of Directors may
abolish any such reserve in the manner in which it was created.
ARTICLE XI
FISCAL YEAR
Section 1. The fiscal year of the Corporation shall begin on
November 1 of each year, and end on October 31 of each year.
ARTICLE XIII
NOTICES
Section 1. Whenever under the provisions of these By-Laws
notice is required to be given to any director or stockholder, such notice is
deemed given when it is personally delivered, left at the residence or usual
place of business of the director or stockholder, or mailed to such director or
stockholder at such address as shall appear on the books of the Corporation and
such notice, if mailed, shall be deemed to be given at the time it shall be so
deposited in the United States mail postage prepaid. In the case of directors,
such notice may also be given orally by telephone or by telegraph or cable.
Section 2. Any notice required to be given under these By-Laws
may be waived in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated therein.
ARTICLE XIII
AMENDMENTS
Section 1. These By-Laws may be amended, altered or repealed
by the affirmative vote of the holders of a majority of the shares of capital
stock of the Corporation issued and outstanding and entitled to vote thereon, or
by a majority of the Board of Directors, as the case may be.
DELAWARE GROUP DELAWARE FUND, INC.
DELAWARE FUND SERIES
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, made by and between DELAWARE GROUP DELAWARE FUND,
INC., a Maryland corporation (the "Fund"), for the COMMON STOCK SERIES, which is
known and does business as the DELAWARE FUND SERIES (the "Series"), and DELAWARE
MANAGEMENT COMPANY, INC., a Delaware corporation (the "Investment Manager").
W I T N E S S E T H:
WHEREAS, the Fund has been organized and operates as an
investment company registered under the Investment Company Act of 1940 and
engages in the business of investing and reinvesting its assets in securities;
and
WHEREAS, the Investment Manager is a registered Investment
Adviser under the Investment Advisers Act of 1940 and engages in the business of
providing investment management services; and
WHEREAS, the indirect parent company of the Investment Manager
completed on the date of this Agreement a merger transaction which resulted in a
change of control of the Investment Manager and an automatic termination of the
previous Investment Management Agreement for the Series dated as of the 29th day
of June, 1988; and
WHEREAS, the Board of Directors of the Fund and shareholders
of the Series have determined to enter into a new Investment Management
Agreement with the Investment Manager to be effective as of the date hereof.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, and each of the parties hereto intending to be legally bound,
it is agreed as follows:
1. The Fund hereby employs the Investment Manager to manage
the investment and reinvestment of the Series' assets and to administer its
affairs, subject to the direction of the Board and officers of the Fund for the
period and on the terms hereinafter set forth. The Investment Manager hereby
accepts such employment and agrees during such period to render the services and
assume the obligations herein set forth for the compensation herein provided.
The Investment Manager shall, for all purposes herein, be deemed to be an
independent contractor, and shall, unless otherwise expressly provided and
authorized, have no authority to act for or represent the Fund in any way, or in
<PAGE>
any way be deemed an agent of the Fund. The Investment Manager shall regularly
make decisions as to what securities to purchase and sell on behalf of the
Series and shall give written instructions to the Trading Department maintained
by the Fund for implementation of such decisions and shall furnish the Board of
Directors of the Fund with such information and reports regarding the Series'
investments as the Investment Manager deems appropriate or as the Directors of
the Fund may reasonably request.
2. The Fund shall conduct its own business and affairs and
shall bear the expenses and salaries necessary and incidental thereto including,
but not in limitation of the foregoing, the costs incurred in: the maintenance
of its corporate existence; the maintenance of its own books, records and
procedures; dealing with its own shareholders; the payment of dividends;
transfer of stock, including issuance, redemption and repurchase of shares;
preparation of share certificates; reports and notices to shareholders; calling
and holding of shareholders' meetings; miscellaneous office expenses; brokerage
commissions; custodian fees; legal and accounting fees; and taxes. Directors,
officers and employees of the Investment Manager may be directors, officers and
employees of the funds of which Delaware Management Company, Inc. is Investment
Manager. Directors, officers and employees of the Investment Manager who are
directors, officers and/or employees of the funds shall not receive any
compensation from the funds for acting in such dual capacity.
In the conduct of the respective businesses of the parties
hereto and in the performance of this Agreement, the Fund and Investment Manager
may share facilities common to each, with appropriate proration of expenses
between them.
3. (a) The Fund shall place and execute its own orders for the
purchase and sale of portfolio securities with broker/dealers. Subject to the
primary objective of obtaining the best available prices and execution, the Fund
will place orders for the purchase and sale of portfolio securities with such
broker/dealers selected from among those designated from time to time by the
Investment Manager, who provide statistical, factual and financial information
and services to the Fund, to the Investment Manager, or to any other fund for
which the Investment Manager provides investment advisory services and/or with
broker/dealers who sell shares of the Fund or who sell shares of any other fund
for which the Investment Manager provides investment advisory services.
Broker/dealers who sell shares of the funds of which Delaware Management
Company, Inc. is Investment Manager, shall only receive orders for the purchase
or sale of portfolio securities to the extent that the placing of such orders is
in compliance with the Rules of the Securities and Exchange Commission and the
National Association of Securities Dealers, Inc.
<PAGE>
(b) Notwithstanding the provisions of subparagraph (a) above
and subject to such policies and procedures as may be adopted by the Board of
Directors and officers of the Fund, the Investment Manager may ask the Fund and
the Fund may agree to pay a member of an exchange, broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount of
commission another member of an exchange, broker or dealer would have charged
for effecting that transaction, in such instances where it and the Investment
Manager have determined in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such member, broker or dealer, viewed in terms of either that
particular transaction or the Investment Manager's overall responsibilities with
respect to the Fund and to other funds for which the Investment Manager
exercises investment discretion.
4. As compensation for the services to be rendered to the Fund
by the Investment Manager under the provisions of this Agreement, the Fund shall
pay to the Investment Manager monthly from the Series' assets a fee based on the
average daily net assets of the Series during the month. Such fee shall be
calculated in accordance with the following rates and provisions, less the
Series' proportionate part of all fees paid to members of the Board of Directors
of the Fund during the same period based on the number of publicly offered
series of the Fund.
Monthly Rate Equivalent Annual Rate Average Daily Net Assets
- ------------ ---------------------- ---------------------------
6/120 of 1% .600% on the first $100,000,000
5.25/120 of 1% .525% on the next $150,000,000
5/120 of 1% .500% on the next $250,000,000
4.75/120 of 1% .475% on assets over $500,000,000
If this Agreement is terminated prior to the end of any
calendar month, the management fee shall be prorated for the portion of any
month in which this Agreement is in effect according to the proportion which the
number of calendar days during which the Agreement is in effect bears to the
number of calendar days in the month, and shall be payable within 10 days after
the date of termination.
5. The services to be rendered by the Investment Manager to
the Fund under the provisions of this Agreement are not to be deemed to be
exclusive, and the Investment Manager shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
6. The Investment Manager, its directors, officers, employees,
agents and shareholders may engage in other businesses, may render investment
advisory services to other investment companies, or to any other corporation,
association, firm or individual, and render underwriting services to the Fund
<PAGE>
or to any other investment company, corporation, association, firm or
individual.
7. In the absence of willful misfeasance, bad faith, gross
negligence, or a reckless disregard of the performance of duties of the
Investment Manager to the Fund, the Investment Manager shall not be subject to
liabilities to the Fund or to any shareholder of the Fund for any action or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security, or otherwise.
8. This Agreement shall be executed and become effective as of
the date written below if approved by the vote of a majority of the outstanding
voting securities of the Series. It shall continue in effect for a period of two
years and may be renewed thereafter only so long as such renewal and continuance
is specifically approved at least annually by the Board of Directors or by vote
of a majority of the outstanding voting securities of the Series and only if the
terms and the renewal hereof have been approved by the vote of a majority of the
Directors of the Fund, who are not parties hereto or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on such
approval. No amendment to this Agreement shall be effective unless the terms
thereof have been approved by the vote of a majority of the outstanding voting
securities of the Series and by the vote of a majority of Directors of the Fund
who are not parties to the Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such approval.
Notwithstanding the foregoing, this Agreement may be terminated by the Fund at
any time, without the payment of a penalty, on sixty days' written notice to the
Investment Manager of the Fund's intention to do so, pursuant to action by the
Board of Directors of the Fund or pursuant to vote of a majority of the
outstanding voting securities of the Series. The Investment Manager may
terminate this Agreement at any time, without the payment of penalty, on sixty
days' written notice to the Fund of its intention to do so. Upon termination of
this Agreement, the obligations of all the parties hereunder shall cease and
terminate as of the date of such termination, except for any obligation to
respond for a breach of this Agreement committed prior to such termination, and
except for the obligation of the Fund to pay to the Investment Manager the fee
provided in Paragraph 4 hereof, prorated to the date of termination. This
Agreement shall automatically terminate in the event of its assignment.
9. This Agreement shall extend to and bind the heirs,
executors, administrators and successors of the parties hereto.
10. For the purposes of this Agreement, the terms "vote of a
majority of the outstanding voting securities"; "interested persons"; and
"assignment" shall have the meanings defined in the Investment Company Act
of 1940.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement by having it be signed by their duly authorized officers as of the 3rd
day of April, 1995.
DELAWARE GROUP DELAWARE FUND, INC.
for the DELAWARE FUND SERIES
Attest: /s/ Eric E. Miller By: /s/ Brian F. Wruble
------------------ ----------------------
Eric E. Miller Brian F. Wruble
DELAWARE MANAGEMENT COMPANY, INC.
Attest: /s/ Richelle S. Maestro By: /s/ Wayne A. Stork
------------------------- -----------------------
Richelle S. Maestro Wayne A. Stork
<PAGE>
DELAWARE GROUP DELAWARE FUND, INC.
DIVIDEND GROWTH FUND SERIES
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, made by and between DELAWARE GROUP DELAWARE FUND,
INC. (the "Fund"), a Maryland corporation, for the DIVIDEND GROWTH FUND SERIES
(the "Series"), and DELAWARE MANAGEMENT COMPANY, INC. (the "Investment
Manager"), a Delaware corporation.
W I T N E S S E T H:
WHEREAS, the Fund has been organized and operates as an
investment company registered under the Investment Company Act of 1940 and
engages in the business of investing and reinvesting its assets in securities;
and
WHEREAS, the Investment Manager is a registered Investment
Adviser under the Investment Advisers Act of 1940 and engages in the business of
providing investment management services; and
WHEREAS, the indirect parent company of the Investment Manager
completed on the date of this Agreement a merger transaction which resulted in a
change of control of the Investment Manager and an automatic termination of the
previous Investment Management Agreement for the Series dated as of the 29th day
of December, 1993; and
WHEREAS, the Board of Directors of the Fund and shareholders
of the Series have determined to enter into a new Investment Management
Agreement with the Investment Manager to be effective as of the date hereof.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, and each of the parties hereto intending to be legally bound,
it is agreed as follows:
1. The Fund hereby employs the Investment Manager to manage
the investment and reinvestment of the Series' assets and to administer its
affairs, subject to the direction of the Board and officers of the Fund for the
period and on the terms hereinafter set forth. The Investment Manager hereby
accepts such employment and agrees during such period to render the services and
assume the obligations herein set forth for the compensation herein provided.
The Investment Manager shall, for all purposes herein, be deemed to be an
independent contractor, and shall, unless otherwise expressly provided and
authorized, have no authority to act for or represent the Fund in any way, or in
any way be deemed an agent of the Fund. The Investment Manager shall regularly
make decisions as to what securities to purchase and sell on behalf of the
Series and shall give written instructions to the Trading Department maintained
by the Fund for implementation of such decisions and shall furnish the Board of
Directors of the Fund with such information and reports regarding the Series'
investments as the Investment Manager deems appropriate or as the Directors
of the Fund may reasonably request.
<PAGE>
2. The Fund shall conduct its own business and affairs and
shall bear the expenses and salaries necessary and incidental thereto including,
but not in limitation of the foregoing, the costs incurred in: the maintenance
of its corporate existence; the maintenance of its own books, records and
procedures; dealing with its own shareholders; the payment of dividends;
transfer of stock, including issuance, redemption and repurchase of shares;
preparation of share certificates; reports and notices to shareholders; calling
and holding of shareholders' meetings; miscellaneous office expenses; brokerage
commissions; custodian fees; legal and accounting fees; and taxes. The Series
shall bear all of its own organizational costs.
Directors, officers and employees of the Investment Manager
may be directors, officers and employees of the funds of which Delaware
Management Company, Inc. is Investment Manager. Directors, officers and
employees of the Investment Manager who are directors, officers and/or employees
of the funds shall not receive any compensation from the funds for acting in
such dual capacity.
In the conduct of the respective businesses of the parties
hereto and in the performance of this Agreement, the Fund and Investment Manager
may share facilities common to each, with appropriate proration of expenses
between them.
3. (a) The Fund shall place and execute its own orders for the
purchase and sale of portfolio securities with broker/dealers. subject to the
primary objective of obtaining the best available prices and execution, the Fund
will place orders for the purchase and sale of portfolio securities with such
broker/dealers selected from among those designated from time to time by the
Investment Manager, who provide statistical, factual and financial information
and services to the Fund, to the Investment Manager, or to any other fund for
which the Investment Manager provides investment advisory services and/or with
broker/dealers who sell shares of the Fund or who sell shares of any other fund
for which the Investment Manager provides investment advisory services.
Broker/dealers who sell shares of the funds of which Delaware Management
Company, Inc. is Investment Manager, shall only receive orders for the purchase
or sale of portfolio securities to the extent that the placing of such orders is
in compliance with the Rules of the Securities and Exchange Commission and the
National Association of Securities Dealers, Inc.
(b) Notwithstanding the provisions of subparagraph (a) above
and subject to such policies and procedures as may be adopted by the Board of
Directors and officers of the Fund, the Investment Manager may ask the Fund, and
the Fund may agree, to pay a member of an exchange, broker or dealer an amount
of commission for effecting a securities transaction in excess of the amount of
commission another member of an exchange, broker or dealer would have charged
<PAGE>
for effecting that transaction, in such instances where it, and the Investment
Manager, have determined in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such member, broker or dealer, viewed in terms of either that
particular transaction or the Investment Manager's overall responsibilities with
respect to the Fund and to other funds for which the Investment Manager
exercises investment discretion.
4. As compensation for the services to be rendered to the Fund
by the Investment Manager under the provisions of this Agreement, the Fund shall
pay to the Investment Manager monthly from the Series' assets a fee based on the
daily average net assets of the Series during the month. Such fee shall be
calculated in accordance with the following schedule.
Equivalent
Monthly Rate Annual Rate Average Daily Net Assets
- ------------ ----------- --------------------------
6/120 of 1% .600% on the first $500,000,000
5/120 of 1% .500% on assets over $500,000,000
If this Agreement is terminated prior to the end of any
calendar month, the management fee shall be prorated for the portion of any
month in which this Agreement is in effect according to the proportion which the
number of calendar days during which the Agreement is in effect bears to the
number of calendar days in the month, and shall be payable within 10 days after
the date of termination.
5. The services to be rendered by the Investment Manager to
the Fund under the provisions of this Agreement are not to be deemed to be
exclusive, and the Investment Manager shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
6. The Investment Manager, its directors, officers, employees,
agents and shareholders may engage in other businesses, may render investment
advisory services to other investment companies, or to any other corporation,
association, firm or individual, and may render underwriting services to the
Fund or to any other investment company, corporation, association, firm or
individual.
7. In the absence of willful misfeasance, bad faith, gross
negligence, or a reckless disregard of the performance of duties of the
Investment Manager to the Fund, the Investment Manager shall not be subject to
liabilities to the Fund or to any shareholder of the Fund for any action or
omission in the course of, or connected with, rendering services hereunder
<PAGE>
or for any losses that may be sustained in the purchase, holding or sale of any
security, or otherwise.
8. This Agreement shall be executed and become effective as of
the date written below if approved by the vote of a majority of the outstanding
voting securities of the Series. It shall continue in effect for a period of two
years from such date and may be renewed thereafter only so long as such renewal
and continuance is specifically approved at least annually by the Board of
Directors of the Fund or by vote of a majority of the outstanding voting
securities of the Series and only if the terms and the renewal hereof have been
approved by the vote of a majority of the Directors of the Fund who are not
parties hereto or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval. No amendment to this
Agreement shall be effective unless the terms thereof have been approved by the
vote of a majority of the outstanding voting securities of the Series and by the
vote of a majority of Directors of the Fund who are not parties to the Agreement
or interested persons of any such party, cast in person at a meeting called for
the purpose of voting on such approval. Notwithstanding the foregoing, this
Agreement may be terminated by the Fund at any time, without the payment of a
penalty, on sixty days' written notice to the Investment Manager of the Fund's
intention to do so, pursuant to action by the Board of Directors of the Fund or
pursuant to vote of a majority of the outstanding voting securities of the
Series. The Investment Manager may terminate this Agreement at any time, without
the payment of penalty, on sixty days' written notice to the Fund of its
intention to do so. Upon termination of this Agreement, the obligations of all
the parties hereunder shall cease and terminate as of the date of such
termination, except for any obligation to respond for a breach of this Agreement
committed prior to such termination, and except for the obligation of the Fund
to pay to the Investment Manager the fee provided in paragraph 4 hereof,
prorated to the date of termination. This Agreement shall automatically
terminate in the event of its assignment.
9. This Agreement shall extend to and bind the heirs,
executors, administrators and successors of the parties hereto.
10. For the purposes of this Agreement, the terms "vote of a
majority of the outstanding voting securities;" "interested persons;" and
"assignment" shall have the meanings defined in the Investment Company Act of
1940.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement by having it signed by their duly authorized officers as of the 3rd
day of April, 1995.
DELAWARE GROUP DELAWARE FUND, INC. for
the DIVIDEND GROWTH FUND SERIES
Attest: /s/ Eric E. Miller By: /s/ Brian F. Wruble
-------------------- --------------------
Eric E. Miller Brian F. Wruble
DELAWARE MANAGEMENT COMPANY, INC.
Attest: /s/ Richelle S. Maestro By: /s/ Wayne A. Stork
------------------------ ----------------------------
Richelle S. Maestro Wayne A. Stork
<PAGE>
[FORM OF DISTRIBUTION AGREEMENT]
[FUND NAME]
[SERIES NAME, IF APPLICABLE]
DISTRIBUTION AGREEMENT
Distribution Agreement (the "Agreement") made as of this 3rd
day of April, 1995 by and between [FUND NAME], a [Maryland
corporation/Pennsylvania common law trust] (the "Fund")[, for the [SERIES NAME]
(the "Series")] and DELAWARE DISTRIBUTORS, L.P. (the "Distributor"), a Delaware
limited partnership.
WITNESSETH
WHEREAS, the Fund is an investment company regulated by
Federal and State regulatory bodies, and
WHEREAS, the Distributor is engaged in the business of
promoting the distribution of the securities of investment companies and, in
connection therewith and acting solely as agent for such investment companies
and not as principal, advertising, promoting, offering and selling their
securities to the public, and
WHEREAS, the Fund and the Distributor (or its predecessor)
were the parties to a contract under which the Distributor acted as the national
distributor of the shares of the [Fund/Series], which contract was amended and
restated as of the [date] and subsequently readopted as of January 3, 1995 (the
"Prior Distribution Agreement"), and
WHEREAS, Delaware Management Holdings, Inc. ("Holdings"),
the indirect parent company of the Distributor, completed on the
date of this Agreement a merger transaction with a newly-formed
subsidiary of Lincoln National Corporation, pursuant to which
Holdings became a wholly-owned subsidiary of Lincoln National
Corporation, and
<PAGE>
WHEREAS, the merger transaction resulted in a change of
control of the Distributor and an automatic termination of the Prior
Distribution Agreement, and
WHEREAS, the Board of [Directors/Trustees] of the Fund has
determined to enter into a new agreement with the Distributor as of the date
hereof, pursuant to which the Distributor shall continue to be the national
distributor of the [Fund's/Series'] ____________ class (now doing business as
___________ A Class and hereinafter referred to as the "Class A Shares"), the
Fund's ___________ B Class (the "Class B Shares") and the Fund's ______________
(Institutional) class (now doing business as _____________ Institutional Class
and hereinafter referred to as the "Institutional Class Shares"), which classes
may do business under these or such other names as the Board of
[Directors/Trustees] may designate from time to time, on the terms and
conditions set forth below,
NOW, THEREFORE, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. The Fund hereby engages the Distributor to promote the distribution of
the [Fund's/Series'] shares and, in connection therewith and as agent
for the Fund and not as principal, to advertise, promote, offer and
sell the [Fund's/Series'] shares to the public.
<PAGE>
2. (a) The Distributor agrees to serve as distributor of the
[Fund's/Series'] shares and, as agent for the Fund and
not as principal, to advertise, promote and use its best
efforts to sell the [Fund's/Series'] shares wherever
their sale is legal, either through dealers or otherwise,
in such places and in such manner, not inconsistent with
the law and the provisions of this Agreement and the
Fund's Registration Statement under the Securities Act of
1933, including the Prospectus contained therein and the
Statement of Additional Information contained therein, as
may be mutually determined by the Fund and the
Distributor from time to time.
(b) For the Institutional Class Shares, the Distributor will bear
all costs of financing any activity which is primarily
intended to result in the sale of that class of shares,
including, but not necessarily limited to, advertising,
compensation of underwriters, dealers and sales personnel, the
printing and mailing of sales literature and distribution of
that class of shares.
(c) For its services as agent for the Class A Shares and Class B
Shares, the Distributor shall be entitled to compensation on
each sale or redemption, as appropriate, of shares of such
classes equal to any front-end or deferred sales charge
described in the Prospectus from time to time and may allow
concessions to dealers in such amounts and on such terms as
are therein set forth.
<PAGE>
(d) For the Class A Shares and Class B Shares, the Fund
shall, in addition, compensate the Distributor for its
services as provided in the Distribution Plan as adopted
on behalf of the Class A Shares and Class B Shares,
respectively, pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (the "Plans"), copies of
which as presently in force are attached hereto as,
respectively, Exhibit "A" and "B".
3. (a) The Fund agrees to make available for sale by the Fund
through the Distributor all or such part of the authorized but
unissued shares [of the Series] as the Distributor shall
require from time to time, and except as provided in Paragraph
3(b) hereof, the Fund will not sell [its/the Series'] shares
other than through the efforts of the Distributor.
(b) The Fund reserves the right from time to time (1) to sell
and issue shares other than for cash; (2) to issue shares
in exchange for substantially all of the assets of any
corporation or trust, or in exchange of shares of any
corporation or trust; (3) to pay stock dividends to its
shareholders, or to pay dividends in cash or stock at the
option of its stockholders, or to sell stock to existing
stockholders to the extent of dividends payable from time
to time in cash, or to split up or combine its
outstanding shares of common stock; (4) to offer shares
for cash to its stockholders as a whole, by the use of
transferable rights or otherwise, and to sell and issue shares
pursuant to such offers; and (5) to act as its own distributor
in any jurisdiction in which the Distributor is not registered
as a broker-dealer.
<PAGE>
4. The Fund warrants the following:
(a) The Fund is, or will be, a properly registered investment
company, and any and all [Series] shares which it will sell
through the Distributor are, or will be, properly registered
with the Securities and Exchange Commission ("SEC").
(b) The provisions of this Agreement do not violate the terms of
any instrument by which the Fund is bound, nor do they violate
any law or regulation of any body having jurisdiction over the
Fund or its property.
5. (a) The Fund will supply to the Distributor a conformed copy
of the Registration Statement, all amendments thereto,
all exhibits, and each Prospectus and Statement of
Additional Information.
(b) The Fund will register or qualify the shares for sale in
such states as is deemed desirable.
(c) The Fund, without expense to the Distributor,
(1) will give and continue to give such financial
statements and other information as may be required
by the SEC or the proper public bodies of the
states in which the [Fund's/Series'] shares may be
qualified;
(2) from time to time, will furnish the Distributor as
soon as reasonably practicable true copies of its
periodic reports to stockholders;
<PAGE>
(3) will promptly advise the Distributor in person or by
telephone or telegraph, and promptly confirm such
advice in writing, (a) when any amendment or
supplement to the Registration Statement becomes
effective, (b) of any request by the SEC for
amendments or supplements to the Registration
Statement or the Prospectus or for additional
information, and (c) of the issuance by the SEC of
any Stop Order suspending the effectiveness of the
Registration Statement, or the initiation of any
proceedings for that purpose;
(4) if at any time the SEC shall issue any Stop Order
suspending the effectiveness of the Registration
Statement, will make every reasonable effort to
obtain the lifting of such order at the earliest
possible moment;
(5) will from time to time, use its best effort to keep a
sufficient supply of [Series] shares authorized, any
increases being subject to approval of the Fund's
shareholders as may be required;
(6) before filing any further amendment to the
Registration Statement or to the Prospectus, will
furnish the Distributor copies of the proposed
amendment and will not, at any time, whether before
or after the effective date of the Registration
Statement, file any amendment to the Registration
Statement or supplement to the Prospectus of which
the Distributor shall not previously have been
advised or to which the Distributor shall reasonably
object (based upon the accuracy or completeness
thereof) in writing;
(7) will continue to make available to its stockholders
(and forward copies to the Distributor) of such
periodic, interim and any other reports as are now,
or as hereafter may be, required by the provisions of
the Investment Company Act of 1940; and
(8) will, for the purpose of computing the offering price
of [its/the Series'] shares, advise the Distributor
within one hour after the close of the New York Stock
Exchange (or as soon as practicable thereafter) on
each business day upon which the New York Stock
Exchange may be open of the net asset value per share
of [its/the Series'] shares of common stock outstand-
ing, determined in accordance with any applicable
provisions of law and the provisions of the Articles
of Incorporation, as amended, of the Fund as of the
close of business on such business day. In the event
that prices are to be calculated more than once
daily, the Fund will promptly advise the Distributor
of the time of each calculation and the price
computed at each such time.
<PAGE>
6. The Distributor agrees to submit to the Fund, prior to its
use, the form of all sales literature proposed to be generally
disseminated by or for the Distributor, all advertisements
proposed to be used by the Distributor, all sales literature
or advertisements prepared by or for the Distributor for such
dissemination or for use by others in connection with the sale
of the [Fund's/Series'] shares, and the form of dealers' sales
contract the Distributor intends to use in connection with
sales of the [Fund's/Series'] shares. The Distributor also
agrees that the Distributor will submit such sales literature
and advertisements to the NASD, SEC or other regulatory agency
as from time to time may be appropriate, considering practices
then current in the industry. The Distributor agrees not to
use such form of dealers' sales contract or to use or to
permit others to use such sales literature or advertisements
without the written consent of the Fund if any regulatory
agency expresses objection thereto or if the Fund delivers to
the Distributor a written objection thereto.
7. The purchase price of each share sold hereunder shall be the offering
price per share mutually agreed upon by the parties hereto, and as
described in the Fund's Prospectus, as amended from time to time,
determined in accordance with any applicable provision of law, the
provisions of its Articles of Incorporation and the Rules of Fair
Practice of the National Association of Securities Dealers, Inc.
<PAGE>
8. The responsibility of the Distributor hereunder shall be
limited to the promotion of sales of [Fund/Series] shares. The
Distributor shall undertake to promote such sales solely as
agent of the Fund, and shall not purchase or sell such shares
as principal. Orders for [Series] shares and payment for such
orders shall be directed to the Fund's agent, Delaware Service
Company, Inc. for acceptance on behalf of the Fund. The
Distributor is not empowered to approve orders for sales of
shares or accept payment for such orders. Sales of [Fund/
Series] shares shall be deemed to be made when and where
accepted by Delaware Service Company, Inc. on behalf of the
Fund.
9. With respect to the apportionment of costs between the Fund
and the Distributor of activities with which both are
concerned, the following will apply:
(a) The Fund and the Distributor will cooperate in preparing
the Registration Statements, the Prospectus, the
Statement of Additional Information, and all amendments,
supplements and replacements thereto. The Fund will pay
all costs incurred in the preparation of the Fund's
Registration Statement, including typesetting, the costs
incurred in printing and mailing Prospectuses and Annual,
Semi-Annual and other financial reports to its own
shareholders and fees and expenses of counsel and
accountants.
<PAGE>
(b) The Distributor will pay the costs incurred in printing
and mailing copies of Prospectuses to prospective
investors.
(c) The Distributor will pay advertising and promotional
expenses, including the costs of literature sent to
prospective investors.
(d) The Fund will pay the costs and fees incurred in
registering or qualifying the shares with the various
states and with the SEC.
(e) The Distributor will pay the costs of any additional copies of
Fund financial and other reports and other Fund literature
supplied to the Distributor by the Fund for sales promotion
purposes.
10. The Distributor may engage in other business, provided such other
business does not interfere with the performance by the Distributor of
its obligations under this Agreement.
11. The Fund agrees to indemnify, defend and hold harmless the
Distributor and each person, if any, who controls the
Distributor within the meaning of Section 15 of the Securities
Act of 1933, from and against any and all losses, damages, or
liabilities to which, jointly or severally, the Distributor or
such controlling person may become subject, insofar as the
losses, damages or liabilities arise out of the performance of
its duties hereunder except that the Fund shall not be liable
<PAGE>
for indemnification of the Distributor or any controlling person
thereof for any liability to the Fund or its security holders to which
they would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of their duties under
this Agreement.
12. Copies of financial reports, Registration Statements and
Prospectuses, as well as demands, notices, requests, consents,
waivers, and other communications in writing which it may be
necessary or desirable for either party to deliver or furnish
to the other will be duly delivered or furnished, if delivered
to such party at its address shown below during regular
business hours, or if sent to that party by registered mail or
by prepaid telegram filed with an office or with an agent of
Western Union or another nationally recognized telegraph
service, in all cases within the time or times herein
prescribed, addressed to the recipient at 1818 Market Street,
Philadelphia, Pennsylvania 19103, or at such other address as
the Fund or the Distributor may designate in writing and
furnish to the other.
13. This Agreement shall not be assigned, as that term is defined in the
Investment Company Act of 1940, by the Distributor and shall terminate
automatically in the event of its attempted assignment by the
Distributor. This Agreement shall not be assigned by the Fund without
the written consent of the Distributor signed by its duly authorized
officers and delivered to the Fund. Except as specifically provided in
<PAGE>
the indemnification provision contained in Paragraph 11 herein, this
Agreement and all conditions and provisions hereof are for the sole and
exclusive benefit of the parties hereto and their legal successors and
no express or implied provision of this Agreement is intended or shall
be construed to give any person other than the parties hereto and their
legal successors any legal or equitable right, remedy or claim under or
in respect of this Agreement or any provisions herein contained.
14. (a) This Agreement shall remain in force for a period of two
years from the date hereof and from year to year
thereafter, but only so long as such continuance is
specifically approved at least annually by the Board of
[Directors/Trustees] or by vote of a majority of the
outstanding voting securities of the Fund and only if the
terms and the renewal thereof have been approved by the
vote of a majority of the [Directors/Trustees] of the
Fund, who are not parties hereto or interested persons of
any such party, cast in person at a meeting called for
the purpose of voting on such approval.
(b) The Distributor may terminate this Agreement on written notice
to the Fund at any time in case the effectiveness of the
Registration Statement shall be suspended, or in case Stop
Order proceedings are initiated by the SEC in respect of the
Registration Statement and such proceedings are not withdrawn
or terminated within thirty days. The Distributor may also
<PAGE>
terminate this Agreement at any time by giving the Fund
written notice of its intention to terminate the Agreement at
the expiration of three months from the date of delivery of
such written notice of intention to the Fund.
(c) The Fund may terminate this Agreement at any time on at
least thirty days prior written notice to the Distributor
(1) if proceedings are commenced by the Distributor or
any of its stockholders for the Distributor's liquidation
or dissolution or the winding up of the Distributor's
affairs; (2) if a receiver or trustee of the Distributor
or any of its property is appointed and such appointment
is not vacated within thirty days thereafter; (3) if, due
to any action by or before any court or any federal or
state commission, regulatory body, or administrative
agency or other governmental body, the Distributor shall
be prevented from selling securities in the United States
or because of any action or conduct on the Distributor's
part, sales of the shares are not qualified for sale. The
Fund may also terminate this Agreement at any time upon
prior written notice to the Distributor of its intention
to so terminate at the expiration of three months from
the date of the delivery of such written notice to the
Distributor.
<PAGE>
15. The validity, interpretation and construction of this
Agreement, and of each part hereof, will be governed by the
laws of the Commonwealth of Pennsylvania.
16. In the event any provision of this Agreement is determined to
be void or unenforceable, such determination shall not affect
the remainder of the Agreement, which shall continue to be in
force.
DELAWARE DISTRIBUTORS, L.P.
By: DELAWARE DISTRIBUTORS, INC.,
----------------------------------------
General Partner
Attest:
By:
- -------------------------------- --------------------------------------
Name: Name:
Title: Title:
[FUND NAME]
[for the SERIES NAME]
Attest:
By:
- -------------------------------- --------------------------------------
Name: Name:
Title: Title:
<PAGE>
[FORM OF 12b-1 PLAN FOR CLASS A SHARES]
Exhibit A
12b-1 PLAN
----------
The following Distribution Plan (the "Plan") has been adopted pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by [FUND NAME]
(the "Fund")[, for the [SERIES NAME] (the "Series")] on behalf of the _________
class [(now doing business as __________ A Class and] hereinafter referred to as
the "Class"), which Fund[, Series] and Class may do business under these or such
other names as the Board of [Directors/Trustees] of the Fund may designate from
time to time. The Plan has been approved by a majority of the Board of
[Directors/Trustees], including a majority of the [Directors/Trustees] who are
not interested persons of the Fund and who have no direct or indirect financial
interest in the operation of the Plan or in any agreements related thereto, cast
in person at a meeting called for the purpose of voting on such Plan. Such
approval by the [Directors/Trustees] included a determination that in the
exercise of reasonable business judgment and in light of their fiduciary duties,
there is a reasonable likelihood that the Plan will benefit the Class and its
shareholders. If the Plan has not yet been approved by a majority of the
outstanding voting securities as required in the Act, the Plan will be presented
to the public shareholders at the next regular annual or special meeting.
<PAGE>
The Fund is a [corporation/common law trust] organized under the laws of
the [State of Maryland/Commonwealth of Pennsylvania], is authorized to issue
different series and classes of securities and is an open-end management
investment company registered under the Act. [Delaware Management Company, Inc.
("DMC")/Delaware International Advisers Ltd. ("DIA Ltd.")] serves as the
[Fund's/Series'] investment adviser and manager pursuant to an Investment
Management Agreement. Delaware Service Company, Inc. serves as the
[Fund's/Series'] shareholder servicing, dividend disbursing and transfer agent.
Delaware Distributors, L.P. ("the Distributor") is the principal underwriter and
national distributor for the [Fund's/Series'] shares, including shares of the
Class, pursuant to the Distribution Agreement between the Distributor and the
[Fund/Series] ("Distribution Agreement").
The Distributor may enter into agreements with other registered
broker-dealers substantially in the form of the Dealer Agreement approved by the
Fund in the implementation of this Plan and of the Distribution Agreement
between it and the [Fund/Series]. The [Fund/Series] may, in addition, enter into
arrangements with persons other than broker-dealers which are not "affiliated
persons" or "interested persons" of the Fund, [DMC/DIA Ltd.] or the Distributor
to provide to the [Fund/Series] services in the [Fund's/Series'] marketing of
the shares of the Class, such arrangements to be reflected by Service
Agreements.
<PAGE>
The Plan provides that:
l. The Fund shall pay a monthly fee not to exceed 0.3% (3/10
of 1%) per annum of the [Fund's/Series'] average daily net assets represented by
shares of the Class (the "Maximum Amount") as may be determined by the Fund's
Board of [Directors/Trustees] from time to time. Such monthly fee shall be
reduced by the aggregate sums paid by the Fund to persons other than
broker-dealers (the "Service Providers") pursuant to Service Agreements referred
to above.
2. (a) The Distributor shall use the monies paid to it
pursuant to paragraph l above to furnish, or cause or encourage others to
furnish, services and incentives in connection with the promotion, offering and
sale of Class shares and, where suitable and appropriate, the retention of Class
shares by shareholders.
(b) The Service Providers shall use the monies paid
respectively to them to reimburse themselves for the actual costs they have
incurred in confirming that their customers have received the Prospectus and
Statement of Additional Information, if applicable, and as a fee for (l)
assisting such customers in maintaining proper records with the Fund (2)
answering questions relating to their respective accounts and (3) aiding in
maintaining the investment of their respective customers in the Class.
3. The Distributor shall report to the Fund at least monthly
on the amount and the use of the monies paid to it under the Plan. The Service
Providers shall inform the Fund monthly and in writing of the amounts each
claims under the Service Agreements and the Plan; both the Distributor and the
<PAGE>
Service Providers shall furnish the Board of [Directors/Trustees] of the Fund
with such other information as the Board may reasonably request in connection
with the payments made under the Plan and the use thereof by the Distributor and
the Service Providers, respectively, in order to enable the Board to make an
informed determination of the amount of the Fund's payments and whether the Plan
should be continued.
4. The officers of the Fund shall furnish to the Board of
[Directors/Trustees] of the Fund, for their review, on a quarterly basis, a
written report of the amounts expended under the Plan and the purposes for which
such expenditures were made.
5. This Plan shall take effect at such time as the Distributor
shall notify the Fund in writing of the commencement of the Plan, which time
shall not be before the first annual or special meeting of the public
shareholders at which the Plan is or was approved by the vote of a majority of
the outstanding voting securities as required in the Act (the "Commencement
Date"); thereafter, the Plan shall continue in effect for a period of more than
one year from the Commencement Date only so long as such continuance is
specifically approved at least annually by a vote of the Board of
[Directors/Trustees] of the Fund, and of the [Directors/Trustees] who are not
interested persons of the Fund and have no direct or indirect financial interest
in the operation of the Plan or in any agreements related to the Plan
("non-interested [Directors/Trustees]"), cast in person at a meeting called for
the purpose of voting on such Plan.
<PAGE>
6. (a) The Plan may be terminated at any time by vote
of a majority of the non-interested [Directors/Trustees] or by vote
of a majority of the outstanding voting securities of the Class.
(b) The Plan may not be amended to increase
materially the amount to be spent for distribution pursuant to paragraph l
thereof without approval by the shareholders of the Class.
7. The Distribution Agreement between the [Fund/Series] and
the Distributor, and the Service Agreements between the [Fund/ Series] and the
Service Providers, shall specifically have a copy of this Plan attached to, and
its terms and provisions incorporated respectively by reference in, such
agreements.
8. All material amendments to this Plan shall be approved by
the non-interested [Directors/Trustees] in the manner described in paragraph 5
above.
9. So long as the Plan is in effect, the selection and
nomination of the Fund's non-interested [Directors/Trustees] shall be committed
to the discretion of such non-interested [Directors/Trustees].
10. The definitions contained in Sections 2(a)(3), 2(a)(4),
2(a)(l9) and 2(a)(42) of the Act shall govern the meaning of "affiliated
person," "assignment," "interested person(s)" and "vote of a majority of the
outstanding voting securities," respectively, for the purposes of this Plan.
This Plan shall take effect on the Commencement Date, as
previously defined.
<PAGE>
[FORM OF 12b-1 PLAN FOR CLASS B SHARES]
Exhibit B
12b-1 Plan
----------
The following Distribution Plan (the "Plan") has been adopted pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by [FUND NAME]
(the "Fund"), [for the [SERIES NAME] (the "Series")] on behalf of the _________
B Class (the "Class"), which Fund[, Series] and Class may do business under
these or such other names as the Board of [Directors/Trustees] of the Fund may
designate from time to time. The Plan has been approved by a majority of the
Board of [Directors/Trustees], including a majority of the [Directors/Trustees]
who are not interested persons of the Fund and who have no direct or indirect
financial interest in the operation of the Plan or in any agreements related
thereto, cast in person at a meeting called for the purpose of voting on such
Plan. Such approval by the [Directors/Trustees] included a determination that in
the exercise of reasonable business judgment and in light of their fiduciary
duties, there is a reasonable likelihood that the Plan will benefit the Class
and its shareholders. The Plan has been approved by a vote of the holders of a
majority of the outstanding voting securities of the Class, as defined in the
Act.
The Fund is a [corporation/common law trust] organized under the laws of
the [State of Maryland/Commonwealth of Pennsylvania], is authorized to issue
different series and classes of securities and is an open-end management
investment company registered under the Act. [Delaware Management Company,
Inc./Delaware International Advisers Ltd.] serves as the [Fund's/Series']
investment adviser and manager pursuant to an Investment Management Agreement.
Delaware Service Company, Inc. serves as the [Fund's/Series'] shareholder
servicing, dividend disbursing and transfer agent. Delaware Distributors, L.P.
(the "Distributor") is the principal underwriter and national distributor for
the [Fund's/Series'] shares, including shares of the Class, pursuant to the
Distribution Agreement between the Distributor and the [Fund/Series]
("Distribution Agreement").
<PAGE>
The Plan provides that:
1. (a) The Fund shall pay to the Distributor a monthly fee not
to exceed 0.75% (3/4 of 1%) per annum of the [Fund's/ Series'] average daily net
assets represented by shares of the Class as may be determined by the Fund's
Board of [Directors/Trustees] from time to time.
(b) In addition to the amounts described in (a) above, the
Fund shall pay (i) to the Distributor for payment to dealers or others, or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
[Fund's/Series'] average daily net assets represented by shares of the Class, as
a service fee pursuant to dealer or servicing agreements, the forms of which
have been approved from time to time by the Fund's Board of
[Directors/Trustees].
2. (a) The Distributor shall use the monies paid to it
pursuant to paragraph 1(a) above to assist in the distribution and
promotion of shares of the Class. Payments made to the Distributor under the
Plan may be used for, among other things, preparation and distribution of
advertisements, sales literature and prospectuses and reports used for sales
purposes, as well as compensation related to sales and marketing personnel, and
holding special promotions. In addition, such fees may be used to pay for
advancing the commission costs to dealers with respect to the sale of Class
shares.
<PAGE>
(b) The monies to be paid pursuant to paragraph 1(b) above
shall be used to pay dealers or others for, among other things, furnishing
personal services and maintaining shareholder accounts, which services include
confirming that customers have received the Prospectus and Statement of
Additional Information, if applicable; assisting such customers in maintaining
proper records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.
3. The Distributor shall report to the Fund at least monthly
on the amount and the use of the monies paid to it under paragraph 1(a) above.
In addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
any others receiving fees under the Plan shall furnish the Board of
[Directors/Trustees] of the Fund with such other information as the Board may
reasonably request in connection with the payments made under the Plan and the
use thereof by the Distributor and others in order to enable the Board to make
an informed determination of the amount of the Fund's payments and whether the
Plan should be continued.
<PAGE>
4. The officers of the Fund shall furnish to the Board of
[Directors/Trustees] of the Fund, for their review, on a quarterly basis, a
written report of the amounts expended under the Plan and the purposes for which
such expenditures were made.
5. This Plan shall take effect at such time as the Distributor
shall notify the Fund of the commencement of the Plan (the "Commencement Date");
thereafter, the Plan shall continue in effect for a period of more than one year
from the Commencement Date only so long as such continuance is specifically
approved at least annually by a vote of the Board of [Directors/Trustees] of the
Fund, and of the [Directors/Trustees] who are not interested persons of the Fund
and have no direct or indirect financial interest in the operation of the Plan
or in any agreements related to the Plan ("non-interested
[Directors/Trustees]"), cast in person at a meeting called for the purpose of
voting on such Plan.
6. (a) The Plan may be terminated at any time by vote of a
majority of the non-interested [Directors/Trustees] or by vote of a majority of
the outstanding voting securities of the Class.
(b) The Plan may not be amended to increase materially the
amount to be spent for distribution pursuant to paragraph 1 thereof without
approval by the shareholders of the Class.
<PAGE>
7. The Distribution Agreement between the [Fund/Series] and
the Distributor, and any dealers or servicing agreements between the Distributor
and brokers or others or between the [Fund/Series] and others receiving a
servicing fee, shall specifically have a copy of this Plan attached to, and its
terms and provisions incorporated respectively by reference in, such agreements.
8. All material amendments to this Plan shall be approved by
the non-interested [Directors/Trustees] in the manner described in paragraph 5
above.
9. So long as the Plan is in effect, the selection and
nomination of the Fund's non-interested [Directors/Trustees] shall be committed
to the discretion of such non-interested [Directors/Trustees].
10. The definitions contained in Sections 2(a)(3), 2(a)(4),
2(a)(19) and 2(a)(42) of the Act shall govern the meaning of "affiliated
person," "assignment," "interested person(s)" and "vote of a majority of the
outstanding voting securities," respectively, for the purposes of this Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
<PAGE>
[Form of Amendment to Distribution Agreement]
[FUND NAME]
[SERIES NAME, IF APPLICABLE]
AMENDMENT NO. 1 TO DISTRIBUTION AGREEMENT
This Amendment No. 1 to Distribution Agreement (this "Agreement") is
made as of the_____day of___________, 1995, by and between____________(the
"Fund"),[for the____________(the "Series"),] and DELAWARE DISTRIBUTORS, L.P.
(the "Distributor").
WITNESSETH
WHEREAS, the Fund[, for the Series,] and the Distributor are parties to
that certain Distribution Agreement made as of the 3rd day of April, 1995 (the
"Distribution Agreement"); and
WHEREAS, the Board of Directors of the Fund has established [CLASS C
SHARES NAME] (the "Class C Shares") as an additional class of [the Series]
[shares of the Fund] and the Fund and the Distributor desire to amend the
Distribution Agreement to provide that the Distributor shall act as the national
distributor of the Class C Shares pursuant thereto;
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. The Class C Shares are hereby included among the shares to which the
Distribution Agreement relates and the Distributor shall act as distributor for
the Class C Shares pursuant to and in accordance with the Distribution
Agreement, as amended hereby.
2. Hereafter, each reference to "Class A Shares and Class B Shares" in
Section 2 (c) and (d) of the Distribution Agreement [compensation of the
Distributor] shall be deemed to include the Class C Shares, provided that the
<PAGE>
Distribution Plan adopted pursuant to Rule 12b-1 under the Investment Company
Act of 1940 for the Class C Shares and presently in force is attached hereto as
Exhibit "A."
DELAWARE DISTRIBUTORS, L.P.
By: Delaware Distributors, Inc.,
General Partner
ATTEST:
By:
- ------------------------------ --------------------------------
Name: Name:
Title: Title:
[FUND NAME][,for the [SERIES NAME]]
ATTEST:
By:
- ------------------------------ ---------------------------------
Name: Name:
Title: Title:
<PAGE>
EXHIBIT A
[FORM OF 12b-1 PLAN
C CLASS SHARES]
DISTRIBUTION PLAN
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by the Fund
(the "Fund"), on behalf of the Fund's C Class (the "Class"). The Plan has been
approved by a majority of the Board of Directors, including a majority of the
Directors who are not interested persons of the Fund and who have no direct or
indirect financial interest in the operation of the Plan or in any agreements
related thereto, cast in person at a meeting called for the purpose of voting on
such Plan. Such approval by the Directors included a determination that in the
exercise of reasonable business judgment and in light of their fiduciary duties,
there is a reasonable likelihood that the Plan will benefit the Fund and its
shareholders. The Plan has been approved by a vote of the holders of a majority
of the outstanding voting securities of the Class, as defined in the Act.
The Fund is a [corporation/business trust] organized under the laws of
the [State of Maryland/Commonwealth of Pennsylvania], is authorized to issue
different series and classes of securities and is an open-end management
investment company registered under the Act. [Delaware Management Company, Inc.
A-1
<PAGE>
("DMC") or Delaware International Advisers Ltd. ("Delaware International"), an
affiliate of DMC,] serves as the Fund's investment adviser and manager pursuant
to an Investment Management Agreement. Delaware Service Company, Inc. serves as
the Fund's shareholder servicing, dividend disbursing and transfer agent.
Delaware Distributors, L.P. (the "Distributor") is the principal underwriter and
national distributor for the Fund's shares, including shares of the Class,
pursuant to the Distribution Agreement between the Distributor and the Fund
("Distribution Agreement").
The Plan provides that:
1.(a) The Fund shall pay to the Distributor a monthly fee not to exceed
0.75% (3/4 of 1%) per annum of the Fund's average daily net assets represented
by shares of the Class as may be determined by the Fund's Board of Directors
from time to time.
(b) In addition to the amounts described in paragraph 1(a) above, the
Fund shall pay: (i) to the Distributor for payment to dealers or others; or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
Fund's average daily net assets represented by shares of the Class, as a service
fee pursuant to dealer or servicing agreements.
2.(a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for,
among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation related to sales and marketing personnel, and holding special
A-2
<PAGE>
promotions. In addition, such fees may be used to pay for advancing the
commission costs to dealers with respect to the sale of Class shares.
(b) The monies to be paid pursuant to paragraph 1(b) above shall be
used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include confirming
that customers have received the Prospectus and Statement of Additional
Information, if applicable; assisting such customers in maintaining proper
records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Fund.
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under paragraph 1(a) above. In
addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
any others receiving fees under the Plan shall furnish the Board of Directors of
the Fund with such other information as the Board may reasonably request in
connection with the payments made under the Plan and the use thereof by the
Distributor and others in order to enable the Board to make an informed
determination of the amount of the Fund's payments and whether the Plan should
be continued.
A-3
<PAGE>
4. The officers of the Fund shall furnish to the Board of Directors of
the Fund, and the Directors shall review, on a quarterly basis, a written report
of the amounts expended under the Plan and the purposes for which such
expenditures were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the fund in writing of the commencement of the Plan (the "Commencement
Date"); thereafter, the Plan shall continue in effect for a period of more than
one year from the Commencement Date only so long as such continuance is
specifically approved at least annually by a vote of the Board of Directors of
the Fund, and of the Directors who are not interested persons of the Fund and
have no direct or indirect financial interest in the operation of the Plan or in
any agreements related to the Plan ("non-interested Directors"), cast in person
at a meeting called for the purpose of voting on such Plan.
6.(a) The Plan may be terminated at any time by vote of a majority of
the non-interested Directors or by vote of a majority of the outstanding voting
securities of the Class.
(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph 1 thereof without approval by
the shareholders of the Class.
7. All material amendments to this Plan shall be approved by the
non-interested Directors in the manner described in paragraph 5 above.
A-4
<PAGE>
8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Directors shall be committed to the discretion of such
non-interested Directors.
9. The definitions contained in Sections 2(a)(3), 2(a)(19) and
2(a)(42) of the Act shall govern the meaning of "affiliated person,"
"interested person(s)" and "vote of a majority of the outstanding voting
securities," respectively, for the purposes of this Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
November 29, 1995
A-5
<PAGE>
DELAWARE GROUP
Administration and Service Agreement
Gentlemen:
We are the national distributor of the shares of all of the classes
(now existing or hereafter added) of all of the Funds in the Delaware Group of
Funds. The term "Fund" as used in this Agreement refers to each fund in the
Delaware Group which retains the Distributor to promote and sell its shares, and
any fund which may hereafter be added to the Delaware Group and retain us as
national distributor. You have indicated that you wish to provide certain
services to your customers relating to their ownership of Fund shares, in
accordance with the terms of this Agreement.
TERMS
1. With respect to any Fund that offers shares of classes for which
Distribution Plans have been adopted under Rule 12b-1 (individually a "12b-1
Plan") of the Investment Company Act of 1940 (the "1940 Act"), which 12b-1 Plans
provide for the payment of service fees, we expect you to provide administrative
and other services, including, but not limited to, furnishing personal and other
services and assistance to your customers who own Fund shares, answering routine
inquiries regarding a Fund, assisting in changing dividend options, account
designations and addresses, maintaining such accounts, or such other services as
a Fund may require, to the extent permitted by applicable statutes, rules, or
regulations. For such services, we shall pay you a fee, as established by us
from time to time, based on the value of the shares of each class of each Fund
which are attributable to customers of your firm. We are permitted to make this
payment under the terms of the 12b-1 Plans adopted by certain of the Funds, as
such Plans may be in effect from time to time.
2. You shall furnish us and each Fund with such information as shall
reasonably be requested by the Board of Directors or Trustees with respect to
the fees paid to you pursuant to this Agreement.
3. We shall furnish to the Board of Directors or Trustees, for their
review, on a quarterly basis, a written report of the amounts expended under
<PAGE>
the Plan by us with respect to the relevant Fund and the purposes for which
such expenditures were made.
4. This Agreement may be terminated by either party at any time by
written notice to that effect and will terminate without notice upon any act of
insolvency by you. Notwithstanding the termination of this Agreement, you shall
remain liable for any amounts otherwise owing to the Distributor or the Funds
and for your portion of any transfer tax or other liability which may be
asserted or assessed against the Distributor or the Fund, or upon any one or
more of the Distributor's dealers, based upon a claim that you and such dealers
or any of them constitute a partnership, an unincorporated business or other
separate entity.
5. Any obligation assumed by a Fund pursuant to this Agreement shall be
limited in all cases to the assets of such Fund and no person shall seek
satisfaction thereof from shareholders of a Fund.
6. The 12b-1 Plans in effect on the date of this Agreement are
described in the Funds' Prospectuses. Each Fund reserves the right to terminate
or suspend its 12b-1 Plan(s) at any time as specified in such Plan(s) and we
reserve the right, at any time, without notice, to modify, suspend or terminate
payments hereunder in connection with such 12b-1 Plan(s).
7. This Agreement shall take effect on the date set forth below.
8. The terms and provisions of the current Prospectus and Statement of
Additional Information for each relevant Fund are hereby accepted and agreed to
by the parties hereto as evidenced by our execution hereof.
GENERAL
9. Governing Law. This Agreement will be governed by and construed in
accordance with the law of the State of Pennsylvania, without reference to that
state's choice of law doctrine.
10. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one Agreement.
11. Severability. In the event that any provision of this Agreement,
or the application of any such provision to any person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
<PAGE>
to persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
12. Entire Agreement. This Agreement sets forth the entire
understanding of the parties hereto and supersedes all prior agreements and
understandings between the parties hereto relating to the subject matter hereof.
13. Headings. The underlined headings contained herein are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the interpretation
hereof.
DELAWARE DISTRIBUTORS, L.P.
By: DELAWARE DISTRIBUTORS, INC.,
General Partner
By:
--------------------------------
Agreed and Accepted:
- ------------------------------
(Name)
By:
---------------------------
(Authorized Officer)
Date:
-------------------------
<PAGE>
DEALER'S AGREEMENT
We invite you, as a selected dealer, to participate as principal in the
distribution of the shares of all of the classes (now existing or hereafter
added) of all of the Funds in the Delaware Group of Investment Companies which
retain us, Delaware Distributors, L.P., to act as exclusive national
distributor. The term "Fund" as used in this Agreement, refers to each Fund in
the Delaware Group which retains us to promote and sell its shares, and any Fund
which may hereafter be added to the Delaware Group and retain us as national
distributor. Such additional Funds will be included in this Agreement upon our
providing you with written notice of such inclusion.
OFFERING PRICE TO PUBLIC: Orders for shares received from you and accepted by a
Fund or its agent, Delaware Service Company, Inc., will be at the public
offering price applicable to each order as set forth in that Fund's Prospectus.
The manner of computing the net asset value of shares, the public offering price
and the effective time of orders received from you are described in the
Prospectus for each Fund. We reserve the right, at any time and without notice,
to suspend the sale of Fund shares.
CONCESSIONS TO YOU: You will be entitled to deduct the applicable concession as
set forth in the then current Prospectus of a Fund from the purchase price of
certain purchase orders placed by you for shares of a Fund having a sales
charge. We reserve the right from time to time, without prior notice, to modify,
suspend or eliminate such concessions by amendment, sticker or supplement to the
Prospectus for the Fund. If any shares confirmed to you under the terms of this
Agreement are redeemed or repurchased by the Fund or by us as agent for the
Fund, or are tendered for redemption or repurchase, within seven business days
after the date of our confirmation of the original purchase order, you shall
promptly refund to us the concession allowed to you on such shares.
PURCHASE PLANS: The purchase price on all orders placed by you and any
concessions or other fees otherwise due to you under this Agreement will be
subject to the then current terms and provisions of any applicable special plans
and accounts (e.g., volume purchases, letters of intent, rights of accumulation,
combined purchases privilege, exchange and reinvestment privileges and
<PAGE>
retirement plan accounts) as set forth from time to time in the Prospectus. We
must be notified when an order is placed if it qualifies for a reduced sales
charge under any of these plans. We reserve the right, at any time, without
prior notice, to modify, suspend or eliminate any such plans or accounts by
amendment, sticker or supplement to the Prospectus for the Fund.
SALES, ORDERS AND CONFIRMATIONS: In offering Fund shares to the public or
otherwise, you shall act as dealer for your own account, and in no transaction
shall you have any authority to act as agent for the Fund, for any other
selected dealer or for us. No person is authorized to make any representations
concerning the shares to the Fund except those contained in the Prospectus and
in written information issued by the Fund or by us as a supplement to such
Prospectus. In purchasing Fund shares, you shall rely only on such
representations.
All sales must be made subject to confirmation and orders are subject
to acceptance or rejection by the Fund in its sole discretion. Your orders must
be wired, telephoned or written to the Fund or its agent. You agree to place
orders for the same number of shares sold by you at the price at which such
shares are sold. You agree that you will not purchase Fund shares except for
investment or for the purpose of covering purchase orders already received and
that you will not, as principal, sell Fund shares unless purchased by you from
the Fund under the terms hereof. You also agree that you will not withhold
placing with us orders received from your customers so as to profit yourself
from such withholding. Each of your orders shall be confirmed by you in writing
on the same day.
PAYMENT AND ISSUANCE OF CERTIFICATES: The shares purchased by you hereunder
shall be paid for in full at the public offering price, less any concession to
you as set forth above, by check payable to the Fund, at its office, within
three business days after our acceptance of your order. If not so paid, we
reserve the right to cancel the sale and to hold you responsible for any loss
sustained by us or the Fund (including lost profit) in consequence. Certificates
representing the Fund's shares will not be issued unless (i) the Fund's
Prospectus indicates that certificates may be issued for the class of shares
being purchased, and (ii) a specific request is received from the purchaser.
Certificates, if requested, will be issued in the names indicated by
registration instructions accompanying your payment.
-2-
<PAGE>
REDEMPTION: The Prospectus describes the provisions whereby the Fund, under all
ordinary circumstances, will redeem shares held by shareholders on demand. You
agree that you will not make any representations to shareholders relating to the
redemption of their shares other than the statements contained in the Prospectus
and the underlying organizational documents of the Fund, to which it refers, and
that you will quote as the redemption price only the price determined by the
Fund. You shall not repurchase any shares from your customers at a price below
that next quoted by the Fund for redemption. You may charge a reasonable fee for
services in connection with the repurchase by you from your customers of shares.
You may hold such repurchased shares only for investment purposes or submit such
shares to the Fund for redemption.
12b-1 PLAN: With respect to any Fund that offers shares of classes for which
Distribution Plans have been adopted under Rule 12b-1 (individually a "12b-1
Plan") of the Investment Company Act of 1940 (the "1940 Act"), we expect you to
provide distribution and marketing services in the promotion of the Fund's
shares. In connection with the receipt of distribution fees and/or the receipt
of service fees as set forth under the 12b-1 Plan(s) applicable to the class or
classes of Fund shares purchased by your customers, we expect you to provide
administrative and other services to your customers who own Fund shares,
including, but not limited to, furnishing personal and other services and
assistance, answering routine inquiries regarding a Fund, assisting in changing
dividend options, account designations and addresses, maintaining such accounts,
or such other services as the Fund may require, to the extent permitted by
applicable statutes, rules, or regulations. For such services we will pay you a
fee, as established by us from time to time, based on a portion of the net asset
value of the accounts of your clients in the Fund. We are permitted to make this
payment under the terms of the 12b-1 Plans adopted by certain of the Funds, as
such Plans may be in effect from time to time. The 12b-1 Plans in effect on the
date of this Agreement are described in the Funds' Prospectuses. Each Fund
reserves the right to terminate or suspend its 12b-1 Plan at any time as
specified in the Plan and we reserve the right, at any time, without notice, to
modify, suspend or terminate payments hereunder in connection with such 12b-1
Plan. You will furnish the Fund and us with such information as may be
-3-
<PAGE>
reasonably requested by the Fund or its directors or trustees or by us with
respect to such fees paid to you pursuant to this Agreement.
LEGAL COMPLIANCE: This Agreement and any transaction with, or payment to, you
pursuant to the terms hereof is conditioned on your representation to us that,
as of the date of this Agreement you are, and at all times during its
effectiveness you will be: (a) a registered broker/dealer under the Securities
Exchange Act of 1934 and qualified under applicable state securities laws in
each jurisdiction in which you are required to be qualified to act as a
broker/dealer in securities, and a member in good standing of the National
Association of Securities Dealers, Inc. (the "NASD"); or (b) a foreign
broker/dealer not eligible for membership in the NASD and otherwise in
compliance with applicable U.S. federal and state securities laws. You agree to
notify us promptly in writing and immediately suspend sales of Fund shares if
this representation ceases to be true. You also agree that, whether you are a
member of the NASD or a foreign broker/dealer not eligible for such membership,
you will comply with the rules of the NASD including, in particular, Sections 2
and 26 of Article III thereof, and that you will maintain adequate records with
respect to your transactions with the Funds.
BLUE SKY MATTERS: We shall have no obligation or responsibility with respect to
your right to sell Fund shares in any state or jurisdiction. From time to time
we may furnish you with information identifying the states and jurisdictions
under the securities laws of which it is believed a Fund's shares may be sold.
You will not transact orders for Fund shares in states or jurisdictions in which
we indicate Fund shares may not be sold. You agree to offer and sell Fund shares
outside the United States only in compliance with all applicable laws, rules and
regulations of any foreign government having jurisdiction over such transactions
in addition to any applicable laws, rules and regulations of the United States.
LITERATURE: We will furnish you with copies of each Fund's Prospectus, sales
literature and other information made publicity available by the Fund, in
reasonable quantities upon your request. You agree to deliver a copy of the
current Prospectus in accordance with the provisions of the Securities Act of
1933 to each purchaser of Fund shares for whom you act as broker. We shall file
Fund sales literature and promotional material with the NASD and SEC as
required.
-4-
<PAGE>
You may not publish or use any sales literature or promotional materials with
respect to the Funds without our prior review and written approval.
NOTICES AND COMMUNICATIONS: All communications from you should be addressed to
us at One Commerce Square, 2005 Market Street, Philadelphia, PA 19103. Any
notice from us to you shall be deemed to have been duly given if mailed or
telegraphed to you at the address set forth below. Each of us may change the
address to which notices shall be sent by notice to the other in accordance with
the terms hereof.
TERMINATION: This Agreement may be terminated by either party at any time by
written notice to that effect and will terminate without notice upon the
appointment of a trustee for you under the Securities Investor Protection Act,
or any other act of insolvency by you. Notwithstanding the termination of this
Agreement, you shall remain liable for any amounts otherwise owing to us or the
Funds and for your portion of any transfer tax or other liability which may be
asserted or assessed against the Fund, or us, or upon any one or more of the
selected dealers based upon the claim that the selected dealers or any of them
constitute a partnership, an unincorporated business or other separate entity.
AMENDMENT: This Agreement may be amended or revised at any time by us upon
notice to you and, unless you notify us in writing to the contrary, you will be
deemed to have accepted such modifications.
GENERAL: Your acceptance hereof will constitute an obligation on your part to
observe all the terms and conditions hereof. In the event you breach any of the
terms and conditions of this Agreement, you will indemnify us, the Funds, and
our affiliates for any damages, losses, costs and expenses (including reasonable
attorneys' fees) arising out of or relating to such breach and we may offset any
such damages, losses, costs and expenses against any amounts due to you
hereunder. Nothing contained herein shall constitute you, us and any dealers an
association or partnership. All references in this Agreement to the "Prospectus"
refer to the then current version of the Prospectus and include the Statement of
Additional Information incorporated by reference therein and any stickers or
supplements thereto. This Agreement supercedes and replaces any prior agreement
-5-
<PAGE>
between us and you with respect to your purchase and sale of Fund shares and is
to be construed in accordance with the laws of the State of Delaware.
Please confirm this Agreement by executing one copy of this Agreement
below and returning it to us. Keep the enclosed duplicate copy for your records.
DELAWARE DISTRIBUTORS, L.P.
By: Delaware Distributors, Inc.,
General Partner
By:/s/Keith E. Mitchell
----------------------
Name: Keith E. Mitchell
Title: President/Chief Executive Officer
-6-
<PAGE>
DEALER'S AGREEMENT ACCEPTANCE
DELAWARE DISTRIBUTORS, L.P.
The undersigned hereby confirms the Dealer's Agreement and acknowledges
that any purchase of Fund shares made during the effectiveness of this Agreement
is subject to all the applicable terms and conditions set forth in this
Agreement, and agrees to pay for the shares at the price and upon the terms and
conditions stated in the Agreement. The undersigned hereby acknowledges receipt
of Prospectuses relating to the Fund shares and confirms that, in executing the
Dealer's Agreement, it has relied on such Prospectuses and not on any other
statement whatsoever, written or oral.
INVESTMENT DEALER PLEASE SIGN HERE AND COMPLETE BELOW
By: DATE
------------------------------- ----------------------------
Name:
-----------------------------
Title:
----------------------------
- ----------------------------------
FIRM
- ----------------------------------
FIRM'S TAX IDENTIFICATION NUMBER
- ----------------------------------
STREET ADDRESS
- ----------------------------------
CITY/STATE/ZIP
<PAGE>
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 only 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
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.
<PAGE>
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
fully by check payable to the Fund at its office within five 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-1 Plan") of the Investment Company Act of 1940 (the "1940 Act"),
we expect you will provide shareholder and administrative services to your
customers, such as: answering inquiries regarding the Fund; assisting in
changing dividend options, account designations and addresses; performing
sub-accounting; establishing and maintaining shareholder accounts and records;
processing purchase and redemption transactions; providing periodic statements
and/or updates showing a customer's account balance and integrating such
statements with those of other transactions and balances in the customer's other
accounts serviced by you; and arranging for bank wires. You will transmit
promptly to customers all communications sent to you for transmittal to clients
by or on behalf of us, any Fund or such Fund's investment advisor, custodian or
transfer or dividend disbursing agent. 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 certain of the
Funds, as such 12b-1 Plans may be in effect from time to time, provided,
however, that no payments shall be due and paid to you hereunder with respect to
a Fund unless and until the form of this Agreement shall have been approved by a
majority of the Board of Directors or Trustees of that Fund and by a majority of
the directors or trustees who are not "interested persons" of us, the Fund or
its investment manager, as such term is defined in the 1940 Act (i.e., non-
interested directors) by vote cast in person at a meeting called for the purpose
of voting on this form of Agreement. 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.
SALE 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.
<PAGE>
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 yo 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 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, yo 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 in 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
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 materials with respect to the Funds
without our prior review and written approval.
CUSTOMERS: The names 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.
<PAGE>
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.
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
Accepted and Agreed to:
- ---------------------------
(Name of Firm)
BY:________________________
Name:
Title:
<PAGE>
PROFIT SHARING PLAN
OF
DELAWARE GROUP DELAWARE FUND, INC.
SECOND AMENDMENT AND RESTATEMENT
EFFECTIVE APRIL 1, 1989
<PAGE>
PROFIT SHARING PLAN
OF
DELAWARE GROUP DELAWARE FUND, INC.
SECOND AMENDMENT AND RESTATEMENT
EFFECTIVE APRIL 1, 1989
TABLE OF CONTENTS
-----------------
PAGE
----
ARTICLE I
PURPOSE CLAUSE . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE III
ELIGIBILITY OF EMPLOYEES
TO PARTICIPATE IN THE PLAN . . . . . . . . . . . . . . 6
ARTICLE IV
CONTRIBUTIONS TO PLAN . . . . . . . . . . . . . . . . . 7
ARTICLE V
ALLOCATION OF CONTRIBUTIONS . . . . . . . . . . . . . . 12
ARTICLE VI
RETIREMENT BENEFITS . . . . . . . . . . . . . . . . . . 14
ARTICLE VII
DISABILITY BENEFITS . . . . . . . . . . . . . . . . . . 14
ARTICLE VIII
DEATH BENEFITS . . . . . . . . . . . . . . . . . . . . 14
ARTICLE IX
OTHER SEPARATION FROM SERVICE . . . . . . . . . . . . . 16
ARTICLE X
METHOD OF PAYMENT . . . . . . . . . . . . . . . . . . . 18
ARTICLE XI
ADMINISTRATION OF PLAN . . . . . . . . . . . . . . . . 26
ARTICLE XII
AMENDMENT, CONSOLIDATION, MERGER
OR TERMINATION . . . . . . . . . . . . . . . . . . . . 29
(i)
<PAGE>
ARTICLE XIII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE XIV
LOANS . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE XV
LIMITATIONS ON ALLOCATIONS . . . . . . . . . . . . . . 32
ARTICLE XVI
TOP HEAVY DEFINITIONS AND RULES . . . . . . . . . . . . 36
(ii)
<PAGE>
PROFIT SHARING PLAN
OF
DELAWARE GROUP DELAWARE FUND, INC.
SECOND AMENDMENT AND RESTATEMENT
EFFECTIVE APRIL 1, 1989
ARTICLE I
PURPOSE CLAUSE
--------------
This Profit Sharing Plan and the Trust Agreement forming a part hereof are
established for the benefit of the employees of Delaware Group Delaware Fund,
Inc. and the other investment companies of the Delaware Group of Funds to
promote in them a strong interest in the successful operation of the business
and to provide for them an opportunity for accumulation of funds for their
retirement benefit.
ARTICLE II
DEFINITIONS
-----------
When used herein, the following words shall have the following meanings
unless the context clearly indicates otherwise:
2.1 "Administrative Committee" or "Committee" shall mean the Administrative
Committee with authority and responsibility to manage and direct the operation
and administration of this Plan. "Administrative Committee" shall be deemed to
also mean "Administrator" and "Plan Administrator" as defined in ERISA.
2.2 "Anniversary Date" shall mean the first day of each Plan Year.
2.3 "Beneficiary" shall mean the person or persons designated by a
Participant to receive benefits upon the death of said Participant pursuant to
Article VIII.
2.4 "Board of Directors" shall mean the Board of Directors of the Employer.
2.5 "Code" shall mean the Internal Revenue Code of 1986, as amended.
2.6 "Effective Date" of the Plan shall mean October 1, 1983. The Effective
Date of this amended and restated Plan shall mean April 1, 1989, except where
indicated otherwise.
2.7 "Eligibility Computation Period" shall mean the period of twelve (12)
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<PAGE>
consecutive months beginning on the date an Employee first performs an Hour of
Service upon hire or rehire after a One Year Break in Service, and any Plan Year
following such date of hire or date of rehire following a One Year Break in
Service.
2.8 "Eligibility Year of Service" shall mean the Eligibility Computation
Period during which the Employee performs one thousand (1,000) or more Hours of
Service. Eligibility Years of Service shall include an Employee's prior service
with Delaware Management Company, Inc. or any Entity required to be aggregated
with Delaware Management Company, Inc. under Sections 414(b) or(c) of the Code.
2.9 "Employee" shall mean any person employed by the Employer or by any
affiliated Entity which adopts this Plan; provided, however, no person covered
by a collective bargaining agreement under which the Employer has participated
in good faith bargaining concerning retirement benefits shall be considered an
Employee for the purposes of this Plan. Any Leased Employee shall not be
considered an Employee for purposes of the Plan.
2.10 "Employer" shall mean Delaware Group Delaware Fund, Inc. and any other
affiliated investment company which adopts this Plan. Effective October 1, 1987,
and solely for purposes of determining periods of service for eligibility for
participation and vesting, the term "Employer" shall include any corporation
which is a member of a controlled group of corporations (as defined in Section
414(b) of the Code) which includes the Employer; any trade or business (whether
or not incorporated) which is under common control (as defined in Section 414(c)
of the Code) with the Employer; any organization (whether or not incorporated)
which is a member of an affiliated service group (as defined in Section 414(m)
of the Code) which includes the Employer; and any other Entity required to be
aggregated with the Employer pursuant to regulations under Section 414(o) of the
Code.
2.11 "Employer Contribution Account" shall mean a Participant's account
derived from Employer contributions and the earnings thereon.
2.12 "Entity" shall mean an individual, partnership, corporation or
unincorporated organization.
2.13 "ERISA" shall mean the Employee Retirement Income Security Act of 1974
and the Regulations promulgated thereunder by either the Department of Labor or
Treasury.
2.14 "Hour of Service" shall mean:
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(a) Each hour for which an Employee is paid, or entitled to payment, for
the performance of duties for the Employer. These hours will be credited to the
Employee for the computation period in which the duties are performed; and
(b) Each hour for which an Employee is paid, or entitled to payment, by the
Employer on account of a period of time during which no duties are performed
(irrespective of whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including disability), layoff, jury
duty, military service or leave of absence. No more than 501 Hours of Service
will be credited under this paragraph for any single continuous period (whether
or not such period occurs in a single computation period); and
(c) Each hour for which back pay, regardless of mitigation of damages, is
either awarded or agreed to by the Employer. The same Hours of Service will not
be credited both under paragraph (a) or paragraph (b), as the case may be, and
under this paragraph (c). These hours will be credited to the Employee for the
computation period or periods to which the award or agreement pertains rather
than the computation period in which the award, agreement or payment is made.
(d) Hours of Service will be calculated on the basis described in
Department of Labor Regulations Section 2530.200b-2(b) and (c).
(e) Solely for purposes of determining whether a Break in Service has
occurred, for participation and vesting purposes, an individual who is absent
from work for maternity or paternity reasons will receive credit for the Hours
of Service which would otherwise have been credited to such individual. In the
event these hours cannot be determined, eight (8) Hours of Service per day will
be used. For purposes of this paragraph, an absence from work for maternity or
paternity reasons means an absence (i) by reason of the pregnancy of the
individual, (ii) by reason of the birth of a child of the individual, (iii) by
reason of the placement of a child with the individual in connection with the
adoption of the child by such individual, or (iv) for purposes of caring for the
child for a period beginning immediately following such birth or placement.
However, in no event will the hours treated as Hours of Service under this
paragraph (e), by reason of any pregnancy or placement, exceed 501 hours. The
Hours of Service credited under this paragraph will be credited (i) in the Plan
Year in which the absence begins if the crediting is necessary to prevent a
Break in Service in that period, or (ii) in all other cases, in the following
Plan Year.
(f) Effective for Plan Years beginning on or after April 1, 1994, an
Employee shall be credited with 45 Hours of Service for each week for which he
would be required to be credited with at least one Hour of Service under
paragraphs (a)-(e) above.
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2.15 "Leased Employee" shall mean any person described in Section 414(n) of
the Code who is not an employee of the Employer who, pursuant to an agreement
between the Employer and any other person, has performed service for the
Employer (or for any related persons determined in accordance with Section
414(n)(6) of the Code) on a substantially full-time basis for a period of at
least one year and such services are of a type historically performed by
employees in the Employer's business field.
2.16 "Named Fiduciary" shall be the Administrative Committee and the
Trustee or Trustees serving from time to time and any other person who is
specifically so designated by the Board of Directors.
2.17 "Normal Retirement Date" shall mean the date on which a Participant
shall reach age 65.
2.18 "One Year Break in Service" or "Break in Service" shall mean a Plan
Year during which an Employee has or was separated from employment with Employer
and has completed 500 or less Hours of Service.
2.19 "Participant" shall mean any Employee who meets the eligibility
requirements under Article III or any Employee who is or may become eligible to
receive a benefit under the Plan or whose Beneficiaries may be eligible to
receive any such benefit.
2.20 "Participant Contribution Account" shall mean a Participant's account
derived from his voluntary contributions and the earnings thereon.
2.21 "Plan" shall mean the Employer's Profit Sharing Plan set forth in this
document and all subsequent amendments thereto.
2.22 "Plan Compensation" shall mean as of each Anniversary Date, the basic
compensation received by an Employee from the Employer during the preceding Plan
Year, including salary, draw, overtime and bonuses, but excluding contributions
to this or any other deferred compensation plan. Plan Compensation includes
salary reduction contributions paid by the Employer on the Employee's behalf to
a cafeteria plan, within the meaning of Section 125 of the Code, maintained by
the Employer. Effective for Plan Years beginning on or after April 1, 1994, Plan
Compensation shall mean the sum of (a) the total earnings which are received by
the Employee from the Employer for the preceding Plan Year and which are
required to be reported as wages on the Employee's Form W-2 (in the wages, tips
and other compensation box) and (b) the total amount contributed by the
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Employer on behalf of the Employee pursuant to a salary reduction agreement
which is not includable in the gross income of the Employee under Sections 125
or 402 (e)(3) of the Code, but excluding all of the following items (even if
includable in gross income): reimbursements or other expense allowances, fringe
benefits (cash and non-cash), moving expenses, deferred compensation and welfare
benefits.
For Plan Years beginning on or after April 1, 1989, the Plan Compensation
of each Participant taken into account under the Plan shall not exceed $200,000,
as adjusted by the Secretary of the Treasury. In determining the Plan
Compensation of a Participant for purposes of the limitations set forth in the
preceding sentence, the rules of Section 414(q)(6) of the Code shall apply,
except in applying such rules, the term "family" shall include only the spouse
of the Participant and any lineal descendants of the Participant who have not
attained age 19 before the close of the Plan Year. If, as a result of the
application of such rules, the adjusted $200,000 limitation is exceeded, then
the limitation shall be prorated among the affected individuals in proportion to
each such individual's Plan Compensation as determined under this Section 2.22
prior to the application of this limitation. Effective for Plan Years beginning
on or after January 1, 1994, the Plan Compensation of a Participant shall not
exceed $150,000, as adjusted at the time and manner prescribed by Section 401
(a)(17)(B) of the Code.
2.23 "Plan Year" shall mean a twelve-month period beginning on April 1st
and ending on March 31st. For the Plan Years beginning before April 1, 1989 and
after December 31, 1986, the term Plan Year means a twelve month period
beginning October 1st and ending September 30th, except that the Plan Year
beginning October 1, 1988 is a short year which ends March 31, 1989.
2.24 "Total and Permanent Disability" shall mean incapacity, resulting from
injury or disease, of a Participant to perform any work for Employer and shall
be presumed permanent after the same has continued uninterrupted for six months
as certified by a qualified physician selected by the Administrative Committee.
2.25 "Trustee" or "Trustees" shall mean the trustee or trustees named in
the Trust Agreement attached hereto and forming a part hereof, or any successor
thereto.
2.26 "Trust Fund" or "Fund" shall mean all property held pursuant to the
Trust Agreement.
2.27 "Valuation Date" means the last day of each Plan Year and such other
quarterly, monthly or daily dates as determined by the Administrative Committee.
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2.28 "Year of Service" shall mean a Plan Year during which an Employee
completes at least 1,000 Hours of Service; provided, however, that for the
period from October 1, 1988 through March 31, 1990, an Employee shall be given
credit for a Year of Service if he completes 1,000 Hours of Service during the
period October 1, 1988 to September 30, 1989 and shall be given credit for an
additional Year of Service if he completes 1,000 Hours of Service during the
period April 1, 1989 to March 31, 1990. For purposes of determining a
Participant's nonforfeitable right to his Employer Contribution Account, Years
of Service shall include an Employee's prior service with Delaware Management
Company, Inc. or any other Entity required to be aggregated with Delaware
Management Company, Inc. under Sections 414(b) or (c) of the Code. An Employee
shall also receive credit for a Year of Service if he completes 1000 or more
Hours of Service during his initial Eligibility Computation Period.
2.29 Whenever used herein, the masculine provision includes the feminine
and the singular includes the plural.
ARTICLE III
ELIGIBILITY OF EMPLOYEES
TO PARTICIPATE IN THE PLAN
--------------------------
3.1 Each Employee who was a Participant on March 31, 1989 shall continue as
a Participant. Each other Employee shall be eligible to participate in this Plan
on the first day of the Plan Year within which he completes one Eligibility Year
of Service.
3.2 Any Participant who returns to service after a Break in Service shall
be admitted to the Plan as a Participant on his date of re-employment.
3.3 Within 60 days of each Anniversary Date of this Plan, the Employer
shall furnish the Administrator a list showing all eligible Employees, the date
of employment, the Years of Service, the Plan Compensation of each eligible
Employee and the date of termination of any terminated Employees.
3.4 Notwithstanding the provisions of Section 3.1 to the contrary, if an
Employee is employed by the Employer on March 31, 1989 and has completed by such
date 1,000 or more Hours of Service during an Eligibility Computation Period
which began on or before October 1, 1988, such Employee shall be eligible to
participate in the Plan on October 1, 1988.
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ARTICLE IV
CONTRIBUTIONS TO PLAN
---------------------
4.1 Each participating Employer may contribute to the Plan's Trust Fund for
each taxable year an amount, if any, determined in accordance with a resolution
of the Board of Directors adopted before the date prescribed by law for filing
its Federal income tax return for such taxable year (including extensions
thereof); provided, however, that no contributions shall be made for any year in
excess of the amount deductible for such year under provisions of the Code and
regulations thereunder as then in effect. For Plan Years beginning on or after
April 1, 1989, the Employer may make contributions regardless of whether or not
it has Net Profits and Earnings for its tax year.
4.2 For Plan Years beginning before April 1, 1989, Net Profits and Earnings
in any one year of operations means the net income before provisions for Federal
and State income taxes as determined by the certified public accountants
employed by the Employer in accordance with generally accepted accounting
principles of open-end management investment companies.
4.3 For each taxable year, the contributions shall accrue on the
Anniversary Date thereof, but shall not be considered as accruing during the
said taxable year prior to the Anniversary Date thereof.
4.4 The Trust Fund shall not be diverted to any use other than the
exclusive benefit of eligible Employees and their Beneficiaries.
4.5 Effective August 1, 1991, a Participant may not make voluntary
contributions to his Participant Contribution Account. Prior to August 1, 1991,
a Participant may make voluntary contributions to his Participant Contribution
Account. Such contributions may be made by payroll deductions or in such other
manner and subject to such procedures as the Administrator may prescribe. No
Participant may contribute more than ten percent of his aggregate Plan
Compensation for all Plan Years during which he participated in the Plan.
4.6 Notwithstanding the provisions of Article IX, a Participant shall have
a nonforfeitable interest in all voluntary contributions made by him and in any
increase in his account attributable to such contributions.
4.7 A Participant shall have the right to withdraw the total amount of his
voluntary contributions at any time; provided, however, that such withdrawal
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shall be permissible only with respect to the amount of such Participant's
voluntary contributions and not to any increase in his account attributable to
such contributions. No Participant shall be permitted to make withdrawals of
his voluntary contributions more than four times in any one calendar year.
Effective as of the date of adoption of this amended and restated Plan, a
Participant shall be permitted to make withdrawals as frequently as monthly of
all or a portion of his voluntary contributions, including the earnings
thereon.
4.8 The Fund may accept rollover contributions on behalf of an Employee
(including an Employee who has not satisfied the requirements to be eligible to
participate) from any other plan maintained for his benefit which satisfies the
requirements of a tax-qualified plan, or a rollover individual retirement
account; provided, however, that such rollovers are permitted by and effected in
accordance with the requirements of the Code. The Administrative Committee may
as a condition of acceptance of such rollovers demand such information, opinions
and statements as it deems necessary to assure that such rollovers conform to
the requirements of the federal tax laws.
4.9 An Employee for whom a rollover has been made shall be deemed a
Participant with respect to the amount contributed and shall have a
nonforfeitable interest in such amount and any increases attributable to it. Any
such rollovers shall be held in a special account for the Participant segregated
from other assets held by the fund. Such contributions will be administered and
distributed pursuant to the provisions of this Plan.
4.10 The following special non-discrimination rules pertaining to voluntary
contributions shall be applicable for Plan Years beginning on or after October
1, 1987 and before April 1, 1990.
(a) For any Plan Year, the Contribution Percentage for all Highly
Compensated Employees will not exceed the greater of (i) or (ii) as follows:
(i) The Contribution Percentage for all Non-Highly Compensated Employees,
times 1.25; or
(ii) The lesser of the Contribution Percentage for all Non-Highly
Compensated Employees, times 2.0, provided that the Contribution Percentage for
all Highly Compensated Employees may not exceed the Contribution Percentage for
all Non-Highly Compensated Employees by more than two (2) percentage points or
such lesser amount as the Secretary of Treasury will prescribe to prevent the
multiple use of this alternative limitation with respect to any Highly
Compensated Employee.
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(b) Distribution of Excess Aggregate Contributions.
(i) Excess Aggregate Contributions, plus any income and minus any loss
allocable thereto, will be distributed no later than the last day of each Plan
Year to Participants to whose accounts Excess Aggregate Contributions were
allocated for the preceding Plan Year.
(ii) For the Plan Year beginning on October 1, 1987, the income or loss
allocable to Excess Aggregate Contributions shall be determined under any
reasonable method, which method shall be applied on a consistent basis for all
Participants. For Plan Years beginning after 1987, the income or loss allocable
to Excess Aggregate Contributions shall be the sum of (A) and (B) below:
(A) The income or loss for the Plan Year allocable to the Participant's
voluntary contribution Account multiplied by a fraction, the numerator of which
is the Participant's Excess Aggregate Contributions for the year, and the
denominator of which is the balance of the Participant's voluntary contribution
account as of the end of the Plan Year, minus income (or plus losses) allocable
to such account.
(B) The income or loss for the period between the end of the Plan Year and
the date of the distribution allocable to the Participant's voluntary
contribution account multiplied by the fraction described in (A), above.
In lieu of using the formula described in (B), the income or loss for the
period between the end of the Plan Year and the date of the distribution
allocable to Excess Aggregate Contributions for the year may be calculated under
the following alternative method, provided such method is applied on a
consistent basis for all Participants: ten percent (10%) of the amount
determined under (A), above, multiplied by the number of whole calendar months
that have elapsed since the end of the Plan Year. For this purpose, if a
distribution of Excess Aggregate Contributions is made after the 15th day of a
month, that month will be counted as a whole month.
(c) The following definitions apply for purposes of this Section 4.10.:
(i) "Contribution Percentage" means, for a group of Participants, the
average of the following ratios (calculated separately) for each Participant in
the group:
(A) The sum of voluntary contributions made on behalf of each Participant
for the Plan Year; over
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(B) The Participant's Compensation for that Plan Year, whether or not the
Participant was a Participant for the entire Plan Year.
The Contribution Percentage for any Participant who is a Highly Compensated
Employee for the Plan Year and who is eligible to have voluntary employee
contributions or employer matching contributions allocated to his account under
two or more plans described in Section 401(a) of the Code or arrangements
described in Section 401(k) of the Code that are maintained by the employer or
an entity that is required to be aggregated with the employer pursuant to
Sections 414(b), (c), (m), or (o) of the Code will be determined as if all such
contributions were made under a single plan. If a Highly Compensated Employee
participates in two or more arrangements described in Section 401(k) of the Code
that have different plan years, all such arrangements ending with or within the
same calendar year shall be treated as a single arrangement.
For purposes of determining the Contribution Percentage of a Participant
who is a five-percent owner or one of the ten most Highly Compensated Employees,
the Contribution Percentage and compensation of such Participant will include
the Contribution Percentage and Compensation of Family Members, and such Family
Members will be disregarded in determining the Contribution Percentage for
Participants who are Non-Highly Compensated Employees.
Voluntary contributions will be considered made for a Plan Year if made by
the date specified in the applicable regulations and allocated to a
Participant's account for the Plan Year.
The determination and treatment of the Contribution Percentage of any
Participant will satisfy such other requirements as may be prescribed by
Secretary of the Treasury.
In the event that this Plan satisfies the requirements of Sections 401(m),
401(a)(4) or 410(b) of the Code only if aggregated with one or more other plans,
or if one or more other plans satisfy the requirements of such Sections only if
aggregated with this Plan, then this Section 4.10 will be applied by determining
the Contribution Percentages of eligible Participants as if all such plans were
a single plan. For plan years beginning after December 31, 1989, plans may be
aggregated in order to satisfy Section 401(m) of the Code only if they have the
same plan year.
(ii) "Excess Aggregate Contributions" means, with respect to any Plan Year,
the excess of:
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(A) The aggregate Contribution Percentage amounts taken into account in
computing the numerator of the Contribution Percentage actually made on behalf
of Highly Compensated Employees for such Plan Year; over
(B) The maximum Contribution Percentage amounts permitted by the
Contribution Percentage limits set forth in this Section 4.10 (determined by
reducing contributions made on behalf of Highly Compensated Employees in order
of their Contribution Percentages beginning with the highest of such
percentages).
(iii) "Family Member" means an individual described in Section 414(q)(6)(B)
of the Code.
(iv) "Highly Compensated Employee" means a highly compensated active
employee or a highly compensated former employee, as described below.
A highly compensated active employee includes any employee who performs
service for the employer during the determination year and who, during the
look-back year: (i)received compensation from the employer in excess of $75,000
(as adjusted pursuant to Section 415(d) of the Code); (ii) received compensation
from the employer in excess of $50,000 (as adjusted pursuant to Section 415(d)
of the Code) and was a member of the top-paid group for such year; or (iii) was
an officer of the employer and received compensation during such year that is
greater than 50 percent of the dollar limitation in effect under Section
415(b)(1)(A) of the Code. The term Highly Compensated Employee also includes:
(i) employees who are both described in the preceding sentence if the term
"determination year" is substituted for the term "look-back year" and the
employee is one of the 100 employees who received the most compensation from the
Employer during the determination year; and (ii) employees who are five percent
owners at any time during the look-back year or determination year.
If no officer has satisfied the compensation requirement of (iii) above
during either a determination year or a look-back year, the highest paid officer
for such year shall be treated as a Highly Compensated Employee.
For this purpose, the determination year shall be the Plan Year. The
look-back shall be the twelve (12)-month period immediately preceding the
determination year.
A highly compensated former employee includes any employee who separated
from service (or was deemed to have separated) prior to the determination year,
performs no service for the employer during the determination year, and was a
highly compensated active employee for either the separation year or any
determination year ending on or after the employee's fifty-fifth (55th)
birthday.
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If an employee is, during a determination year or look-back year, a Family
Member of either a five percent owner who is an active or former employee or a
Highly Compensated Employee who is one of the ten (10) most Highly Compensated
Employees ranked on the basis of compensation paid by the Employer during such
year, then the Family Member and the five percent owner or top-ten (10) Highly
Compensated Employee shall be aggregated. In such case, the Family Member and
five percent owner or top-ten Highly Compensated Employee shall be treated as a
single employee receiving compensation and Plan contributions or benefits equal
to the sum of such compensation and contributions or benefits of the Family
Member and five percent owner or ten (10) most Highly Compensated Employee.
The determination of who is a Highly Compensated Employee, including the
determinations of the number and identity of employees in the top-paid group,
the top one hundred (100) employees, a five percent owner, the number of
employees treated as officers and the compensation that is considered, will be
made in accordance with Section 414(q) of the Code and the regulations
thereunder.
(v) "Compensation" means all of an Employee's compensation, as that term is
defined in Article XV, Limitations on Allocations, and shall include elective
contributions that are made by the Employer on behalf of the Employee and which
are not includable in income under Section 125 of the Code. Compensation shall
be subject to the limitation of Section 401(a)(17) of the Code.
ARTICLE V
ALLOCATION OF CONTRIBUTIONS
---------------------------
5.1 A separate and complete accounting shall be maintained for each
Participant which shall set forth the amount credited to or forfeited from his
Employer Contribution Account and his Participant Contribution Account. Employer
contributions and Participant contributions shall be allocated among investment
companies managed by Delaware Management Company, Inc. Each Participant shall
file a written notice with the Committee thereby making an election as to what
proportion of his contributions, including both contributions made by the
Employer and voluntary contributions, shall be allocated to the eligible
investment company funds, as announced from time to time by the Committee. Each
Participant shall have the right to change the investment allocation of his
contributions and his accumulated account balance, in accordance with rules and
procedures as announced from time to time by the Committee, provided changes are
subject to any limitations imposed on the right of exchange by the investment
media.
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5.2 The Employer's contributions and any forfeitures for each Plan Year
shall be credited to the Employer Contribution Accounts of Participants who are
employed by the Employer on the Anniversary Date and allocated in the proportion
that the Plan Compensation of each Participant bears to the total Plan
Compensation of all Participants for such Plan Year. A Participant who
terminates employment on the Anniversary Date shall be treated as employed by
the Employer on the Anniversary Date. All voluntary contributions made by a
Participant prior to August 1, 1991 shall be credited to his Participant
Contribution Account.
5.3 As of the Anniversary Date, each Participant's Employer Contribution
Account and his Participant Contribution Account shall be valued at its fair
market value. For the purposes of paying benefits to a Participant, his accounts
shall be valued on the most recent Valuation Date as determined by the
Administrative Committee.
5.4 Income when earned less expenses, if any, when charged, shall be
credited to or charged against each Participant's account, in accordance with
the self-directed investments selected by the Participant.
5.5 The Committee shall, as of each Anniversary Date, determine the total
amount of forfeitures which accrued during the Plan Year and shall add the
forfeited amount to the Employer's annual contribution for the purposes of
reallocation to the remaining Participants as provided in Section 5.2.
5.6 Any allocation made and credited to the account of a Participant under
this Article shall not cause such Participant to have any right, title or
interest in or to any assets of the Trust Fund except at the time or times, and
under the terms and conditions, expressly provided for in this Plan.
5.7 (a) In the case of a contribution to the Plan which is made by the
Employer because of a mistake of fact, the Employer may, within one year after
the payment of such contribution, withdraw such contribution from the Trust
Fund.
(b) Employer contributions to the Plan are expressly conditioned on the
deductibility of such contributions under Section 404 of the Code. To the extent
such contributions are disallowed, the Employer may, within one year of the
disallowance of the deduction, withdraw such contribution from the Trust Fund.
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ARTICLE VI
RETIREMENT BENEFITS
-------------------
6.1 Upon attaining Normal Retirement Date, a Participant shall have a fully
vested and nonforfeitable right to his entire Employer Contribution Account and
shall be entitled to retire and upon so retiring shall be entitled to the
commencement of the payment of his benefits, consisting of the balance of his
accounts, in accordance with the method of payment elected pursuant to Article
X.
6.2 A Participant who retires after his Normal Retirement Date shall
continue to be a Participant in the Plan until his actual retirement and shall
be eligible to share in the allocation of Employer contributions as provided in
Section 5.2.
ARTICLE VII
DISABILITY BENEFITS
-------------------
7.1 If the employment of a Participant has been terminated prior to his
retirement date because of Total and Permanent Disability, such Participant
shall be entitled to receive his entire Participant Contribution Account and his
entire Employer Contribution Account in accordance with the manner elected under
Article X.
7.2 Upon a Participant's cessation of Total and Permanent Disability and
upon his return to work for Employer before all of his account has been
distributed, no further payments shall be made therefrom by reason of the
disability. A Participant shall have no right or obligation to repay any amount
distributed to him pursuant to Section 7.1.
ARTICLE VIII
DEATH BENEFITS
--------------
8.1 Notwithstanding anything stated in the Plan to the contrary, if a
Participant dies prior to receiving the entire nonforfeitable amount credited to
his accounts, all such undistributed nonforfeitable amounts shall be paid to the
Participant's surviving spouse, unless there is no surviving spouse or the
surviving spouse consents in writing to the payment of death benefits to another
Beneficiary. A spouse's consent must satisfy the following requirements:
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(a) the consent must be in writing;
(b) the consent must be witnessed by a member of the Administrative
Committee or a notary public;
(c) the consent must approve a designation of a specific Beneficiary,
including any class of Beneficiaries or any contingent Beneficiaries, which may
not be changed without spousal consent, or the spouse expressly permits
designations by the Participant without any further spousal consent; and
(d) the consent acknowledges the effect of the Participant's designation of
Beneficiary. If a consent permits designations by the Participant without any
requirement of further consent by such spouse, it must acknowledge that the
spouse has the right to limit consent to a specific Beneficiary and that the
spouse voluntarily elects to relinquish such right.
Written consent of a spouse need not be obtained if the Participant
establishes to the satisfaction of the Committee that there is no spouse or that
the spouse cannot be located. Any such designation may be changed from time to
time by the Participant by filing a new designation with the Committee, provided
the spousal consent requirements above are satisfied.
8.2 Each Participant may file with the Committee a designation of
Beneficiary to receive amounts payable under this Plan upon his death. The
designation may be changed from time to time by the Participant, except that a
married Participant may not name a Beneficiary other than his spouse without a
written consent which satisfies the requirements of Section 8.1. If no
designation has been filed, or all designated Beneficiaries have predeceased the
Participant, then any amounts payable shall be paid to his surviving spouse. If
there is no surviving spouse, any amounts payable shall be paid to his estate.
8.3 If at, after or during the time when a benefit is payable to any
Beneficiary, the Administrative Committee, upon request of the Trustee or at its
own instance, mails by registered or certified mail to the Beneficiary at the
Beneficiary's last known address a written demand for his then address, or for
satisfactory evidence of his continued life or both, and, if the Beneficiary
shall fail to furnish the information to the Committee within 3 years from the
mailing of the demand, then the Committee shall distribute the remaining
benefits to the Beneficiary next entitled thereto under Section 8.3 above as if
the Beneficiary designated by the Participant or Section 8.3 were then deceased.
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ARTICLE IX
OTHER SEPARATION FROM SERVICE
-----------------------------
9.1 (a) If a Participant separates from service other than under Articles
VI, VII or VIII, he shall be entitled to receive a lump sum distribution of his
entire Participant Contribution Account and his entire nonforfeitable Employer
Contribution Account. Such distribution shall be made upon the written request
of the Participant and shall be made as soon as practicable following the
Participant's separation from service, but not later than the close of the
second Plan which such separation occurs.
(b) If the non-forfeitable portion of the Participant's Employer
Contribution Account and his Participant Contribution Account exceeds $3500 (or
ever exceeded $3500 at the time of an earlier distribution), and the Participant
does not consent in writing to receive a lump sum distribution of his accounts
by the close of the second Plan Year following his separation from service, no
distribution shall be made to the Participant until he attains his Normal
Retirement Date. Regardless of whether the Participant consents in writing, if
the non-forfeitable portion of the Participant's Employer Contribution Account
and Participant Contribution Account does not exceed $3500 (or did not exceed
$3500 at the time of a prior distribution), a lump sum distribution shall be
made to the Participant of the entire value of the non-forfeitable portion of
his accounts not later than the end of the second Plan Year following his
separation from service.
(c) If a distribution is made to the Participant of the nonforfeitable
portion of his Employer Contribution Account upon his separation from service,
the non-vested portion of his Account, if any, will be treated as a forfeiture
and reallocated to remaining Participants as provided in Section 5.2. If the
Participant does not receive a distribution of his Employer Contribution Account
upon his separation from service, such Account shall be held for the Participant
until he attains Normal Retirement Date and the non-vested portion of the
Account shall be treated as a forfeiture when the Participant sustains five
consecutive One Year Breaks in Service.
(d) In the event a Participant who is less than fully vested in his
Employer Contribution Account receives a distribution of his vested interest in
such Account upon his separation from service, and such Participant subsequently
returns to employment of the Employer, the Participant's Employer Contribution
Account will be restored to the value of the Account on the date of the
distribution if the Participant repays to the Trustees the full amount of such
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distribution before the earlier of five consecutive One-Year Breaks in Service
or five years after the Participant's date of reemployment. Restoration of the
forfeited amount of a Participant's Account shall be made from forfeitures or
Employer contributions.
9.2 (a) In the event a Participant separates from service with the Employer
for reasons other than retirement, disability, death or a layoff by the
Employer, he shall have a nonforfeitable right to the amount credited to his
Employer Contribution Account in accordance with the following schedule:
Completed Years of Service Percentage
-------------------------- ----------
At least But less than
0 1 0%
1 2 20%
2 3 40%
3 4 60%
4 5 80%
5 or more 100%
(b) A Participant shall have a wholly vested and nonforfeitable right to
his Employer Contribution Account upon separation from service on account of
retirement on or after the Normal Retirement Date, Total and Permanent
Disability, death while in the employ of the Employer or layoff by the Employer.
For purposes of this Section 9.2, the term "layoff" shall mean any involuntary
separation from service other than separation due to cause. If a Participant
separates from service with the Employer, the non-vested portion of his Employer
Contribution Account, if any, shall be forfeited upon the death of the
Participant.
(c) If the Employer amends the Plan in a manner which directly or
indirectly affects the computation of a Participant's nonforfeitable percentage,
each Participant who completes an Hour of Service in any Plan Year beginning
after December 31, 1988 and who has at least three Years of Service may elect
after the adoption of such amendment to have his nonforfeitable interest
computed under the Plan without regard to such amendment. The period during
which the election may be made shall commence the day the amendment is adopted
and shall end on later of:
(i) sixty (60) days after the amendment is adopted;
(ii) sixty (60) days after the amendment becomes effective; or
(iii) sixty (60) days after the Participant is issued written notice of the
amendment by the Employer or the Committee.
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9.3 (a) In the case of a Participant who has a Break in Service, Years of
Service completed before such Break shall not be counted until the Participant
has completed a Year of Service for the purpose of determining his
nonforfeitable percentage of the amount credited to his Employer Contribution
Account after such Break in Service.
(b) Years of Service completed on reemployment and after separation from
service with the Employer in connection with which he has five consecutive One
Year Breaks in Service shall not be counted for purposes of determining such
Participant's nonforfeitable percentage right to amounts credited to his
Employer Contribution Account before such Break in Service.
ARTICLE X
METHOD OF PAYMENT
-----------------
10.1 At the request of a Participant, the form of benefit payments may be
one of the following in cash:
(a) in a lump sum payment; or
(b) in periodic, monthly, quarterly, semi-annual or annual installments
over a period certain not exceeding the Participant's life expectancy or the
joint life expectancy of the Participant and his designated Beneficiary. If
periodic installments are to be paid, a Participant's account shall be invested
in the investment company funds available under the Plan as designated by the
Participant.
If periodic installments are paid over the life expectancy of the
Participant or joint life expectancy of the Participant and a designated
Beneficiary, a Participant may elect, prior to the time distributions begin,
whether or not to have his life expectancy and his Beneficiary's life expectancy
(if the Beneficiary is his spouse) annually recalculated. In the absence of such
election, life expectancies will not be recalculated.
10.2 In no event shall payments of benefits under this Plan commence later
than sixty (60) days after the close of the Plan Year in which the latest of the
following events occur:
(a) the Participant attains age sixty-five (65); or
(b) the Participant completes ten years of participation in the Plan; or
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(c) the termination of the Participant's service with the Employer.
10.3 (a) Notwithstanding the other requirements of this Plan, distributions
on behalf of any Participant, including a five percent (5%) owner, may be made
in accordance with all of the following requirements (regardless of when such
distribution commences):
(i) The distribution by the Trust Fund is one which would not have
disqualified such Trust under Section 401(a)(9) of the Code as in effect prior
to amendment by the Deficit Reduction Act of 1984.
(ii) The distribution is in accordance with a method of distribution
designated by the Participant whose interest is being distributed or, if the
Participant is deceased, by a Beneficiary of such Participant.
(iii) Such designation was in writing, was signed by the Participant or the
Beneficiary, and was made before January 1, 1984.
(iv) The Participant had accrued a benefit under the Plan as of December
31, 1983.
(v) The method of distribution designated by the Participant or the
Beneficiary specifies the time at which distribution will commence, the period
over which distributions will be made, and in the case of any distribution upon
the Participant's death, the Beneficiaries of the Participant listed in order of
priority.
(b) A distribution upon death will not be covered by this Section unless
the information in the designation contains the required information described
above with the respect to the distributions to be made upon the death of the
Participant.
(c) For any distribution which commenced before January 1, 1984, but
continues after December 31, 1983, the Participant, or the Beneficiary, to whom
such distribution is being made, will be presumed to have designated the method
of distribution under which the distribution is being made if the method of
distribution was specified in writing and the distribution satisfies the
requirements in subsections (a)(i) and (v) above.
(d) If a designation is revoked, any subsequent distribution must satisfy
the requirements of Section 401(a)(9) of the Code. Any changes in the
designation will be considered to be revocation of the designation. However, the
mere substitution or addition of another Beneficiary (one not named in the
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designation) under the designation will not be considered to be revocation
of the designation, so long as such substitution or addition does not alter the
period over which distributions are to be made under the designation, either
directly or indirectly (for example, by altering the relevant measuring life).
10.4 Required Distributions. All distributions required under this Section
10.4 shall be determined and made in accordance with the proposed regulations
under Section 401(a)(9) of the Code, including the minimum distribution
incidental benefit requirement of Section 1.401(a)(9)-2 of the proposed
regulations.
(a) Required beginning date. The entire interest of a Participant must be
distributed or begin to be distributed no later than the Participant's required
beginning date.
(b) Limits on Distribution Periods. As of the first distribution calendar
year, distributions, if not made in a single-sum, may only be made over one of
the following periods (or a combination thereof):
(1) a period certain not extending beyond the life expectancy of the
Participant, or
(2) a period certain not extending beyond the joint and last survivor
expectancy of the Participant and a designated beneficiary.
(c) Determination of amount to be distributed each year. If the
Participant's interest is to be distributed in other than a single sum, the
following minimum distribution rules shall apply on or after the required
beginning date:
(1) If a Participant's benefit is to be distributed over (i) a period not
extending beyond the life expectancy of the Participant or the joint life and
last survivor expectancy of the Participant and the Participant's designated
beneficiary or (ii) a period not extending beyond the life expectancy of the
designated beneficiary, the amount required to be distributed for each calendar
year, beginning with distributions for the first distribution calendar year,
must at least equal the quotient obtained by dividing the Participant's benefit
by the applicable life expectancy.
(2) For calendar years beginning before January 1, 1989, if the
Participant's spouse is not the designated beneficiary, the method of
distribution selected must assure that at least fifty percent (50%) of the
present value of the amount available for distribution is paid within the life
expectancy of the Participant.
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(3) For calendar years beginning after December 31, 1988, the amount to be
distributed each year, beginning with distributions for the first distribution
calendar year, shall not be less than the quotient obtained by dividing the
Participant's benefit by the lesser of (1) the applicable life expectancy or (2)
if the Participant's spouse is not the designated beneficiary, the applicable
divisor determined from the table set forth in Q&A-4 of Section 1.401(a)(9)-2 of
the proposed regulations. Distributions after the death of the Participant shall
be distributed using the applicable life expectancy in (c)(i)(A) above as the
relevant divisor without regard to proposed regulations Section 1.401(a)(9)-2.
(4) The minimum distribution required for the Participant's first
distribution calendar year must be made on or before the Participant's required
beginning date. The minimum distribution for other calendar years, including the
minimum distribution for the distribution calendar year in which the
Participant's required beginning date occurs, must be made on or before December
31 of that distribution calendar year.
(d) Death Distribution Provisions.
(1) Distribution beginning before death. If the Participant dies after
distribution of his or her interest has begun, the remaining portion of such
interest will continue to be distributed at least as rapidly as under the method
of distribution being used prior to the Participant's death.
(2) Distribution beginning after death. If the Participant dies before
distribution of his or her interest begins, distribution of the Participant's
entire interest shall be completed by December 31 of the calendar year
containing the fifth (5th) anniversary of the Participant's death except to the
extent that the Participant or his designated beneficiary elects to receive
distributions in accordance with (i) or (ii) below:
(i) if any portion of the Participant's interest is payable to a designated
beneficiary, distributions may be made over a period certain not greater than
the life expectancy of the designated beneficiary commencing on or before
December 31 of the calendar year immediately following the calendar year in
which the Participant died;
(ii) if the designated beneficiary is the Participant's surviving spouse,
the date distributions are required to begin in accordance with (i) above shall
not be earlier than the later of (1) December 31 of the calendar year
immediately following the calendar year in which the Participant died and (2)
December 31 of the calendar year in which the Participant would have attained
age 70 1/2.
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If the Participant has not made an election pursuant to Section 10.4(d)(2)
by the time of his or her death, the Participant's designated beneficiary must
elect the method of distribution no later than the earlier of (1) December 31 of
the calendar year in which distributions would be required to begin under this
Section 10.4(d), or (2) December 31 of the calendar year which contains the
fifth (5th) anniversary of the date of death of the Participant. If the
Participant has no designated beneficiary, or if the designated beneficiary does
not elect a method of distribution, distribution of the Participant's entire
interest must be completed by December 31 of the calendar year containing the
fifth (5th) anniversary of the Participant's death.
(3) For purposes of Section 10.4(d)(2) above, if the surviving spouse dies
after the Participant, but before payments to such spouse begin, the provisions
of Section 10.4(d)(2), with the exception of subparagraph (ii) therein, shall be
applied as if the surviving spouse were the Participant.
(4) For purposes of Section 10.4(d), distribution of a Participant's
interest is considered to begin on the Participant's required beginning date
(or, if Section 10.4(d)(3) above is applicable, the date distribution is
required to begin to the surviving spouse pursuant to Section 10.4(d)(3) above).
(e) Definitions.
(1) Applicable life expectancy. The life expectancy (or joint and last
survivor expectancy) calculated using the attained age of the Participant (or
designated beneficiary) as of the Participant's (or designated beneficiary's)
birthday in the applicable calendar year reduced by one for each calendar year
which has elapsed since the date life expectancy was first calculated. If life
expectancy is being recalculated, the applicable life expectancy will be the
life expectancy as so recalculated. The applicable calendar year shall be the
first distribution calendar year and if life expectancy is being recalculated,
such succeeding calendar year.
(2) Designated beneficiary. The individual who is designated as the
beneficiary under the Plan in accordance with Section 401(a)(9) and the proposed
regulations thereunder.
(3) Distribution calendar year. A calendar year for which a minimum
distribution is required. For distributions beginning before the Participant's
death, the first distribution calendar year is the calendar year immediately
preceding the calendar year which contains the Participant's required beginning
date. For distributions beginning after the Participant's death, the first
distribution calendar year is the calendar year in which distributions are
required to begin pursuant to Section 10.4(d) above.
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(4) Life expectancy. Life expectancy and joint and last survivor expectancy
are computed by use of the expected return multiples in Tables V and VI of
Section 1.72-9 of the income tax regulations. Unless otherwise elected by the
Participant by the time distributions are required to begin, life expectancies
shall not be recalculated annually. Such election shall be irrevocable as to the
Participant (or spouse) and shall apply to all subsequent years. The life
expectancy of a nonspouse designated beneficiary may not be recalculated. A
spousal designated beneficiary may not elect to have his or her life expectancy
recalculated with respect to any distribution paid pursuant to Section
10.4(d)(2).
(5) Participant's benefit.
(i) The Participant's account balance as of the last valuation date in the
calendar year immediately preceding the distribution calendar year (valuation
calendar year) increased by the amount of any contributions or forfeitures
allocated to the account balance as of dates in the valuation calendar year
after the valuation date and decreased by distributions made in the valuation
calendar year after the valuation date.
(ii) For purposes of paragraph (i) above, if any portion of the minimum
distribution for the first distribution calendar year is made in the second
distribution calendar year on or before the required beginning date, the amount
of the minimum distribution made in the second distribution calendar year shall
be treated as if it had been made in the immediately preceding distribution
calendar year.
(6) Required beginning date.
(i) General rule. The required beginning date of a Participant is the first
day of April of the calendar year following the calendar year in which the
Participant attains age 70 1/2.
(ii) Transitional rules. The required beginning date of a Participant who
attains age 70 1/2 before January 1, 1988, shall be determined in accordance
with (A) or (B) below:
(A) Non-five (5)-percent owners. The required beginning date of a
Participant who is not a five (5)-percent owner is the first day of April of the
calendar year following the calendar year in which the later of retirement or
attainment of age 70 1/2 occurs.
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(B) Five (5)-percent owners. The required beginning date of a Participant
who is a five (5)-percent owner during any year beginning after December 31,
1979, is the first day of April following the later of:
(I) the calendar year in which the Participant attains age 70 1/2, or
(II) the earlier of the calendar year with or within which ends the Plan
Year in which the Participant becomes a five (5)-percent owner, or the calendar
year in which the Participant retires.
The required beginning date of a Participant who is not a five (5)-percent
owner who attains age 70 1/2 during 1988 and who has not retired as of January
1, 1989, is April 1, 1990.
(iii) Five (5)-percent owner. A Participant is treated as a five
(5)-percent owner for purposes of this section if such Participant is a five
(5)-percent owner as defined in Section 416(i) of the Code (determined in
accordance with Section 416 but without regard to whether the Plan is top-heavy)
at any time during the Plan Year ending with or within the calendar year in
which such owner attains age 66 1/2 or any subsequent Plan Year.
(iv) Once distributions have begun to a five (5)-percent owner under this
section, they must continue to be distributed, even if the Participant ceases to
be a five (5)-percent owner in a subsequent year.
10.5 Restrictions on Distributions Prior to Normal Retirement Date. If the
value of a Participant's vested account balance exceeds (or at the time of any
prior distribution exceeded) $3,500, the Participant must consent to any
distribution made to him before he attains the Normal Retirement Date. The
consent of the Participant shall be obtained in writing within the 90-day period
ending on the date benefits are paid. The Committee shall notify the Participant
of his right to defer any distribution until the Participant attains the Normal
Retirement Date (or would have attained the Normal Retirement Date if not
deceased). Such notification shall include a general description of the material
features, and an explanation of the relative values of, the optional forms of
benefit available under the Plan in a manner that would satisfy the notice
requirements of Section 417(a)(3) of the Code below, and shall be provided no
less than 30 days and no more than 90 days prior to the date benefits are paid.
The consent of the Participant shall not be required to the extent that a
distribution is required to satisfy Sections 401(a)(9) or 415 of the Code. A
distribution may be paid to the Participant less than 30 days after the notice
described in this Section 10.5 is given to him, provided that the Administrative
Committee clearly informs the Participant that he has the right to a period of
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at least 30 days after receiving the notice to consider the decision of
whether or not to elect the distribution and the Participant, after receiving
the notice, affirmatively elects to receive a distribution. In addition, subject
to Section 10.7, upon termination of this Plan, the Participant's entire account
balance may be distributed without the Participant's consent to the Participant
or transferred to another defined contribution plan (other than an employee
stock ownership plan, as defined in Section 4975(e)(7) of the Code) within the
same controlled group as the Employer.
10.6 Withdrawals upon Attainment of Age 59-1/2. Upon the attainment of age
59-1/2, a Participant who is fully vested in his Employer Contribution Account
will be entitled to withdraw once a Plan Year all or any portion of his account
balance in a single sum. Any withdrawal by a Participant under this Section 10.6
will be made only after the Participant files a written request with the
Administrative Committee pursuant to such terms and conditions as the Committee
may prescribe.
10.7 Direct Rollovers
(a) This Section applies to distributions made on or after January 1, 1993.
Notwithstanding any provision of the Plan to the contrary that would otherwise
limit a distributee's election under this Section, a distributee may elect, at
the time and in the manner prescribed by the Administrative Committee to have
any portion of an eligible rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct rollover.
(b) Definitions.
(i) Eligible rollover distribution: An eligible rollover distribution is
any distribution of all or any portion of the balance to the credit of the
distributee, except that an eligible rollover distribution does not include: any
distribution that is one of a series of substantially equal periodic payments
(not less frequently than annually) made for the life (or life expectancy) of
the distributee or the joint lives (or joint life expectancies) of the
distributee and the distributee's designated beneficiary, or for a specified
period of ten years or more; any distribution to the extent such distribution is
required under section 401(a)(9) of the Code; and the portion of any
distribution that is not includable in gross income (determined without regard
to the exclusion for net unrealized appreciation with respect to employer
securities).
(ii) Eligible retirement plan: An eligible retirement plan is an individual
retirement account described in section 408(a) of the Code, an individual
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retirement annuity described in section 408(b) of the Code, an annuity plan
described in section 403(a) of the Code, or a qualified trust described in
section 401(a) of the Code, that accepts the distributee's eligible rollover
distribution. However, in the case of an eligible rollover distribution to the
surviving spouse, an eligible retirement plan is an individual retirement
account or individual retirement annuity.
(iii) Distributee: A distributee includes an Employee or former Employee.
In addition, the Employee's or former Employee's surviving spouse or former
spouse who is the alternate payee under a qualified domestic relations order, as
defined in section 414(p) of the Code, are distributees with regard to the
interest of the spouse or former spouse.
(iv) Direct rollover: A direct rollover is a payment by the Plan to the
eligible retirement plan specified by the distributee.
ARTICLE XI
ADMINISTRATION OF PLAN
----------------------
11.1 (a) This Plan shall be administered by a Committee which shall consist
of not less than two nor more than five members.
(b) The Committee shall serve without compensation from the Plan. Vacancies
may be filled by the Chief Executive Officer of Delaware Group Delaware Fund,
Inc. on an interim basis, until action to fill the vacancy is taken by the Board
of Directors of Delaware Group Delaware Fund, Inc.
(c) The Committee:
(1) shall act by affirmative vote of a majority of its members at a meeting
called with five days notice or in writing without a meeting;
(2) shall appoint a Secretary who may be but need not be one of its own
members. He shall keep complete records of the administration of the Plan;
(3) may authorize each and any one of its members to perform routine acts
and to sign documents on its behalf.
11.2 The Committee may appoint such persons or committees, employ such
attorneys, agents, accountants, investment managers, consultants, actuaries, and
other specialists as it deems necessary or desirable to advise or assist
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it in the performance of its duties hereunder and the Committee may rely upon
their respective written opinions or certificates. To the extent such persons
are empowered by written notification from the Committee to perform duties
defined in ERISA as fiduciary duties, such empowerment shall constitute a
delegation of fiduciary responsibility for purposes of determining the
co-fiduciary liability under ERISA. The Committee shall review the performance
of any such persons periodically.
11.3 Administration of the Plan shall consist of interpreting and carrying
out the provisions of this Plan. The Committee shall determine the eligibility
of Employees to participate in this Plan, their rights while Participants in
this Plan and the nature and amount of benefits to be received therefrom. The
Committee shall decide any disputes which may arise under this Plan and the
Trust Agreement. The Committee may provide rules and regulations for the
administration of the Plan consistent with its terms and provisions. Any
construction or interpretation of the Plan and any determination of fact in
administering the Plan made in good faith by the Committee shall be final and
conclusive for all Plan purposes. The Committee shall have the discretionary
authority to determine eligibility for benefits and to construe the terms of the
Plan.
11.4 (a) The Committee shall prescribe a form for the presentation of
claims under the terms of this Plan and/or Trust Agreement.
(b) Upon presentation to the Committee of a claim on the prescribed form,
the Committee shall make a determination of the validity thereof. If the
determination is adverse to the claimant, the Committee shall furnish to the
claimant within 90 days after the receipt of the claim a written notice setting
forth the following:
(1) The specific reason or reasons for the denial;
(2) Specific reference to pertinent provisions of the Plan on which the
denial is based;
(3) A description of any additional material or information necessary for
the claimant to perfect the claim and an explanation of why such material or
information is necessary; and
(4) Appropriate information as to the steps to be taken if the claimant
wishes to submit his or her claim for review.
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(c) In the event of a denial of a claim, the claimant or his duly
authorized representative may appeal such denial to the Committee for a full and
fair review of the adverse determination. Claimant's request for review must be
in writing and made to the Committee within 60 days after receipt by claimant of
the written notification required under Section 11.4(b); provided, however, such
60 day period shall be extended if circumstances so warrant. Claimant or his
duly authorized representative may submit issues and comments in writing which
shall be given full consideration by the Committee in his review.
(d) The Committee may, in its sole discretion, conduct a hearing. A request
for a hearing made by claimant will be given full consideration. At such
hearing, the claimant shall be entitled to appear and present evidence and be
represented by counsel.
(e) A decision on a request for review shall be made by the Committee not
later than 60 days after receipt of the request; provided, however, in the event
of a hearing or other special circumstances, such decision shall be made not
later than 120 days after receipt of such request. If it is necessary to extend
the period of time for making a decision beyond 60 days after the receipt of the
request, the claimant shall be notified in writing of the extension of time
prior to the beginning of such extension.
(f) The Committee's decision on review shall state in writing the specific
reasons and references to the Plan provisions on which it is based. Such
decision shall be promptly provided to the claimant. If the decision on review
is not furnished in accordance with the foregoing, the claim shall be deemed
denied on review.
11.5 The Committee shall have the power to allocate its responsibilities
among its several members, except that all matters involving the hearing of and
decision on the claims and the review of the determination of benefits shall be
made by the full Committee; provided, however, that no member of the Committee
shall participate in any matter relating solely to himself.
11.6 To the extent required by law, the Committee shall give notice in
writing to all interested parties of any amendment of this Plan and/or Trust
Agreement and of any application to any government agency for any determination
of the effect of any such amendment on the Plan within the jurisdiction of that
agency.
11.7 (a) The Committee shall administer the Plan and the Trust Agreement
forming a part thereof under uniform rules of general application.
(b) The Committee or any member thereof:
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(1) May serve under the Plan and/or the Trust Agreement in one or more
fiduciary capacities, as that term is defined in ERISA; and
(2) May resign by giving written notice thereof to the Chief Executive
Officer of Delaware Group Delaware Fund, Inc. not less than fifteen (15) days
before the effective date of such resignation; and
(3) May be removed at any time, without cause, by the Board of Directors of
Delaware Group Delaware Fund, Inc.
ARTICLE XII
AMENDMENT, CONSOLIDATION, MERGER OR TERMINATION
-----------------------------------------------
12.1 Delaware Group Delaware Fund, Inc. may amend the Plan and the Trust
Agreement in any manner and at any time by action of its Board of Directors;
provided, however, that no amendment shall deprive any Participant or his
Beneficiary of any vested interest he may have hereunder unless the amendment is
for the purpose of conforming the Plan to the requirements of the Code or any
other applicable law. No amendment which affects the rights, responsibilities or
duties of the Trustee may be made without the Trustee's written consent. No
amendment shall be made to the Plan which has the effect of eliminating or
reducing an early retirement benefit or a retirement-type subsidy, eliminating
an optional form of benefit or decreasing a Participant's account balance with
respect to benefits attributable to service before the amendment. Further, if
the vesting schedule of the Plan is amended, in the case of an Employee who is a
Participant as of the later of the date such amendment is adopted or the date it
becomes effective, the nonforfeitable percentage (determined as of such date) of
such Employee's right to his Employer derived account balance will not be less
than his percentage computed under the Plan without regard to such amendment.
12.2 Any Participant on the effective date of an amendment who is not
actively participating in the Plan on such effective date shall not benefit from
an amendment unless otherwise required by law or unless such amendment is
specifically made applicable to such Participant.
12.3 In the event of any merger or consolidation with, or transfer of
assets or liabilities to, any other plan, each Participant shall be entitled to
a benefit after the merger, consolidation or transfer (if the Plan then
terminated) which is not less than the benefits he would have been entitled to
receive immediately before the merger, consolidation or transfer (if the Plan
had then terminated).
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12.4 The Employer intends to continue the Plan indefinitely but reserves
the right to discontinue contributions, terminate or partially terminate the
Plan at any time. In the event of a complete discontinuance of contributions,
termination or partial termination of the Plan, the interests of all
Participants affected shall become nonforfeitable. Upon termination of the Plan,
the Employer shall in its complete discretion notify the Trustee to either hold
all assets of the Trust Fund and make payments in accordance with the terms of
the Plan or distribute to each Participant his net account balance in a lump sum
payment in cash or kind. The Employer's contribution to the Trust Fund or the
income thereof shall not be paid to, or shall not revert to Employer and shall
not be used for any purpose other than the exclusive benefit of the Participants
or their Beneficiaries.
ARTICLE XIII
MISCELLANEOUS
-------------
13.1 To the extent permitted by law, it is a condition of the Plan that the
benefits provided hereunder shall not be subject to assignment, anticipation,
alienation, attachment, levy or transfer, and any attempt to do so shall not be
recognized. The preceding sentence shall also apply to the creation, assignment
or recognition of a right to any benefit payable with respect to a Participant
pursuant to a domestic relations order, unless such order is determined to be a
qualified domestic relations order as defined in Section 414(p) of the Code. If
provided by the terms of a qualified domestic relations order, a distribution of
benefits may be made from the Plan to the alternate payee under such order in a
single lump sum as soon as practicable following the determination by the
Administrative Committee that the order constitutes a qualified domestic
relations order. Payment of benefits may be made to the alternate payee even
though the Participant identified in the order has not attained the earliest
retirement age under the Plan. For purposes of this Section 13.1, the "earliest
retirement age" means the earlier of (i) the date in which the Participant is
entitled to a distribution under the Plan or (ii) the later of the date the
Participant attains age 50 or the earliest date on which the Participant would
begin receiving benefits if the Participant separated from service.
13.2 Nothing herein contained shall be deemed to give any Employee the
right to be retained in the employ of Employer or to interfere with the right of
the Employer to discharge any Employee at any time, nor shall it be deemed to
give the Employer the right to require any Employee to remain in its employ, nor
shall it interfere with the Employee's right to terminate his employment at any
time.
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<PAGE>
13.3 All expenses incurred by the Trustees in the administration of the
Fund, including but not limited to the compensation of counsel, accountants,
Trustees, other agents or fiduciaries, shall be charged against the Employer,
unless otherwise paid by the Fund.
13.4 This Plan shall be interpreted in accordance with the laws of the
Commonwealth of Pennsylvania, except to the extent superseded by ERISA as in
effect from time to time.
ARTICLE XIV
LOANS
-----
14.1 The Committee, in its sole discretion, may direct the Trustees to make
a loan to a Participant, who is a party-in-interest, as defined in Section 3(14)
of ERISA, from the Participant's account balance upon receipt of a written
request from the Participant. The total amount of any such loan (when added to
the outstanding balance of all other loans to the Participant under the Plan or
any other qualified plan of the Employer) shall not exceed the lesser of $50,000
or 50% of the Participant's vested account balance. The $50,000 limitation shall
be reduced by the excess, if any, of the highest outstanding balance of loans to
the Participant from the Plan during the one-year period ending on the day
before the date on which such loan was made over the outstanding balance of
loans from the Plan to the Participant on the date that such loan was made.
14.2 A request by a Participant for a loan shall be made in writing to the
Committee and shall specify the amount of the loan. The terms and conditions on
which the Committee shall approve loans under the Plan shall be applied on a
reasonably equivalent basis with respect to all Participants. If a Participant's
request for a loan is approved by the Committee, the Committee shall furnish the
Trustees with written instructions directing the Trustees to make the loan in a
lump sum payment of cash to the Participant. In making any loan payment under
this Article XIV, the Trustees shall be fully entitled to rely on the
instructions furnished by the Committee, and shall be under no duty to make any
inquiry or investigation with respect thereto.
14.3 Loans shall be made on such terms and subject to such limitations as
the Committee may prescribe from time to time, provided that any such loan shall
be evidenced by a written note, shall bear a reasonable rate of interest on the
unpaid principal thereof, shall be adequately secured, and shall be repaid by
the Participant over a period not to exceed five years.
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<PAGE>
14.4 Any loan to a Participant under the Plan shall be secured by the
pledge of not more than 50% percent of the Participant's right, title and
interest in his vested account balance. Such pledge shall be evidenced by the
execution of a promissory note by the Participant.
14.5 The Committee shall have the sole responsibility for insuring that a
Participant timely makes all loan repayments, and for notifying the Trustees in
the event of any default by the Participant on the loan. Each loan repayment
shall be paid to the Trustees, and shall be accompanied by written instructions
from the Committee that identifies the Participant on whose behalf the loan
repayment is being made. Repayment of loans shall be made solely by means of
payroll deductions, or such other manner approved by the Committee.
14.6 In the event of a default by a Participant on a loan repayment, all
remaining principal payments on the loan shall be immediately due and payable.
The Committee shall be authorized (to the extent permitted by law) to take any
and all actions necessary and appropriate to enforce collection of an unpaid
loan. However, in the event of a default, foreclosure on the note and attachment
of security will not occur until a distributable event occurs under the Plan.
14.7 Upon the occurrence of a Participant's retirement or death, or earlier
distribution of benefits, the unpaid balance of any loan, including any unpaid
interest, shall be deducted from any payment or distribution from the Trust Fund
to which such Participant or his Beneficiary may be entitled and his vested
interest in his account shall be reduced.
14.8 A loan to a Participant shall be considered an investment of the
separate account(s) of the Participant from which the loan is made. All loan
repayments shall be credited to such separate account(s) and reinvested in the
investment company fund designated by the Participant.
14.9 A loan may not be made to a Participant who owns (or is considered as
owning within the meaning of Section 318(a)(1) of the Internal Revenue Code)
more than 5% of the outstanding stock of the Employer.
14.10 For loans granted or renewed on or after the last day of first Plan
Year beginning on or after January 1, 1989, the Committee shall issue written
loan guidelines, which shall form part of the Plan, describing the procedures
and conditions for making loans, and may revise those guidelines at any time,
and for any reason.
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<PAGE>
ARTICLE XV
LIMITATIONS ON ALLOCATIONS
--------------------------
15.1 The provisions of this Article XV shall be effective for limitation
years beginning after December 31, 1986.
(a) Notwithstanding any provisions of this Plan to the contrary, the annual
additions which may be credited to a Participant's account for any limitation
year will not exceed the lesser of the maximum permissible amount or any other
limitation contained in this Plan.
(b) As soon as is administratively feasible after the end of the limitation
year, the maximum permissible amount for the limitation year will be determined
on the basis of the Participant's actual compensation for the limitation year.
(c) In the event that it is determined that because of the allocation of
forfeitures, a reasonable error in estimating a Participant's annual
compensation or under other limited facts and circumstances permitted by the
Commissioner of the Internal Revenue Service, if there is an excess amount the
excess will be disposed of as follows:
(1) If the Participant is covered by the Plan at the end of the limitation
year, the excess amount shall be used to reduce employer contributions
(including any allocation of forfeitures) for such Participant in the next
limitation year, and each succeeding limitation year if necessary;
(2) If the Participant is not covered by the Plan at the end of the
limitation year, the excess amount will be held unallocated in a suspense
account. The suspense account will be applied to reduce future employer
contributions (including allocation of any forfeitures) for all remaining
Participants in the next limitation year, and each succeeding limitation year if
necessary;
(3) If a suspense account is in existence at any time during the limitation
year pursuant to this Section, it will not participate in the allocation of
investment gains and losses. The entire amount allocated to Participants from a
suspense account, including any such gains or other income or less any losses is
considered an annual addition.
(d) For the purpose of applying the limitations under this Article, all
defined contribution plans maintained by the employer are to be considered as a
single plan.
15.2 Definitions. For purposes of this Article only, the following
definitions and rules of interpretation will apply:
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<PAGE>
(a) "annual additions" -- The sum of the following amounts credited to a
Participant's account for the limitation year:
(1) employer contributions;
(2) forfeitures;
(3) voluntary Employee contributions;
(4) amounts allocated after March 31, 1984, to an individual medical
account, as defined in Section 415(1)(1) of the Code, which is part of a pension
or annuity maintained by the employer;
(5) amounts derived from contributions paid or accrued after December 31,
1985, in taxable years ending after such date, which are attributable to
post-retirement medical benefits allocated to the separate account of a key
employee, as defined in Section 419A(d)(3) of the Code, under a welfare benefit
fund as defined in Section 419(e) of the Code, maintained by the employer; and
(6) excess amounts applied under this Article in the limitation year to
reduce employer contributions.
(b) "compensation" -- a Participant's earned income, wages, salaries, and
fees for professional services and other amounts received (without regard to
whether an amount is paid in cash) for personal services actually rendered in
the course of employment with the employer to the extent that the amounts are
includable in gross income (including, but not limited to, commissions paid
salesmen, compensation for services on the basis of a percentage of profits,
commissions on insurance premiums, tips, bonuses, fringe benefits,
reimbursements and expense allowances), and excluding the following:
(1) Employer contributions to a plan of deferred compensation which are not
includable in the Employee's gross income for the taxable year in which
contributed, or Employer contributions under a simplified employee pension to
the extent such contributions are deductible by the Employee, or any
distributions from a plan of deferred compensation;
(2) Amounts realized from the exercise of a nonqualified stock option, or
when restricted stock (or property) held by the Employee either becomes freely
transferable or is no longer subject to a substantial risk of forfeiture;
(3) Amounts realized from the sale, exchange or other disposition of stock
acquired under a qualified stock option; and
-37-
<PAGE>
(4) Other amounts which received special tax benefits, or contributions
made by the employer (whether or not under a salary reduction agreement) towards
the purchase of an annuity described in Section 403(b) of the Code (whether or
not the amounts are actually excludable from the gross income of the Employee);
and
(5) Any contribution for medical benefits (within the meaning of Section
419A(f)(2) of the Code) after separation from service which is otherwise treated
as an annual addition; and
(6) Any amount otherwise treated as an annual addition under Section
415(i)(1) of the Code.
For purposes of applying the limitations of this Article, compensation for
a limitation year is the compensation actually paid or includable in gross
income during such year.
Notwithstanding the preceding sentence, compensation for a Participant who
is permanently and totally disabled (as defined in Section 37(e)(3) of the Code)
is the compensation such Participant would have received for the limitation year
if the Participant had been paid at the rate of compensation paid immediately
before becoming permanently and totally disabled; such imputed compensation for
the disabled Participant may be taken into account only if the Participant is
not an officer, an owner, or highly compensated, and contributions made on
behalf of such Participant are nonforfeitable when made.
(c) "employer" -- The Employer that adopts this Plan, and all members of a
controlled group of corporations (as defined in Section 414(b) of the Code as
modified by Section 415(h) of the Code), all commonly controlled trades or
businesses (as defined in Section 414(c) of the Code as modified by Section
415(h) of the Code), or affiliated service groups (as defined in Section 414(m)
of the Code) of which the adopting Employer is a part.
(d) "excess amount" -- The excess of the Participant's annual additions for
the limitation year over the maximum permissible amount.
(e) "limitation year" -- Effective April 2, 1989, the twelve-month period
beginning April 2 and ending April 1. Prior to April 2, 1989, the limitation
year is the twelve-month period from November 1 through the following October
31, except the limitation year beginning November 1, 1988 shall end April 1,
1989.
-38-
<PAGE>
(f) "maximum permissible amount" -- The lesser of $30,000 (or, if greater,
1/4 of the dollar limitation in effect under Section 415(b)(1)(A) of the Code)
or twenty-five percent (25%) of the Participant's compensation for the
limitation year.
ARTICLE XVI
TOP HEAVY DEFINITIONS AND RULES
-------------------------------
16.1 Key employee. An Employee or former Employee, (or the Beneficiary of
such an Employee or former Employee) who at any time during the determination
period was:
(a) An officer of the Employer having an annual compensation greater than
fifty percent (50%) of the amount in effect under Section 415(b)(1)(A) of the
Code for any such Plan Year;
(b) One of the ten Employees having annual compensation from the Employer
of more than the limitation in effect under Section 415(c)(1)(A) of the Code and
owning (or considered as owning within the meaning of Section 318 of the Code)
the largest interests in the Employer;
(c) A person owning (or considered as owning within the meaning of Section
318 of the Code) more than five percent (5%) of the outstanding stock of the
Employer or stock possessing more then five percent (5%) of the total combined
voting power of ail stock of the Employer, or
(d) A person who has annual compensation from the Employer of more than
$150,000 and who would be described in (c) hereof if one percent (1%) were
substituted for five percent (5%).
For purposes of (a) above, no more than fifty (50) Employees (or, if lesser, the
greater of three or ten percent of the Employees will be treated as officers.)
For purposes of (b), if two Employees have the same interest in the Employer,
the Employee having greater annual compensation from the Employer will be
treated as having a larger interest. For purposes of this Article the term
"compensation" shall have the same meaning as provided for in Article XV.
The determination period is the Plan Year containing the determination date
as defined in Section 16.8, and the four (4) preceding Plan Years. The
determination of who is a key employee will be made in accordance with the rules
and regulations under Section 416(i)(1) of the Code.
16.2 Non-key employee. Any Employee who is not a key employee. In addition,
any Beneficiary of a non-key employee will be treated as a non-key employee.
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<PAGE>
16.3 Permissive aggregation group. The required aggregation group of plans
plus any other plan or plans of the Employer, which considered as a group with
the required aggregation group, would continue to satisfy the requirements of
Sections 401(a)(4) and 410 of the Code.
16.4 Required aggregation group.
(a) Each qualified plan of the Employer in which at least one key employee
participates or participated at any time during the determination period
(regardless of whether the plan has terminated), and
(b) Any other qualified plan of the Employer which enables a plan described
in (a) to meet the requirements of Sections 401 (a)(4) and 410 of the Code.
16.5 Top-heavy plan. This Plan is top-heavy for any Plan Year if any of the
following conditions exist;
(a) If the top-heavy ratio for this Plan exceeds sixty percent (60%) and
this Plan is not part of any required aggregation group or permissive
aggregation group of plans.
(b) If this Plan is part of a required aggregation group of plans but not
part of a permissive aggregation group and the top-heavy ratio for the required
aggregation group of plans exceeds sixty percent (60%).
(c) If this Plan is a part of a permissive aggregation group of plans and
the top-heavy ratio for the required aggregation group exceeds sixty percent
(60%) and the top-heavy ratio for the permissive aggregation group exceeds sixty
percent (60%).
16.6 Super top-heavy plan. For any Plan Year in which this Plan would be a
Top-Heavy Plan pursuant to Section 16.5 above if "ninety percent (90%)" were
substituted for "sixty percent (60%)" at each place where "sixty percent (60%)"
appears therein.
16.7 Top-heavy ratio.
(a) If the Employer maintains one or more defined contribution plans
(including any simplified employee pension plan) and has not maintained any
defined benefit plan which during the five (5) year period ending on the
determination date has or has had accrued benefits, the top-heavy ratio for this
Plan alone or for the required or permissive aggregation group as appropriate is
a fraction, the numerator of which is the sum of the account balances of all key
employees as of the determination date (including any part of any account
balance distributed in the five (5) year period ending on the determination
-40-
<PAGE>
date), and the denominator of which is the sum of all account balances
(including any part of any account balance distributed in the five (5) Year
period ending on the determination date), both computed in accordance with
Section 416 of the Code and the regulations thereunder. Both the numerator and
denominator of the top-heavy ratio are increased to reflect any contribution not
actually made as of the determination date, but which is required to be taken
into account on that date under Section 416 of the Code and the regulations
thereunder.
(b) If the Employer maintains one or more defined contribution plans
(including any simplified employee pension plan) and maintains or has maintained
one or more defined benefit plans which during the five (5) year period ending
on the Determination Date has or has had any accrued benefits, the top-heavy
ratio for any required or permissive aggregation group as appropriate is a
fraction, the numerator of which is the sum of account balances under the
aggregated defined contribution plan or plans for all key employees determined
in accordance with (2) above, and the present value of accrued benefits under
the aggregated defined benefit plan or plans for all key employees as of the
determination date, and the denominator of which is the sum of the account
balances under the aggregated defined contribution plan or plans for all
Participants, determined in accordance with (a) above, and the present value of
accrued benefits under the aggregated defined benefit plan or plans for all
Participants as of the determination dates, all determined in accordance with
Section 416 of the Code and the regulations thereunder. The accrued benefits
under a defined benefit plan in both the numerator and denominator of the
top-heavy ratio are increased for any distribution of an accrued benefit made in
the five year period ending on the determination date.
(c) For the purposes of (a) and (b) above, the value of account balances
and the present value of accrued benefits will be determined as of the most
recent valuation date that falls within or ends with the twelve (12) month
period ending on the determination date, except as provided in Section 416 of
the Code and the regulations thereunder for the first and second plan years of a
defined benefit plan. The account balances and accrued benefits of a Participant
(1) who is a non-key employee but who was a key employee in a prior year, or (2)
who has not been credited with at least one Hour of Service with any Employer
maintaining the Plan at any time during the five (5) year period ending on the
determination date will be disregarded. The calculation of the top-heavy ratio,
and the extent to which distributions, rollovers, and transfers are taken into
account will be made in accordance with Section 416 of the Code and the
regulations thereunder. When aggregating plans the value of account balances and
accrued benefits will be calculated with reference to the determination dates
that fall within the same calendar year. If any individual has not received
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<PAGE>
any compensation from any employer maintaining the plan (other than benefits
under the Plan) at any time during the five (5) year period ending on the
determination date, any accrued benefit for such individual (and the account
of such individual) will not be taken into account.
Effective for Plan Years beginning after December 31, 1986, the accrued
benefit of a Participant other than a key employee shall be determined under (i)
the method, if any, that uniformly applies for accrual purposes under all
defined benefit plans maintained by the Employer or (ii) if there is no such
method, as if such benefit accrued not more rapidly than the slowest accrual
rate permitted under the fractional rule of Section 411(b)(1)(C) of the Code.
16.8 Determination date. With respect to any Plan Year subsequent to the
first Plan Year, the last day of the preceding Plan Year. For the first Plan
Year of the Plan, the last day of that Plan Year.
16.9 Valuation date. The last day of the Plan Year.
16.10 Present value. Present value will be based upon the interest and
mortality rates specified in the Employer's defined benefit plan.
16.11 Minimum Allocation.
(a) If in any Plan Year the Plan is a Top Heavy Plan and the Employer does
not maintain any qualified defined benefit plan in addition to this Plan, except
as provided in (b) and (c) below, the Employer contributions and forfeitures
allocated on behalf of any Participant who is a non-key employee will not be
less than the lesser of three percent (3%) of such Participant's compensation or
the largest percentage of Employer contributions and forfeitures, as a
percentage of the first $200,000 of the key employee's compensation (as defined
in Section 15.2(b)), and as limited by Section 401(a)(17) of the Code, allocated
on behalf of any key employee for that year. The minimum allocation is
determined without regard to any Social Security contributions. This minimum
allocation will be made even though, under other Plan provisions, the
Participant would not otherwise be entitled to receive an allocation, or would
have received a lesser allocation for the year because of the Participant's
failure to complete 1,000 Hours of Service. The minimum allocation (if any)
required under this paragraph (a) shall be made to this Plan only to the extent
such allocation is not made for the Participant under any other defined
contribution plan(s) maintained by the Employer.
-42-
<PAGE>
(b) In the event the Employer maintains a qualified defined benefit plan(s)
in addition to this Plan, the Employer will provide a minimum allocation at
least equal to five percent (5%) of compensation (as defined in Section 15.2(b))
to each non-key employee, entitled under (a) above to receive a minimum
allocation, who is covered under this Plan and the qualified defined benefit
plan(s). If this Plan enables a defined benefit plan to meet the requirements of
Section 401(a) or 410 of the Code, the minimum allocation described in (a) above
must be at least three percent (3%) of a Participant's compensation, regardless
of the largest percentage of Employer contributions and forfeitures of a key
employee's compensation.
(c) The provisions in (a) and (b) above will not apply to any Participant
who was not employed by the Employer on the last day of the Plan Year.
(d) The minimum allocation required under this Section 16.11 (to the extent
required to be nonforfeitable under Section 416(b) of the Code) may not be
forfeited under Sections 411(a)(3)(B) or 411(a)(3)(D) of the Code.
IN WITNESS WHEREOF, Delaware Group Delaware Fund, Inc. has caused this
amended and restated Plan, effective April 1, 1989, to be executed by its duly
authorized officers and its corporate seal to be impressed hereon this 17th day
of November, 1994.
Attest: DELAWARE GROUP DELAWARE FUND, INC.
/s/ George M. Chamberlain, Jr. By: /s/Brian F. Wruble
- ------------------------------ -------------------------
George M. Chamberlain, Jr. Brian F. Wruble
Senior Vice President/Secretary President and Chief
Executive Officer
-43-
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "Financial
Highlights" in the Prospectus and "Financial Statements" in the Statement of
Additional Information and to the incorporation by reference in this
Post-Effective Amendment No. 102 to the Registration Statement (Form N-1A)
(No. 2-10765) of Delaware Group Fund, Inc. - Delaware Fund and Devon Fund of our
reports dated December 1, 1994, included in the 1994 Annual Reports to
Shareholders of Delaware Group Delaware Fund, Inc. - Delaware Fund and Devon
Fund.
Ernst & Young LLP
Philadelphia, Pennsylvania
November 20, 1995
<PAGE>
DELAWARE
GROUP
- ----------
IRA APPLICATION
AND TRANSFER FORM
|| PERSONAL IRA
|| SPOUSAL IRA
|| ROLLOVER IRA
(PHOTO OF LARGE KEY) || DIRECT ROLLOVER
|| PARTICIPANT'S SEP/IRA
|| PARTICIPANT'S SARSEP
||=======================================
RETIREMENT
LOGO PLANNING
IS THE KEY
<PAGE>
Welcome to the Delaware Group
DELAWARE Before completing your Individual Retirement Account (IRA)
GROUP Application, please review the following points so you can
========== take advantage of the many options available to you with
your Delaware Group Account.
________________________________________________________________________________
To Open Your Delaware Group IRA:
When opening both a Personal and Spousal IRA be sure to complete a separate
application for yourself and for your non-working spouse. The overall maximum
for both accounts is $2,250 per year with no more than $2,000 in either account.
When making Your Investment Selection, talk to your financial adviser to
determine whether Class A shares or Class B shares are more appropriate for you.
Please indicate which fund, or funds, you have selected for your IRA investments
by checking the appropriate selection box next to the fund(s). There is no limit
to the number of funds you may select as long as you meet the required minimum
investment of $25 per fund. And there is only one $15 annual maintenance fee,
regardless of the number of funds you select for your Delaware Group IRA. This
fee can either be prepaid by you, or debited from your IRA account. Your initial
contribution must total $250.
When making your contribution by check, make your check payable to: Delaware
Management Trust Company, the Custodian of your Delaware Group IRA.
If this is a Rollover IRA, and you received a distribution check made payable to
you, be sure to sign and endorse the back of the check, "Payable to Delaware
Management Trust Company."
For Direct Rollovers, in which he plan assets flow directly from the former
trustee/custodian to Delaware Management Trust Company, please be sure to
complete the separate "Direct Rollover" form included with this package.
Checks representing Direct Rollover assets should be made payable to Delaware
Management Trust Company.
Send your completed and signed Application, along with your contribution and/or
Transfer of Assets or Direct Rollover instructions to:
Delaware Service Company, Inc.
Attn: Retirement Plans Department
1818 Market Street
Philadelphia, PA 19103-3682
Additional IRA Services
To establish an Automatic Investing Plan, where regularly scheduled
contributions are taken directly from your personal checking account and
invested into your Delaware Group IRA, call our offices at the telephone number
listed below. Your Shareholder Services Representative will explain this
valuable program of automatic investing and send you the appropriate sign-up
materials.
If you wish to begin taking systematic withdrawals from your account, you will
also need to complete a Retirement Plan Systematic Withdrawal Plan Form. This
service is available for Class A shares only. Just call the telephone number
listed below to request the form.
If you are 70 1/2 or older and need to take Required Distributions from your
account, please ask for an IRA Required Distribution Election Form. Shareholders
cannot roll over or transfer the minimum amount they are required to receive
during a distribution calendar year.
For Simplified Employee Pension/IRA and
Salary Reduction SEP Participants:
SEP/IRA and SARSEP Participants can also arrange to open a personal Delaware
Group IRA at the same time they establish their plan participant account. No
matter how many different Delaware Group IRAs you open, you only pay one $15
annual maintenance fee.
If you are an Employer Participant in the plan, be sure to complete the
appropriate Employer Adoption Agreement as well as the Participant IRA
Application.
If you have any questions or would like assistance
in completing the Individual Retirement Account Application, please call us at
800-523-1918. In Philadelphia, call 215-988-1241.
Again, welcome to the Delaware Group.
<PAGE>
DELAWARE
GROUP
======== Individual Retirement Account Application =======
1 __________________________________ || || ||-|| ||-|| || || ||
Information Name Social Security Number
About You __________________________________ _____/______/_____
Address Date of Birth
Please __________________________________ ( )_____________( )__________
print. City State Zip Phone: Business Home
===============================================================================
2
Type of IRA
Check one.
| | Personal IRA ($2,000 annual limit)
| | Spousal IRA ($2,250 overall limit for you and your non-working spouse with
no more than $2,000 in either account. Separate applications required.)
| | Rollover IRA (No dollar limit; complete Rollover Information section below
and on page 4 of this Application)
| | Transfer of Assets (No dollar limit; complete the Transfer of Assets Form on
page 7 of this Application)
| | SEP/IRA -- Simplified Employee Pension/IRA Plan ($30,000 overall limit).
Must be accompanied by a Delaware Group SEP Plan Establishment Document
completed by the Employer.
| | Self-Directed SEP/IRA -- Simplified Employee Pension/IRA Plan ($30,000
overall limit). Must be accompanied by IRS Form 5305-SEP.
| | SARSEP -- Salary Reduction SEP/IRA Plan ($8,994 salary deferral limit in
1993, indexed each year). Must be accompanied by a Delaware Group SARSEP
Plan Establishment Document completed by the Employer.
| | Self-Directed SARSEP -- Salary Reduction SEP/IRA Plan ($8,994 salary
deferral limit in 1993, indexed each year). Must be accompanied by IRS Form
5305A-SEP.
For SEP/IRA & SARSEP plans, please complete the following:
________________________________________________________________________________
Company Name
________________________________________________________________________________
Address of Employer
________________________________________________________________________________
City State Zip
| | | | - | | | | | | | | | | | | | |
Employer Tax I.D. Number
| | Check here if you are a new participant in an existing
SEP/IRA or SARSEP plan.
<TABLE>
<CAPTION>
====================================================================================================================================
(Employer Contribution) (Salary
IRA SEP/IRA Reduction
Current Prior Rollover/ Current Prior Contribution)
3 Year Year Transfer Year Year SARSEP
------------------- --------- ------------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Your
Investment Initial Contribution $_____ $_____ $_____ $_____ $_____ $_____
Selections Delaware Group -- Equity Funds
| | Decatur Income || Class A
Minimum initial Fund || Class B _____% _____% _____% _____% _____% _____%
contribution: | | Decatur Total || Class A
$250. Minimum Return Fund || Class B _____% _____% _____% _____% _____% _____%
investment per | | DelCap Fund || Class A
fund: $25. || Class B _____% _____% _____% _____% _____% _____%
Remember to | | Trend Fund || Class A
check off your || Class B _____% _____% _____% _____% _____% _____%
fund(s) selection. | | Value Fund || Class A
|| Class B _____% _____% _____% _____% _____% _____%
Please do not | | International || Class A
use fractional Equity Fund || Class B _____% _____% _____% _____% _____% _____%
percentages, for | | Dividend || Class A
example 33 1/3, Growth Fund || Class B _____% _____% _____% _____% _____% _____%
and be sure | | Delaware Fund || Class A
percentages || Class B _____% _____% _____% _____% _____% _____%
total 100% Income Funds
| | Delchester Fund || Class A
Investing for || Class B _____% _____% _____% _____% _____% _____%
prior year can | | U.S. Govt. Fund || Class A
only be done || Class B _____% _____% _____% _____% _____% _____%
prior to the tax | | Treasury Reserves || Class A
filing deadline. Intermediate Fund || Class B _____% _____% _____% _____% _____% _____%
If no year is Money Market Funds
designated, | | Delaware || Class A
current year will Cash Reserve || Class B _____% _____% _____% _____% _____% _____%
be assumed. || Consultant Class
| | U.S. Govt. || Class A
Money Fund || Consultant Class_____% _____% _____% _____% _____% _____%
Other
| | __________ || Class A
|| Class B _____% _____% _____% _____% _____% _____%
| | __________ || Class A
|| Class B _____% _____% _____% _____% _____% _____%
TOTALS 100% 100% 100% 100% 100% 100%
</TABLE>
<PAGE>
================================================================================
4 Source of Your Contribution
| | Contribution by Check -- Total Dollar Amount of Initial Investment: $______
| | IRA to IRA Transfer of Assets -- Make sure you complete and sign the
attached Transfer of Assets Form on page 7.
| | Director Rollover -- Complete and sign the enclosed Direct Rollover Form.
| | Broker-Placed Phone Order
________________________________________________________________________________
Delaware Confirmation Number
________________________________________________________________________________
Order Date
________________________________________________________________________________
Number of Shares
________________________________________________________________________________
Name of Fund
| | Contributing from an Existing Delaware Group Account -- convert $__________
from my regular fund account #________________to this IRA account. If your
regular fund account is registered as a joint account, we require a
signature guarantee from the joint owner.
================================================================================
5 Rollover Information Complete all that apply. Includes Direct Rollovers from
Qualified plans or 403(b)s.
| | IRA Rollover -- I hereby elect to treat this contribution as a rollover
contribution. I understand that this is an irrevocable election. The source
of the rollover is from:
| | A Qualified Plan
| | A 403(b) Plan
| | Another IRA
| | A Qualified Plan or IRA or 403(b) by Beneficiary (spouse only)
| | Death Benefit IRA -- Surviving spouse does not elect to treat the death
benefit rollover as his or her own IRA
| | Rollover IRA -- Surviving Spouse does elect to treat the death benefit
rollover as his or her own IRA
| | Rollover after age 70 1/2 -- Pursuant to IRS Regulations, I hereby certify
that I am not rolling over any minimum amount required to be distributed to
me with respect to any applicable distribution calendar year. In order to
receive required minimum distributions in the future under your Delaware
Group IRA, please contact the Delaware Group and we will send you an IRA
Required Distribution Election Form.
================================================================================
6 Additional Services for Your Consideration
These optional services are available as special elections for your Delaware
Group IRA.
Consult the prospectus(es) of the fund(s) for more details on the terms of these
optional services.
If you have further questions, ask your financial adviser or call us at
800-523-1918. In Philadelphia call 215-988-1241.
| | Wealth Builder Option -- I authorize Delaware Group to transfer $__________
($100 or more) per month, through liquidation of shares in this fund, to one
or more other Delaware Group funds ($100 minimum per fund) under this IRA.
Note: For Class A accounts, Wealth Builder transactions must be directed to
another Class A account. For Class B accounts, Wealth Builder transactions
must be directed to another Class B account.
_______________________________________________________________________________
Name of Fund from Section 3
_______________________________________________________________________________
Name of Fund from Section 3
_______________________________________________________________________________
New Fund (new account will be established)
_______________________________________________________________________________
New Fund (new account will be established)
$_______________________________________________________________________________
Amount per month
$_______________________________________________________________________________
Amount per month
| | Dividend Maximizer -- Dividends and any capital gains are reinvested in the
same fund automatically unless otherwise indicated. I elect to have
dividends and any capital gains under this IRA invested in another IRA
account.
| | New Account -- Name of Fund ________________________________________________
| | Systematic Withdrawal Plan -- If you wish to begin receiving periodic
distributions (available for Class A accounts only) under the Terms and
Conditions of the IRA, please contact our office and we will send you a
Retirement Plan Systematic Withdrawal Plan Form. Please note, if you are age
70 1/2 or older, you should request an IRA Required Distribution Election
Form.
| | Combined Purchases Privilege -- This privilege allows the combining of
shares currently owned in other non-money market Delaware Group funds with
the dollar amount of this IRA Account to determine a reduced sales charge,
if applicable.
Name of Fund Account Number Number of Shares
_____________________ _________________________________________________
_____________________ _________________________________________________
| | Letter of Intention -- This option allows the aggregation of anticipated
purchases by an individual in non-money market Delaware Group funds during a
13-month period, along with any existing assets listed in the Combined
Purchase Privilege Section, to obtain a reduced sales charge. This option is
available for funds with front-end sales charges only, though Class B shares
can be used for purposes of filling Class A Letters of Intention. To learn
more, please see your Fund's current prospectus and sales charge breakpoint
schedule. I have read and agree to the terms of the prospectus(es) of the
fund(s) I have selected on this application, and wish to establish a Letter
Of Intent, although I am not obligated to do so, where my investments in
non-money market funds will aggregate or exceed:
| | $100,000 | | $250,000 | | $500,000 | | $1,000,000
I understand that if I do not satisfy the investment level selected above
that my account will be adjusted to reflect the applicable sales charge.
Note to SEP/IRA SARSEP Participants: A separate Letter Of Intent Form must be
completed by your employer, on behalf of all participants in the Plan, to obtain
a reduced sales charge.
<PAGE>
If this is not a Personal or Spousal IRA, please contact Your financial adviser
or Delaware Group before completing this section.
| | Automatic Investing Plan -- Please transfer $____ ($25 or more for A Shares,
$100 or more for B Shares) from my bank account each month to invest in
_________________________________________. Date of Transfer each month:
Fund Name
| | 1st | | 5th | | 10th | | 15th | | 20th | | 25th
________________________________________________________________________________
Bank Name Bank Account #
________________________________________________________________________________
Name(s) on Bank Account
While we cannot guarantee that your bank will accept this offer, we will ask for
its cooperation. If you discontinue this plan at any time, and your banking
registration has not changed, we can reinstate it immediately via written or
telephone request.
Attach a voided check or deposit slip to avoid delays in processing.
================================================================================
7 Agreement And Beneficiary Designation
Your signature is required.
You can change your Beneficiary Designation at any time by completing a Change
of Beneficiary Designation Form and returning it to Delaware Service Company,
Inc. 1818 Market St. Philadelphia, PA 19103-3682.
Contact Delaware Group for the appropriate Change of Beneficiary Form.
By signing below, I designate the following person(s) to receive any benefit
from my Individual Retirement Account which may become due upon or after my
death according to the terms and conditions of the Plan. I understand that this
Beneficiary Designation will remain in full force and effect unless and until I
revoke this designation by completing a Change of Beneficiary Designation Form
for the Delaware Group Individual Retirement Custodial Account at a later date
and returning it to the Custodian.
Pay to: Primary Beneficiary ___________________________%
_______________________________________________________________________________
Name
_______________________________________________________________________________
Address
_______________________________________________________________________________
City State Zip
____________________________________________________ ____/_____/____________
Relationship Date of Birth
| | | | | | - | | | | - | | | | | | | |
Social Security Number
If more than one Primary Beneficiary is selected and no percentage of plan
benefits is indicated, the assets will be divided equally between the Primary
Beneficiaries.
If no Beneficiary is designated, assets will be paid to your estate.
If the Custodian receives satisfactory proof that the Primary Beneficiary is
deceased, or if more than one Primary Beneficiary is selected and both are
deceased, the assets will be paid to the Contingent Beneficiary as indicated.
Pay to: Primary Beneficiary ___________________________%
_______________________________________________________________________________
Name
_______________________________________________________________________________
Address
_______________________________________________________________________________
City State Zip
____________________________________________________ ____/_____/____________
Relationship Date of Birth
| | | | | | - | | | | - | | | | | | | |
Social Security Number
<PAGE>
Pay to: Contingent Beneficiary ___________________________%
_______________________________________________________________________________
Name
_______________________________________________________________________________
Address
_______________________________________________________________________________
City State Zip
____________________________________________________ ____/_____/____________
Relationship Date of Birth
| | | | | | - | | | | - | | | | | | | |
Social Security Number
If you are married and you do not designate your spouse as your sole Primary
Beneficiary, you should consult with an attorney as to whether applicable law
may require your spouse to sign a written consent to your designation or a
written declaration to give up community or marital property interests in your
IRA. The Custodian shall have no responsibility for determining whether your
Beneficiary Designation is valid under applicable law and shall have no
liability to any person for acting in accordance with your Beneficiary
Designation.
===============================================================================
By signing below, I hereby establish an Individual Retirement Account under
Section 408(a) of the Internal Revenue Code of 1986, as amended, ("the
Code") to provide for my retirement and for the support of my beneficiaries
after my death. I hereby acknowledge receipt of the Terms and Conditions and
Disclosure Statement for the Individual Retirement Account required under the
Income Tax Regulations under Section 408(i) of the Code and am in receipt of an
effective prospectus(es) for the Fund(s) I am investing in. I hereby appoint
Delaware Management Trust Company as Custodian and agree to pay the annual
maintenance fee, currently $15. (If this fee is not included or is not paid by
April 30th annually, it will be debited from your account each May.)
X ___________________________________________ _______________________________
Investor's Signature Date
===============================================================================
Please send your completed and signed application, along with your contribution,
to Delaware Service Company, Inc., Attn: Retirement Plan Department, 1818 Market
Street, Philadelphia, PA 19103-3682. Be sure to make your check payable to
Delaware Management Trust Company.
<PAGE>
================================================================================
Broker Information
To be completed by Investment Dealer.
________________________________________________________________________________
Name of Brokerage Firm
________________________________________________________________________________
Home Office Address
________________________________________________________________________________
Authorized Firm Signature
________________________________________________________________________________
Representative's Name/Number
________________________________________________________________________________
Branch Office Address
________________________________________________________________________________
Representative's Phone Number
================================================================================
Custodian Acceptance
For use by Custodian only.
/s/ Diane Anderson
________________________________________________________________________________
Authorized Officer of Delaware Management Trust Company
================================================================================
DELAWARE
GROUP
=======
The Delaware Group Of Funds
Delaware's family of funds enables investors to match their needs with a broad
range of investment objectives covering the risk-reward spectrum. The following
are available as investment vehicles for any Delaware Group retirement program.
| | Trend Fund
Seeks long-term capital appreciation by investing in securities issued by
small, growth-oriented companies exhibiting a strong potential for capital
appreciation.
| | DelCap Fund
Seeks long-term growth by investing in common stocks and securities
convertible into common stocks of mid-sized companies that have demonstrated
their ability to grow and demonstrate a potential for continued growth.
| | Value Fund
Seeks long-term growth by investing primarily in common stocks of small and
mid-size companies whose market values appear low relative to their
underlying value or potential value.
| | International Equity Fund
Seeks long-term growth without undue risk to principal by investing
primarily in a range of foreign equity securities that have potential for
capital appreciation and income.
| | Decatur Income Fund
Seeks highest possible current income by investing primarily in common
stocks of established companies with strong dividend histories that provide
the potential for income and capital appreciation without undue risk to
principal.
| | Decatur Total Return Fund
Seeks long-term total return by investing primarily in securities that
provide the potential for income and capital appreciation without undue risk
to principal.
| | Dividend Growth Fund
Seeks current income and capital appreciation by investing primarily in
income-producing common stocks. Focuses on common stocks believed to have
the potential for above-average dividend increases over time.
| | Delaware Fund
Seeks long-term growth through a balance of capital appreciation, income and
preservation of capital. Invests in common stock and investment grade bonds.
| | U.S. Government Fund
Seeks high current income consistent with safety of principal through
investment in securities issued by the U.S. government, its agencies or
instrumentalities.
| | Delchester Fund
Seeks high current income as is consistent with reasonable safety by
investing primarily in high-yielding, lower rated corporate bonds, U.S.
government securities and commercial paper issued by companies with the
ability to pay interest and repay principal.
| | Treasury Reserves Intermediate Fund
Seeks to provide a high, stable level of income with a high degree of
principal stability through investments in short- and intermediate-term
securities issued or guaranteed by the U.S. government, its agencies and
instrumentalities.
| | U.S. Government Money Fund
Seeks a high current income with a goal of maintaining a constant share
price by investing in short-term securities issued and/or guaranteed by the
U.S. government, its agencies and instrumentalities.
| | Delaware Cash Reserve
Seeks high current income with a goal of maintaining a constant share price
by investing in high-quality money market instruments with maturities of no
more than one year.
All funds, except U.S. Government Money Fund, currently offer Class A and B
shares. Please consult your financial adviser about which class is more
appropriate for you.
===============================================================================
The Delaware Group investor can seek total return through equity-oriented
investments, stability and current income through fixed-income investments, or
combine these styles to achieve the desired investment balance. As the
investor's needs or objectives change, the exchange privilege enables
investments to be transferred from one fund to another within the Delaware Group
without losing their tax-advantaged status.
<PAGE>
DELAWARE
GROUP
========
IRA Transfer of Assets Form
Use this form to transfer your IRA assets to a Delaware Group IRA. If you don't
have an existing Delaware Group IRA, please fill out an application. If you are
transferring IRA assets from more than one custodial account, please complete a
separate Transfer Form for each transfer. Please note, you must complete a
separate Transfer of Assets Form for each plan trustee/ custodian and/or for
each CD maturity date, if applicable. If you wish to make a direct rollover of
assets from a qualified plan or 403(b), please complete a Direct Rollover form.
================================================================================
Information About Your Delaware Group IRA
_______________________________________________________________________________
Individual's Name
_______________________________________________________________________________
Address
_______________________________________________________________________________
City State Zip
(__________)___________________________________________________________________
Telephone: Home
(__________)___________________________________________________________________
Business
| | | | | | - | | | | - | | | | | | | |
Social Security Number
Select One
| | 1. This is a transfer to a new Delaware Group IRA. My investment choices are
on page 3 of this IRA application.
| | 2. Invest the amount to be transferred into my existing Delaware Group IRA
as follows:
Fund:________ | | Class A | | Class B Percent:_____ Account#:
Fund:________ | | Class A | | Class B Percent:_____ Account#:
Fund:________ | | Class A | | Class B Percent:_____ Account#:
================================================================================
Information About Your IRA to Be Transferred
_______________________________________________________________________________
Name of Present Custodian
_______________________________________________________________________________
Address
_______________________________________________________________________________
City State Zip
___________________________________ (____________)_________________________
Contact Person Phone Number
IRA Account # _________________________________________________________________
Investment Fund # _____________________________________________________________
Investment Fund # _____________________________________________________________
For Certificates of Deposit:
_______________________________________________________________________________
Maturity Date
| | Please do not transfer until my CD matures.
| | Please roll over immediately. I am aware of the early withdrawal penalty.
Type of account you are transferring: | | Personal | | Rollover IRA (With
Qualified Plan or 403(b) assets) | | SEP or SARSEP Please note, you must
complete a separate Transfer of Assets Form for each plan trustee/custodian
and/or for each maturity date, if applicable. If you wish to make a direct
rollover of assets from a qualified plan of 403(b), please complete a Direct
Rollover form.
================================================================================
Your Authorization to Transfer
Your present Custodian may require additional documentation such as a
signature guarantee. Please check with them for their requirements.
<PAGE>
I have established an IRA with Delaware Management Trust Company as the
Custodian. Please roll over the amount listed below to them as successor
Custodian.
| | Complete -- Liquidate ALL of the above referenced account(s)
transfer IN CASH.
| | Partial -- Liquidate assets totaling $ ________________and transfer IN CASH.
| | Re-registration (Transfer in Kind) -- My IRA includes the Delaware Group
fund(s) listed below. Please re-register with Delaware Management Trust
Company as the Custodian. Send Delaware Group any outstanding Delaware Group
Fund certificates and proper documentation to re-register these shares.
Note, the Delaware Management Trust Company can accept only Delaware Group
funds for re-registration.
_____________________________________ _______________________________________
Fund Name Account Number
| | Transfer on or after age 70 1/2 -- Pursuant to IRS Regulations, I hereby
certify that this Transfer will not included any minimum amount required to
be distributed to me with respect to any applicable distribution calendar
year. In order to receive required minimum distributions in the future under
your Delaware Group IRA, please contact the Delaware Group and we will send
you an IRA Required Distribution Election Form.
SIGN HERE
X ____________________________________ _________________________
Your Signature - must be in ink Date
===============================================================================
Custodian Acceptance
For use by Custodian only.
Please be advised that the Delaware Management Trust Company is acting as
Custodian and is willing to accept the proceeds from the above referenced
Custodial Account.
Please make check payable to: Delaware Management Trust
Company, For the Benefit Of: (Participant), and mail to Delaware Management
Trust Company, Transfer of Assets Department, 1818 Market Street, Suite 1604,
Philadelphia, PA 19103-3682.
________________________________________________________ _________________
Authorized Officer of Delaware Management Trust Company Date
<PAGE>
DELAWARE
GROUP
========
IRA Transfer of Assets Form
Use this form to transfer your IRA assets to a Delaware Group IRA. If you don't
have an existing Delaware Group IRA, please fill out an application. If you are
transferring IRA assets from more than one custodial account, please complete a
separate Transfer Form for each transfer. Please note, you must complete a
separate Transfer of Assets Form for each plan trustee/ custodian and/or for
each CD maturity date, if applicable. If you wish to make a direct rollover of
assets from a qualified plan or 403(b), please complete a Direct Rollover form.
================================================================================
Information About Your Delaware Group IRA
_______________________________________________________________________________
Individual's Name
_______________________________________________________________________________
Address
_______________________________________________________________________________
City State Zip
(__________)___________________________________________________________________
Telephone: Home
(__________)___________________________________________________________________
Business
| | | | | | - | | | | - | | | | | | | |
Social Security Number
Select One
| | 1. This is a transfer to a new Delaware Group IRA. My investment choices
are on page 3 of this IRA application.
| | 2. Invest the amount to be transferred into my existing Delaware Group IRA
as follows:
Fund:________ | | Class A | | Class B Percent:_____ Account#:
Fund:________ | | Class A | | Class B Percent:_____ Account#:
Fund:________ | | Class A | | Class B Percent:_____ Account#:
================================================================================
Information About Your IRA to Be Transferred
_______________________________________________________________________________
Name of Present Custodian
_______________________________________________________________________________
Address
_______________________________________________________________________________
City State Zip
___________________________________ (____________)_________________________
Contact Person Phone Number
IRA Account # _________________________________________________________________
Investment Fund # _____________________________________________________________
Investment Fund # _____________________________________________________________
For Certificates of Deposit:
_______________________________________________________________________________
Maturity Date
| | Please do not transfer until my CD matures.
| | Please roll over immediately. I am aware of the early withdrawal penalty.
Type of account you are transferring: | | Personal | | Rollover IRA (With
Qualified Plan or 403(b) assets) | | SEP or SARSEP Please note, you must
complete a separate Transfer of Assets Form for each plan trustee/custodian
and/or for each maturity date, if applicable. If you wish to make a direct
rollover of assets from a qualified plan of 403(b), please complete a Direct
Rollover form.
================================================================================
Your Authorization to Transfer
Your present Custodian may require additional documentation such as a signature
guarantee. Please check with them for their requirements.
<PAGE>
I have established an IRA with Delaware Management Trust Company as the
Custodian. Please roll over the amount listed below to them as successor
Custodian.
| | Complete -- Liquidate ALL of the above referenced account(s)
transfer IN CASH.
| | Partial -- Liquidate assets totaling $________________ and transfer IN CASH.
| | Re-registration (Transfer in Kind) -- My IRA includes the Delaware Group
fund(s) listed below. Please re-register with Delaware Management Trust Company
as the Custodian. Send Delaware Group any outstanding Delaware Group Fund
certificates and proper documentation to re-register these shares. Note, the
Delaware Management Trust Company can accept only Delaware Group funds for
re-registration.
______________________________________ ________________________________________
Fund Name Account Number
| | Transfer on or after age 70 1/2 -- Pursuant to IRS Regulations, I hereby
certify that this Transfer will not included any minimum amount required to be
distributed to me with respect to any applicable distribution calendar year. In
order to receive required minimum distributions in the future under your
Delaware Group IRA, please contact the Delaware Group and we will send you an
IRA Required Distribution Election Form.
SIGN HERE
X ________________________________________ ____________________________
Your Signature - must be in ink Date
===============================================================================
Custodian Acceptance
For use by Custodian only.
Please be advised that the Delaware Management Trust Company is acting as
Custodian and is willing to accept the proceeds from the above referenced
Custodial Account.
Please make check payable to: Delaware Management Trust Company, For the Benefit
Of: (Participant), and mail to Delaware Management Trust Company, Transfer of
Assets Department, 1818 Market Street, Suite 1604, Philadelphia, PA 19103-3682.
_______________________________________________________ _____________________
Authorized Officer of Delaware Management Trust Company Date
<PAGE>
DELAWARE GROUP
| | Delaware Management Company, Inc.
Investment Manager
| | Delaware Distributors, L.P.
National Distributor
| | Delaware Service Company, Inc.
Shareholder Servicing, Dividend
Disbursing and Transfer Agent
| | Delaware Management Trust Company
Custodian
DELAWARE
GROUP
========
1818 Market Street
Philadelphia, PA 19103-3682
800-523-1918 Nationwide
215-988-1241 in Philadelphia
Use of this material with the public, either in written or oral form, can only
be made in conjunction with the prospectuses of the funds in the Delaware Group
being offered. The prospectus contains further information, including sales
charges and expenses.
Be sure to consult your financial adviser when making investments. Mutual funds
can be a valuable part of your financial plan; however, they are not obligations
of or guaranteed by any bank and are not FDIC or government insured. In
addition, they involve risk, including possible loss of principal.
RL-102-10/94
<PAGE>
DELAWARE
GROUP
========
IRA Direct Rollover Form
Use this form to roll over the assets in your Qualified Plan or 403(b) plan to a
Delaware Group IRA. Please note, you must complete a separate IRA Direct
Rollover Form for each plan trustee/custodian and/or for each CD maturity date,
if applicable.
Information About Your Delaware Group IRA
________________________________________________________________________________
Name
________________________________________________________________________________
Address
________________________________________________________________________________
City State Zip
| | | | | | - | | | | - | | | | | | | |
Social Security Number
(__________)____________________________________________________________________
Phone: Home
(__________)____________________________________________________________________
Phone: Business
| | This is a rollover to a new Delaware Group IRA. My investment choices are
on page 3 of the enclosed IRA application.
| | Invest the amount to be rolled over into my existing Delaware Group IRA
as follows:
Fund Name: _________ Percent/Amt: _________ Account #: __________
Fund Name: _________ Percent/Amt: _________ Account #: __________
Fund Name: _________ Percent/Amt: _________ Account #: __________
================================================================================
Information About Your Qualified Plan or 403(b) to be Rolled Over
________________________________________________________________________________
Name of Employer
________________________________________________________________________________
Address
________________________________________________________________________________
City State Zip
____________________________________(________)__________________________________
Contact Person Phone Number
Account Number: ________________________________________________________________
Account Number: ________________________________________________________________
Account Number: ________________________________________________________________
Account Number: ________________________________________________________________
Type of account: | | Qualified Plan | | 403(b)
For Certificates of Deposit:
________________________________________________________________________________
Maturity Date
| | Please do not roll over until my CD matures.
| | Please roll over immediately. I am aware of the early withdrawal penalty.
Name of Financial Institution:
________________________________________________________________________________
<PAGE>
================================================================================
Your Authorization to Roll Over
Your present Custodian may require additional documentation such as a signature
guarantee. Please check with them for their requirements.
I have established an IRA with Delaware Management Trust Company as the
Custodian. Please roll over the amount listed below to them as IRA Custodian.
| | Partial -- Liquidate assets totaling $___________ and directly roll over
IN CASH.
| | Complete -- Liquidate ALL of the above referenced account(s) and directly
roll over IN CASH.
| | Check here if you are age 70 1/2 or older.
Pursuant to IRS Regulations, I hereby certify that I am not rolling over any
minimum amount required to be distributed to me with respect to any
applicable distribution calendar year. In order to receive required minimum
distributions in the future under your Delaware Group IRA, please contact
the Delaware Group and we will send you an IRA Required Distribution
Election Form.
X ______________________________ __________________
Your Signature - must be in ink Date
================================================================================
Custodian Acceptance
For use by Delaware Management Trust Company only.
Please be advised that the Delaware Management Trust Company, as Custodian, is
willing to accept the proceeds from the above-referenced plan as an IRA account
pursuant to Internal Revenue Code Section 408.
Please make check payable to: Delaware Management Trust Company, For the Benefit
Of: (Participant), Direct Rollover; and mail to Delaware Management Trust Co.,
1818 Market Street, Philadelphia, PA 19103-3682.
________________________________________________________ _______________
Authorized Officer of Delaware Management Trust Company Date
RL-102B - 10/93
<PAGE>
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
TABLE OF CONTENTS
Terms and Conditions
Article I. Contributions ....................... 2
Article II. Nonforfeitability .................. 2
Article III. Prohibited Investments ............ 2
Article IV. Required Distributions ............. 2
1. Required Beginning Date ................... 2
2. Changing Method of Payment ................ 2
3. Lifetime Distributions .................... 3
4. Death Distributions ....................... 3
5. Multiple individual Retirement Accounts ... 4
Article V. Reporting ........................... 4
Article VI. Amendment of Plan .................. 4
Article VII. The Custodian ..................... 4
1. Appointment of Agents ..................... 4
2. No Investment Responsibility .............. 4
3. Entire Contract ........................... 4
4. Delaware Service Company, Inc. ............ 5
5. Designation of Beneficiary ................ 5
6. Taxes and Expenses ........................ 5
7. Termination of Account .................... 5
8. Resignation or Removal of Custodian ....... 5
9. Custodian's Fees .......................... 5
10. Agreements with Investment Advisers ....... 5
11. Applicable Law ............................ 5
Disclosure Statement
Revocation ..................................... 6
Requirements of an Individual Retirement Account 6
Eligibility .................................... 6
Contributions .................................. 7
(A) Deductible Contributions .................. 7
(B) Non-deductible Contributions .............. 8
(C) Spousal IRA Contributions ................. 8
(D) Excess Contributions ...................... 8
(E) Rollover Contributions .................... 9
Distributions .................................. 10
(A) Normal Distributions ...................... 10
(B) Required Distributions .................... 10
(C) Distributions After Death ................. 10
Tax Treatment of Distributions ................. 11
(A) Income Tax ................................ 11
(B) Federal Income Tax Withholding ............ 11
(C) Early Withdrawal Tax ...................... 11
(D) Gift Tax .................................. 12
(E) Estate Tax ................................ 12
Borrowing/Prohibited Transactions .............. 12
Reporting to the IRS ........................... 12
(A) Form 5329 ................................. 12
(B) Form 8606 ................................. 12
IRS Approval ................................... 12
IRA Account Balance ............................ 12
Fees and Charges ............................... 13
(A) IRA Fees .................................. 13
(B) Mutual Fund Sales Charges ................. 13
(C) Redemption and Repurchase Charges ......... 13
(D) Further Details ........................... 13
Qualified Tax Advice ........................... 13
1
<PAGE>
DELAWARE MANAGEMENT COMPANY, INC.
Individual Retirement Custodial Account
The Delaware Management Company, Inc. Individual Retirement Custodial
Account (the "Plan"), including the Application which is a part thereof, is
established for the exclusive benefit of the individual ("Applicant") designated
in the Application, or his/her beneficiaries.
W I T N E S S E T H:
WHEREAS, the Applicant desires to provide for retirement and for the
support of his/her beneficiaries upon death; and
WHEREAS, to accomplish this purpose, the Applicant desires to establish an
individual Retirement Account (the "Account") as described in Section 408(a) of
the Internal Revenue Code of 1986, as amended, or any successor statute
(hereinafter referred to as "the Code").
NOW, THEREFORE, for the purposes aforesaid, the Account is established,
effective as of the date of the Application, as follows:
ARTICLE I. CONTRIBUTIONS
Except in the case of a rollover contribution described in Sections 402(c),
403(a)(4), 403(b)(8), 408(d)(3) of the Code, or an employer contribution to a
simplified employee pension plan as described in Section 408(k), the Custodian
will only accept cash and will not accept contributions on behalf of the
Applicant in excess of $2,000 for any taxable year. In no event shall the
Custodian accept a rollover of property other than shares of the Delaware Group
of Funds. Rollover contributions before January 1, 1993 include rollovers
described in Sections 402(a)(5), 402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8), or
408(d)(3).
ARTICLE II. NONFORFEITABILITY
The Applicant's interest in the balance in the Account is nonforfeitable.
ARTICLE III. PROHIBITED INVESTMENTS
1. No part of the Account shall be invested in life insurance contracts; nor may
assets of the Account be commingled with other property except in a common trust
fund or common investment fund (within the meaning of Section 408(a)(5) Code).
2. No part of the Account shall be invested incollectibles as defined in
Section 408(m) of the Code.
ARTICLE IV. REQUIRED DISTRIBUTIONS
1. Required Beginning Date. The Applicant's interest in the Account will be
distributed to him/her upon his/her providing Delaware Service Company, Inc.
with instructions as to the method of distribution. The entire interest of the
Applicant in the Account must be or commence to be distributed no later than the
first day of April following the calendar year in which the Applicant attains
age 70 1/2 (the "Required Beginning Date"). Not later than the Required
Beginning Date, the Applicant may elect to have the balance in the Account
distributed:
(a) In a lump sum;
(b) In monthly, quarterly or annual payments or over a period certain not
extending beyond the life expectancy of such Applicant or the joint life
and last survivor expectancy of the Applicant and his/her designated
beneficiary.
2. Changing Method of Payment. Even though distributions may have commenced
pursuant to 1(b) above, the Applicant may receive a distribution of the balance
in the Account in a lump sum or receive distributions under another method of
payment available in 1(b), by providing written notice to Delaware Service
Company, Inc. The Applicant may change the method of payment in 1(b) once a
year, provided: (i) written notice is given to Delaware Service Company, Inc. no
later than December 15 preceding the year in which the method of payment will be
changed and (ii) that distributions are made in accordance with the requirements
of Section 408(a)(6) of the Code and the regulations thereunder.
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3. Lifetime Distributions. If the Applicant is living on his/her Required
Beginning Date, the following distribution provisions shall apply:
(a) Required Minimum Distributions. If the Applicant's entire interest in the
account is to be distributed in a manner other than a lump sum, then the
amount to be distributed each year, commencing with the Required Beginning
Date and each year thereafter, must be at least equal to the quotient
obtained by dividing the Applicant's entire interest in the Account on the
December 31 of the preceding year by the applicable life expectancy.
(b) Minimum Distributions before 1989. For calendar years beginning before
January 1, 1989, if the Applicant's spouse is not the designated
beneficiary, the method of distribution selected must ensure that at least
50% of the present value of the amount available for distribution is paid
within the life expectancy of the Applicant.
(c) Minimum Distributions after 1988. For calendar years beginning after
December 31, 1988, the amount to be distributed each year, beginning with
the first calendar year for which distributions are required and then for
each succeeding calendar year, shall not be less than the quotient obtained
by dividing the balance in the Account as of the preceding December 31 by
the lesser of (1) the applicable life expectancy or (2) if the Applicant's
spouse is not the designated beneficiary, the applicable divisor determined
from the table set forth in Q & A-4 of Section 1.401 (a)(9)-2 of the
Proposed Income Tax Regulations. Distributions after the death of the
Applicant shall be calculated using the applicable life expectancy as the
relevant divisor without regard to Section 1401 (a)(9)-2 of the proposed
regulations.
(d) Computation of Life Expectancy. Life expectancy is computed by use of the
expected return multiples in Tables V and VI of Section 1.72-9 of the
Income Tax Regulations. Unless otherwise elected by the Applicant by the
time distributions are required to begin, life expectancies shall not be
recalculated annually. Such election shall be irrevocable as to the
Applicant and will apply to all subsequent years. The life expectancy of a
non-spouse beneficiary may not be recalculated; rather, life expectancy
shall be calculated using the attained age of the beneficiary during the
calendar year in which distributions are required to begin pursuant to this
Section 3, and payments for subsequent years shall be calculated based on
such life expectancy reduced by one for each calendar year which has
elapsed since the calendar year life expectancy was first calculated.
4. Death Distributions. If the Applicant dies before the entire interest is
distributed, the following distribution provisions shall apply:
(a) Distributions beginning before death. If the Applicant dies after
distribution of his/her interest in the Account has begun, the remaining
portion of such interest will continue to be distributed at least as
rapidly as under the method of distribution being used prior to the
Applicant's death. However, if the designated beneficiary is the
Applicant's surviving spouse, the spouse may elect to treat the Account as
his/her own individual retirement account. This election will be deemed to
have been made if such surviving spouse makes a regular contribution to the
Account, makes a rollover to or from the Account, or fails to elect any of
the provisions in paragraph (b) below. Distributions under this Section 4
are considered to have begun if the distributions are made on account of
the individual reaching his or her required beginning date. If the
individual receives distributions prior to the required beginning date and
the individual dies, distributions will not be considered to begin.
(b) Distributions beginning after death. If the Applicant dies before the
distribution of his/her interest in the Account begins, the Applicant's
entire interest will be distributed by December 31 of the calendar year
containing the fifth anniversary of the applicant's death unless the
applicant elects or, if the Applicant has not so elected, the designated
beneficiary or beneficiaries elect that the entire interest be distributed
in accordance with one of the following three provisions:
(i) The Applicant's entire interest will be distributed over a period
certain not greater than the life expectancy of the Applicant's
designated beneficiary commencing on or before December 31 of the
calendar year immediately following the calendar year in which the
Applicant died. The designated beneficiary may elect at any time to
receive greater payments.
(ii) If the designated beneficiary of the Applicant is the Applicant's
surviving spouse, payments may be made to the surviving spouse over
his/her life expectancy commencing on any date prior to the later of (1)
the December 31 of the calendar year immediately following the calendar
year in which the Applicant died and (2) the December 31
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of the calendar year in which the Applicant would have attained age
70 1/2. The surviving spouse may accelerate these payments at any time
(i.e., increase the frequency or amount of such payments).
(iii) If the designated beneficiary is the Applicant's surviving spouse, the
spouse may elect to treat the Account as his/her own individual
retirement account. This election will be deemed to have been made if
the surviving spouse makes a regular contribution to the Account, makes
a rollover to or from the Account, or fails to elect any of the above
two provisions.
(c) Computation of Life Expectancy. Life expectancy is computed by use of the
expected return multiples in Tables V and VI of Section 1.72-9 of the
Income Tax Regulations. For purposes of distributions beginning after the
Applicant's death, unless otherwise elected by the surviving spouse by the
time distributions are required to begin, life expectancy shall not be
recalculated annually. Such election shall be irrevocable as to the
surviving spouse and shall apply to all subsequent years. In the case of
any other designated beneficiary, life expectancy shall be calculated using
the attained age of the beneficiary during the calendar year in which
distributions are required to begin in accordance with this Section 4, and
payments for any subsequent calendar year shall be calculated based on such
life expectancy reduced by one for each calendar year which has elapsed
since the calendar year life expectancy was first calculated.
5. Multiple individual Retirement Accounts. An individual may satisfy the
minimum distribution requirements described above by receiving a distribution
from one IRA that is equal to the amount required to satisfy the minimum
distribution requirements for two or more IRAs. For this purpose, the owner
of two or more IRAs may use the "alternative method" described in Notice
88-38, 1988-1 C.B. 524, to satisfy the minimum distribution requirements
described above.
ARTICLE V. REPORTING
1. The Applicant agrees to provide the Custodian with information necessary for
the Custodian to prepare any reports required under Section 408(i) of the Code
and related regulations.
2. The Custodian agrees to submit reports to the Internal Revenue Service and
the Applicant as prescribed by the Internal Revenue Service. The Custodian shall
furnish the Applicant with an annual calendar year report concerning the value
of the Account.
ARTICLE VI. AMENDMENT OF PLAN
Delaware Management Company, Inc. may amend this Plan from time to time to
comply with the applicable provisions of the Code and related regulations and
to make any other changes determined by Delaware Management Company, Inc. to
be necessary and desirable.
ARTICLE VII. THE CUSTODIAN
1. Appointment of Agents. The Custodian appoints Delaware Service Company, Inc.
as its agent to receive the Applicant's contributions under this Plan. Delaware
Service Company, Inc., as the Custodian's agent, will deliver the Applicant's
contributions to the Custodian to be invested as provided in the Application.
The Custodian may also appoint one or more broker-dealers as its agent(s),
pursuant to a legally binding agency agreement with such broker-dealer(s), for
purposes of receiving the Applicant's contributions hereunder and receiving
contributions made on behalf of the Applicant pursuant to a simplified employee
pension plan (including a salary reduction SEP).
2. No Investment Responsibility. The Custodian shall have no investment
responsibility or discretion with respect to this Account. The Custodian shall
vote the regulated investment company shares held therein as directed by the
Applicant. If the Applicant does not provide voting instructions to the
Custodian, the Custodian shall vote Account shares in direct proportion to those
voting instructions, on an issue by issue basis, received by the Custodian from
other Individual Retirement Account shareholders of the fund.
3. Entire Contract. This Plan and Application constitute the entire contract
between Applicant and Custodian and, except as provided herein, no
representative of Delaware Management Company, Inc., Delaware Service Company,
Inc., Delaware Distributors, Inc., the Delaware Group of Funds nor any
broker-dealer shall be deemed to be a representative of or acting on
behalf of Custodian, nor shall any such representative have any
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authority to make representations or to bind the Custodian beyond the terms of
this document. The Custodian, Delaware Management Company, Inc., Delaware
Service Company, Inc., Delaware Distributors, Inc., the Delaware Group of Funds
and their affiliates shall not be responsible for any liability arising out of
this Plan and Application except such liability as is occasioned by their own
negligence or wilful misconduct. The Custodian and Delaware Service Company,
Inc. shall not be responsible for any action or omission taken in accordance
with any notice, request, instruction, certificate, beneficiary designation or
other instrument reasonably believed by Custodian or Delaware Service Company,
Inc. to be genuine.
4. Delaware Service Company, Inc. The Custodian may employ Delaware Service
Company, Inc. to carry out certain of the Custodian's administrative
functions hereunder in accordance with an agreement between Custodian and
Delaware Service Company, Inc.
5. Designation of Beneficiary. The Applicant shall have the right, by written
notice to Delaware Service Company, Inc., to designate or to change a
beneficiary to receive any benefit to which the Applicant may be entitled in the
event of death prior to the complete distribution of such benefits. If no such
designation is in effect upon the Applicant's death, the beneficiary shall be
the Applicant's estate. The Custodian and Delaware Service Company, Inc. shall
have no responsibility to determine whether any person or persons other than the
Applicant's designated beneficiary may be entitled, under applicable law, to
receive amounts from the Account on account of the death of the Applicant and
shall have no liability to any person for acting in accordance with Applicant's
beneficiary designation.
6. Taxes and Expenses. Any income taxes or other taxes of any kind whatsoever
that may be levied or assessed upon or in respect to the Account, any transfer
taxes incurred in connection with the investment and reinvestment of the assets
of the Account, other administrative expenses incurred by the Custodian in the
performance of its duties, including fees for legal services rendered to the
Custodian, and the compensation to the Custodian shall be paid from the assets
of the Account, unless paid by the Applicant.
7. Termination of Account. This Account shall terminate upon the complete
distribution of the Account to the Applicant or his/her beneficiaries or to
successor individual retirement accounts or annuities.
8. Resignation or Removal of Custodian. The Custodian may resign at any time
upon ninety (90) days notice in writing to the Applicant and to Delaware
Management Company, Inc. or may be removed by Delaware Management Company,
Inc. at any time upon ninety (90) days notice in writing to the Custodian.
Upon such resignation or removal, Delaware Management Company, Inc. will
appoint a successor Custodian. If within sixty (60) days after the
Custodian's resignation or removal, Delaware Management Company, Inc. has not
appointed a successor Custodian which has accepted such appointment, the
Custodian may appoint such successor itself.
9. Custodian's Fees. The Custodian's fees shall be as published or amended
from time to time.
10. Agreements with Investment Advisers. The Custodian, in its discretion, may
enter into an agreement with an investment adviser, registered under the
Investment Adviser's Act of 1940, for the purpose of redeeming investment
company shares held hereunder to pay for market timer services rendered by the
adviser with respect to the Applicant's Account.
11. Applicable Law. This Plan shall be construed under the laws of the
Commonwealth of Pennsylvania, without giving effect to conflict of laws
principles, and shall become effective only upon execution by Custodian at its
offices in Philadelphia, Pennsylvania. The Custodian shall not be called upon to
take any action outside the Commonwealth of Pennsylvania.
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DISCLOSURE STATEMENT
REVOCATION
You are entitled to revoke your individual retirement account ("IRA"), for
any reason and without penalty, by mailing or delivering written notice of
revocation to Delaware Service Company, Inc. within seven days after your
receipt of the IRA Disclosure Statement or within seven days after you establish
your IRA; however, if your IRA is established more than seven days after receipt
of the IRA Disclosure Statement, you may not revoke your IRA. If you wish to
revoke your IRA, mail or deliver your written notice to Delaware Service Co.,
Inc., Retirement Plans Department, 1818 Market Street, Philadelphia, PA 19103.
If mailed, the revocation notice will be considered mailed on the date of
postmark (or if sent by certified or registered mail, the date of certification
or registration) if it is deposited in the mail in the United States in an
envelope or other appropriate wrapper, first class postage prepaid, properly
addressed. While oral revocations are not accepted, you may contact us at (800)
523-1918 (In Philadelphia call 988-1241) if you have any questions with respect
to this procedure. If you should choose to revoke your IRA, the entire amount of
your contribution will be refunded without adjustment for administrative
expenses or any other amount.
REQUIREMENTS OF AN INDIVIDUAL
RETIREMENT ACCOUNT
An Individual Retirement Account investing contributions in any of the Funds
in the Delaware Group is a Custodial Account created in the United States for
the exclusive benefit of an individual or his/her beneficiaries. The written
instrument creating the Custodial Account must satisfy the following
requirements:
1. Except in the case of a rollover contribution (explained below),
contributions must be in cash and may not exceed $2,000, or $2,250 if a
spousal IRA, for any taxable year;
2. The Custodian must be a bank or other person approved by the Secretary of
the Treasury;
3. No part of the IRA funds may be invested in life insurance contracts;
4. The interest of an individual in the IRA must be nonforfeitable;
5. The assets of the IRA may not be commingled with other property except in
a common trust fund or common investment fund; and
6. The entire interest of an individual must be distributed in accordance with
certain rules (explained below under "Distributions").
ELIGIBILITY
You are eligible to establish and contribute to an IRA for any year in which
you work and receive compensation for such work, provided that you have not
attained age 70 1/2 in the year in question. If eligible, both a husband and
wife may each have their own separate IRA. If either spouse is ineligible to
establish an IRA, because the spouse has no "compensation," the other spouse may
be permitted to establish a Spousal IRA.
"Compensation" includes wages, salaries, professional fees, and other
amounts received for personal services, including such items as commissions paid
to salesmen, compensation for services on the basis of a percentage of profits,
commissions on insurance premiums, tips and bonuses. Compensation also includes
earned income of a self-employed person and any amount includable in an
individual's income as alimony or separate maintenance payments. Compensation
does not include amounts derived from or received as earnings or profits from
property, such as interest, dividends and rent, or any amount not includable in
gross income.
If you satisfy certain requirements, you may also establish an IRA for the
purpose of transferring retirement savings distributed from another individual
retirement account, individual retirement annuity, tax-sheltered annuity or
qualified retirement plan maintained by your employer.
You may have an IRA whether or not you are a participant in any other
retirement plan. However, if you or your spouse are an active participant in
another retirement plan, the amount of your annual contribution which is tax
deductible may be reduced (explained below under "Contributions").
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CONTRIBUTIONS
(A) Deductible Contributions
You may make an annual contribution to your IRA up to a maximum of $2,000(1)
or 100% of your compensation, whichever is less. If neither you nor your spouse
is an "active participant" in an employer maintained retirement plan at any time
during the year, the entire amount of your contribution (within the above
limits) will be tax deductible.
As explained below, if either you or your spouse is an active participant in
an employer maintained retirement plan, but you have adjusted gross income (AGI)
below the "applicable dollar amount," your entire contribution will still be tax
deductible. However, if either you or your spouse is an active participant and
your AGI is above the applicable dollar amount, the amount of your contribution
which is tax deductible will be reduced or eliminated as illustrated by the
chart below:
Tax Deductible Contributions:
Who Qualifies:
If you are not an active participant in
an employer-sponsored retirement plan:
100% deductible at any income level
If you are an active participant in
an employer-sponsored retirement plan:
Adjusted Gross Income Contribution
Married Single Deductibility
--------------- --------------- ---------------
below $40,000 below $25,000 Full
$40,000-$50,000 $25,000-$35,000 Partial
over $50,000 over $35,000 No
In order to be deductible for a taxable year, annual contributions must be
made not later than the due date (without regard to extensions) of your tax
return for the year for which the deduction is claimed.
Definition of Active Participant
You are an "active participant" for a year if you are "covered" by any of the
following retirement plans:
1. A qualified plan described in Section 401(a) of the Internal Revenue Code
(hereinafter the "Code");
2. An annuity plan described in Section 403(a) of the Code;
- ------------
(1) An additional $250 may be contributed to a Spousal IRA for a total of $2,250
for a working and non-working spouse.
3. A plan established for its employees by the United States, by a state or
local government or by an agency or instrumentality thereof (other than an
eligible deferred compensation plan as defined in Section 457(b) of the Code);
4. An annuity contract or custodial account described in Section 403(b) of
the Code;
5. A simplified employee pension (SEP) and salary reduction SEP described in
Section 408(k) of the Code;
6. A trust described in Section 501(c)(18) of the code.
You are considered "covered" by a retirement plan for a year if your employer
or union has a retirement plan of a type described above under which money is
added to your account or you are eligible to earn retirement credits. You are an
active participant for a year even if you are not yet vested in your retirement
benefit. Also, if you make required contributions or voluntary employee
contributions to a retirement plan, you are an active participant. In certain
plans, you may be an active participant even if you were only with the employer
for part of the year. Your active participant status should be indicated on your
Form W-2.
You are not considered an active participant if you are covered by a plan
only because of your service as (1) an Armed Forces Reservist, for less than
ninety (90) days of active service; or (2) a volunteer fire fighter covered for
fire fighting service by a government plan. Of course, if you are covered under
any other plan, these exceptions do not apply.
If you would like specific advice as to whether you are an active participant
in a retirement plan, you should consult with your attorney or a qualified tax
adviser.
AGI Threshold Level
If you or your spouse are an active participant, you must calculate your
adjusted gross income (AGI) for the year (if you and your spouse file a joint
tax return, you must use your combined AGI) to determine whether your IRA
contribution will be deductible. The instructions to your tax return will show
you how to calculate your AGI for this purpose. If you are at or below a certain
AGI level, called the "Threshold Level," you are treated as if you were not an
active participant and can make a deductible contribution under the same rules
as a person who is not an active participant.
If you are single, your AGI Threshold Level is $25,000. If you are married
and file a joint tax return, the Threshold Level is $40,000. If you are married
but file a separate tax return, the Threshold Level is $0. If you and your
spouse file separate tax returns and you live apart at all times during the
year, both you and your spouse will be treated as single in determining the
deductibility of your IRA contributions and your spouse's IRA contributions.
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Calculation of Deduction Limit
If your AGI is less than $10,000 above your Threshold Level, you will still
be able to make a deductible contribution, but it will be limited in amount. The
amount by which your AGI exceeds your Threshold Level (AGI minus Threshold
Level) is called your Excess AGI. The maximum allowable deduction is $2,000 (or
a total of $2,250 for a Spousal IRA). You may calculate your deduction limit by
using the following formula:
$10,000 -- Excess AGI x Maximum Allowable = Deduction
- ---------------------
$10,000 Deduction Limit
You must round up the result to the next highest $10 level. For example, if
the result is $1,525, you must round it up to $1,530. If the final result is
below $200 but above $0, your deduction limit is $200. Your deduction limit
cannot, in any event, exceed 100% of your compensation.
The following examples illustrate the above formula.
Example One: Bob, a single individual, is an active participant in his
employer's retirement plan and has AGI of $28,000. Bob has contributed $2,000 to
his IRA for the current year. Bob will calculate the deductible portion of his
IRA contribution as follows:
1. Bob must first determine the amount of his Excess AGI. His Excess AGI is
equal to his AGI minus his Threshold Level. Because Bob is a single
individual his Threshold Level is $25,000. Thus, his Excess AGI is $3,000
($28,000 -- $25,000).
2. Bob will now determine his deduction limit as follows:
$10,000 -- $3,000 x $2,000 = $1,400
----------------
$10,000
Example Two: Jack and Jane are a married couple who file a joint income tax
return and have a combined AGI of $45,000. Jack is not covered by his employer's
retirement plan. Jane is an active participant in her employer's retirement
plan. Jack and Jane have each contributed $2,000 to their separate IRAs. Jack
and Jane will calculate the deductible portion of their contributions as
follows:
1. Jack and Jane must first determine the amount of their Excess AGI. Since they
are a married couple filing a joint return their Threshold Level is $40,000.
Thus, their Excess AGI is $5,000 ($45,000 -- $40,000).
2. Jack and Jane will each determine their individual deduction limit as
follows:
$10,000 -- $5,000 x $2,000 = $1,000
----------------
$10,000
(B) Non-deductible Contributions
Even if your deduction limit is less than $2,000 ($2,250 for a Spousal IRA),
you may still contribute to your IRA up to the lesser of 100% of your
compensation or $2,000 ($2,250 for a Spousal IRA). The amount of your
contribution which is not deductible will be treated as a non-deductible
contribution to your IRA. You may also choose to treat a contribution as
non-deductible even if you could have deducted part or all of the contribution.
Interest or other earnings on your contribution, whether from deductible or non-
deductible contributions, will not be taxed until distributed to you from the
IRA.
You may make your $2,000 contribution at any time during the year, if your
compensation for the year will be at least $2,000, without having to designate
at such time how much of your contribution will be deductible. When you complete
your tax return, you must then determine how much of your contribution is
deductible. If you determine that all or a portion of your contribution is
non-deductible, you must report such amount to the Internal Revenue Service on
your tax return for the year.
(C) Spousal IRA Contributions
If you and your spouse file a joint income tax return and your spouse either
has no compensation for the taxable year or elects to be treated as having no
compensation for the taxable year, you may establish an IRA for the benefit of
your spouse. If you make contributions on behalf of yourself and your spouse for
a given tax year, the aggregate amount of the contributions to both your IRA and
your spouse's IRA may not exceed the lesser of $2,250 or the amount of your
compensation for such year. The contribution does not have to be split equally
between the IRAs belonging to you and your spouse. However, the total
contributions to either of your IRAs may not exceed $2,000.
You are not permitted to make contributions to your IRA in the year in which
you attain age 70 1/2 and subsequent years; however, you may continue to deduct
contributions to your non-working spouse's IRA until the year in which your
spouse reaches age 70 1/2.
(D) Excess Contributions
If you make a contribution to your IRA in excess of the deductible and
non-deductible limits, whichever is applicable, such amount is an "excess
contribution." A non-deductible 6% excise tax is imposed upon the excess
contribution for the year in which it is made and also for each following year
until it is eliminated. However, the amount of the tax for any year cannot
exceed 6% of the value of your IRA as of the close of the tax year.
You may avoid the imposition of such 6% tax if you withdraw any excess
contributions from your IRA before the due date for filing your federal
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tax return (not including extensions) for the year for which the excess
contribution is made. The earnings attributable to the excess contribution also
must be withdrawn by that date and must be included in your gross income in the
year for which the excess contribution was made. A timely withdrawal of the
excess contributions will permit you to avoid not only the 6% excise tax but
also the 10% penalty tax on premature distributions.
A withdrawal of an excess contribution after the tax return filing date will
avoid the 10% penalty tax on premature distributions, provided that the total
contribution for the year did not exceed $2,250 and no deduction was allowed for
the excess contribution.
As an alternative to withdrawing such excess contribution, you may eliminate
the excess by reducing your future annual contributions below the maximum
allowable amount. However, you will continue to be subject to the 6% excise tax
for each year until the excess contribution is completely eliminated.
(E) Rollover Contributions
A rollover contribution must consist of cash or other assets distributed from
one retirement program and "rolled over" tax free to another. There are two
types of rollover contributions to an IRA. The first type involves the
distribution of cash or other assets from one IRA which is "rolled over" to
another IRA. For this purpose, the term "IRA" includes individual retirement
accounts and individual retirement annuities. The second type involves the
distribution of cash or other assets from a tax-sheltered annuity or custodial
account or from a qualified retirement plan which is "rolled over" to an IRA. A
rollover contribution is neither includable in your income nor deductible.
Unlike annual contributions, rollover contributions are not subject to the
annual $2,000 limitation (or $2,250 in the case of the Spousal IRA) or 100% of
compensation limitation. A rollover contribution may not include any minimum
amounts required to be distributed to you during the calendar year in which you
attain age 70 1/2 or during any subsequent year. A rollover contribution must be
in cash or in shares of the Delaware Group of Funds.
IRA to IRA
If you receive a distribution from another individual retirement account or
individual retirement annuity, you may redeposit all or part of the amount you
receive into your IRA. You must roll over such amount within the sixty (60)-day
period following your receipt of the distribution in order for such amount to
qualify for rollover treatment and in order for such amount to avoid being
treated as a taxable distribution. Amounts not rolled over may also be subject
to the 10% penalty tax on premature distributions. A surviving spouse
beneficiary of an IRA may roll over a distribution from the IRA to the spouse's
own IRA; a non-spouse beneficiary is not eligible to roll over such a
distribution.
A rollover from each separate individual retirement account or individual
retirement annuity is allowed only once a year. The one-year period begins on
the date that you receive the distribution and not on the date it is rolled over
into another IRA. A rollover from one IRA to another should not be confused with
a direct transfer of your IRA assets from one IRA custodian or trustee to
another IRA custodian or trustee. A transfer from one IRA custodian to another
is not considered a rollover and, consequently, is not affected by the
once-a-year limitation on rollovers.
Qualified Retirement Plan to IRA
You may also be eligible for tax-free rollover treatment when you receive a
distribution from your employer's qualified retirement plan or from a
tax-sheltered annuity or custodial account.
In order to qualify for tax-free rollover treatment, a distribution from a
qualified retirement plan must constitute an "eligible rollover distribution."
Any distribution from an employer-sponsored tax-qualified retirement plan or
tax-sheltered annuity or custodial account will qualify as an eligible rollover
distribution unless it is one of the following:
(i) A distribution which is one of a series of substantially equal periodic
payments (not less frequently than annually) made for the life (or life
expectancy) of the employee or the lives (or joint life expectancies) of
the employee and the employee's designated beneficiary, or for a specified
period of 10 years or more.
(ii) The portion of a distribution representing the minimum annual distribution
required after an employee attains age 70 1/2 or dies.
(iii) The non-taxable portion of a distribution representing after-tax
contributions to the plan.
(iv) Certain corrective distributions of elective deferrals, after-tax
contributions and matching contributions.
(v) A distribution to a non-spouse beneficiary of a deceased participant.
(vi) A distribution pursuant to a qualified domestic relations order to an
alternate payee who is neither the participant's spouse or former spouse.
(vii) A distribution to a surviving spouse to the extent the distribution is
subject to the Death Benefit Exclusion under Code section 101(b).
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If an eligible rollover distribution is paid to you, it wiII be subject to
mandatory 20% federal income tax withholding. You cannot elect to waive this
withholding tax, even if you intend to take advantage of tax-free rollover
treatment. If cash is available from some other source equal to the amount
withheld and you transfer that amount plus the net amount of the distribution to
your IRA within sixty (60) days after the distribution, no portion of the
eligible rollover distribution will be taxable to you. You may be entitled to a
full refund of the 20% withheld, depending upon your tax situation for the year.
If you roll over only the amount of the distribution actually received by you
and do not roll over an amount equal to the 20% withheld, you will be taxed on
the 20% withheld, and may be subject to a 10% additional tax on premature
distributions if you are younger than age 59 1/2.
However, the 20% withholding can be avoided by making a "direct rollover" to
your IRA. A direct rollover is a direct payment by the distributing
tax-qualified retirement plan or tax-sheltered annuity or custodial account to
your IRA rather than to you. If your eligible rollover distribution is at least
$200, your employer's plan must give you the option to make a direct rollover of
your eligible rollover distribution to an IRA.
The eligible rollover distribution rules also apply to distributions to a
surviving spouse who is a beneficiary of a deceased participant. These rules
also apply to distributions to a spouse or former spouse who is an alternate
payee with respect to a participant's benefits under a qualified domestic
relations order.
DISTRIBUTIONS
The IRA distribution rules are similar to the rules for distributions from
qualified retirement plans, in accordance with proposed regulations issued by
the Secretary of the Treasury. As of the date of issuance of this Disclosure
Statement, the regulations have not been finalized. Accordingly, the description
below of the distribution rules will be subject to modification upon issuance of
final regulations.
(A) Normal Distributions
Your IRA is intended to provide a source of income to you upon your
retirement on or after age 59 1/2 or if you become disabled. Distributions other
than amounts rolled over into another IRA or qualified plan are taxed as
ordinary income in the year received by you. With certain exceptions,
distributions which occur prior to age 59 1/2 will be subject to a 10%
additional tax on premature distributions (explained below).
(B) Required Distributions
While distributions from your IRA may commence any time, such distributions
must commence on or before the first day of April of the year following the year
in which you attain age 70 1/2 (known as the "Required Beginning Date").
Distributions must be paid to you in accordance with one of the following
methods:
(i) A single lump sum payment; or
(ii) In monthly, quarterly or annual payments over a period certain not
extending beyond your life expectancy or the joint and last survivor
expectancy of you and your designated beneficiary.
Even though distributions may have commenced in the method explained in
option (ii) above, you may receive a distribution of the balance in your IRA at
any time. Distributions may be received in a single payment or in installment
payments (but distributions which will be rolled over must exclude any minimum
amount required to be distributed during that calendar year).
If you elect to have your IRA distributed in other than a single payment, the
amount to be distributed each year, beginning with the first calendar year for
which distributions are required and for each succeeding year, must be at
least equal to the amount determined by dividing the entire amount of your IRA
as of the preceding December 31 by your life expectancy or by the joint and last
survivor life expectancies of you and your designated beneficiary. If your
designated benficiary is not your spouse and is more than 10 years younger than
you, your beneficiary will be treated as if he/she were only 10 years younger
than you for purposes of determining the joint life expectancy of you and your
beneficiary. In order to enforce such minimum distribution requirements, a 50%
tax is imposed on the amount, if any, by which the minimum required distribution
exceeds the actual amount distributed. If the failure to make the minimum
distribution is due to a reasonable error and steps are taken to remedy such
error, the 50% tax may be waived by the Internal Revenue Service.
If you have more than one IRA, you can satisfy the minimum distribution
requirements by taking from one IRA the amount required to satisfy the
requirement for all other IRAs.
(C) Distributions After Death
At the time that you establish your IRA, you have the right to select a
beneficiary who will be entitled to receive the balance in your IRA if you
should die prior to the complete distribution of your IRA. You have the right,
prior to the complete distribution of your IRA, to change your designation of
beneficiary. If you fail to properly designate a beneficiary, your estate will
be treated as your designated beneficiary.
10
<PAGE>
If you should die after the distribution of your IRA has commenced, the
remaining portion of your IRA will continue to be distributed at least as
rapidly as under the method of distribution being used prior to your death. If
you should die before the distribution of your IRA has commenced, the entire
interest in your IRA must be distributed in accordance with one of the following
provisions:
(i) The entire balance of your IRA is distributed by the December 31 of the
year containing the fifth anniversary of your death;
(ii) If the balance of your IRA is payable to a designated beneficiary, such
amount may be distributed in substantially equal periodic installments
over the life expectancy of the beneficiary commencing no later than the
December 31 of the year after your death;
(iii) If the designated beneficiary is your surviving spouse, your spouse may
elect to receive periodic payments over his/her life expectancy,
commencing at any date prior to the later of (1) the December 31 of the
year following your death or (2) the December 31 of the year in which you
would have attained age 70 1/2;
(iv) If the designated beneficiary is your surviving spouse, your spouse may
elect to treat your IRA as his/her own IRA and receive distributions under
the general distribution rules discussed above.
TAX TREATMENT OF DISTRIBUTIONS
(A) Income Tax
As a general rule, distributions from your IRA are taxable to you as ordinary
income. However, if non-deductible contributions have been made to your IRA,
the portion of your IRA distribution consisting of non-deductible contributions
will not be taxed again when received by you. If you make any non-deductible IRA
contributions, each distribution from your IRA will consist of a non-taxable
portion (return of non-deductible contributions) and a taxable portion (return
of deductible contributions, if any, and earnings). Thus, you may not take a
distribution which is entirely tax-free. The following formula is used to
determine the non-taxable portion of your distributions for a tax year:
Non-deductible Non-taxable
Contributions x Total Distribution = Distributions
---------------------- (for the year) (for the year)
Year-end IRA Balance
In determining your year-end IRA balance, you add back all distributions
taken during the year.
The following example illustrates how you will determine the non-taxable
portion of your distributions for a taxable year.
Example: Mary has made the following contributions to her IRA:
YEAR DEDUCTIBLE NON-DEDUCTIBLE
1985 $2,000 $0
1986 $2,000 $0
1987 $2,000 $0
1988 $1,000 $1,000
1989 $0 $2,000
------ ------
$7,000 $3,000
During 1990, Mary receives a $1,000 distribution from her IRA. On December
31, 1990 the total value of Mary's IRA is $11,000. The non-taxable portion of
the distribution she received during 1990 is determined as follows:
$3,000 x $1,000 = $250
--------------
11,000 + 1,000
To determine your year end balance you treat all of your IRAs as a single
IRA. This includes all regular IRAs, as well as simplified employee pension
(SEP) IRAs, salary reduction SEPs, and rollover IRAs.
A single lump sum distribution from your IRA is not entitled to special
10-year averaging, five-year averaging or capital gains treatment.
(B) Federal Income Tax Withholding
Distributions from your IRA are subject to Federal income tax withholding
unless the recipient elects in writing that no taxes be withheld. If the total
account balance or a portion of the account balance is distributed, then the
withheld amount will equal 10% of the distribution. If the distribution is part
of a series of periodic payments, the withheld amount will be calculated as if
the distribution were wages, and Form W-4P must be completed.
(C) Early Withdrawal Tax
In general, distributions from your IRA which occur prior to age 59 1/2 will
be subject to adverse tax consequences. Not only will such distributions be
fully taxable to you as ordinary income (subject to the formula described above
for determining the non-taxable portion of your distribution), such
distributions will also be subject to a 10% additional premature distribution
tax.
In addition to the exceptions for rollovers and the return of excess
contributions discussed above, distributions on account of your death or
disability will be exempt from the 10% additional tax. You are considered
11
<PAGE>
disabled if you are unable to engage in any substantial gainful activity because
of a medically determinable physical or mental impairment which can be expected
to result in death or to be of long, continued and indefinite duration. In
addition, distributions before age 59 1/2 are not subject to the 10% tax if made
in the form of substantially equal periodic payments and are made for your life
(or life expectancy) or the joint lives (or joint life expectancies) of you and
your designated beneficiary.
A transfer of amounts held in your IRA to your spouse's or former spouse's
IRA pursuant to a divorce or separation instrument will not be taxable as
ordinary income or subject to the 10% additional tax.
(D) Gift Tax
Your designation of a beneficiary for your IRA will not be treated as a gift
and will not subject you to Federal gift taxes.
(E) Estate Tax
Any amounts remaining in your IRA after your death will be included in your
gross estate and may be subject to Federal estate tax.
BORROWING/PROHIBITED TRANSACTIONS
You may not use the IRA or any portion of the IRA as security for a loan. If
you do, the portion pledged as security will be treated as distributed to you,
and will thus be includable in your taxable income for that year. Certain other
transactions (called "prohibited transactions" in the Code) may also result in
the disqualification of your IRA and the inclusion in income of the fair market
value of the IRA. Neither you, nor your beneficiary, may engage in any of the
following prohibited transactions with the IRA:
(a) a sale, exchange, or leasing of any property;
(b) lending of money or other extension of credit;
(c) furnishing of goods, services or facilities;
(d) the transfer or use of income or assets of the IRA by you or your
beneficiary.
If such transactions are engaged in, your IRA will be disqualified and will
lose its tax-exempt status. Under such circumstances, your IRA will be
considered to have been distributed to you and will be subject to the income and
additional taxes discussed above.
REPORTING TO THE IRS
(A) FORM 5329
If a transaction has occurred upon which a special penalty tax is imposed,
such as an excess contribution, a premature distribution or a failure to make a
timely distribution, you are required to file Form 5329 with your income tax
return for the year of the transaction. Form 5329 need not be filed if the only
activity for the year is the making of contributions or the distribution of
permissible benefits.
(B) FORM 8606
You are required to file Form 8606 if you make a non-deductible IRA
contribution.
IRS APPROVAL
The Delaware Group Prototype IRA has previously been approved by the Internal
Revenue Service as to its written form. Since that time, it has been amended to
conform to changes in the law and has been resubmitted to the Internal Revenue
Service for approval. At the time this Disclosure Statement was prepared, the
Internal Revenue Service had not reviewed the amendments.
Please be aware that the Internal Revenue Service's approval is a
determination only as to the form of the IRA and does not represent a
determination as to the merits of your particular IRA.
IRA ACCOUNT BALANCE
Each of the mutual fund shares held in your IRA has an equal interest in the
assets, net investment income and capital gains of the mutual fund selected. The
value of the shares is dependent upon, among other things, the market values of
the securities in the mutual fund's investment portfolio, which are subject to
fluctuation; therefore, growth in the value of your IRA cannot be projected or
guaranteed. Dividends from net investment income and any capital gains
distributions paid by the mutual fund selected will be reinvested in fund shares
at the net asset value thereof as of the respective ex-dividend dates, and such
additional shares will be credited to your IRA.
12
<PAGE>
FEES AND CHARGES
(A) IRA Fees
In general, there is an annual maintenance fee (currently $15 per year) for
your IRA. If an investor owns more than one Delaware Group IRA or opens a
Delaware Group IRA and invests in multiple funds within the Delaware Group,
however, only one fee per Social Security number will be charged. IRA fees are
deducted from the IRA during May of each year, unless paid directly by the
shareholder to the Custodian prior to May of each calendar year. The IRA fees
are subject to change.
(B) Mutual Fund Sales Charges
A sales charge will be made against your investment except for Delaware Group
Cash Reserve and Delaware Group U.S. Government Money Fund. For investments
under $1 million, sales charge rates range from a maximum of 8.50% to 1.5% of
the offering price of the fund shares. Depending on the Delaware Group fund
selected, the maximum rate applicable to an initial $1,000 contribution would be
8.50%, 5.75%, 4.75% or 3.00%. The maximum rate is applicable to subsequent
contributions of $1,000 until the value of the fund shares meets or exceeds a
level that qualifies the shareholder to receive a reduced sales charge. An
account value of $10,000 reduces the sales charge for funds at the maximum 8.50%
level to 7.75%. The sales charge for funds with a maximum of 5.75% is reduced to
4.75% when the account reaches $100,000.
The sales charge for funds with a maximum of 4.75% is reduced to 3.75% when
the account reaches $100,000. The sales charge for funds with a maximum of 3.00%
is reduced to 2.50% when the account reaches $100,000. Further sales charge
reductions at lower rates are applicable on larger purchases and on purchases
under the fund's Right of Accumulation and Letter of Intention. Group purchases
that meet our minimum standard may be subject to a different sales charge.
Reduced sales charges also apply to the combination of shares of any of the
funds in the Delaware Group (except Delaware Group Cash Reserve and Delaware
Group U.S. Government Money Fund, unless they were acquired through an exchange
or unless the inclusion of such shares brings your total account balance to $1
million) held by you and those held in your IRA.
(C) Redemption and Repurchase Charges
Neither the fund nor the national distributor makes a charge for redemptions
or repurchases.
(D) Further Details
Please refer to the prospectus of the fund or funds selected as your
investment for further details, including current charges and expenses.
QUALIFIED TAX ADVICE
The above is only a general description of taxation of IRAs. Because of the
unfavorable tax consequences which could result from the improper establishment
or use of an IRA, you may wish to consult with an attorney or qualified tax
adviser. Neither Delaware Management Company, Inc., Delaware Service Co., Inc.,
the Delaware Group of Funds nor the Custodian assumes any liability for tax
consequences to investors or beneficiaries arising from IRAs.
13
<PAGE>
DELAWARE
GROUP
========
IRA
(PHOTO OF LARGE KEY)
|| PLAN DOCUMENT
|| TERMS AND CONDITIONS
|| DISCLOSURE STATEMENT
||=========================
THE DELAWARE ORGANIZATION
| | Delaware Management Company, Inc.
Investment Manager
| | Delaware Distributors, L.P.
National Distributor
| | Delaware Service Company, Inc.
Shareholder Servicing, Dividend
Disbursing and Transfer Agent
| | Delaware Management Trust Company
Custodian
RETIREMENT
1818 Market Street PLANNING (LOGO)
Philadelphia, PA 19103-3682 IS THE KEY
800-523-4640
In Philadelphia 215-988-1333
RL-101-150M-12/93-U
Printed in the U.S.A.
<PAGE>
CLAIMS PROCEDURE
The Employer shall establish a claims procedure in accordance with the
requirements of the Employee Retirement Income Security Act of 1974, as amended,
if applicable, for the presentation of claims under the terms of the SEP
Document. A claim is a request for a plan benefit, including participation and
contributions, by an Employee or Beneficiary. The Employer shall make all
determinations as to the eligibility of any Employee for plan participation or
Employer contribution. In the event the claim is denied, the Employer shall
provide written notice of its determination to the Employee or Beneficiary
within ninety (90) days after receipt of the claim unless special circumstances
require an extension of time for processing the claim. If such an extension of
time for processing is required, written notice of the extension shall be
furnished to the claimant prior to the termination of the initial 90-day
period. The written notice will be set forth in a manner that may be understood
by the claimant and shall include:
1) The reason for the denial.
2) Specific reference to pertinent plan provisions on which the denial is
based.
3) Additional information necessary for the claimant to perfect the claim and
why the information is necessary.
4) Information about the procedures for submitting the denied claim for
review.
RL-210-1/93-5M-U
[FORM OF 12b-1 PLAN FOR CLASS A SHARES]
12b-1 Plan
Class A
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule l2b-l under the Investment Company Act of l940 (the "Act") by [FUND
NAME] (the "Fund")[, now for the [SERIES NAME] (the "Series")] on behalf of the
_____________ class [now doing business as the _____________ A Class]
(hereinafter referred to as the "Class"), which Fund[, Series] and Class may do
business under these or such other names as the Board of [Directors/Trustees] of
the Fund may designate from time to time. The Plan has been approved by a
majority of the Board of [Directors/Trustees], including a majority of the
[Directors/Trustees] who are not interested persons of the Fund and who have no
direct or indirect financial interest in the operation of the Plan or in any
agreements related thereto ("non-interested [Directors/Trustees]"), cast in
person at a meeting called for the purpose of voting on such Plan. Such approval
by the [Directors/Trustees] included a determination that in the exercise of
reasonable business judgment and in light of their fiduciary duties, there is a
reasonable likelihood that the Plan will benefit the Class and its shareholders.
If the Plan has not yet been approved by a majority of the outstanding voting
securities as required in the Act, the Plan will be presented to the public
shareholders at the next regular annual or special meeting.
<PAGE>
The Fund is a [corporation/common law trust] organized under the laws
of the [State of Maryland/Commonwealth of Pennsylvania], is authorized to issue
different series and classes of securities and is an open-end management
investment company registered under the Act. [Delaware Management Company,
Inc./Delaware International Advisers Ltd.] serves as the [Fund's/Series']
investment adviser and manager pursuant to an Investment Management Agreement.
Delaware Service Company, Inc. serves as the [Fund's/Series'] shareholder
servicing, dividend disbursing and transfer agent. Delaware Distributors, L.P.
(the "Distributor") is the principal underwriter and national distributor for
the [Fund's/Series'] shares, including shares of the Class pursuant to the
Distribution Agreement between the Distributor and the [Fund/Series]
("Distribution Agreement").
The Plan provides that:
l. The Fund shall pay to the Distributor a monthly fee not to exceed
0.3% (3/10 of l%) per annum of the [Fund's/Series'] average daily net assets
represented by shares of the Class (the "Maximum Amount") as may be determined
by the Fund's Board of [Directors/Trustees] from time to time. Such monthly fee
shall be reduced by the aggregate sums paid by the Fund [on behalf of the
Series] to persons other than broker-dealers (the "Service Providers") who may,
pursuant to servicing agreements, provide to the [Fund/Series] services in the
[Fund's/Series'] marketing of shares of the Class.
2. (a) The Distributor shall use the monies paid to it pursuant to
paragraph l above to furnish, or cause or encourage others to furnish, services
and incentives in connection with the promotion, offering and sale of Class
shares and, where suitable and appropriate, the retention of Class shares by
shareholders.
(b) The Service Providers shall use the monies paid respectively to
them to reimburse themselves for the actual costs they have incurred in
confirming that their customers have received the Prospectus and Statement of
Additional Information, if applicable, and as a fee for (l) assisting such
customers in maintaining proper records with the Fund (2) answering questions
relating to their respective accounts and (3) aiding in maintaining the
investment of their respective customers in the Class.
<PAGE>
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under the Plan. The Service
Providers shall inform the Fund monthly and in writing of the amounts each
claims under the Plan; both the Distributor and the Service Providers shall
furnish the Board of [Directors/Trustees] of the Fund with such other
information as the Board may reasonably request in connection with the payments
made under the Plan and the use thereof by the Distributor and the Service
Providers, respectively, in order to enable the Board to make an informed
determination of the amount of the Fund's payments and whether the Plan should
be continued.
4. The officers of the Fund shall furnish to the Board of
[Directors/Trustees] of the Fund, for their review, on a quarterly basis, a
written report of the amounts expended under the Plan and the purposes for which
such expenditures were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the Fund in writing of the commencement of the Plan, which time shall not
be before the first annual or special meeting of the public shareholders at
which the Plan is or was approved by the vote of a majority of the outstanding
voting securities as required in the Act (the "Commencement Date"); thereafter,
the Plan shall continue in effect for a period of more than one year from the
Commencement Date only so long as such continuance is specifically approved at
least annually by a vote of the Board of [Directors/Trustees] of the Fund, and
of the non-interested [Directors/Trustees], cast in person at a meeting called
for the purpose of voting on such Plan.
6. (a) The Plan may be terminated at any time by vote of a majority of
the non-interested [Directors/Trustees] or by vote of a majority of the
outstanding voting securities of the Class.
(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph l thereof without approval by
the shareholders of the Class.
7. All material amendments to this Plan shall be approved by the
non-interested [Directors/Trustees] in the manner described in paragraph 5
above.
<PAGE>
8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested [Directors/Trustees] shall be committed to the
discretion of such non-interested [Directors/Trustees].
9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
of the outstanding voting securities," respectively, for the purposes of this
Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
November 29, 1995
[FORM OF 12b-1 PLAN FOR CLASS B SHARES]
12b-1 Plan
Class B
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by [FUND
NAME] (the "Fund") [,for the [SERIES NAME] (the "Series")] on behalf of the
_______________________ B Class (the "Class"), which Fund[, Series] and Class
may do business under these or such other names as the Board of
[Directors/Trustees] of the Fund may designate from time to time. The Plan has
been approved by a majority of the Board of [Directors/Trustees], including a
majority of the [Directors/Trustees] who are not interested persons of the Fund
and who have no direct or indirect financial interest in the operation of the
Plan or in any agreements related thereto ("non-interested
[Directors/Trustees]"), cast in person at a meeting called for the purpose of
voting on such Plan. Such approval by the [Directors/Trustees] included a
determination that in the exercise of reasonable business judgment and in light
of their fiduciary duties, there is a reasonable likelihood that the Plan will
benefit the Class and its shareholders. The Plan has been approved by a vote of
the holders of a majority of the outstanding voting securities of the Class, as
defined in the Act.
The Fund is a [corporation/common law trust] organized under the laws
of the [State of Maryland/Commonwealth of Pennsylvania], is authorized to issue
different series and classes of securities and is an open-end management
investment company registered under the Act. [Delaware Management Company,
Inc./Delaware International Advisers Ltd.] serves as the [Fund's/Series']
investment adviser and manager pursuant to an Investment Management Agreement.
Delaware Service Company, Inc. serves as the [Fund's/Series'] shareholder
servicing, dividend disbursing and transfer agent. Delaware Distributors, L.P.
(the "Distributor") is the principal underwriter and national distributor for
the [Fund's/Series'] shares, including shares of the Class, pursuant to the
Distribution Agreement between the Distributor and the [Fund/Series]
("Distribution Agreement").
<PAGE>
The Plan provides that:
1. (a) The Fund shall pay to the Distributor a monthly fee not to
exceed 0.75% (3/4 of 1%) per annum of the [Fund's/Series'] average daily net
assets represented by shares of the Class as may be determined by the Fund's
Board of [Directors/Trustees] from time to time.
(b) In addition to the amounts described in (a) above, the Fund
shall pay (i) to the Distributor for payment to dealers or others, or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
[Fund's/Series'] average daily net assets represented by shares of the Class, as
a service fee pursuant to dealer or servicing agreements.
2. (a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for,
among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation related to sales and marketing personnel, and holding special
promotions. In addition, such fees may be used to pay for advancing the
commission costs to dealers with respect to the sale of Class shares.
(b) The monies to be paid pursuant to paragraph 1(b) above shall be
used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include confirming
that customers have received the Prospectus and Statement of Additional
Information, if applicable; assisting such customers in maintaining proper
records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under paragraph 1(a) above. In
addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
any others receiving fees under the Plan shall furnish the Board of
[Directors/Trustees] of the Fund with such other information as the Board may
reasonably request in connection with the payments made under the Plan and the
use thereof by the Distributor and others in order to enable the Board to make
an informed determination of the amount of the Fund's payments and whether the
Plan should be continued.
<PAGE>
4. The officers of the Fund shall furnish to the Board of
[Directors/Trustees] of the Fund, for their review, on a quarterly basis, a
written report of the amounts expended under the Plan and the purposes for which
such expenditures were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the Fund of the commencement of the Plan (the "Commencement Date");
thereafter, the Plan shall continue in effect for a period of more than one year
from the Commencement Date only so long as such continuance is specifically
approved at least annually by a vote of the Board of [Directors/Trustees] of the
Fund, and of the non-interested [Directors/Trustees], cast in person at a
meeting called for the purpose of voting on such Plan.
6.(a) The Plan may be terminated at any time by vote of a majority
of the non-interested [Directors/Trustees] or by vote of a majority of the
outstanding voting securities of the Class.
(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph 1 thereof without approval by
the shareholders of the Class.
7. All material amendments to this Plan shall be approved by the
non-interested [Directors/Trustees] in the manner described in paragraph 5
above.
8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested [Directors/Trustees] shall be committed to the
discretion of such non-interested [Directors/Trustees].
9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
of the outstanding voting securities," respectively, for the purposes of this
Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
November 29, 1995
<PAGE>
[FORM OF 12b-1 PLAN
C CLASS SHARES]
DISTRIBUTION PLAN
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by the Fund
(the "Fund"), on behalf of the Fund's C Class (the "Class"). The Plan has been
approved by a majority of the Board of Directors, including a majority of the
Directors who are not interested persons of the Fund and who have no direct or
indirect financial interest in the operation of the Plan or in any agreements
related thereto, cast in person at a meeting called for the purpose of voting on
such Plan. Such approval by the Directors included a determination that in the
exercise of reasonable business judgment and in light of their fiduciary duties,
there is a reasonable likelihood that the Plan will benefit the Fund and its
shareholders. The Plan has been approved by a vote of the holders of a majority
of the outstanding voting securities of the Class, as defined in the Act.
The Fund is a [corporation/business trust] organized under the laws of
the [State of Maryland/Commonwealth of Pennsylvania], is authorized to issue
different series and classes of securities and is an open-end management
investment company registered under the Act. [Delaware Management Company, Inc.
("DMC") or Delaware International Advisers Ltd. ("Delaware International"), an
<PAGE>
affiliate of DMC,] serves as the Fund's investment adviser and manager pursuant
to an Investment Management Agreement. Delaware Service Company, Inc. serves as
the Fund's shareholder servicing, dividend disbursing and transfer agent.
Delaware Distributors, L.P. (the "Distributor") is the principal underwriter and
national distributor for the Fund's shares, including shares of the Class,
pursuant to the Distribution Agreement between the Distributor and the Fund
("Distribution Agreement").
The Plan provides that:
1.(a) The Fund shall pay to the Distributor a monthly fee not to exceed
0.75% (3/4 of 1%) per annum of the Fund's average daily net assets represented
by shares of the Class as may be determined by the Fund's Board of Directors
from time to time.
(b) In addition to the amounts described in paragraph 1(a) above, the
Fund shall pay: (i) to the Distributor for payment to dealers or others; or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
Fund's average daily net assets represented by shares of the Class, as a service
fee pursuant to dealer or servicing agreements.
2.(a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for,
among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation related to sales and marketing personnel, and holding special
<PAGE>
promotions. In addition, such fees may be used to pay for advancing the
commission costs to dealers with respect to the sale of Class shares.
(b) The monies to be paid pursuant to paragraph 1(b) above shall be
used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include confirming
that customers have received the Prospectus and Statement of Additional
Information, if applicable; assisting such customers in maintaining proper
records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Fund.
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under paragraph 1(a) above. In
addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
any others receiving fees under the Plan shall furnish the Board of Directors of
the Fund with such other information as the Board may reasonably request in
connection with the payments made under the Plan and the use thereof by the
Distributor and others in order to enable the Board to make an informed
determination of the amount of the Fund's payments and whether the Plan should
be continued.
4. The officers of the Fund shall furnish to the Board of Directors of
the Fund, and the Directors shall review, on a quarterly basis, a written report
of the amounts expended under the Plan and the purposes for which such
expenditures were made.
<PAGE>
5. This Plan shall take effect at such time as the Distributor shall
notify the fund in writing of the commencement of the Plan (the "Commencement
Date"); thereafter, the Plan shall continue in effect for a period of more than
one year from the Commencement Date only so long as such continuance is
specifically approved at least annually by a vote of the Board of Directors of
the Fund, and of the Directors who are not interested persons of the Fund and
have no direct or indirect financial interest in the operation of the Plan or in
any agreements related to the Plan ("non-interested Directors"), cast in person
at a meeting called for the purpose of voting on such Plan.
6.(a) The Plan may be terminated at any time by vote of a majority of
the non-interested Directors or by vote of a majority of the outstanding voting
securities of the Class.
(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph 1 thereof without approval by
the shareholders of the Class.
7. All material amendments to this Plan shall be approved by the
non-interested Directors in the manner described in paragraph 5 above.
8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Directors shall be committed to the discretion of such
non-interested Directors.
9. The definitions contained in Sections 2(a)(3), 2(a)(19) and
2(a)(42) of the Act shall govern the meaning of "affiliated person,"
<PAGE>
"interested person(s)" and "vote of a majority of the outstanding voting
securities," respectively, for the purposes of this Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
November 29, 1995
<PAGE>
DELAWARE GROUP DEVON FUND A
ANNUALIZED RATE OF RETURN
FOR FISCAL YEAR ENDING 1995
- ------------------------------------------------------------------
Average Annual Compounded Rate of Return:
n
P(1 + T) = ERV
ONE
YEAR
- ----------
1
$1000(1 - T) = $1,129.86
T = 12.99%
LIFE OF
FUND
- ----------
1.33698630
$1000(1 - T) = $1,174.05
T = 12.75%
<PAGE>
DELAWARE GROUP DEVON FUND A
ANNUALIZED RATE OF RETURN
FOR FISCAL YEAR ENDING 1995
- ------------------------------------------------------------------
Average Annual Compounded Rate of Return:
n
P(1 + T) = ERV
ONE
YEAR
- ----------
1
$1000(1 - T) = $1,075.87
T = 7.59%
LIFE OF
FUND
- ----------
1.33698630
$1000(1 - T) = $1,118.15
T = 8.71%
<PAGE>
DELAWARE GROUP DEVON FUND A
TOTAL RETURN PERFORMANCE
THREE MONTHS
- -----------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $10.60
Initial Shares 94.340
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ---------------------------------------------------------
1995 | 94.340 | $0.040 | 0.344 | 94.684
- ---------------------------------------------------------
Ending Shares 94.684
Ending NAV x $11.13
----------
Investment Return $1,053.83
Total Return Performance
- ------------------------
Investment Return $1,053.83
Less Initial Investment $1,000.00
----------
$53.83 / $1,000.00 x 10
Total Return: 5.38%
<PAGE>
DELAWARE GROUP DEVON FUND A
TOTAL RETURN PERFORMANCE
SIX MONTHS
- -----------------------------------------------------------
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 | $0.460 4.021 | 91.972
- -----------------------------------------------------------
Ending Shares 91.972
Ending NAV x $11.13
-----------
Investment Return $1,023.65
- ------------------------
Investment Return $1,023.65
Less Initial Investment $1,000.00
-----------
$23.65 / $1,000.00 x 100
Total Return: 2.37%
<PAGE>
DELAWARE GROUP DEVON FUND A
TOTAL RETURN PERFORMANCE
NINE MONTHS
- ----------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $11.09
Initial Shares 90.171
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------
1995 | 90.171 | $0.490 4.386 | 94.557
- -----------------------------------------------------
Ending Shares 94.557
Ending NAV x $11.13
-----------
Investment Return $1,052.42
Total Return Performance
- ------------------------
Investment Return $1,052.42
Less Initial Investment $1,000.00
-----------
$52.42 /$1,000.00 x 100
Total Return: 5.24%
<PAGE>
DELAWARE GROUP DEVON FUND A
TOTAL RETURN PERFORMANCE
ONE YEAR
- --------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $10.88
Initial Shares 91.912
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------
1995 | 91.912 | $0.520 4.752 | 96.664
- --------------------------------------------------------
Ending Shares 96.664
Ending NAV x $11.13
----------
Investment Return $1,075.87
Total Return Performance
- ------------------------
Investment Return $1,075.87
Less Initial Investment $1,000.00
----------
$75.87 /$1,000.00 x 100
Total Return: 7.59%
<PAGE>
DELAWARE GROUP DEVON FUND A
TOTAL RETURN PERFORMANCE
LIFE OF FUND
- ---------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $10.50
Initial Shares 95.238
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ---------------------------------------------------
1994 | 95.238 | $0.030 0.286 | 95.524
- ---------------------------------------------------
1995 | 95.524 | $0.520 4.939 | 100.463
- ---------------------------------------------------
Ending Shares 100.463
Ending NAV x $11.13
---------
Investment Return $1,118.15
Total Return Performance
- ------------------------
Investment Return $1,118.15
Less Initial Investment $1,000.00
---------
$118.15 /$1,000.00 x 100
Total Return: 11.82%
<PAGE>
DELAWARE GROUP DEVON FUND INSTITUTIONAL
ANNUALIZED RATE OF RETURN
FOR FISCAL YEAR ENDING 1995
- ------------------------------------------------------------------
Average Annual Compounded Rate of Return:
n
P(1 + T) = ERV
ONE
YEAR
- ----------
1
$1000(1 - T) = $1,132.88
T = 13.29%
LIFE OF
FUND
- ----------
1.3369863
$1000(1 - T) = $1,178.34
T = 13.06%
<PAGE>
DELAWARE GROUP DEVON FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
THREE MONTHS
- -----------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $10.11
Initial Shares 98.912
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------
1995 | 98.912 | $0.040 0.360 | 99.272
- -----------------------------------------------------------
Ending Shares 99.272
Ending NAV x $11.15
-----------
Investment Return $1,106.88
- ------------------------
Investment Return $1,106.88
Less Initial Investment $1,000.00
-----------
$106.88 / $1,000.00 x 100
Total Return: 10.69%
<PAGE>
DELAWARE GROUP DEVON FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
SIX MONTHS
- ----------------------------------------------------------
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 | $0.480 12.364 | 96.470
- -----------------------------------------------------
Ending Shares 96.470
Ending NAV x $11.15
-----------
Investment Return $1,075.64
Total Return Performance
- ------------------------
Investment Return $1,075.64
Less Initial Investment $1,000.00
-----------
$75.64 /$1,000.00 x 100
Total Return: 7.56%
<PAGE>
DELAWARE GROUP DEVON FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
NINE MONTHS
- ---------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $10.58
Initial Shares 94.518
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ---------------------------------------------------
1995 | 94.518 | $0.510 4.781 | 99.299
- ---------------------------------------------------
Ending Shares 99.299
Ending NAV x $11.15
---------
Investment Return $1,107.18
Total Return Performance
- ------------------------
Investment Return $1,107.18
Less Initial Investment $1,000.00
---------
$107.18 /$1,000.00 x 100
Total Return: 10.72%
<PAGE>
DELAWARE GROUP DEVON FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
ONE YEAR
- --------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $10.37
Initial Shares 96.432
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------
1995 | 96.432 | $0.540 5.172 | 101.604
- --------------------------------------------------------
Ending Shares 101.604
Ending NAV x $11.15
----------
Investment Return $1,132.88
Total Return Performance
- ------------------------
Investment Return $1,132.88
Less Initial Investment $1,000.00
----------
$132.88 /$1,000.00 x 100
Total Return: 13.29%
<PAGE>
DELAWARE GROUP DEVON FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
LIFE OF FUND
- ------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $10.00
Initial Shares 100.000
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ---------------------------------------------------------
1994 | 100.000 | $0.030 | 0.300 | 100.300
- ---------------------------------------------------------
1995 | 100.300 | $0.540 | 5.381 | 105.681
- ---------------------------------------------------------
Ending Shares 105.681
Ending NAV x $11.15
----------
Investment Return $1,178.34
Total Return Performance
- ------------------------
Investment Return $1,178.34
Less Initial Investment $1,000.00
----------
$178.34 / $1,000.00 x 100
Total Return: 17.83%
<PAGE>
DELAWARE GROUP DEVON FUND B
TOTAL RETURN PERFORMANCE
THREE 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
- ---------------------------------------------------------
1994 | 99.206 | $0.030 | 0.272 | 99.478
- ---------------------------------------------------------
Ending Shares 99.478
Ending NAV x $11.10
----------
Investment Return $1,104.21
Total Return Performance
- ------------------------
Investment Return $1,104.21
Less Initial Investment $1,000.00
----------
$104.21 / $1,000.00 x 100
Total Return: 10.42%
<PAGE>
DELAWARE GROUP DEVON FUND B
TOTAL RETURN PERFORMANCE
THREE 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
- --------------------------------------------------------
1994 | 99.206 | $0.030 0.272 | 99.478
- --------------------------------------------------------
Ending Shares 99.478
Ending NAV x $11.10
----------
$1,104.21
Less CDSC $40.00
----------
Investment Return $1,064.21
Total Return Performance
- ------------------------
Investment Return $1,064.21
Less Initial Investment $1,000.00
----------
$64.21 /$1,000.00 x 100
Total Return: 6.42%
<PAGE>
DELAWARE GROUP DEVON FUND B
TOTAL RETURN PERFORMANCE
SIX MONTHS (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
- -----------------------------------------------------------
1994 | 92.421 | $0.440 4.049 | 96.470
- -----------------------------------------------------------
Ending Shares 96.470
Ending NAV x $11.10
-----------
$1,070.82
Less CDSC $40.00
-----------
Investment Return $1,030.82
Total Return Performance
- ------------------------
Investment Return $1,030.82
Less Initial Investment $1,000.00
-----------
$30.82 / $1,000.00 x 100
Total Return: 3.08%
<PAGE>
DELAWARE GROUP DEVON FUND B
TOTAL RETURN PERFORMANCE
SIX MONTHS (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
- -----------------------------------------------------
1994 | 92.421 | $0.440 | 4.049 | 96.470
- -----------------------------------------------------
Ending Shares 96.470
Ending NAV x $11.10
-----------
Investment Return $1,070.82
Total Return Performance
- ------------------------
Investment Return $1,070.82
Less Initial Investment $1,000.00
-----------
$70.82 /$1,000.00 x 100
Total Return: 7.08%
<PAGE>
DELAWARE GROUP DEVON FUND B
TOTAL RETURN PERFORMANCE
LIFE OF FUND (EXCLUDING CDSC)
- ---------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $10.90
Initial Shares 91.743
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ---------------------------------------------------
1994 | 91.743 | $0.470 4.286 | 96.029
- ---------------------------------------------------
Ending Shares 96.029
Ending NAV x $11.10
---------
Investment Return $1,065.92
Total Return Performance
- ------------------------
Investment Return $1,065.92
Less Initial Investment $1,000.00
---------
$65.92 /$1,000.00 x 100
Total Return: 6.59%
<PAGE>
DELAWARE GROUP DEVON FUND B
TOTAL RETURN PERFORMANCE
LIFE OF FUND (INCLUDING CDSC)
- -------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $10.90
Initial Shares 91.743
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ---------------------------------------------------
1994 | 91.743 | $0.470 4.286 | 96.029
- ---------------------------------------------------
Ending Shares 96.029
Ending NAV x $11.10
---------
$1,065.92
Less CDSC $40.00
---------
Investment Return $1,025.92
Total Return Performance
- ------------------------
Investment Return $1,025.92
Less Initial Investment $1,000.00
---------
$25.92 /$1,000.00 x 100
Total Return: 2.59%
<PAGE>
DELAWARE GROUP DELAWARE FUND INSTITUTIONAL
ANNUALIZED RATE OF RETURN FOR
FISCAL YEAR ENDING 1995
- --------------------------------------------------------------------------------
Average Annual Compounded Rate of Return:
n
P(1 + T) = ERV
ONE
YEAR
----
1
$1000(1 - T) = $1,072.01
T = 7.20%
THREE
YEARS
-----
3
$1000(1 - T) = $1,275.63
T = 8.45%
FIVE
YEARS
-----
5
$1000(1 - T) = $1,639.50
T = 10.39%
TEN
YEARS
-----
10
$1000(1 - T) = $3,079.18
T = 11.90%
FIFTEEN
YEARS
-----
15
$1000(1 - T) = $7,929.48
T = 14.80%
LIFE OF
FUND
----
57.01643836
$1000(1 - T) = $388,612.35
T = 11.02%
<PAGE>
DELAWARE GROUP DELAWARE FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
THREE MONTHS
- --------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $17.31
Initial Shares 57.770
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
1995 57.770 $0.150 0.477 58.247
Ending Shares 58.247
Ending NAV $18.41
---------
Investment Return $1,072.33
Total Return Performance
- ------------------------
Investment Return $1,072.33
Less Initial Investment $1,000.00
---------
$72.33 / $1,000.00 x 100
Total Return: 7.23%
<PAGE>
DELAWARE GROUP DELAWARE FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
SIX MONTHS
- --------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $18.03
Initial Shares 55.463
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
1995 55.463 $0.610 1.956 57.419
- --------------------------------------------------------------------------------
Ending Shares 57.419
Ending NAV $18.41
---------
Investment Return $1,057.08
Total Return Performance
- ------------------------
Investment Return $1,057.08
Less Initial Investment $1,000.00
---------
$57.08 / $1,000.00 x 100
Total Return: 5.71%
<PAGE>
DELAWARE GROUP DELAWARE FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
NINE MONTHS
- --------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $18.01
Initial Shares 55.525
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
1995 55.525 $0.760 2.439 57.964
- --------------------------------------------------------------------------------
Ending Shares 57.964
Ending NAV $18.41
----------
Investment Return $1,067.12
Total Return Performance
- ------------------------
Investment Return $1,067.12
Less Initial Investment $1,000.00
----------
$67.12 / $1,000.00 x 100
Total Return: 6.71%
<PAGE>
DELAWARE GROUP DELAWARE FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
ONE YEAR
Initial Investment $1,000.00
Beginning OFFER $18.08
Initial Shares 55.310
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
1995 55.310 $0.150 2.920 58.230
- --------------------------------------------------------------------------------
Ending Shares 58.230
Ending NAV x $18.41
---------
Investment Return $1,072.01
Total Return Performance
- ------------------------
Investment Return $1,072.01
Less Initial Investment $1,000.00
---------
$72.01 / $1,000.00 x 100
Total Return: 7.20%
<PAGE>
DELAWARE GROUP DELAWARE FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
THREE YEARS
- --------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $18.02
Initial Shares 55.494
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
1993 55.494 $1.430 4.386 59.880
- --------------------------------------------------------------------------------
1994 59.880 $1.790 5.937 65.817
- --------------------------------------------------------------------------------
1995 65.817 $0.910 3.473 69.290
- --------------------------------------------------------------------------------
Ending Shares 69.290
Ending NAV x $18.41
---------
Investment Return $1,275.63
Total Return Performance
- ------------------------
Investment Return $1,275.63
Less Initial Investment $1,000.00
---------
$275.63 /$1,000.00 x 100
Total Return: 27.56%
<PAGE>
DELAWARE GROUP DELAWARE FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
FIVE YEARS
- --------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $16.95
Initial Shares 58.997
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
1991 58.997 $1.170 4.176 63.173
- --------------------------------------------------------------------------------
1992 63.173 $2.240 8.151 71.324
- --------------------------------------------------------------------------------
1993 71.324 $1.430 5.636 76.960
- --------------------------------------------------------------------------------
1994 76.960 $1.790 6.924 83.884
- --------------------------------------------------------------------------------
1995 83.884 $0.910 5.171 89.055
- --------------------------------------------------------------------------------
Ending Shares 89.055
Ending NAV x $18.41
---------
Investment Return $1,639.50
- ------------------------
Investment Return $1,639.50
Less Initial Investment $1,000.00
---------
$639.50 /$1,000.00 x 100
Total Return: 63.95%
<PAGE>
DELAWARE GROUP DELAWARE FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
TEN YEARS
- --------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $19.18
Initial Shares 52.138
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
1986 52.138 $2.700 12.364 59.558
- --------------------------------------------------------------------------------
1987 59.558 $4.810 12.364 74.794
- --------------------------------------------------------------------------------
1988 74.794 $4.410 12.364 100.456
- --------------------------------------------------------------------------------
1989 100.456 $0.750 12.364 105.604
- --------------------------------------------------------------------------------
1990 105.604 $0.840 12.364 110.804
- --------------------------------------------------------------------------------
1991 110.804 $1.170 12.364 118.645
- --------------------------------------------------------------------------------
1992 118.645 $2.240 12.364 133.954
- --------------------------------------------------------------------------------
1993 133.954 $1.430 12.364 144.541
- --------------------------------------------------------------------------------
1994 144.541 $1.790 12.364 158.871
- --------------------------------------------------------------------------------
1995 158.871 $0.910 12.364 167.256
- --------------------------------------------------------------------------------
Ending Shares 167.256
Ending NAV x $18.41
---------
Investment Return $3,079.18
Total Return Performance
- ------------------------
Investment Return $3,079.18
Less Initial Investment $1,000.00
---------
$2,079.18 / $1,000.00 x 100
Total Return: 207.92%
<PAGE>
DELAWARE GROUP DELAWARE FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
FIFTEEN YEARS
- --------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $11.88
Initial Shares 84.175
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
1981 84.175 $0.690 4.102 88.277
- --------------------------------------------------------------------------------
1982 88.277 $1.090 6.223 94.500
- --------------------------------------------------------------------------------
1983 94.500 $1.420 6.965 101.465
- --------------------------------------------------------------------------------
1984 101.465 $3.740 20.186 121.651
- --------------------------------------------------------------------------------
1985 121.651 $1.810 12.624 134.275
- --------------------------------------------------------------------------------
1986 134.275 $2.700 19.107 153.382
- --------------------------------------------------------------------------------
1987 153.382 $4.810 39.238 192.620
- --------------------------------------------------------------------------------
1988 192.620 $4.410 66.089 258.709
- --------------------------------------------------------------------------------
1989 258.709 $0.750 13.255 271.964
- --------------------------------------------------------------------------------
1990 271.964 $0.840 13.394 285.358
- --------------------------------------------------------------------------------
1991 285.358 $1.170 20.192 305.550
- --------------------------------------------------------------------------------
1992 305.550 $2.240 39.426 344.976
- --------------------------------------------------------------------------------
1993 344.976 $1.430 27.266 372.242
- --------------------------------------------------------------------------------
1994 372.242 $1.790 36.905 409.147
- --------------------------------------------------------------------------------
1995 409.147 $0.910 21.569 430.716
- --------------------------------------------------------------------------------
Ending Shares 430.716
Ending NAV x $18.41
---------
Investment Return $7,929.48
Total Return Performance
- ------------------------
Investment Return $7,929.48
Less Initial Investment $1,000.00
---------
$6,929.48 / $1,000.00 x 100
Total Return: 693.00%
<PAGE>
DELAWARE GROUP DELAWARE FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
LIFE OF FUND
- --------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $7.50
Initial Shares 133.333
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
1939 133.333 $0.725 4.654 137.987
- --------------------------------------------------------------------------------
1940 137.987 $0.400 6.999 144.986
- --------------------------------------------------------------------------------
1941 144.986 $0.450 8.547 153.533
- --------------------------------------------------------------------------------
1942 153.533 $0.425 8.930 162.463
- --------------------------------------------------------------------------------
1943 162.463 $0.425 9.287 171.750
- --------------------------------------------------------------------------------
1944 171.750 $1.175 23.437 195.187
- --------------------------------------------------------------------------------
1945 195.187 $1.150 25.966 221.153
- --------------------------------------------------------------------------------
1946 221.153 $1.275 26.957 248.110
- --------------------------------------------------------------------------------
1947 248.110 $1.925 58.786 306.896
- --------------------------------------------------------------------------------
1948 306.896 $0.575 24.870 331.766
- --------------------------------------------------------------------------------
1949 331.766 $0.575 27.795 359.561
- --------------------------------------------------------------------------------
1950 359.561 $0.550 30.552 390.113
- --------------------------------------------------------------------------------
1951 390.113 $0.650 33.935 424.048
- --------------------------------------------------------------------------------
1952 424.048 $0.775 40.450 464.498
- --------------------------------------------------------------------------------
1953 464.498 $0.675 38.420 502.918
- --------------------------------------------------------------------------------
1954 502.918 $0.625 41.512 544.430
- --------------------------------------------------------------------------------
1955 544.430 $0.825 47.115 591.545
- --------------------------------------------------------------------------------
1956 591.545 $1.000 55.000 646.545
- --------------------------------------------------------------------------------
1957 646.545 $1.000 60.801 707.346
- --------------------------------------------------------------------------------
1958 707.346 $0.850 66.092 773.438
- --------------------------------------------------------------------------------
<PAGE>
DELAWARE GROUP DELAWARE FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
LIFE OF FUND
- --------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $7.50
Initial Shares 133.333
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
1959 773.438 $0.850 67.595 841.033
- --------------------------------------------------------------------------------
1960 841.033 $1.100 69.645 910.678
- --------------------------------------------------------------------------------
1961 910.678 $0.850 70.674 981.352
- --------------------------------------------------------------------------------
1962 981.352 $1.050 79.993 1,061.345
- --------------------------------------------------------------------------------
1963 1061.345 $0.700 74.760 1,136.105
- --------------------------------------------------------------------------------
1964 1136.105 $0.900 92.961 1,229.066
- --------------------------------------------------------------------------------
1965 1229.066 $1.000 99.740 1,328.806
- --------------------------------------------------------------------------------
1966 1328.806 $1.100 102.565 1,431.371
- --------------------------------------------------------------------------------
1967 1431.371 $2.030 206.423 1,637.794
- --------------------------------------------------------------------------------
1968 1637.794 $2.145 236.357 1,874.151
- --------------------------------------------------------------------------------
1969 1874.151 $1.580 179.154 2,053.305
- --------------------------------------------------------------------------------
1970 2053.305 $1.410 228.621 2,281.926
- --------------------------------------------------------------------------------
1971 2281.926 $0.860 184.335 2,466.261
- --------------------------------------------------------------------------------
1972 2466.261 $1.100 238.963 2,705.224
- --------------------------------------------------------------------------------
1973 2705.224 $1.110 244.500 2,949.724
- --------------------------------------------------------------------------------
1974 2949.724 $0.470 159.594 3,109.318
- --------------------------------------------------------------------------------
1975 3109.318 $0.400 169.678 3,278.996
- --------------------------------------------------------------------------------
1976 3278.996 $0.410 150.437 3,429.433
- --------------------------------------------------------------------------------
1977 3429.433 $0.435 138.269 3,567.702
- --------------------------------------------------------------------------------
1978 3567.702 $0.515 172.819 3,740.521
- --------------------------------------------------------------------------------
1979 3740.521 $0.550 189.094 3,929.615
- --------------------------------------------------------------------------------
<PAGE>
DELAWARE GROUP DELAWARE FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
LIFE OF FUND
- --------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $7.50
Initial Shares 133.333
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
1980 3929.615 $0.580 195.467 4,125.082
- --------------------------------------------------------------------------------
1981 4125.082 $0.690 200.996 4,326.078
- --------------------------------------------------------------------------------
1982 4326.078 $1.090 304.977 4,631.055
- --------------------------------------------------------------------------------
1983 4631.055 $1.420 341.340 4,972.395
- --------------------------------------------------------------------------------
1984 4972.395 $3.740 989.247 5,961.642
- --------------------------------------------------------------------------------
1985 5961.642 $1.810 618.629 6,580.271
- --------------------------------------------------------------------------------
1986 6580.271 $2.700 936.358 7,516.629
- --------------------------------------------------------------------------------
1987 7516.629 $4.810 1922.862 9,439.491
- --------------------------------------------------------------------------------
1988 9439.491 $4.410 3238.687 12,678.178
- --------------------------------------------------------------------------------
1989 12678.178 $0.750 649.586 13,327.764
- --------------------------------------------------------------------------------
1990 13327.764 $0.840 656.353 13,984.117
- --------------------------------------------------------------------------------
1991 13984.117 $1.170 989.506 14,973.623
- --------------------------------------------------------------------------------
1992 14973.623 $2.240 1932.084 16,905.707
- --------------------------------------------------------------------------------
1993 16905.707 $1.430 1336.119 18,241.826
- --------------------------------------------------------------------------------
1994 18241.826 $1.790 1808.573 20,050.399
- --------------------------------------------------------------------------------
1995 20050.399 $0.910 1058.366 21,108.765
- --------------------------------------------------------------------------------
Ending Shares 21108.765
Ending NAV $18.41
-----------
Investment Return $388,612.36
<PAGE>
DELAWARE GROUP DELAWARE FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
LIFE OF FUND
- -----------------------------------------------------------
Initial Investment $1,000,00
Beginning OFFER $7.50
Initial Shares 133.333
Total Return Performance
- ------------------------
Investment Return $388,612.36
Less Initial Investment $1,000.00
-----------
$387,612.36 / $1,000.00 x 100
Total Return: 38761.24%
<PAGE>
DELAWARE GROUP DELAWARE FUND B
TOTAL RETURN PERFORMANCE
THREE 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
- --------------------------------------------------------------------------------
1994 57.837 $0.120 0.382 58.219
- --------------------------------------------------------------------------------
Ending Shares 58.219
Ending NAV x $18.38
---------
Investment Return $1,070.07
Total Return Performance
- ------------------------
Investment Return $1,070.07
Less Initial Investment $1,000.00
---------
$70.07 /$1,000.00 x 100
Total Return: 7.01%
<PAGE>
DELAWARE GROUP DELAWARE FUND B
TOTAL RETURN PERFORMANCE
THREE 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
- --------------------------------------------------------------------------------
1994 57.837 $0.120 914.013 971.850
- --------------------------------------------------------------------------------
Ending Shares 58.219
Ending NAV x $18.38
---------
$1,070.07
Less CDSC $40.00
---------
Investment Return $1,030.07
Total Return Performance
- ------------------------
Investment Return $1,030.07
Less Initial Investment $1,000.00
---------
$30.07 / $1,000.00 x 100
Total Return: 3.01%
<PAGE>
DELAWARE GROUP DELAWARE FUND B
TOTAL RETURN PERFORMANCE
SIX MONTHS (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
- --------------------------------------------------------------------------------
1994 55.617 $0.520 1.672 57.289
- --------------------------------------------------------------------------------
Ending Shares 57.289
Ending NAV $18.38
---------
Investment Return $1,052.97
Total Return Performance
- ------------------------
Investment Return $1,052.97
Less Initial Investment $1,000.00
---------
$52.97 / $1,000.00 x 100
Total Return: 5.30%
<PAGE>
DELAWARE GROUP DELAWARE FUND B
TOTAL RETURN PERFORMANCE
SIX MONTHS (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
- --------------------------------------------------------------------------------
1994 55.617 $0.520 1.672 57.289
- --------------------------------------------------------------------------------
Ending Shares 57.289
Ending NAV x $18.38
---------
$1,052.97
Less CDSC $40.00
---------
Investment Return $1,012.97
Total Return Performance
- ------------------------
Investment Return $1,012.97
Less Initial Investment $1,000.00
---------
$12.97 / $1,000.00 x 100
Total Return: 1.30%
<PAGE>
DELAWARE GROUP DELAWARE FUND B
TOTAL RETURN PERFORMANCE
LIFE OF FUND (EXCLUDING CDSC)
- --------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $18.34
Initial Shares 54.526
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
1994 54.526 $0.670 2.111 56.637
- --------------------------------------------------------------------------------
Ending Shares 56.637
Ending NAV $18.38
---------
Investment Return $1,040.99
Total Return Performance
- ------------------------
Investment Return $1,040.99
Less Initial Investment $1,000.00
---------
$40.99 / $1,000.00 x 100
Total Return: 4.10%
<PAGE>
DELAWARE GROUP DELAWARE FUND B
TOTAL RETURN PERFORMANCE
LIFE OF FUND (INCLUDING CDSC)
- --------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $18.34
Initial Shares 54.526
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
1994 54.526 $0.670 2.111 56.637
- --------------------------------------------------------------------------------
Ending Shares 56.637
Ending NAV $18.38
---------
$1,040.99
Less CDSC $40.00
---------
Investment Return $1,000.99
Total Return Performance
- ------------------------
Investment Return $1,000.99
Less Initial Investment $1,000.00
---------
$0.99 / $1,000.00 x 100
Total Return: 0.10%
<PAGE>
DELAWARE GROUP DELAWARE FUND A
ANNUALIZED RATE OF RETURN
FOR FISCAL YEAR ENDING 1995
- --------------------------------------------------------------------------------
Average Annual Compounded Rate of Return:
n
P(1 + T) = ERV
ONE
YEAR
----
1
$1000(1 - T) = $1,070.81
T = 7.08%
THREE
YEARS
-----
3
$1000(1 - T) = $1,270.96
T = 8.32%
FIVE
YEARS
-----
5
$1000(1 - T) = $1,633.50
T = 10.31%
TEN
YEARS
-----
10
$1000(1 - T) = $3,067.83
T = 11.86%
FIFTEEN
YEARS
-----
15
$1000(1 - T) = $7,900.79
T = 14.77%
LIFE
OF FUND
-------
57.01643836
$1000(1 - T) = $387,179.77
T = 11.02%
<PAGE>
DELAWARE GROUP DELAWARE FUND A
ANNUALIZED RATE OF RETURN
FOR FISCAL YEAR ENDING 1995
- --------------------------------------------------------------------------------
Average Annual Compounded Rate of Return:
n
P(1 + T) = ERV
ONE
YEAR
----
1
$1000(1 - T) = $1,019.97
T = 2.00%
THREE
YEARS
-----
3
$1000(1 - T) = $1,210.44
T = 6.57%
FIVE
YEARS
-----
5
$1000(1 - T) = $1,555.46
T = 9.24%
TEN
YEARS
-----
10
$1000(1 - T) = $2,921.44
T = 11.32%
FIFTEEN
YEARS
-----
15
$1000(1 - T) = $7,526.87
T = 14.40%
LIFE OF
FUND
----
57.01643836
$1000(1 - T) = $368,972.40
T = 10.92%
<PAGE>
DELAWARE GROUP DELAWARE FUND A
TOTAL RETURN PERFORMANCE
ONE YEAR
- --------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $18.96
Initial Shares 52.743
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
1995 52.743 $0.880 2.691 55.434
- --------------------------------------------------------------------------------
Ending Shares 55.434
Ending NAV x $18.40
---------
Investment Return $1,019.99
Total Return Performance
- ------------------------
Investment Return $1,019.99
Less Initial Investment $1,000.00
---------
$19.99 / $1,000.00 x 100
Total Return: 2.00%
<PAGE>
DELAWARE GROUP DELAWARE FUND A
TOTAL RETURN PERFORMANCE
THREE YEARS
- --------------------------------------------------------------------------------
$1,000.00
Initial Investment $19.12
Beginning OFFER 52.301
Initial Shares
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
1993 52.301 $1.430 4.731 57.032
- --------------------------------------------------------------------------------
1994 57.032 $1.760 5.559 62.591
- --------------------------------------------------------------------------------
1995 62.591 $0.880 3.194 65.785
- --------------------------------------------------------------------------------
Ending Shares 65.785
Ending NAV x $18.40
---------
Investment Return $1,210.44
Total Return Performance
- ------------------------
Investment Return $1,210.44
Less Initial Investment $1,000.00
---------
$210.44 / $1,000.00 x 100
Total Return: 21.04%
<PAGE>
DELAWARE GROUP DELAWARE FUND A
TOTAL RETURN PERFORMANCE
FIVE YEARS
- --------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $17.79
Initial Shares 56.211
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
1991 56.211 $1.170 3.944 60.155
- --------------------------------------------------------------------------------
1992 60.155 $2.240 7.762 67.917
- --------------------------------------------------------------------------------
1993 67.917 $1.430 5.370 73.287
- --------------------------------------------------------------------------------
1994 73.287 $1.760 7.145 80.432
- --------------------------------------------------------------------------------
1995 80.432 $0.880 4.104 84.536
- --------------------------------------------------------------------------------
Ending Shares 84.536
Ending NAV x $18.40
---------
Investment Return $1,555.46
- ------------------------
Investment Return $1,555.46
Less Initial Investment $1,000.00
---------
$555.46 / $1,000.00 x 100
Total Return: 55.55%
<PAGE>
DELAWARE GROUP DELAWARE FUND A
TOTAL RETURN PERFORMANCE
TEN YEARS
- --------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $20.14
Initial Shares 49.652
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
1986 49.652 $2.700 7.066 56.718
- --------------------------------------------------------------------------------
1987 56.718 $4.810 14.508 71.226
- --------------------------------------------------------------------------------
1988 71.226 $4.410 23.887 95.113
- --------------------------------------------------------------------------------
1989 95.113 $0.750 5.451 100.564
- --------------------------------------------------------------------------------
1990 100.564 $0.840 4.952 105.516
- --------------------------------------------------------------------------------
1991 105.516 $1.170 7.466 112.982
- --------------------------------------------------------------------------------
1992 112.982 $2.240 14.578 127.560
- --------------------------------------------------------------------------------
1993 127.560 $1.430 10.087 137.647
- --------------------------------------------------------------------------------
1994 137.647 $1.760 13.419 151.066
- --------------------------------------------------------------------------------
1995 151.066 $0.880 7.708 158.774
- --------------------------------------------------------------------------------
Ending Shares 158.774
Ending NAV x $18.40
----------
Investment Return $2,921.44
Total Return Performance
- ------------------------
Investment Return $2,921.44
Less Initial Investment $1,000.00
---------
$1,921.44 / $1,000.00 x 100
Total Return: 192.14%
<PAGE>
DELAWARE GROUP DELAWARE FUND A
TOTAL RETURN PERFORMANCE
THREE MONTHS
- --------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $18.17
Initial Shares 55.036
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
1995 55.036 $0.150 0.455 55.491
- --------------------------------------------------------------------------------
Ending Shares 55.491
Ending NAV x $18.40
---------
Investment Return $1,021.03
Total Return Performance
- ------------------------
Investment Return $1,021.03
Less Initial Investment $1,000.00
---------
$21.03 / $1,000.00 x 100
Total Return: 2.10%
<PAGE>
DELAWARE GROUP DELAWARE FUND A
TOTAL RETURN PERFORMANCE
SIX MONTHS
- --------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $18.90
Initial Shares 52.910
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
1995 52.910 $0.580 1.773 54.683
- --------------------------------------------------------------------------------
Ending Shares 54.683
Ending NAV x $18.40
---------
Investment Return $1,006.17
Total Return Performance
- ------------------------
Investment Return $1,006.17
Less Initial Investment $1,000.00
---------
$6.17 / $1,000.00 x 100
Total Return: 0.62%
<PAGE>
DELAWARE GROUP DELAWARE FUND A
TOTAL RETURN PERFORMANCE
NINE MONTHS
- --------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $18.89
Initial Shares 52.938
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
1995 52.938 $0.730 2.233 55.171
- --------------------------------------------------------------------------------
Ending Shares 55.171
Ending NAV $18.40
---------
Investment Return $1,015.15
Total Return Performance
- ------------------------
Investment Return $1,015.15
Less Initial Investment $1,000.00
---------
$15.15 / $1,000.00 x 100
Total Return: 1.52%
<PAGE>
DELAWARE GROUP DELAWARE FUND A
TOTAL RETURN PERFORMANCE
FIFTEEN YEARS
Initial Investment $1,000.00
Beginning OFFER $12.47
Initial Shares 80.192
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
1981 80.192 $0.690 3.907 84.099
- --------------------------------------------------------------------------------
1982 84.099 $1.090 5.929 90.028
- --------------------------------------------------------------------------------
1983 90.028 $1.420 6.636 96.664
- --------------------------------------------------------------------------------
1984 96.664 $3.740 19.232 115.896
- --------------------------------------------------------------------------------
1985 115.896 $1.810 12.027 127.923
- --------------------------------------------------------------------------------
1986 127.923 $2.700 18.204 146.127
- --------------------------------------------------------------------------------
1987 146.127 $4.810 37.380 183.507
- --------------------------------------------------------------------------------
1988 183.507 $4.410 62.961 246.468
- --------------------------------------------------------------------------------
1989 246.468 $0.750 12.628 259.096
- --------------------------------------------------------------------------------
1990 259.096 $0.840 12.759 271.855
- --------------------------------------------------------------------------------
1991 271.855 $1.170 19.237 291.092
- --------------------------------------------------------------------------------
1992 291.092 $2.240 37.560 328.652
- --------------------------------------------------------------------------------
1993 328.652 $1.430 25.985 354.637
- --------------------------------------------------------------------------------
1994 354.637 $1.760 34.574 389.211
- --------------------------------------------------------------------------------
1995 389.211 $0.880 19.858 409.069
- --------------------------------------------------------------------------------
Ending Shares 409.069
Ending NAV $18.40
---------
Investment $7,526.87
Return
Total Return Performance
- ------------------------
Investment Return $7,526.87
Less Initial Investment $1,000.00
---------
$6,526.87 / $1,000.00 x 100
Total Return: 652.69%
<PAGE>
DELAWARE GROUP DELAWARE FUND A
TOTAL RETURN PERFORMANCE
LIFE OF FUND
- --------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $7.87
Initial Shares 127.065
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
1939 127.065 $0.725 4.434 131.499
1940 131.499 $0.400 6.669 138.168
1941 138.168 $0.450 8.146 146.314
1942 146.314 $0.425 8.510 154.824
1943 154.824 $0.425 8.849 163.673
1944 163.673 $1.175 22.334 186.007
1945 186.007 $1.150 24.745 210.752
1946 210.752 $1.275 25.689 236.441
1947 236.441 $1.925 56.023 292.464
1948 292.464 $0.575 23.701 316.165
1949 316.165 $0.575 26.489 342.654
1950 342.654 $0.550 29.115 371.769
1951 371.769 $0.650 32.338 404.107
1952 404.107 $0.775 38.548 442.655
1953 442.655 $0.675 36.614 479.269
1954 479.269 $0.625 39.559 518.828
1955 518.828 $0.825 44.898 563.726
1956 563.726 $1.000 52.413 616.139
1957 616.139 $1.000 57.942 674.081
1958 674.081 $0.850 62.984 737.065
1959 737.065 $0.850 56.360 793.425
1960 793.425 $1.100 74.428 867.853
1961 867.853 $0.850 67.350 935.203
1962 935.203 $1.050 76.231 1,011.434
1963 1011.434 $0.700 71.244 1,082.678
1964 1082.678 $0.900 88.591 1,171.269
1965 1171.269 $1.000 95.051 1,266.320
1966 1266.320 $1.100 97.742 1,364.062
1967 1364.062 $2.030 196.714 1,560.776
1968 1560.776 $2.145 225.241 1,786.017
1969 1786.017 $1.580 170.729 1,956.746
1970 1956.746 $1.410 217.871 2,174.617
1971 2174.617 $0.860 175.666 2,350.283
1972 2350.283 $1.100 227.727 2,578.010
1973 2578.010 $1.110 233.004 2,811.014
1974 2811.014 $0.470 152.089 2,963.103
1975 2963.103 $0.400 161.697 3,124.800
1976 3124.800 $0.410 143.363 3,268.163
1977 3268.163 $0.435 131.767 3,399.930
1978 3399.930 $0.515 164.692 3,564.622
1979 3564.622 $0.550 180.202 3,744.824
1980 3744.824 $0.580 186.275 3,931.099
1981 3931.099 $0.690 191.543 4,122.642
1982 4122.642 $1.090 290.634 4,413.276
1983 4413.276 $1.420 325.288 4,738.564
1984 4738.564 $3.740 942.725 5,681.289
1985 5681.289 $1.810 589.538 6,270.827
1986 6270.827 $2.700 892.326 7,163.153
1987 7163.153 $4.810 1832.439 8,995.592
1988 8995.592 $4.410 3086.386 12,081.978
1989 12081.978 $0.750 619.039 12,701.017
1990 12701.017 $0.840 625.487 13,326.504
1991 13326.504 $1.170 942.974 14,269.478
1992 14269.478 $2.240 1841.228 16,110.706
1993 16110.706 $1.430 1273.834 17,384.540
1994 17384.540 $1.760 1694.819 19,079.359
1995 19079.359 $0.880 973.489 20,052.848
<PAGE>
DELAWARE GROUP DELAWARE FUND A
TOTAL RETURN PERFORMANCE
LIFE OF FUND
- ------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $7.87
Initial Shares 127.065
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
Ending Shares 20052.848
Ending NAV $18.40
-----------
Investment Return $368,972.40
Total Return Performance
- ------------------------
Investment Return $368,972.40
Less Initial Investment $1,000.00
-----------
$367,972.40 / $1,000.00 x 100
Total Return: 36797.24%
<PAGE>
Draft 11/8/95
SUBJECT TO BOARD APPROVAL
The Delaware Group of Funds
Multiple Class Plan Pursuant to Rule 18f-3
This Multiple Class Plan (the "Plan") has been adopted by a
majority of the Board of Directors of each of the investment companies listed on
Appendix A as may be amended from time to time (each individually a "Fund," and
collectively, the "Funds"), including a majority of the Directors who are not
interested persons of each Fund, pursuant to Rule 18f-3 under the Investment
Company Act of 1940, as amended (the "Act"). The Board of each Fund has
determined that the Plan, including the allocation of expenses, is in the best
interests of the Fund as a whole, each series of shares offered by such Fund
(individually and collectively the "Series") where the Fund offers its shares in
multiple series, and each class of shares offered by the Fund or Series, as
relevant. The Plan sets forth the provisions relating to the establishment of
multiple classes of shares for each Fund and, if relevant, its Series. To the
extent that a subject matter set forth in this Plan is covered by a Fund's
Articles of Incorporation or By-Laws, such Articles of Incorporation or By-Laws
will control in the event of any inconsistencies with descriptions contained in
this Plan.
The term "Portfolio," when used in this Plan in the context of
a Fund that offers only a single series of shares, shall be a reference to the
Fund, and when used in the context of a Fund that offers multiple series of
shares, shall be a reference to each series of such Fund.
CLASSES
1. Appendix A to this Plan describes the classes to be issued
by each Portfolio and identifies the names of such classes.
FRONT-END SALES CHARGE
2. Class A shares carry a front-end sales charge as described
in the Funds' relevant prospectuses; and Class B, Class C and Institutional
Class shares are sold without a front-end sales charge.
<PAGE>
CONTINGENT DEFERRED SALES CHARGE
3. Class A shares are not subject to a contingent deferred
sales charge ("CDSC"), except in the following limited circumstances. On
investments of $1 million or more for which a dealer's commission is paid by the
Fund's principal underwriter, a CDSC of 1.00% of the lesser of (i) the net asset
value at the time of redemption, or (ii) the original net asset value at the
time of purchase applies to redemptions of those investments within the
contingency period of 12 months from the month of purchase.
4. Class B shares redeemed within six years of their purchase
shall be assessed a CDSC at the following rate: (i) 4.00% if shares are redeemed
within two years of purchase; (ii) 3.00% if shares are redeemed during the third
or fourth year following purchase; (iii) 2.00% if shares are redeemed during the
fifth year following purchase; (iv) 1.00% if shares are redeemed during the
sixth year following purchase; and (vi) 0% thereafter.
5. Class C shares redeemed within twelve months of their
purchase shall be assessed a CDSC at the rate of 1.00% of the lesser of (i) the
net asset value at the time of redemption, or (ii) the original net asset value
at the time of purchase.
6. The CDSC for each class is waived in certain circumstances,
as described in the Funds' relevant prospectuses. Shares that are subject to a
CDSC age one month at the end of the month in which the shares were purchased,
regardless of the specific date during the month that the shares were purchased.
7. Institutional Class shares are not subject to a CDSC.
RULE 12b-1 PLANS
8. In accordance with the Rule 12b-1 Plan for the Class A
shares of each Portfolio, the Fund shall pay to Delaware Distributors, L.P. (the
"Distributor") a monthly fee not to exceed 0.30% per annum of such Portfolio's
average daily net assets represented by Class A shares as may be determined by
the Fund's Board of Directors from time to time. The monthly fee shall be
reduced by the aggregate sums paid by or on behalf of such Portfolio to persons
other than broker-dealers (the "Service Providers") pursuant to servicing
agreements.
9. In accordance with the Rule 12b-1 Plan for the Class B
shares of each Portfolio, the Fund shall pay to the Distributor a monthly fee
not to exceed 0.75% per annum of such Portfolio's average daily net assets
represented by Class B shares as may be determined by the Fund's Board of
Directors from time to time. In addition to these amounts, the Fund shall pay
(i) to the Distributor for payment to dealers or others, or (ii) directly to
others, an amount not to exceed 0.25% per annum of such Portfolio's average
daily net assets represented by Class B shares, as a service fee pursuant to
dealer or servicing agreements.
-2-
<PAGE>
10. In accordance with the Rule 12b-1 Plan for the Class C
shares of each Portfolio, the Fund shall pay to the Distributor a monthly fee
not to exceed 0.75% per annum of such Portfolio's average daily net assets
represented by Class C shares as may be determined by the Fund's Board of
Directors from time to time. In addition to these amounts, the Fund shall pay
(i) to the Distributor for payment to dealers or others, or (ii) directly to
others, an amount not to exceed 0.25% per annum of such Portfolio's average
daily net assets represented by Class C shares, as a service fee pursuant to
dealer or servicing agreements.
11. A Rule 12b-1 Plan has not been adopted for the
Institutional Class shares of any Portfolio.
ALLOCATION OF EXPENSES
12. The Fund shall allocate to each class of shares of a
Portfolio any fees and expenses incurred by the Fund in connection with the
distribution or servicing of such class of shares under a Rule 12b-1 Plan, if
any, adopted for such class. In addition, the Fund reserves the right, subject
to approval by the Fund's Board of Directors, to allocate fees and expenses of
the following nature to a particular class of shares of a Portfolio (to the
extent that such fees and expenses actually vary among each class of shares or
vary by types of services provided to each class of shares of the Portfolio):
(i) transfer agency and other recordkeeping costs;
(ii) Securities and Exchange Commission and blue sky
registration or qualification fees;
(iii) printing and postage expenses related to printing and
distributing class specific materials, such as
shareholder reports, prospectuses and proxies to
current shareholders of a particular class or to
regulatory authorities with respect to such class of
shares;
(iv) audit or accounting fees or expenses relating
solely to such class;
(v) the expenses of administrative personnel and
services as required to support the shareholders
of such class;
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<PAGE>
(vi) litigation or other legal expenses relating solely
to such class of shares;
(vii) Directors' fees and expenses incurred as a result
of issues relating solely to such class of shares;
and
(viii) other expenses subsequently identified and determined
to be properly allocated to such class
of shares.
13. Except for any expenses that are allocated to a particular
class as described in paragraph 11 above, all expenses incurred by a Portfolio
will be allocated to each class of shares of such Portfolio on the basis of the
net asset value of each such class in relation to the net asset value of the
Portfolio.
ALLOCATION OF INCOME AND GAINS
14. Income and realized and unrealized capital gains and
losses of a Portfolio will be allocated to each class of shares of such
Portfolio on the basis of the net asset value of each such class in relation to
the net asset value of the Portfolio.
CONVERSIONS
15. (a) Except for shares acquired through a reinvestment of
dividends or distributions, Class B shares held for eight years after purchase
are eligible for automatic conversion into Class A shares of the same Portfolio
in accordance with the terms described in the relevant prospectus. Class B
shares acquired through a reinvestment of dividends or distributions will
convert into Class A shares of the same Portfolio pro rata with the Class B
shares that were not acquired through the reinvestment of dividends and
distributions.
(b) The automatic conversion feature of Class B shares
shall be suspended at any time that the Board of Directors of the Fund
determines that there is not available a reasonably satisfactory opinion of
counsel to the effect that (i) the assessment of the higher fee under the Fund's
Rule 12b-1 Plan for Class B does not result in the Fund's dividends or
distributions constituting a preferential dividend under the Internal Revenue
Code of 1986, as amended, and (ii) the conversion of Class B shares into Class A
shares does not constitute a taxable event under federal income tax law. In
addition, the Board of Directors of a Fund may suspend the automatic conversion
feature by determining that any other condition to conversion set forth in the
relevant prospectus, as amended from time to time, is not satisfied.
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<PAGE>
(c) The Board of Directors of a Fund may also suspend the
automatic conversion of Class B shares if it determines that suspension is
appropriate to comply with the requirements of the Act, or any rule or
regulation issued thereunder, relating to voting by Class B shareholders on the
Fund's Rule 12b-1 Plan for Class A or, in the alternative, the Board of
Directors may provide Class B shareholders with alternative conversion or
exchange rights.
16. Class A, Class C and Institutional Class shares do
not have a conversion feature.
EXCHANGES
17. Exchanges are permitted between Class A Shares and
Institutional Class Shares of a Portfolio or of any other Portfolio in the
Delaware Group funds; Class B shares of a Portfolio may only be exchanged for
Class B shares of any other Portfolio in the Delaware Group; Class C shares of a
Portfolio may only be exchanged for Class C shares of any other Portfolio in the
Delaware Group. All exchanges are subject to the eligibility and minimum
purchase requirements set forth in the Funds' prospectuses. Exchanges cannot be
made between open-end and closed-end funds within the Delaware Group.
18. Each class will vote separately with respect to the Rule
12b-1 Plan related to that class; provided, however, that Class B shares of a
Portfolio may vote on any proposal to materially increase the fees to be paid by
the Fund under the Rule 12b-1 Plan for the Class A shares of the same Portfolio.
19. On an ongoing basis, the Directors, pursuant to their
fiduciary responsibilities under the Act and otherwise, will monitor the
Portfolio for the existence of any material conflicts between the interests of
all the classes of shares offered by such Portfolio. The Directors, including a
majority of the Directors who are not interested persons of the Fund, shall take
such action as is reasonably necessary to eliminate any such conflict that may
develop. The Manager and the Distributor shall be responsible for alerting the
Board to any material conflicts that arise.
20. As described more fully in the Funds' relevant
prospectuses, broker-dealers that sell shares of a Portfolio will be compensated
differently depending on which class of shares the investor selects.
21. Each Fund reserves the right to increase, decrease or
waive the CDSC imposed on any existing or future class of shares of a Portfolio
within the ranges permissible under applicable rules and regulations of the
Securities and Exchange Commission (the "SEC") and the rules of the National
Association of Securities Dealers, Inc. (the "NASD"), as such rules may be
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<PAGE>
amended or adopted from time to time. Each Fund may in the future alter the
terms of the existing classes of such Portfolio or create new classes in
compliance with applicable rules and regulations of the SEC and the NASD.
22. All material amendments to this Plan must be approved by a
majority of the Directors of each Fund affected by such amendments, including a
majority of the Directors who are not interested persons of the Fund.
Effective as of November 29, 1995
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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
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POWER OF ATTORNEY
Each of the undersigned, a member of the Board of Directors of DELAWARE
GROUP DELAWARE FUND, INC., hereby constitutes and appoints Wayne A. Stork, W.
Thacher Longstreth and Walter P. Babich and any one of them acting singly, his
true and lawful attorneys-in-fact, in his name, place, and stead, to execute and
cause to be filed with the Securities and Exchange Commission and other federal
or state government agency or body, such registration statements, and any and
all amendments thereto as either of such designees may deem to be appropriate
under the Securities Act of 1933, as amended, the Investment Company Act of
1940, as amended, and all other applicable federal and state securities laws.
IN WITNESS WHEREOF, the undersigned have executed this instrument as of
this 20th day of April, 1995.
/s/ Walter P. Babich /s/ W. Thacher Longstreth
- ----------------------- ------------------------------
Walter P. Babich W. Thacher Longstreth
/s/ Anthony D. Knerr /s/ Charles E. Peck
- ----------------------- ------------------------------
Anthony D. Knerr Charles E. Peck
/s/ Ann R. Leven /s/ Wayne A. Stork
- ----------------------- ------------------------------
Ann R. Leven Wayne A. Stork
ANNUAL REPORTS
FOR DELAWARE FUND AND
DEVON FUND FOR THE FISCAL
YEAR ENDED OCTOBER 31, 1994
<PAGE>
PHOTO OF VARIOUS COLONIAL OBJECTS
DELAWARE GROUP
A TRADITION OF SOUND INVESTING SINCE 1929
1994
Annual
Report
DELAWARE GROUP
DELAWARE FUND
<PAGE>
TABLE OF CONTENTS
LETTER TO SHAREHOLDERS 1
STOCK AND BOND MARKETS RESPOND TO
RISING INTEREST RATES 2
DELAWARE FUND'S STOCK PORTFOLIO:
CAREFUL SELECTION REMAINS PARAMOUNT 3
DELAWARE FUND'S BOND PORTFOLIO
NAVIGATES DIFFICULT YEAR 5
STRONG PERFORMANCE OVER 56 YEARS 6
FINANCIAL STATEMENTS 8
DELAWARE GROUP
A TRADITION OF SOUND INVESTING
Delaware's investment experience dates back to 1929. Our first mutual fund was
established in 1938. Headquartered in Philadelphia with an affiliate in
London, our team includes some of the best minds in the money management
business. Delaware International Advisers Ltd., our London-based
international investment team, was established in 1990.
With some of the nation's largest public and private pension plans,
foundations and endowments as clients, Delaware Group manages mutual funds
with the same time-tested, disciplined strategies demanded by institutional
investors. As one of the nation's oldest independent money managers - with
over 60 years of investment management standing behind us - we have
experience you can count on and a commitment to excellent service.
Delaware manages $26 billion in mutual funds and institutional
investment advisory accounts. We measure our success by the financial success
and satisfaction of our nearly 500,000 shareholders.
<PAGE>
PHOTO OF VARIOUS COLONIAL OBJECTS
LETTER TO SHAREHOLDERS
December 1994
Dear Shareholder:
Delaware Fund's latest fiscal year, which ended October 31, 1994, was among
the more volatile investment periods in your Fund's 56 years of service to
shareholders. We are pleased that your Fund held its own in the face of a
fickle stock market and the most difficult bond market environment since
1927.
The table to the right presents Delaware Fund A Class total return
(capital change plus income) for the fiscal 12 months, compared with the
results of two unmanaged market indexes: the Standard & Poor's 500 Composite
Stock Price Index and the Lehman Brothers Government Corporate Intermediate
Index. Since Delaware Fund's objective is to provide a balance of current
income, capital appreciation and capital preservation, its portfolio includes
both stocks and bonds similar to those that comprise these indexes. We also
show the average return of the 138 balanced funds tracked by Lipper
Analytical Services, Inc.
Fiscal Year Ended
October 31, 1994 Total Return
- ----------------------------------------------------
Delaware Fund A Class +1.80%
S&P 500 Index +3.87
Lehman Bros. Government
Corporate Intermediate Index -1.93
Lipper Balanced Fund Average -0.71
Delaware Fund and Lipper Balanced Fund performance is based
on net asset value without impact of sales charge. Additional performance as
well as performance for the B Class and the Institutional Class of Delaware
Fund can be found on page 7.
The five interest rate increases orchestrated by the Federal Reserve
Board during this period were the principal cause of the market's turmoil. In
the fixed income sector, the yield on 30-year Treasuries rose from 5.93% on
October 31, 1993 to 7.90% on October 31, 1994, which caused a price decline
of some 23%. Responding to inflationary fears, the Fed adopted a gradualist
approach to tightening the nation's money supply in an effort to slow down
the economy before it "overheats." This sharp jump in rates has been painful
for investors in long-term bonds. Fortunately, in its bond component, your
Fund has emphasized intermediate-term maturity bonds, whose prices tend to be
less sensitive to rising interest rates.
Although the stock market got off to a strong start as the Fund's
fiscal year began in November 1993, stock prices suffered declines, which
were sometimes sharp and abrupt, when the Fed began raising interest rates
last February. Stocks rose near their all-time highs in September and
October, but declined sharply when the Fed raised short-term rates a sixth
time in November. The current outlook is unsettled, though we envision no
significant market decline from current levels.
Delaware Fund's strategy of balancing assets between stocks, bonds
and cash as economic forces change was designed to serve more conservative,
long-term equity investors in challenging investing climates such as we have
experienced over the past 12 months. We encourage shareholders to review the
profiles on the Fund's stock and bond portfolios, which begin on page 3, to
see how the Fund's positioning has contributed to its performance.
As always, we thank you for investing with the Delaware Group. You
can be assured that we will take every step to earn your continued
confidence.
Sincerely,
/s/ Wayne A. Stork /s/ Brian F. Wruble
- ----------------------------- -------------------------------------
Wayne A. Stork Brian F. Wruble
Chairman, Board of Directors President and Chief Executive Officer
Delaware Fund Delaware Fund
1
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PHOTO OF VARIOUS COLONIAL OBJECTS
STOCK AND BOND MARKETS RESPOND
TO RISING INTEREST RATES
When interest rates go up as they did this past year, it can take time for the
securities markets to adjust. Stocks and bonds react to interest rate changes
for different reasons.
In the case of the stock market, rising interest rates can make it
more expensive for a company to borrow money for equipment or expansion. In
other cases, rising rates may squeeze profit margins. This is especially true
for the types of businesses considered "interest rate sensitive," like banks.
Rising rates also affect consumer cyclical companies that manufacture large
appliances, cars and trucks, or other items expected to last for at least
five years. Higher interest rates discourage consumers from buying or
building a new house, which can impact appliance sales. Similarly, consumers
are less likely to buy a new car because loans are more expensive. Since such
situations have the potential to interfere with the profit outlook for
individual companies or sectors, rising interest rates affect investors
expectations which, in turn, affect stock prices.
The relationship between bond prices and interest rates is somewhat
more complicated. For the past several years, the Federal Reserve kept the
federal funds rate - the rate that banks charge each other for overnight
loans - low to help bring the economy out of recession. This helped to lower
interest rates and fueled strong performance in the bond market. This past
year, the economy has been growing steadily. However, if the economy grows
too quickly, fears about inflation begin to surface. As the economy grew in
1994, the Federal Reserve raised interest rates to keep economic growth
moderate and control inflation - the bond market's worst enemy. Since bonds
pay a fixed rate of income for a set number of years and the value of that
income declines if the cost of living increases, restraining potential
inflation should be good for the bond market long term.
Regardless of the potential long-term benefits of the Fed's
short-term rate increases, the bond market's immediate reaction was negative.
Since a bond's current yield equals the stated coupon rate divided by the
price, when interest rates rise, in order for the yield to rise to a level
comparable with new issues, the price of existing bonds must decline. This
was the situation faced by bond holders during most of this past year.
- --------------------------------------------------------------------------------
The Gross Domestic Product Compared to the Prime Interest Rate
GDP Prime Rate
Dec-85 2.30% 9.50%
Dec-86 1.30% 7.50%
Dec-87 5.80% 8.75%
Dec-88 3.80% 10.50%
Dec-89 1.50% 10.50%
Dec-90 -3.20% 10.00%
Dec-91 0.60% 7.50%
Dec-92 5.70% 6.00%
Dec-93 7.00% 6.00%
Sep-94 3.40% 7.80%
As a result of strong economic growth, the Federal Reserve Board has pushed
interest rates higher in an effort to control inflation. The prime rate - the
rate that banks charge their most creditworthy customers - followed. Higher
interest rates had a negative impact on both the stock and bond markets
during much of Delaware Fund's fiscal period.
DELAWARE FUND WAS
WELL-POSITIONED FOR
RISING RATES
When interest rate changes - actual or merely anticipated - are affecting the
markets, investment management decisions become even more critical. We can
report that over the past fiscal year, Delaware Fund's stock (some 60% of net
assets on October 31st) and bond (40%) positions helped the Fund provide a
positive return in the face of difficult markets.
2
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PHOTO OF VARIOUS COLONIAL OBJECTS
DELAWARE FUND'S STOCK PORTFOLIO:
CAREFUL SELECTION REMAINS PARAMOUNT
In the semi-annual report of six months ago, we wrote you that we were working
to strategically position Delaware Fund's stock holdings, searching for
industry sectors with good prospects for continued consistent earnings and
dividend growth, that were undervalued by the market. When we applied our
valuation measures to various areas of the market, we discovered that very
few sectors passed our test. Therefore, we realized it would be more
important to make the right selections within each particular sector. In an
uncertain market, careful selection is critical.
CYCLICAL COMPANIES
Delaware Fund primarily looks for stocks that have a history of consistent
and increasing dividend payments. This often precludes us from investing in
those companies with more cyclical businesses, such as manufacturers of large
equipment for consumer or industrial use. The profits of these companies
typically rise and fall with economic cycles, and earlier this year their
profit cycle appeared to be nearing a peak. Normally when the market senses
that earnings are about to peak, the stocks in question no longer outperform
the broader market. This is exactly what occurred this year, causing many
cyclical companies to underperform. Avoiding this area helped the Fund this
year. We are now looking to add stocks of those companies that meet our
standards for earnings consistency, but whose prices have been unjustifiably
depressed along with the whole cyclical sector.
Photo of George H. Burwell
George H. Burwell
Senior Portfolio Manager, Equity
THE FINANCIAL SECTOR
Though interest rates rose over the year, the financial sector performed well
early on, partly on a rebound from its lows at the end of 1993. More
recently, this group has experienced another downturn in response to rising
interest rates. There remain a number of companies whose revenue growth, we
believe, should mitigate the potential impact that rising interest rates
could have on profit margins. MBNA provides a good profile of the
characteristics we look for in stock selection - strong companies with solid
dividend histories that hold leadership positions in promising industries.
MBNA, the national credit card marketer, is one of the Fund's top five
holdings. The company has a strong track record and has increased its
dividend by 35% since 1991. Recently, Americans have been increasing their
use of credit cards as an alternative to cash, which should bode well for
MBNA, First USA (another Fund holding) and other credit card issuers.
The Fund also has large stock holdings in Fannie Mae and Freddie
Mac, the mortgage agencies, both of which have shown consistent growth and
stable profit margins. Though their stock prices have fallen in response to
interest rate changes, these declines have made the stock even more
attractive to us as possible future purchases.
REAL ESTATE INVESTMENT TRUSTS
Delaware Fund is still a strong believer in real estate investment trusts
(REITs). These investments own large blocks of commercial real estate and
earn money by renting facilities such as hospitals, nursing homes, apartments
and shopping centers. Though REITs can be negatively affected by difficulties
in the real estate market, the improvement in the real estate sector since
1991 has allowed rents to rise on average, which could pass through to REIT
investors via solid dividend increases. When compared to utilities, another
stock group investors typically turn to for income, we have found that REITs
have generally offered higher yields and dividend growth potential. While
REITs in general, including those in the portfolio, were down in the second
half of 1994, Delaware Fund's REITs have performed well relative to the
sector as a whole.
3
<PAGE>
CONSUMER STOCKS
The Fund has generally kept a relatively small weighting in consumer stocks.
Increased product sales (or unit growth) have been very modest for many of
the large consumer companies such as food and pharmaceutical companies.
Without price increases, revenue and earnings growth for these companies is
likely to be slow. We believe one exception is Procter & Gamble, one of our
five top holdings as of October 31st. Though many consumer non-durable
companies have had trouble maintaining steady growth rates, Procter &
Gamble's international unit growth has been driving profits for the whole
company, and we believe there is potential for even more expansion abroad.
Many foreign economies are still in the early stages of economic recovery,
and we believe that Procter & Gamble stands to benefit from its foreign
marketing strength.
OUR STRATEGY GOING FORWARD
When a company's revenue growth is driven primarily by increased product
shipments rather than price increases, investors typically assign a higher
value to the company because the earnings are considered to be more
sustainable. We sift through many industry sectors looking for companies with
strong unit growth combined with reasonable price/earnings multiples, i.e.
those with high-quality earnings that are still, in our opinion, reasonably
priced. Companies such as Danaher, Reynolds & Reynolds and Sunbeam-Oster fit
these criteria and are significant holdings in the Fund. While these stocks
and others like them may not be well known to the investment community, we
believe that their business strategies are sound and their finances strong.
We feel that their value is likely to be recognized by investors, and if it
is, their prices should rise. We have increased our holdings in the retail
sector because we feel these stocks are inexpensive on a long-term basis;
however, so far we have been disappointed by their performance.
Delaware Fund Portfolio Profile
Capital Equipment 7.16%
Manufacturing 3.39%
Real Estate 4.56%
Insurance & Health Care 4.05%
Financial & Banking 8.45%
Communications & Transportation 7.07%
Consumer Companies 17.86%
Energy & Chemicals 7.82%
Fixed Income Component and Liabilities
Net of Receivable and Other Assets 39.64%
As a percentage of net assets as of October 31, 1994.
As we move into the next year, we will continue to monitor interest
rates and other social, political and economic factors that impact the stock
market. We believe that selectivity will be as critical in the near future as
it was over the past year, so we'll be looking for special situations,
particularly within each of the market sectors discussed here. Our goal is to
identify companies that have the potential to do well, even if their specific
sector is out of favor or the market experiences adverse conditions.
4
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PHOTO OF VARIOUS COLONIAL OBJECTS
DELAWARE FUND'S BOND PORTFOLIO
NAVIGATES DIFFICULT YEAR
The past year has been a very difficult one for the bond market. Just as with
our stock strategy, targeting the best sectors and maturities within the
overall market was imperative. According to research by the Arbor Trading
Group, the one year period ended October 31, 1994 was the worst period since
1927 for owners of long maturity bonds, in terms of price declines on 30-year
Treasuries. When interest rates increase, causing prices to decline, bonds of
all types and maturities are affected. But, as we explained in the
semi-annual report, prices of longer maturity bonds are usually hit hardest.
The fixed income portion of Delaware Fund's portfolio, 40% of net
assets at fiscal year-end, was primarily invested in intermediate maturity
bonds - with an average weighted maturity of 5 1/2 years. We kept the maturity
of the portfolio in the five-year range, because we believe that these bonds
offer a good combination of income with potential for reduced price
sensitivity. While this strategy shielded us from the worst price erosion in
the market, the past year was also the third worst period since 1927 for five-
year notes - they were down over 4% on a total return basis for the period
(Source: Bloomberg). Clearly, bond investors had to overcome some very large
hurdles to make progress in such a negative market.
Photo of Dorothea M. Dutton
Dorothea M. Dutton
Senior Portfolio Manager, Fixed Income
By defensively shifting the Fund's assets between the various
sectors of the bond market and by keeping average maturity in the
intermediate range, we were able to provide a fixed income return that kept
pace with its benchmark - the Lehman Brothers Government Corporate
Intermediate Index. Our strategy over the year was to significantly reduce
holdings of Treasuries - which generally react most quickly to interest rate
changes - and to increase our holdings of mortgage securities, as well as
high-quality corporate bonds and asset-backed securities whose credit quality
is not quite as high as that of Treasuries. All of these tend to be less
sensitive to interest rate moves, particularly those with higher coupon
rates.
As short-term interest rates increased over the year, the yield
curve - a statistical comparison of the yields available from bonds of
different maturities - "flattened." Longer term bonds typically have higher
yields than short or intermediate bonds because bond holders are loaning
their money for longer time periods and therefore, would be more affected by
changes in interest rates. When the yield curve flattens, the income
advantage of longer term bonds decreases while their higher volatility
remains, making them even less attractive.
In the upcoming year, we believe the yield curve will continue to
flatten as the Federal Reserve Board remains committed to controlling
potential inflation. We expect to continue following our intermediate
strategy, paying close attention to what types of bonds - whether Treasuries,
mortgages or high-quality corporate bonds - offer the greatest potential
advantages. As always, the goal for the Fund's fixed income portion is to
provide a competitive level of income and add a measure of relative stability
to the overall portfolio. We aim to do this by focusing on bonds that provide
very attractive income opportunities, while striving to limit risk to
principal.
5
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PHOTO OF VARIOUS COLONIAL OBJECTS
STRONG PERFORMANCE OVER 56 YEARS
We believe that Delaware Fund's conservative approach to equity investing has
served investors well over time. Since the Fund's 1938 introduction, it has
provided an average annual return of 10.89% including the impact of the
maximum sales charge. And because the Fund now maintains at least 25% of the
portfolio in fixed income securities, it could be less volatile than a
portfolio comprised only of common stock.
The chart below compares Delaware Fund's performance over the
10-year period ended October 31, 1994 with that of the S&P 500, the unmanaged
index most commonly used to track performance of the broad stock market.
Naturally, balanced funds are expected to underperform pure stock investments
since, by including a bond component, they trade off potential return for
reduced volatility. You can see that Delaware Fund has performed well over
the 10-year period. A $10,000 investment made November 1, 1984 would have
grown to $29,942 by October 31, 1994 including all expenses and the maximum
sales charge. Delaware Fund kept pace with the Lipper Balanced Fund Average
which would have grown to $30,713. The Lipper Balanced Fund Average included
25 mutual funds during this period and, unlike Delaware Fund's return, its
return does not include the impact of any sales charges on those funds.
The chart below includes a line representing the Consumer Price
Index, or "cost of living." While market benchmarks like the S&P 500 are
useful in making comparisons between investment strategies and "the market,"
keeping money growing faster than cost of living increases is critical to an
investor's financial security. As you can see, Delaware Fund grew at a rate
twice that of the inflation rate during this time.
- -----------------------------------------------------
A Look at Long-Term Performance
Growth of a $10,000 Investment,
November 1984 through October 1994
Cost of Living
Index S&P 500 Delaware Fund
Nov-84 $10,000 $10,000 $ 9,427
Oct-85 10,323 11,835 11,356
Oct-86 10,475 15,757 17,081
Oct-87 10,950 16,757 13,088
Oct-88 11,415 19,243 15,972
Oct-89 11,928 24,298 19,432
Oct-90 12,678 22,472 18,816
Oct-91 13,048 30,000 23,392
Oct-92 13,466 32,979 26,284
Oct-93 13,837 37,888 29,414
Oct-94 14,188 39,354 29,942
Chart assumes a $10,000 investment in Delaware Fund Class A on 11/1/84
through 10/31/94. Both the Fund and the indexes reflect the reinvestment of
all distributions. No adjustments were made for the payment of taxes. The S&P
500 is an unmanaged index of common stocks. S&P 500 and CPI data were
provided by Lipper Analytical Services. Performance of other classes of
Delaware Fund is detailed on page 7.
Return and share value will fluctuate so that shares, when redeemed, may be
worth more or less than the original investment. Past performance is not a
guarantee of future results.
6
<PAGE>
Delaware Fund's Performance
Class A Class B
Average Annual Aggregate
Total Returns Total Returns
(Introduced 9/6/94)
10 Years 11.59% Lifetime -1.14%
Excluding Sales Charge
5 Years 7.74%
Lifetime -5.06%
1 Year -4.08% Including Sales Charge
Including Sales Charge
Through October 31, 1994
Return and share value will fluctuate so that shares, when redeemed, may be
worth more or less than the original investment. Past performance is not a
guarantee of future results.
Class A returns reflect the reinvestment of all distributions, the 5.75%
maximum sales charge and the impact of a 12b-1 fee on performance after
6/2/92.
Class B shares do not carry a front-end sales charge, but are subject to a 1%
annual distribution and service fee. They are subject to a deferred sales
charge of up to 4% if redeemed before the end of the sixth year. Lifetime
performance excluding sales charge assumes the investment was not redeemed.
Class B was initially offered on 9/6/94. Performance for this short time
period may not be representative of longer term results.
Average annual total returns for Delaware Fund's Institutional Class, which
is available without sales or asset-based distribution charges only to
certain eligible institutional accounts, were 12.29%, 9.10% and 1.96%,
respectively for the Fund's 10-, five-, and one-year fiscal periods ended
10/31/94. Returns for the 10-, five-, and one-year periods ended 9/30/94 were
12.56%, 8.55% and 1.60%, respectively. The Institutional Class was initially
made available 11/9/92. Performance for the Institutional Class for periods
prior to this date is based on Class A performance, adjusted to eliminate the
sales charge, but not the asset-based distribution charge.
Performance through September 30, 1994
Class A Class B
Average Annual Total Returns Aggregate Total Returns
10 Years 11.86% Lifetime -1.58%
Excluding Sales Charge
5 Years 7.20%
Lifetime -5.48%
1 Year -4.43% Including Sales Charge
Including Sales Charge
7
<PAGE>
FINANCIAL
STATEMENTS
DELAWARE GROUP DELAWARE FUND
STATEMENT OF NET ASSETS
OCTOBER 31, 1994
Number Market
of Shares Value
COMMON STOCK - 60.36%
Capital Equipment & Services - 7.16%
Arvin Industries .............................. 73,600 $ 1,794,000
Diebold ....................................... 58,825 2,485,356
Eaton ......................................... 129,000 6,756,375
Foster Wheeler ................................ 45,500 1,638,000
General Electric .............................. 220,200 10,762,275
Genuine Parts ................................. 49,300 1,780,963
Hewlett Packard ............................... 39,600 3,870,900
Hubbell Class B ............................... 51,300 2,968,988
Rockwell International ........................ 108,000 3,766,500
RPM ........................................... 100,400 1,901,325
Teleflex ...................................... 44,300 1,716,625
-----------
39,441,307
-----------
Chemicals - 0.20%
Loctite ....................................... 25,200 1,124,550
-----------
1,124,550
-----------
Communications - 5.93%
ALLTEL ........................................ 331,900 8,587,913
AT&T .......................................... 66,600 3,663,000
Belo (A.H.) .................................. 42,300 2,315,925
Gannett ....................................... 37,300 1,790,400
General Motors- Class E ....................... 96,200 3,523,325
Sprint ........................................ 90,000 2,936,250
*Tele Danmark ADR .............................. 90,000 2,587,500
Telecom Argentina ADR ......................... 35,600 2,162,700
Telefonica de Argentina ADR ................... 32,600 2,025,275
Tribune ....................................... 58,300 3,068,038
-----------
32,660,326
-----------
Consumer Group - 17.86%
American Greetings Class A .................... 124,600 3,418,713
American Stores ............................... 208,400 5,652,850
Armor All Products ............................ 96,000 2,136,000
Avon Products ................................. 37,600 2,378,200
Cato Class A .................................. 180,000 1,710,000
Dial .......................................... 153,800 3,172,125
Lancaster Colony .............................. 62,799 2,166,566
Marriott International ........................ 66,300 1,939,275
May Department Stores ......................... 318,800 11,994,850
Omnicom Group ................................. 42,300 2,252,475
Penney (J.C.) ................................ 65,400 3,310,875
Phillip Morris ................................ 68,000 4,165,000
Proctor & Gamble .............................. 276,800 17,300,000
Sbarro ........................................ 178,500 4,440,188
<PAGE>
Number Market
of Shares Value
COMMON STOCK (Continued)
Consumer Group (Continued)
Service International ........................ 177,000 $ 4,712,625
Singer ....................................... 320,600 10,058,825
Sunbeam-Oster ................................ 264,700 6,551,325
Walgreen ..................................... 86,700 3,598,050
Wal-Mart Stores .............................. 213,000 5,005,500
Wallace Computer Service ..................... 84,800 2,353,200
-----------
98,316,642
-----------
Energy - 7.62%
Dresser Industries ........................... 157,500 3,327,188
Illinova ..................................... 139,000 2,745,250
Kerr-McGee ................................... 115,000 5,649,375
Mobil Oil .................................... 68,100 5,856,600
Royal Dutch Petroleum ........................ 47,100 5,487,150
Sonat ........................................ 92,100 2,993,250
TOTAL S.A. ADR ............................... 112,223 3,703,359
Unocal ....................................... 261,200 7,640,100
YPF Sociedad Anonima ADR ..................... 188,700 4,552,388
-----------
41,954,660
-----------
Financial & Banking - 8.45%
Bank of New York ............................. 125,000 3,968,750
Emphesys Financial Group ..................... 90,800 3,121,250
Federal Home Loan ............................ 127,300 6,937,850
Federal National Mortgage Association ........ 86,050 6,539,800
First Security ............................... 78,100 2,030,600
First USA .................................... 181,400 6,394,350
MBNA ......................................... 655,400 17,531,950
-----------
46,524,550
-----------
Insurance & Health Care - 4.05%
Abbott Laboratories .......................... 88,300 2,737,300
Bankers Life Holding ......................... 90,000 1,732,500
Bard (C.R.) ................................. 127,600 3,126,200
Equitable of Iowa ............................ 79,500 2,812,313
Pfizer ....................................... 110,000 8,153,750
UNUM ......................................... 81,600 3,743,400
-----------
22,305,463
-----------
Manufacturing - 3.39%
Danaher ...................................... 150,000 7,368,750
Fleetwood Enterprises ........................ 134,000 3,082,000
*Grupo Sidek S.A. ADR ......................... 54,500 960,563
Reynolds & Reynolds .......................... 291,600 7,253,550
-----------
18,664,863
-----------
Real Estate - 4.56%
Associated Estates Realty .................... 122,400 2,310,300
Developers Diversified Realty ................ 190,600 5,336,800
Health Care Property Investors ............... 167,000 4,905,625
Nationwide Health Properties ................. 127,900 4,492,488
ROC Communities .............................. 68,200 1,364,000
Storage USA .................................. 54,000 1,356,750
Summit Property .............................. 83,500 1,450,813
Sun Communities .............................. 121,700 2,738,250
Walden Residential Properties ................ 60,900 1,172,325
-----------
25,127,351
-----------
8
<PAGE>
Statement of Net Assets (Continued)
Number Market
of Shares Value
COMMON STOCK (Continued)
Transportation - 1.14%
CSX .......................................... 51,800 $ 3,755,500
Conrail ...................................... 46,200 2,512,125
-----------
6,267,625
-----------
Total Common Stock
(cost $303,181,024) ....................... 332,387,337
-----------
PREFERRED STOCK - 0.95%
Freeport-McMoran Copper & Gold
pfd cv ..................................... 27,400 5,230,200
-----------
Total Preferred Stock
(cost $5,355,376) ......................... 5,230,200
-----------
Principal
Amount
CONVERTIBLE BONDS - 0.75%
Banco Nacional de Mexico
SA sub deb exch 7.00% 12/15/99 ............. $3,715,000 4,123,650
-----------
Total Convertible Bonds
(cost $4,080,213) ......................... 4,123,650
-----------
CORPORATE BONDS - 11.65%
Advanta 5.125% 11/15/96 ................... 2,950,000 2,817,297
Allstate 5.875% 6/15/98 ................... 4,150,000 3,900,436
Archer Daniels 8.875% 4/15/11 .............. 2,345,000 2,412,405
+Banco Del Estado 8.39% 8/1/01 .............. 2,300,000 2,219,500
Bell Atlantic 5.70% 5/30/96 ................ 2,800,000 2,750,194
Borden 0.00% 5/22/97 ...................... 2,000,000 1,660,000
Celulosa Arauco 7.25% 6/11/98 .............. 2,750,000 2,640,000
Cemex SA 8.875% 6/10/98 ................... 1,000,000 985,000
Chrysler Financial Corp. 5.62%
11/24/97 ................................. 3,000,000 2,841,138
City of Prague 7.75% 5/10/99 ............... 2,690,000 2,596,691
Columbia Republic 7.25% 2/23/04 ............ 1,000,000 864,574
Countrywide Funding 8.25% 7/15/02 .......... 1,895,000 1,853,712
+Financira Energetic Nacional
9.00% 11/8/99 ............................ 2,000,000 1,977,500
First USA Bank 5.75% 1/15/99 ............... 1,500,000 1,373,525
General Motors Acceptance Corporation
8.375% 5/1/97 ............................. 915,000 928,289
+Goldman Sachs 7.125% 3/1/03 ................. 1,000,000 911,250
Grupo Televisa 10.00% 11/9/97 ............... 2,000,000 2,052,578
Hydro-Quebec 8.05% 7/7/24 ................... 1,500,000 1,447,754
+Iberdrola International 7.125%
6/1/03 .................................... 2,250,000 2,061,563
Lockheed 4.875% 2/15/96 .................... 1,885,000 1,836,787
MBNA 6.875% 10/1/99 ........................ 1,240,000 1,179,965
+New York Life Insurance 7.50%
12/15/23 .................................. 1,250,000 1,034,809
Ontario Province 17.00% 11/5/11 ............ 1,000,000 1,236,611
RJR Nabisco 6.80% 9/1/01 ................... 1,000,000 954,925
Saskatchewan Province Canada
8.00% 7/15/04 ............................. 1,150,000 1,118,375
Taubman Realty Group 8.00%
6/15/99 ................................... 2,500,000 2,454,675
<PAGE>
Principal Market
Amount Value
CORPORATE BONDS (Continued)
Tektronix 7.50% 8/1/03 ....................... $ 1,800,000 $ 1,629,000
Tele-Communications 6.58% 2/15/05 ............ 1,000,000 935,275
Tennessee Valley Authority 8.25% 11/15/96 .... 3,165,000 3,241,894
Thailand Kingdom 4.73% 9/30/96 ............... 450,000 429,938
Thailand Kingdom 7.07% 9/30/13 ............... 2,655,000 2,156,176
Transamerica 8.08% 11/4/99 ................... 3,785,000 3,785,000
Utilicorp United 9.300% 12/1/95 .............. 1,500,000 1,534,796
VF 9.50% 5/1/01 .............................. 2,175,000 2,316,756
-----------
Total Corporate Bonds
(cost $65,945,479) .... 64,138,388
-----------
U.S. TREASURY OBLIGATIONS - 2.76%
U.S. Treasury Notes 4.375% 8/15/96 ........... 7,305,000 7,024,210
U.S. Treasury Note/Bond 6.875% 4/30/97 ....... 8,200,000 8,179,500
-----------
Total U.S. Treasury Obligations
(cost $15,436,902) .......................... 15,203,710
-----------
MORTGAGE-BACKED SECURITIES - 12.79%
Federal Home Loan Mortgage Corporation
6.73% 3/21/01 ............................... 795,000 742,776
Federal Home Loan Mortgage Corporation
7.125% 7/21/99 .............................. 2,000,000 1,960,240
Federal Home Loan Mortgage Corporation
8.50% 4/1/09 ................................ 593,368 591,408
Federal Home Loan Mortgage Corporation
8.50% 6/1/14 ................................ 1,005,324 1,019,137
Federal National Mortgage Association
6.00% 2/1/01 ................................ 1,481,052 1,391,263
Federal National Mortgage Association
6.27% 4/3/96 ................................ 3,000,000 2,990,316
Federal National Mortgage Association
7.00% 6/1/09 ................................ 6,139,048 5,834,048
Federal National Mortgage Association
7.00% 7/1/17 ................................ 2,947,078 2,763,807
Federal National Mortgage Association
7.50% 5/1/07 ................................ 8,886,014 8,644,474
Federal National Mortgage Association
7.50% 9/1/08 ................................ 3,772,016 3,691,030
Federal National Mortgage Association
7.50% 4/1/24 ................................ 1,773,604 1,665,526
Federal National Mortgage Association
7.65% 10/20/99 .............................. 1,000,000 995,529
Federal National Mortgage Association
8.00% 9/1/09 ................................ 5,221,320 5,198,502
Federal National Mortgage Association
8.50% 9/1/07 ................................ 15,240,582 15,478,792
Government National Mortgage Association
8.50% 9/15/24 ............................... 5,086,738 5,027,926
Government National Mortgage Association
9.00% 9/30/17 ............................... 5,930,000 6,039,337
Government National Mortgage Association
10.00% 11/15/16 ............................. 1,666 1,790
9
<PAGE>
Statement of Net Assets (Continued)
Principal Market
Amount Value
MORTGAGE-BACKED SECURITIES
(Continud)
Government National Mortgage
Association 10.00% 5/15/19 ................. $ 463,760 $ 499,039
Government National Mortgage
Association 11.00% 12/15/15 ................ 5,252,880 5,804,433
Government National Mortgage
Association 12.500% 12/15/10 ............... 48,962 55,969
-----------
Total Mortgage-Backed Securities
(cost $71,382,007) ........................ 70,395,342
-----------
COLLATERALIZED MORTGAGE
OBLIGATIONS - 2.10%
Federal Deposit Insurance Corporation
Remic Trust Series 94-C1 2A2 7.85%
9/25/25 ................................... 1,750,000 1,716,094
Federal Home Loan Mortgage
Corporation Series 1666-E 6.00%
12/15/19 .................................. 3,020,000 2,644,714
Federal Home Loan Mortgage
Corporation Series 1474-C 7.00%
10/15/22 .................................. 4,030,000 3,722,713
Nomura 94 MD1 A1-B 7.526% 3/15/18 .......... 2,660,000 2,554,431
Paine Webber CMO Trust 9.00%
3/20/97 ................................... 896,876 902,622
-----------
Total Collateralized Mortgage
Obligations (cost $12,117,938) ............. 11,540,574
-----------
ASSET-BACKED SECURITIES - 4.85%
Advanta Corporation 93-1 A2 5.95%
5/25/09 ................................... 1,420,628 1,334,112
American Finance Home Equity
Series 94-2 A1 6.95% 6/25/24 ............... 2,983,235 2,926,833
Series 92-5 A 7.20% 2/15/08 ................ 829,844 809,845
Series 92-1 A 7.50% 3/15/07 ................ 1,221,533 1,211,517
Series 91-1 A 8.00% 7/25/06 ................ 816,897 818,123
Carco Auto Loan Trust
Series 91-3 7.875% 3/15/98 ................. 3,620,000 3,673,214
Fleet Finance Home Equity Trust
Series 90-1 A 8.90% 1/16/06 ................ 2,049,303 2,082,912
Money Store 93-DA1 5.675% 2/15/09 ........... 2,600,836 2,464,292
OSCC Home Equity Loan Trust
6.025% 6/15/08 ............................ 1,797,625 1,708,283
Premier Auto Trust
Series 93-3 A 4.22% 3/2/99 ................. 3,230,864 3,118,753
Series 93-2 A3 4.90% 10/15/98 .............. 2,814,219 2,725,289
Series 93-3 A3 4.90% 12/15/98 .............. 3,979,974 3,844,257
-----------
Total Asset Backed Securities
(cost $27,264,371) ........................ 26,717,430
-----------
Government Agency Notes - 2.29%
Federal Home Loan Bank Global Note
6.125% 8/5/96 ............................. 12,740,000 12,611,734
-----------
Total Government Agency Notes
(Cost $12,693,461) ........................ 12,611,734
-----------
<PAGE>
Principal Market
Amount Value
SHORT-TERM INVESTMENTS - 2.72%
U.S. Treasury Bill 0.00% 11/17/94 .......... $ 15,000,000 $14,969,233
-----------
Total Short-Term Investments
(Cost $14,969,233) ........................ 14,969,233
-----------
REPURCHASE AGREEMENTS - 2.96%
With Bankers Trust 4.73% 11/1/94
(dated 10/31/94, collateralized by
$4,815,000 U.S. Treasury Notes
7.625% due 4/30/96, market value
$4,884,988 and $733,000 U.S.
Treasury Notes 7.375% due
5/15/96, market value $765,810) ............ 5,537,000 5,537,000
With Paine Webber 4.76% 11/1/94
(dated 10/31/94, collateralized by
$4,012,000 U.S. Treasury Notes
8.875% due 7/15/95, market value
$4,195,826 and $1,439,000 U.S. .............
Treasury Notes 6.00% due 6/30/96,
market value $1,453,063) ................... 5,537,000 5,537,000
With Prudential Securities 4.76%
11/1/94 (dated 10/31/94,
collateralized by $1,412,000 U.S. ..........
Treasury Notes 4.625% due 2/29/96,
market value $1,390,022 and
$4,012,000 U.S. Treasury Notes
4.25% due 5/15/96, market value $3,951,899) 5,234,000 5,234,000
-----------
Total Repurchase Agreements
(cost $16,308,000) ........................ 16,308,000
-----------
TOTAL MARKET VALUE OF SECURITIES
OWNED - 104.18% (cost $548,734,004) ........ 573,625,598
LIABILITIES NET OF RECEIVABLES AND
OTHER ASSETS - (4.18%) ..................... (22,993,808)
-----------
NET ASSETS APPLICABLE TO 30,585,251
SHARES ($1 PAR VALUE) OUTSTANDING - 100.00% $ 550,631,790
=============
NET ASSET VALUE - DELAWARE FUND A CLASS
($456,073,556 / 25,339,619 SHARES) ......... $18.00
======
NET ASSET VALUE - DELAWARE FUND
INSTITUTIONAL CLASS
($93,990,438 / 5,214,057 SHARES) ........... $18.03
======
NET ASSET VALUE - DELAWARE FUND B CLASS
($567,796 / 31,575 shares) ................. $17.98
======
__________________________
* Non-income producing security for the year ended October 31, 1994.
+ Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
See accompanying notes
10
<PAGE>
DELAWARE GROUP DELAWARE FUND
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1994
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C> <C>
Interest ................................................. $ 14,212,081
Dividends ................................................ 9,758,456 $ 23,970,537
------------
EXPENSES:
Management fees ($2,913,609) and
directors' fees ($16,169) ............................... 2,929,778
Dividend disbursing and transfer
agent fees and expenses ................................. 948,595
Distribution expenses .................................... 775,907
Salaries ................................................. 181,231
Reports to shareholders .................................. 129,888
Taxes, other than taxes on income ........................ 71,302
Custodian fees ........................................... 64,723
Federal and state registration fees ...................... 40,903
Auditing ................................................. 25,858
Other .................................................... 122,441 5,290,626
---------- ----------
NET INVESTMENT INCOME .................................... 18,679,911
------------
NET REALIZED GAIN AND
UNREALIZED LOSS ON
INVESTMENTS:
Net realized gain from security transactions ............. 7,247,608
Net unrealized depreciation of
investments during the period ........................... (16,013,608)
------------
NET REALIZED AND UNREALIZED
LOSS ON INVESTMENTS: .................................... (8,766,000)
------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ............................... $ 9,913,911
============
COMPUTATION OF NET ASSET VALUE AND OFFERING
PRICE - DELAWARE FUND A CLASS:
Net asset value per share (A) ............................ $18.00
Sales charges (5.75% of offering price, or 6.10% of amount
invested per share) (B) ................................. 1.10
------------
Offering price ........................................... $19.10
============
</TABLE>
- -----------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon the redemption or repurchase of shares.
(B) See Purchasing Shares in the current Prospectus for purchases of $100,000 or
more.
See accompanying notes
<PAGE>
DELAWARE GROUP DELAWARE FUND
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED OCTOBER 31, 1994
Year Ended Year Ended
10/31/94 10/31/93
OPERATIONS:
Net investment income ................. $ 18,679,911 $ 17,563,378
Net realized gain from security
transactions ......................... 7,247,608 33,866,140
Net appreciation (depreciation)
during the period .................... (16,013,608) 8,236,555
------------- -------------
Net increase in net assets resulting
from operations ...................... 9,913,911 59,666,073
------------- -------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income:
Delaware Fund A Class ................ (15,343,261) (16,247,504)
Delaware Fund Institutional Class .... (2,958,346) (2,162,443)
Delaware Fund B Class ................ (3,727) --
Net realized gain from security
transactions:
Delaware Fund A Class ................ (29,288,645) (17,971,335)
Delaware Fund Institutional Class .... (4,503,721) (2,246,196)
Delaware Fund B Class ................ -- --
------------- -------------
(52,097,700) (38,627,478)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
Delaware Fund A Class ................ 28,724,526 76,691,957
Delaware Fund Institutional Class .... 34,025,403 73,139,260
Delaware Fund B Class ................ 567,201 --
Net asset value of shares issued upon
reinvestment of dividends from net
investment income and realized
securities profits:
Delaware Fund A Class ................ 34,242,339 25,797,889
Delaware Fund Institutional Class .... 7,450,202 4,396,899
Delaware Fund B Class ................ 3,714 --
------------- -------------
105,013,385 180,026,005
------------- -------------
Cost of shares repurchased:
Delaware Fund A Class ................ (78,055,142) (101,049,026)
Delaware Fund Institutional Class .... (13,722,666) (7,778,181)
Delaware Fund B Class ................ -- --
------------- -------------
(91,777,808) (108,827,207)
------------- -------------
Increase in net assets derived from
capital share transactions .......... 13,235,577 71,198,798
------------- -------------
NET INCREASE (DECREASE) IN
NET ASSETS ........................... (28,948,212) 92,237,393
NET ASSETS:
Beginning of period ................... 579,580,002 487,342,609
------------- -------------
End of period (including
undistributed net investment
income of $2,742,632 and
$2,368,055, respectively) ............ $ 550,631,790 $ 579,580,002
============= =============
See accompanying notes
11
<PAGE>
DELAWARE GROUP DELAWARE FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1994
1. Significant Accounting Policies
Delaware Group Delaware Fund, Inc. (the "Company") is a diversified, open-end
investment company of the series type organized under the laws of Maryland and
is registered under the Investment Company Act of 1940, as amended. The Company
currently offers two series, Delaware Fund (the "Fund") and Dividend Growth
Fund. The Fund currently offers three classes of shares, Delaware Fund A Class
(formerly known as Delaware Fund class), Delaware Fund Institutional Class
(formerly known as Delaware Fund (Institutional) class), and Delaware Fund B
Class.
Portfolio securities listed or traded on a national securities exchange, except
for bonds, are valued at the last sale price on the exchange where they are
primarily traded. Securities not traded on a particular day, over-the-counter
securities and government and agency securities are valued at mean value between
bid and asked prices. Money market instruments having a maturity of less than 60
days are valued at amortized cost. Debt securities (other than short-term
obligations) are valued on the basis of valuations provided by a pricing service
when such prices are believed to reflect the fair value of such securities.
Prices provided by the 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. Other securities and those for which no quotations are available are
valued at fair value as determined in good faith and in a method approved by the
Board of Directors.
Security transactions are accounted for on the date the securities are purchased
or sold (trade date). Gains and losses are based upon the specific
identification method for both financial statement and federal tax purposes.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis.
No provision for federal income taxes was made since it is the intention of the
Fund to comply with the provisions of the Internal Revenue Code available to
regulated investment companies and to make requisite distributions to
shareholders.
On November 9, 1992, the Fund began offering a new class of shares, the Delaware
Fund Institutional Class, which is available only to certain institutions at net
asset value and on September 6, 1994, the Fund began offering the Delaware Fund
B Class. Each share in each class will bear, pro rata, all of the common
expenses of the Fund except that the Delaware Fund Institutional Class will not
incur any distribution fees under any 12b-1 Plan. The net asset values of all
outstanding shares of each class of the Fund will be computed on a pro rata
basis for each outstanding share based on the proportionate participation in the
Fund represented by the value of shares of that class. All income earned and
expenses incurred by the Fund, will be borne on a pro rata basis by each
outstanding share of a class, based on each class' percentage in the Fund
represented by the value of shares of such classes. Due to the specific
distribution expenses, it is expected that the net asset value of and dividend
paid to each class of the Fund will vary.
The Fund is permitted to borrow money as a temporary measure for extraordinary
or emergency purposes. The Fund had a line of credit arrangement with its
custodian bank, Chemical Bank, for an amount not to exceed $10 million. As of
and for the year ended October 31, 1994, there were no borrowings under this
line of credit.
<PAGE>
2. Investment Management Fee and Other Transactions with Affiliates
In accordance with the terms of the investment management agreement, the
compensation paid to Delaware Management Company, Inc., the investment manager
of the Fund, is equal to (on an annual basis) .6% on the first $100 million of
average daily net assets of the Fund, .525% on the next $150 million, .5% on the
next $250 million and .475% on the average daily net assets over $500 million,
less all amounts paid to the unaffiliated directors by the Fund. Pursuant to the
Distribution Agreement between the Fund and Delaware Distributors, Inc., an
affiliate of Delaware Management Company, Inc., the Distributor will be paid
monthly a fee which is computed on the net assets of the Fund as of the close of
business each day at an annual rate not to exceed 0.30% of the Fund's average
daily net assets attributable to the Delaware Fund A Class and at an annual rate
of 1.00% of the Fund's average daily net assets attributable to the Delaware
Fund B Class.
Certain officers, directors and shareholders of Delaware Management Company,
Inc. are officers and/or directors of the Fund. Directors, officers and
employees of Delaware Management Company, Inc., who are also directors, officers
and employees of the Fund, do not receive any compensation from the Fund.
Salaries of officers and employees who are exclusively employed by the Delaware
Group of Funds are apportioned on the basis of net assets of the respective
Funds. For the year ended October 31, 1994, the Fund's expenses related to such
salaries amounted to $181,231. During the year ended October 31, 1994, Delaware
Service Company, Inc., an affiliate of Delaware Management Company, Inc.,
received $866,854 for providing dividend disbursing and transfer agent services
to the Fund. In addition, Delaware Distributors, Inc., another affiliate of
Delaware Management Company, Inc., received $120,123 from commissions earned on
sales of the Delaware Fund A Class capital stock.
On October 31, 1994, the Fund had an investment management fee payable to
Delaware Management Company, Inc. of $38,029. Also, the Fund had dividend
disbursing and transfer agent fees, and other expenses payable to Delaware
Service Company, Inc. of $28,405. In addition, the Fund owes Delaware Management
Company, Inc. and its affiliates, Delaware Service Company, Inc. and Delaware
Distributors, Inc. $20,150 for other expenses related to operations.
12
<PAGE>
Notes to Financial Statements (Continued)
3. Investments
Investment securities based on cost for federal income tax purposes at
October 31, 1994 are as follows:
Cost of investments .......................... $549,179,647
Aggregate unrealized appreciation ............ 34,126,359
Aggregate unrealized depreciation ............ (9,680,408)
------------
Market value of investments .................. $573,625,598
============
Net realized gain based on cost of specific certificate or bond for federal
income tax purposes was $7,679,118 for the year ended October 31, 1994.
During the year ended October 31, 1994, the Fund had purchases of $709,771,586
and sales of $655,740,687 of investment securities, other than U.S. government
securities and short-term debt securities having maturities of one year or less.
On October 31, 1994 the Fund had a receivable for securities sold of $10,549,067
and a payable for securities purchased of $35,928,758.
4. Capital Stock
Transactions in capital stock shares were as follows:
Year Year
Ended Ended
10/31/94 10/31/93
Shares sold:
Delaware Fund A Class ................. 1,561,930 4,055,353
Delaware Fund Institutional Class ..... 1,850,567 3,875,021
Delaware Fund B Class ................. 31,368 --
Shares issued upon reinvestment of
dividends from net investment
income and realized securities profits:
Delaware Fund A Class ................. 1,883,180 1,383,900
Delaware Fund Institutional Class ..... 410,140 235,411
Delaware Fund B Class ................. 207 --
--------- ---------
5,737,392 9,549,685
--------- ---------
Shares repurchased:
Delaware Fund A Class ................. (4,229,098) (5,344,398)
Delaware Fund Institutional Class ..... (750,002) (407,080)
Delaware Fund B Class ................. -- --
--------- ---------
(4,979,100) (5,751,478)
--------- ---------
Net increase .......................... 758,292 3,798,207
========= =========
<PAGE>
5. Components of Net Assets
Common stock, $1 par value, 200,000,000
shares authorized to the Fund ....................... $516,238,218
Accumulated undistributed income:
Net investment income ............................... 2,742,632
Net realized gain on investments .................... 6,759,346
Net unrealized appreciation of investments .......... 24,891,594
-----------
Total net assets ..................................... $550,631,790
===========
13
<PAGE>
Notes to Financial Statements (Continued)
6. Financial Highlights
Selected data for each share of the Fund outstanding throughout each
period were as follows:
<TABLE>
<CAPTION>
Delaware Fund A Class
-----------------------------------------------------------------------------------
Year Ended October 31,
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period..... $19.430 $18.720 $18.810 $16.190 $17.480 $15.250 $16.850 $23.200 $20.860 $19.070
Income (loss) from investment operations:
Net investment income................... 0.615 0.631 0.660 0.757 0.856 0.796 0.551 0.331 0.554 0.717
Net realized and unrealized gain (loss)
from security transactions............. (0.285) 1.509 1.490 3.033 (1.366) 2.384 2.259 (1.971) 4.486 2.883
-------- ------ ------- ------ ------- ------ ------ -------- ------ ------
Total from investment operations........ 0.330 2.140 2.150 3.790 (0.510) 3.180 2.810 (1.640) 5.040 3.600
Less distributions:
Dividends from net investment income.... (0.600) (0.660) (0.700) (0.880) (0.780) (0.950) (0.320) (0.400) (0.700) (0.800)
Distributions from net realized gain on
security transactions.................. (1.160) (0.770) (1.540) (0.290) none none (4.090) (4.310) (2.000) (1.010)
-------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions..................... (1.760) (1.430) (2.240) (1.170) (0.780) (0.950) (4.410) (4.710) (2.700) (1.810)
Net asset value, end of period........... $18.000 $19.430 $18.720 $18.810 $16.190 $17.480 $15.250 $16.850 $23.200 $20.860
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Total return**........................... 1.80% 11.91% 12.37% 24.32% (3.17%) 21.66% 22.03% (9.14%) 26.85% 20.47%
Ratios/supplemental data:
Net assets, end of period
(000 omitted)..........................$456,074 $507,528 $487,343 $453,449 $349,873 $361,625 $328,650 $320,854 $405,856 $341,269
Ratio of expenses to average
net assets............................ 0.97% 0.89% 0.79%* 0.71% 0.75% 0.76% 0.77% 0.73% 0.69% 0.75%
Ratio of net investment income to
average net assets.................... 3.31% 3.27% 3.64% 4.29% 4.99% 4.73% 4.01% 1.64% 2.53% 3.71%
Portfolio turnover rate................. 142% 160% 144% 212% 147% 129% 180% 205% 104% 132%
</TABLE>
_________________
* Includes 12b-1 distribution expenses effective June 1, 1992.
** Does not include maximum sales charge of 5.75% nor the 1% limited
contingent deferred sales charge that would apply in the event of certain
redemptions within 12 months of purchase for Delaware Fund A Class
(formerly known as Delaware Fund class).
14
<PAGE>
Notes to Financial Statements (Continued)
6. Financial Highlights (Continued)
Selected data for each share of the Fund outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
Delaware Fund Delaware Fund
Institutional Class B Class
---------------------- -------------
Year 11/09/92* 9/6/94**
Ended to to
10/31/94 10/31/93 10/31/94
<S> <C> <C> <C>
Net asset value, beginning of period........................................ $19.460 $18.820 $18.340
Income (loss) from investment operations:
Net investment income...................................................... 0.653 0.632 0.070
Net realized and unrealized gain (loss) from security transactions......... (0.293) 1.438 (0.280)
-------- ------- --------
Total from investment operations........................................... 0.360 2.070 (0.210)
Less distributions:
Dividends from net investment income....................................... (0.630) (0.660) (0.150)
Distributions from net realized gain on security transactions.............. (1.160) (0.770) none
-------- -------- --------
Total distributions........................................................ (1.790) (1.430) (0.150)
Net asset value, end of period.............................................. $18.030 $19.460 $17.980
======== ======== ========
Total return................................................................ 1.96% 11.76% (1.14%)+
Ratios/supplemental data:
Net assets, end of period (000 omitted).................................... $93,990 $75,052 $568
Ratio of expenses to average net assets.................................... 0.81% 0.77% 1.81%
Ratio of net investment income to average net assets....................... 3.47% 3.39% 2.47%
Portfolio turnover rate.................................................... 142% 160% 142%
</TABLE>
_________________
* Date of initial public offering; ratios and total return have been
annualized.
** Date of initial public offering; ratios have been annualized and total
return has not been annualized.
+ Does not include contingent deferred sales charge whichvaries from 1%-4%
depending upon the holding period for Delaware Fund B Class.
15
<PAGE>
DELAWARE GROUP DELAWARE FUND
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, 1994, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended,
and the financial highlights for each of the ten years in the period then
ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
investments owned as of October 31, 1994 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Delaware Group Delaware Fund, Inc. - Delaware Fund at October
31, 1994, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the ten years in the period
then ended, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Philadelphia, Pennsylvania
December 1, 1994
- -------------------------------------------------------------------------------
This annual report is for the information of
Delaware Fund shareholders, but it may be used with
prospective investors when preceded or accompanied by a
current Prospectus, which gives details about charges,
expenses, investment objectives and operating policies of the
Fund. Summary investment results are documented in the
current Statement of Additional Information. If used with
prospective investors, this report must be accompanied by a
Delaware Fund Performance Update for the most recently
completed calendar quarter. The figures in this report
represent past results. The return and principal value of an
investment in the Fund will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
16
<PAGE>
BOARD MEMBERS AND
AFFILIATED OFFICERS
MR. WAYNE A. STORK * Chairman, Delaware Group of Funds, Philadelphia, PA
MR. WALTER P. BABICH * Board Chairman, Citadel Constructors, Inc., King of
Prussia, PA
MR. JOHN K. CASTLE * Chairman, Castle Harlan, Inc., New York, NY
MR. GEORGE M. CHAMBERLAIN, JR.* * Secretary, Delaware Group of Funds
DR. JOHN J. CONNOLLY * President and CEO, Castle Connolly Medical Ltd., New
York, NY
MR. DAVID K. DOWNES* * President, Delaware Management Trust Company
MR. JOHN H. DURHAM * Former Chairman, Delaware Group of Funds, Philadelphia, PA
MR. LEONARD M. HARLAN * President, Castle Harlan, Inc., New York, NY
MR. ANTHONY D. KNERR * Consultant, Anthony Knerr & Associates, New York, NY
MS. ANN R. LEVEN * Deputy Treasurer, National Gallery of Art, Washington, DC
MR. W. THACHER LONGSTRETH * Vice Chairman, Packquisition Corp.,
Philadelphia, PA
MR. KEITH E. MITCHELL* * President and CEO, Delaware Distributors, Inc.
MR. CHARLES E. PECK * Former Chairman and CEO, The Ryland Group, Inc.,
Columbia, MD
MR. BRIAN F. WRUBLE * President and CEO, Delaware Group of Funds,
Philadelphia, PA
*Affiliated officers of the Fund
DELAWARE GROUP OF FUNDS
FOR GROWTH OF CAPITAL FOR TAX-FREE CURRENT INCOME
Trend Fund Tax-Free USA Fund
DelCap Fund Tax-Free Insured Fund
Value Fund Tax-Free USA Intermediate Fund
Tax-Free Pennsylvania Fund
FOR TOTAL RETURN
Dividend Growth Fund
International Equity Fund MONEY MARKET FUNDS
Decatur Total Return Fund Delaware Cash Reserve
Decatur Income Fund U.S. Government Money Fund
Delaware Fund Tax-Free Money Fund
FOR CURRENT INCOME
Delchester Fund CLOSED-END EQUITY/INCOME*
U.S. Government Fund Dividend and Income Fund
Treasury Reserves Intermediate Fund Global Dividend and Income Fund
*Delaware Group Dividend and Income Fund and Delaware Group Global Dividend and
Income Fund purchases can be made through any broker who is registered with
the New York Stock Exchange.
For a prospectus of any Delaware Group fund, contact your financial adviser or
Delaware Group.
<PAGE>
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 credit union
or any bank, are not obligations
of or deposits of any credit
union or any bank, and involve
investment risk, including the
possible loss of principal.
Investment Manager
Delaware Management Company, Inc.
Philadelphia
International Affiliate
Delaware International Advisers Ltd.
London
National Distributor
Delaware Distributors, Inc.
Philadelphia
Shareholder Servicing,
Dividend Disbursing
and Transfer Agent
Delaware Service Company, Inc.
Philadelphia
1818 Market Street
Philadelphia, PA 19103-3682
Nationwide (800) 523-4640;
DELAWARE In Philadelphia (215) 988-1333
GROUP
======== Securities Dealers Only
Philadelphia * London Nationwide (800) 362-7500;
In Philadelphia (215) 988-1050
Copy Rights Delaware Distributors, Inc.
Printed in the U.S.A. on recycled paper. 12/94 - TKO - AR - 002
<PAGE>
PHOTO OF VARIOUS COLONIAL OBJECTS
December 1994
Dear Shareholder:
It is a pleasure to send you the inaugural annual report for
Dividend Growth Fund. The report covers the 10 months of operations from the
Fund's initial offering on December 29, 1993 to October 31, 1994, a
challenging period indeed for a new equity fund. We are pleased to report
that your Fund turned in very strong results on both an absolute and relative
basis. The following table presents the total return at net asset value
(capital change plus income) for the fiscal period, compared to returns for
the unmanaged Standard & Poor's 500 Stock Index and the Lipper Growth &
Income Fund Average:
Although the stock market got off to a strong start as the Fund's
fiscal year began, stock prices suffered declines, which were sometimes steep
and abrupt, when the Federal Reserve began raising rates last February. The
Fed's five interest rate increases during the Fund's fiscal period
have been the principal culprit behind the market's turmoil.
- --------------------------------------------------------------------------------
TOTAL RETURN
TEN MONTHS ENDED
OCTOBER 31, 1994
Delaware Group Dividend Growth Fund A Class +9.25%
Standard & Poor's 500 Stock Index +3.60
Lipper Growth & Income Fund Average* +1.70
- --------------------------------------------------------------------------------
Dividend Growth Fund's return is based on the performance of the portfolio at
net asset value including reinvestment of all distributions. If the maximum
sales charge of 5.75% was included, the return would have been 2.97%. Please
see page 6 for additional information and performance for Class B and the
Institutional Class of Dividend Growth Fund. *Based on the 347 funds tracked
by Lipper Analytical Services, Inc. in the same category as Dividend Growth
Fund during this period excluding any sales charges. None of the performance
above reflects the impact of taxes.
- --------------------------------------------------------------------------------
Stock prices rose near their all-time highs in September and October
of 1994, but declined precipitously in November when the Fed raised
short-term interest rates for a sixth time. Though the outlook is unsettled,
as this report is being prepared, we envision no significant market decline
from current levels.
The past 10 months have proved to be an auspicious start for the
Fund, and a period when its strategy of investing in dividend-paying
companies worked particularly well in a generally unfavorable equity market
environment. We encourage you to read further in this report for a more
comprehensive look at how the Fund's management selects stocks for the
portfolio.
While the market took a "bumpy ride" during Dividend Growth Fund's
first 10 months, we are pleased that we have been able to deliver such
favorable results to you. Thank you for investing with Delaware Group, and we
look forward to reporting to you in the years ahead as Dividend Growth Fund
plays an important role in your investment program.
Sincerely,
/s/ Wayne A. Stork /s/ Brian F. Wruble
- --------------------- -----------------------
Wayne A. Stork Brian F. Wruble
Chairman President & CEO
Dividend Growth Fund, Dividend Growth Fund,
A Series of Delaware Group A Series of Delaware Group
Delaware Fund, Inc. Delaware Fund, Inc.
1
<PAGE>
PHOTO OF VARIOUS COLONIAL OBJECTS
Building A Portfolio:
Dividend Growth Fund's First 10 Months
There are two ways to make a profit in the stock market. The first is
through capital gains--when a stock's price rises during the time period it is
held. The second is dividends, the quarterly income that is paid by many
companies to stockholders. Delaware Group believes that dividends are a very
important and often underappreciated benefit of stock ownership. In building
the Dividend Growth Fund portfolio over the past 10 months, its manager
searched for companies with a history of relatively increasing dividend
payments.
POTENTIAL BENEFITS OF A FOCUS ON DIVIDENDS
* As a Component of Total Return
The chart below shows that dividends have provided nearly half of the
total return of the S&P 500 Stock Index since it was first tracked 68 years
ago. That in itself can be a compelling reason to buy dividend-paying stocks.
But take it one step further. Since dividends have been more predictable than
price appreciation, investors may be willing to pay more for the stocks of
companies with strong dividend histories. That demand, in turn, tends to push
up the prices of these stocks. The stock may also suffer less in a down
market since the value of the dividend can make the stock attractive relative
to other stocks that pay lower or no dividends, and can therefore help
provide support for the stock price.
As you can see, stock dividends contribute directly to total return
via the income they provide and indirectly by increasing the perceived value
of the stock, which helps contribute to price appreciation. Where a
relatively steady dividend is attractive, we believe a growing dividend
should be even more valuable.
=========================================
DIVIDENDS + CAPITAL CHANGE = TOTAL RETURN
Captial Appreciation 53%
Dividends 47%
S&P 500 1926 - 1963
Dividend income has produced nearly half of the S&P 500's total return
since 1926, though there is no assurance that this pattern will be
repeated. A full 47% of the total return of the S&P 500 was contributed by
dividends.
Source: CORR Software (trademark), Ibbotson Associates. Used with permission.
All rights reserved. This illustration is not intended to
be representative of Dividend Growth Fund or any other Delaware Group fund.
* As an Indicator of Financial Strength
Maintaining dividend payments over a long period of time tends to
show that a company has steady earnings and cash flow, both of which can be
an important factor in future growth. The ability to pay dividends is often
an indicator that a company is financially sound.
* To Help Reduce the Impact of Price Volatility
Since rising and falling prices are a fact of life for stock
investors, financial planning experts generally recommend that stock
investments be made with a long-term time horizon, say, at least five years.
However, even investors with the appropriate time horizon often prefer to
reduce the potential volatility of stock returns in the short term.
By creating a "cushion" of sorts, dividend income may help to soften
the bumps in the market created by sudden moves in the prices of stocks. For
example, if a share of stock is bought at $20, and the price drops by $2 over
2
<PAGE>
PHOTO OF VARIOUS COLONIAL OBJECTS
the course of a year, the price of the investment would be down 10%. (This
would not be a realized loss unless the stock were sold at that time.) If the
stock had paid quarterly dividends of $.25, however, the stock would have
provided $1.00 in income, so though the stock's price return would be -10%,
the total return on the investment would be -5%. In this way, a portfolio of
dividend paying stocks could fare better on a total return basis during the
periodic adverse market conditions that are a natural part of stock market
cycles. In better times, when prices are rising, dividends can contribute to
the already positive returns.
Picture of George H. Burwell
George H. Burwell, Senior Portfolio Manager
Dividend payments are determined by a company's board of directors
based on actual earnings and performance of the company. In contrast, a
stock's price can be affected by a multitude of factors including the
economy, overall market conditions and performance of other similar
companies. Consequently, opportunities for price appreciation are often
dependent on investor emotions. This is one of the primary reasons that
dividends have been relatively reliable as is illustrated in the chart below.
(Source: Ibbotson Associates) Companies generally try to avoid cutting their
dividends unless absolutely necessary and try to increase them when possible.
Dividend Growth Fund was designed to help investors benefit from the
"power of dividends." The Fund searches for companies that have shown
consistent and growing dividends and which management believes have the
potential to maintain or increase their dividend growth record. We believe
that these are the companies that have the fundamental strengths needed to
succeed and that their stock prices should benefit as a result.
<PAGE>
===============================================================================
Dividends: The More Reliable Component of Stock Returns
Annual Return Annual Return Annual Return Annual Return
Values Values Values Values
Return from Return from Return from Return from
Price Change Dividends Price Change Dividends
Dec 1926 5.72% 5.41% Dec 1960 -2.97% 3.26%
Dec 1927 30.91 5.71 Dec 1961 23.13 3.48
Dec 1928 37.88 4.81 Dec 1962 -11.81 2.98
Dec 1929 -11.91 3.98 Dec 1963 18.89 3.61
Dec 1930 -28.48 4.57 Dec 1964 12.97 3.33
Dec 1931 -47.07 5.35 Dec 1965 9.06 3.21
Dec 1932 -15.15 6.16 Dec 1966 -13.09 3.11
Dec 1933 46.59 6.39 Dec 1967 20.09 3.64
Dec 1934 -5.94 4.46 Dec 1968 7.66 3.18
Dec 1935 41.37 4.95 Dec 1969 -11.42 3.04
Dec 1936 27.92 5.36 Dec 1970 0.16 3.41
Dec 1937 -38.59 4.66 Dec 1971 10.79 3.33
Dec 1938 25.21 4.83 Dec 1972 15.63 3.09
Dec 1939 -5.45 4.69 Dec 1973 -17.37 2.86
Dec 1940 -15.29 5.36 Dec 1974 -29.72 3.69
Dec 1941 -17.86 6.71 Dec 1975 31.55 5.37
Dec 1942 12.43 6.79 Dec 1976 19.15 4.38
Dec 1943 19.45 6.24 Dec 1977 -11.5 4.31
Dec 1944 13.8 5.48 Dec 1978 1.06 5.33
Dec 1945 30.72 4.97 Dec 1979 12.31 5.71
Dec 1946 -11.87 4.09 Dec 1980 25.77 5.73
Dec 1947 0 5.49 Dec 1981 -9.72 4.89
Dec 1948 -0.65 6.08 Dec 1982 14.76 5.5
Dec 1949 10.26 7.5 Dec 1983 17.27 5
Dec 1950 21.78 8.77 Dec 1984 1.39 4.56
Dec 1951 16.46 6.91 Dec 1985 26.34 5.1
Dec 1952 11.78 5.93 Dec 1986 14.63 3.74
Dec 1953 -6.62 5.46 Dec 1987 2.03 3.64
Dec 1954 45.02 6.21 Dec 1988 12.41 4.17
Dec 1955 26.4 4.56 Dec 1989 27.26 3.85
Dec 1956 2.62 3.83 Dec 1990 -6.56 3.36
Dec 1957 -14.31 3.84 Dec 1991 26.31 3.82
Dec 1958 38.06 4.38 Dec 1992 4.46 3.03
Dec 1959 8.48 3.31 Dec 1993 7.06 2.83
Source: Ibbotson Associates. Based on annual returns of the S&P 500 Stock
Index from 1926 through 1993. This is not intended to represent results from
Dividend Growth or any other Delaware Group Fund.
Over time, the portion of return from dividends has been much more stable than
the portion that resulted from changes in stock prices. Dividends have provided
a base on which equity returns can be built.
3
<PAGE>
PHOTO OF VARIOUS COLONIAL OBJECTS
PROFILING YOUR FUND'S PORTFOLIO
The stock market as a whole offered little in the way of return potential
during the 10 months ended October 31, 1994 as evidenced by the 3.60% return
of the S&P 500 Index. Fortunately, we had the advantage of building a
portfolio at a time when prices on many stocks were depressed. In spite of
the unfavorable environment, we found stocks that met our standards, and as
money came into the Fund, we were able to invest it quickly.
As the Fund's name suggests and as was discussed earlier, we're
continuously looking for companies that have a steady cash flow supporting a
good dividend history and the potential for continued dividend growth. When
evaluating stocks, we also examine specific quantitative measures:
* THE PAYOUT RATIO OF THE DIVIDEND--the comparison between a
company's earnings and what it pays in dividends; and,
* THE STOCK'S PRICE-TO-EARNINGS (P/E) RATIO--a measure of the "cost"
of buying a company's earnings power which can then be compared to the P/E
ratio of other companies
While our emphasis is clearly on the dividend history and cash flow,
these other measures are useful because they give us a more complete picture
of a stock's value. The payout ratio helps us make sure that a company can
afford its dividend, and the P/E ratio helps us avoid companies whose stock
price, we believe, is already high enough to limit potential future gains.
Below, we take a closer look at the sectors and companies that the Dividend
Growth strategy led us to this past year.
CYCLICAL COMPANIES
Our dividend requirements often preclude us from investing in
companies in cyclical businesses--those whose profits typically rise and fall
with economic cycles. Normally, when the market senses that earnings for
these companies--such as manufacturers of large equipment and raw materials
for industrial and consumer use--are about to peak, their stocks no longer
outperform the broad market. This is exactly what occurred earlier this year.
Since the Fund was not heavily invested in cyclical stocks, we benefited.
When investors turn against a particular group of companies, the stock prices
of the strong companies within the group often fall with the weaker
companies. Due to the anticipation of an earnings peak, we now have an
opportunity to acquire stocks of cyclical companies that meet our standards
for dividend consistency, but whose prices have been unjustifiably depressed
along with the rest of the sector.
FINANCIAL SERVICES COMPANIES
Rising interest rates usually spell trouble for the financial sector.
Nonetheless, financial companies performed well early in 1994, due in part to
a rebound from their lows at the end of 1993. More recently, however, the
sector experienced another downturn. Though we believe there are still a
number of strong companies in this group, because of the higher interest rate
environment, investing in financial stocks now requires greater selectivity.
MBNA, the national credit card marketer, is an example of a company
identified by our selection process and now one of the Fund's top five
holdings. We believe that revenue growth for MBNA and several other financial
services companies should be strong enough to mitigate any negative effect on
profits that rising interest rates could have.
4
<PAGE>
PHOTO OF VARIOUS COLONIAL OBJECTS
The Fund also has large stock holdings in Fannie Mae and Freddie Mac,
the mortgage agencies, both of which have shown consistent growth and stable
profit margins. The prices of these two stocks have declined in response to
interest rate changes. However, these declines have actually made the stocks
even more attractive to us as possible future purchases.
REAL ESTATE INVESTMENT TRUSTS
Dividend Growth Fund is a strong believer in Real Estate Investment
Trusts (REITs), which own large blocks of commercial real estate and look to
earn money by renting facilities such as shopping centers, hospitals,
apartments and nursing homes. The improvement in the real estate market since
1991 has allowed rents to rise on average which, we believe, should pass
through to REIT investors by way of solid increases in the dividends paid on
these securities. When compared to utilities--another stock group investors
typically turn to for income--we have found that REITs generally offer
superior yields and dividend growth potential. While REITs in general,
including those in the portfolio, were down in the second half of 1994,
Dividend Growth's REITs have performed well relative to the sector as a
whole.
CONSUMER STOCKS
Relative to the S&P 500, we currently have a fairly small weighting
in consumer growth stocks, such as food and pharmaceutical manufacturers.
Increased product sales (or unit growth) for these companies has been slow,
so without price increases--which we see as unlikely--revenue and earnings
growth may also be slow. One exception, in our opinion, is Procter & Gamble,
one of our largest holdings at fiscal year-end. Procter & Gamble's
international unit growth has been driving profits for the whole company, and
we believe there is the potential for even more expansion abroad. Many
foreign economies are in the early stages of economic recovery, and this
well-known consumer products company stands to benefit from its large
presence overseas.
LOOKING FORWARD
As we move into next year, we will continue to monitor interest rates
and the other social, political and economic factors that impact the stock
market. We believe that selectivity among investments will be as critical in
the near future as it was over the past year, so we'll be looking for special
situations within each of the market sectors discussed here. Our goal is to
identify companies that are likely to do well even if their particular sector
of the economy is out of favor with the market or experiences adverse
economic conditions.
======================================
Dividend Growth Fund Portfolio
- --------------------------------------
Capital Equipment & Services 8.77%
Communications 9.86%
Technology 0.70%
Consumer Cyclical 14.93%
Convertible Bonds 0.92%
Consumer Growth 11.19%
Energy 10.68%
Chemicals 0.37%
Financial & Banking 14.10%
Preferred Stock 2.39%
Insurance & Health Care 5.91%
Manufacturing 5.79%
Real Estate Investment Trusts 6.93%
Transportation 1.69%
Cash & Other Assets 5.77%
- --------------------------------------
Based on Net Assets as of October 31, 1994.
5
<PAGE>
PHOTO OF VARIOUS COLONIAL OBJECTS
PERFORMANCE OVER THE 10-MONTH PERIOD
The chart below compares Dividend Growth Fund's performance over the
10-month period ended October 31, 1994, with that of the unmanaged Standard
and Poor's 500, the index most commonly used to track performance of the
broad stock market. Though 10 months is far too short a time to draw
conclusions about the Fund's performance, we are pleased that Dividend Growth
Fund did so well in such a difficult period. Such results reinforce our
confidence in the soundness of this strategy.
========================================
DIVIDEND GROWTH FUND CLASS A
Div Growth S&P 500
$ 9,425.00 $10,000.00
1/31/94 $ 9,735.08 $10,340.00
2/28/94 $ 9,744.82 $10,059.79
3/31/94 $ 9,416.42 $ 9,622.19
4/30/94 $ 9,755.41 $ 9,745.35
5/31/94 $ 9,877.35 $ 9,904.20
6/30/94 $ 9,688.69 $ 9,661.55
7/31/94 $ 9,971.60 $ 9,978.44
8/31/94 $10,339.56 $10,386.56
9/30/94 $10,169.99 $10,133.13
10/31/94 $10,255.41 $10,360.11
DIVIDEND GROWTH FUND'S PERFORMANCE
Aggregate Total Returns
CLASS A* CLASS B**
Lifetime 2.97% Lifetime -0.46%
Including Sales Charge Excluding Sales Charge
Lifetime -4.43%
Including Sales Charge
Through October 31, 1994
In its first 10 months, Dividend Growth Fund got off to a strong start,
keeping pace with the S&P 500 INDEX, even after taking all fees and sales
charges into account.
Chart assumes a $10,000 investment in Dividend Growth Fund Class A
12/29/93 through 10/31/94 including the impact of the maximum sales charge of
5.75%. Both the Fund and the index reflect the reinvestment of all
distributions. No adjustments were made for the payment of taxes. The S&P 500
is an unmanaged index of common stock. Performance for this short time period
may not be representative of longer term results.
Return and share value will fluctuate so that shares, when redeemed, may be
worth more or less than the original investments. Past performance is not a
guarantee of future results.
*CLASS A returns reflect the impact of the 5.75% maximum sales charge and the
12b-1 fee, and take into account the reinvestment of all distributions.
**CLASS B shares do not carry a front-end sales charge, but are subject to a
1% annual distribution and service fee. They are subject to a deferred sales
charge of up to 4% if redeemed before the end of the sixth year. Lifetime
performance excluding sales charge assumes the investment was not redeemed.
Class B was initially offered on 9/6/94.
The cumulative total return for the lifetime period for Dividend Growth
Fund's Institutional Class, which is available without sales or asset-based
distribution charges only to certain eligible institutional accounts, was
9.55% for the Fund's fiscal period ended 10/31/94. The Institutional Class
was initially made available 12/29/94.
6
<PAGE>
Financial Statements
DELAWARE GROUP DIVIDEND GROWTH FUND(1)
STATEMENT OF NET ASSETS
October 31, 1994
Number Market
of Shares Value
COMMON STOCK-90.92%
CAPITAL EQUIPMENT & SERVICES-8.77%
Arvin Industries ........................... 2,700 $ 65,813
Diebold .................................... 1,200 50,700
Eaton ...................................... 2,200 115,225
Foster Wheeler ............................. 1,000 36,000
General Electric ........................... 3,600 175,950
Genuine Parts .............................. 800 28,900
Hewlett Packard ............................ 800 78,200
Rockwell International ..................... 2,400 83,700
--------
634,488
--------
CHEMICALS-0.37%
Loctite .................................... 600 26,775
--------
26,775
--------
COMMUNICATIONS-9.86%
ALLTEL ..................................... 6,200 160,425
AT&T ....................................... 1,400 77,000
Belo (A.H.) ................................ 600 32,850
Gannett .................................... 800 38,400
General Motors-Class E ..................... 1,500 54,938
News Corp. Ltd.-ADR ........................ 800 39,100
Sprint ..................................... 2,000 65,250
*Tele Danmark-ADR ........................... 3,800 109,250
*Telecom Argentina-ADR ...................... 600 36,450
Telefonica de Argentina-ADR ................ 500 31,063
Tribune .................................... 1,300 68,413
--------
713,139
---------
CONSUMER CYCLICAL-14.93%
Cato Class A ............................... 6,000 57,000
*Federated Department Stores ................ 3,500 72,625
Marriott International ..................... 1,200 35,100
May Department Stores ...................... 6,600 248,325
Penney (J.C.) .............................. 1,500 75,938
Sbarro ..................................... 8,400 208,950
Singer ..................................... 4,000 125,500
Sunbeam-Oster .............................. 5,600 138,600
Wal-Mart Stores ............................ 5,000 117,500
---------
1,079,538
---------
- ---------------
(1) Dividend Growth Fund is a series of Delaware Group Delaware Fund, Inc.
* Non-income producing security for the year ended October 31, 1994.
<PAGE>
Number Market
of Shares Value
COMMON STOCK (CONTINUED)
CONSUMER GROWTH-11.19%
American Greetings Class A ..................... 2,400 $ 65,850
American Stores ................................ 3,600 97,650
Dial ........................................... 1,000 20,625
Omnicom Group .................................. 900 47,925
Philip Morris .................................. 1,500 91,875
Procter & Gamble ............................... 5,000 312,500
Service International .......................... 4,000 106,500
Wallace Computer Service ....................... 2,400 66,600
---------
809,525
---------
ENERGY-10.68%
AES ............................................ 3,000 60,375
Dresser Industries ............................. 3,500 73,938
Illinova ....................................... 1,000 19,750
Kerr-McGee ..................................... 1,700 83,513
Mobil .......................................... 600 51,600
Royal Dutch Petroleum .......................... 900 104,850
Sonat .......................................... 2,100 68,250
TOTAL S.A.-ADR ................................. 3,000 99,000
Unocal ......................................... 3,800 111,150
YPF Sociedad Anonima ADS-ADR ................... 2,800 67,550
Zeigler Coal Holding ........................... 2,300 31,913
---------
771,889
---------
FINANCIAL & BANKING-14.10%
Bank of New York ............................... 2,400 76,200
Emphesys Financial Group ....................... 4,000 137,500
Federal Home Loan .............................. 2,500 136,250
Federal National Mortgage Association .......... 1,700 129,200
First Security ................................. 1,600 41,600
First USA ...................................... 3,500 123,375
Istituto Mobiliare Italiano-ADR ................ 1,500 30,000
MBNA ........................................... 12,900 345,075
---------
1,019,200
---------
INSURANCE & HEALTH CARE-5.91%
Abbott Laboratories ............................ 1,900 58,900
Bankers Life Holding ........................... 1,400 26,950
Bard (C.R.) .................................... 2,700 66,150
Equitable of Iowa .............................. 1,600 56,600
Pfizer ......................................... 1,900 140,838
UNUM ........................................... 1,700 77,988
---------
427,426
---------
7
<PAGE>
Statement of Net Assets (Continued)
Number Market
of Shares Value
COMMON STOCK (CONTINUED)
MANUFACTURING-5.79%
Danaher .......................................... 3,000 $ 147,375
Fleetwood Enterprises ............................ 1,800 41,400
*Grupo Sidek S.A.-ADR ............................. 1,300 22,913
Medusa ........................................... 1,500 34,125
Reynolds & Reynolds .............................. 5,400 134,325
Rival ............................................ 1,500 38,250
---------
418,388
---------
REAL ESTATE-6.93%
Associated Estates Realty ........................ 2,800 52,850
Colonial Properties Trust ........................ 2,000 43,500
Developers Diversified Realty .................... 1,400 39,200
Health Care Property Investors ................... 2,200 64,625
JDN Realty ....................................... 3,000 66,000
Nationwide Health Properties ..................... 1,700 59,713
ROC Communities .................................. 1,500 30,000
Security Capital Industrial Trust ................ 1,888 28,792
Storage USA ...................................... 1,200 30,150
Sun Communities .................................. 2,300 51,750
Walden Residential Properties .................... 1,800 34,650
---------
501,230
---------
TECHNOLOGY-0.70%
Scitex Ord ....................................... 2,000 44,625
Shared Medical Systems ........................... 200 5,913
---------
50,538
---------
TRANSPORTATION-1.69%
Burlington Northern .............................. 1,000 49,875
CSX .............................................. 1,000 72,500
---------
122,375
---------
TOTAL COMMON STOCK (COST $6,395,072) ............. 6,574,511
---------
PREFERRED STOCK-2.39%
Freeport McMoran Copper & Gold
convertible preferred ........................... 2,000 46,000
RJR Nabisco Holdings convertible preferred ....... 10,000 68,750
Reynolds Metals 7.00% convertible preferred ...... 1,000 57,750
---------
TOTAL PREFERRED STOCK (COST $167,910) ............ 172,500
---------
<PAGE>
Principal Market
Amount Value
CONVERTIBLE BONDS-0.92%
Banco Nacional de Mexico SA subordinated
debenture exchange 7.00% 12/15/99 ............... $ 60,000 $ 66,600
----------
TOTAL CONVERTIBLE BONDS (COST $68,954) ........... 66,600
----------
REPURCHASE AGREEMENTS-4.95%
With Bankers Trust 4.73% 11/1/94
(dated 10/31/94, collateralized by
$106,000 U.S. Treasury Notes 7.625%
due 4/30/96, market value $107,237
and $16,000 U.S. Treasury Notes
7.375% due 5/15/96, market value
$16,811) ........................................ 121,000 121,000
With Paine Webber 4.76% 11/1/94
(dated 10/31/94, collateralized by
$88,000 U.S. Treasury Notes 8.875%
due 7/15/95, market value $92,109
and $32,000 U.S. Treasury Notes
6.00% due 6/30/96, market value
$31,898) ........................................ 122,000 122,000
With Prudential Securities 4.76% 11/1/94
(dated 10/31/94, collateralized by
$31,000 U.S. Treasury Notes 4.625% due
2/29/96, market value $30,514 and
$88,000 U.S. Treasury Notes 4.25% due
5/15/96, market value $86,754) .................. 115,000 115,000
----------
TOTAL REPURCHASE AGREEMENTS
(COST $358,000) ................................. 358,000
----------
TOTAL MARKET VALUE OF SECURITIES
OWNED-99.18% (COST $6,989,936)................... $7,171,611
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES-0.82% ........................ 59,531
----------
NET ASSETS APPLICABLE TO 667,163 SHARES
($1.00 PAR VALUE) OUTSTANDING-100.00% ........... $7,231,142
==========
NET ASSET VALUE-DIVIDEND GROWTH FUND
A CLASS ($4,599,958 / 424,790 SHARES) ........... $10.83
======
NET ASSET VALUE-DIVIDEND GROWTH FUND
INSTITUTIONAL CLASS
($2,516,565 / 231,780 SHARES) ................... $10.86
======
NET ASSET VALUE-DIVIDEND GROWTH FUND
B CLASS ($114,619 / 10,593 SHARES) ............. $10.82
======
- ---------------
*Non-income producing security for the year ended October 31, 1994.
See accompanying notes
8
<PAGE>
DELAWARE GROUP DIVIDEND GROWTH FUND
STATEMENT OF OPERATIONS
For the Period December 29, 1993* to October 31, 1994
INVESTMENT INCOME:
Dividends ......................................... $ 132,962
Interest .......................................... 23,954 $ 156,916
---------
EXPENSES:
Federal and state registration fees ............... 40,539
Management fees ................................... 29,901
Auditing .......................................... 20,163
Reports to shareholders ........................... 14,380
Directors' fees ................................... 10,581
Dividend disbursing and transfer
agent fees and expenses .......................... 10,225
Distribution expenses ............................. 8,374
Custodian fees .................................... 7,210
Legal ............................................. 2,575
Salaries .......................................... 1,315
Other ............................................. 5,297
---------
150,560
---------
Less expenses absorbed by
Delaware Management Company, Inc. ................ (94,827) 55,733
--------- ---------
NET INVESTMENT INCOME ............................. 101,183
---------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain from security
transactions ..................................... 196,985
Net unrealized appreciation of
investments during the period .................... 181,675
---------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS .............................. 378,660
---------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ........................ $ 479,843
=========
COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE FOR DIVIDEND GROWTH
FUND A CLASS
Net asset value per share (A) ..................... $10.83
Sales charge (5.75% of offering price, 6.09%
of amount invested per share) (B) ................ .66
------
Offering price .................................... $11.49
======
- --------------
* Date of initial public offering.
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon the redemption or repurchase of shares.
(B) See PURCHASING SHARES in the PROSPECTUS for purchases of $100,000 or
more.
See accompanying notes
<PAGE>
DELAWARE GROUP DIVIDEND GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
PERIOD
12/29/93*
TO
10/31/94
OPERATIONS:
Net investment income ............................... $ 101,183
Net realized gain from security transactions ........ 196,985
Unrealized appreciation during the period ........... 181,675
-----------
Net increase in net assets resulting
from operations .................................... 479,843
-----------
DISTRIBUTION TO SHAREHOLDERS
FROM NET INVESTMENT INCOME:
Dividend Growth Fund A Class ........................ (32,915)
Dividend Growth Institutional Class ................. (22,745)
Dividend Growth Fund B Class ........................ (85)
-----------
(55,745)
-----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
Dividend Growth Fund A Class ....................... 5,237,687
Dividend Growth Institutional Class ................ 3,193,830
Dividend Growth Fund B Class ....................... 114,216
Net asset value of shares issued upon
reinvestment of dividends from net
investment income:
Dividend Growth Fund A Class ....................... 32,824
Dividend Growth Institutional Class ................ 22,745
Dividend Growth Fund B Class ....................... 85
-----------
8,601,387
-----------
Cost of shares repurchased:
Dividend Growth Fund A Class ....................... (906,247)
Dividend Growth Institutional Class ................ (888,096)
Dividend Growth Fund B Class ....................... --
-----------
(1,794,343)
-----------
Increase in net assets derived from
capital share transactions ......................... 6,807,044
-----------
NET INCREASE IN NET ASSETS .......................... 7,231,142
NET ASSETS:
Beginning of period ................................. --
-----------
End of period (including undistributed
net investment income of $45,438) ................... $ 7,231,142
===========
- -----------
* Date of initial public offering.
See accompanying notes
9
<PAGE>
DELAWARE GROUP DIVIDEND GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1994
1. SIGNIFICANT ACCOUNTING POLICIES
The Delaware Group Dividend Growth Fund (the "Fund") is a Series offered by
Delaware Group Delaware Fund, Inc. (the "Company"), a diversified open-end
investment company organized under the laws of Maryland and registered under
the Investment Company Act of 1940, as amended. The Company also currently
offers the Delaware Group Delaware Fund--Delaware Fund Series. The Fund
currently offers three classes of shares, Dividend Growth Fund A Class
(formerly known as Dividend Growth Fund class), Dividend Growth Institutional
Class (formerly known as Dividend Growth (Institutional) class), and
effective September 6, 1994, the Dividend Growth Fund B Class. Each share in
each class will bear pro rata, all of the expenses of the Fund, except that
the Dividend Growth Institutional Class will not include any distribution
fees under any 12b-1 plan. The net asset values of all outstanding shares of
each class of the Fund will be computed on a pro rata basis for each
outstanding share based on the proportionate participation in the Fund
represented by the value of shares of that class. All income earned and
expenses incurred by the Fund, are borne on a pro rata basis by each
outstanding share of a class, based on each class' percentage in the Fund
represented by the value of shares of such classes. Due to the specific
distribution expenses, it is expected that the net asset value and dividend
paid to each class of the Fund will vary.
Portfolio securities listed or traded on a national securities exchange,
except for bonds, are valued at the last sale price on the exchange where
they are primarily traded. Securities not traded on a particular day,
over-the-counter securities and government and agency securities are valued
at mean value between bid and asked prices. Money market instruments having a
maturity of less than 60 days are valued at amortized cost. Debt securities
(other than short-term obligations) are valued on the basis of valuations
provided by a pricing service when such prices are believed to reflect the
fair value of such securities. Prices provided by the 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.
Security transactions are accounted for on the date the securities are
purchased or sold (trade date). Gains and losses are based upon the specific
identification method for both financial statement and federal tax purposes.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis.
No provision for federal income taxes was made since it is the intention of
the Fund to comply with the provisions of the Internal Revenue Code available
to regulated investment companies and to make requisite distributions to
shareholders.
Costs incidental to the initial registration of shares of the Fund amounted
to $27,853. These costs were deferred and are being amortized over a two-year
period following the initial public offering.
<PAGE>
The Fund is permitted to borrow money as a temporary measure for
extraordinary or emergency purposes. The Fund had a line of credit
arrangement with its custodial bank, Chemical Bank, for an amount not to
exceed $500,000. As of and for the period ended October 31, 1994, there were
no borrowings under this line of credit.
2. INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
In accordance with the terms of the investment management agreement, Delaware
Management Company, Inc., the investment manager of the Fund, will receive a fee
to be paid monthly, which is computed on the net assets of the Fund as the close
of business each day at the annual rate of 0.60% on the first $500 million of
average daily net assets of the Fund and 0.50% on the average daily net assets
over $500 million. Pursuant to the Distribution Agreement between the Fund and
Delaware Distributors, Inc., an affiliate of Delaware Management Company, Inc.,
the Distributor will be paid monthly a fee which is computed on the net assets
of the Fund as of the close of business each day at the annual rate of 0.30% of
the Fund's average daily net assets attributable to the Dividend Growth Fund A
Class and at an annual rate of 1.00% of the Fund's average daily net assets
attributable to the Dividend Growth Fund B Class.
Certain officers, directors and shareholders of Delaware Management Company,
Inc. are officers and/or directors of the Fund. Directors, officers and
employees of Delaware Management Company, Inc., who are also directors,
officers and employees of the Fund, do not receive any compensation from the
Fund. Salaries of officers and employees who are exclusively employed by the
Delaware Group of Funds are apportioned on the basis of net assets of the
respective Funds. For the period ended October 31, 1994, expenses related to
such salaries for the Fund amounted to $1,315. Delaware Service Company,
Inc., an affiliate of Delaware Management Company, Inc., provides dividend
disbursing and transfer agent services to the Fund. The dividend disbursing
and transfer agent fees and expenses for the period ended October 31, 1994
were $10,225 for the Fund. In addition, Delaware Distributors, Inc., another
affiliate of Delaware Management Company, Inc., received $11,766 from
commissions earned on sales of the Dividend Growth Fund A Class shares.
Delaware Management Company, Inc. has elected voluntarily to waive its fee
and reimburse the Fund to the extent that annual operating expenses,
exclusive of taxes, interest, brokerage commissions, extraordinary expenses
and 12b-1 expenses exceed 0.95% of average net assets for each class through
June 30, 1995. Total expenses absorbed by Delaware Management Company, Inc.
for the period ended October 31, 1994 were $94,827.
On October 31, 1994, the Fund had expenses relating to operations payable to
Delaware Management Company, Inc. and its affiliates of $20,133.
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. INVESTMENTS
Investment securities based on cost for federal income tax purposes at
October 31, 1994 are as follows:
Cost of investments ......................... $ 6,991,456
Aggregate unrealized appreciation ........... 350,700
Aggregate unrealized depreciation ........... (170,545)
-----------
Market value of investments ................. $ 7,171,611
===========
Net realized gain for Federal income tax purposes was $198,506 for the period
ended October 31, 1994.
During the period ended October 31, 1994, the Fund had purchases of
$14,374,824 and sales of $7,937,837 of investment securities, other than U.S.
government securities and short-term debt securities having maturities of one
year or less.
On October 31, 1994, the Fund had a receivable for securities sold of $70,385
and a payable for securities purchased of $10,244.
4. CAPITAL STOCK
Transactions in capital stock shares were as follows:
PERIOD
12/29/93*
TO
10/31/94
Shares sold:
Dividend Growth Fund A Class ............................... 509,283
Dividend Growth Institutional Class ........................ 314,972
Dividend Growth Fund B Class ............................... 10,585
Shares issued upon reinvestment of
dividends from net investment income:
Dividend Growth Fund A Class ............................... 3,171
Dividend Growth Institutional Class ........................ 2,201
Dividend Growth Fund B Class ............................... 8
--------
840,220
--------
Shares repurchased:
Dividend Growth Fund A Class ............................... (87,664)
Dividend Growth Institutional Class ........................ (85,393)
Dividend Growth B Class .................................... --
--------
(173,057)
--------
Net increase ............................................... 667,163
========
- ----------
* Date of initial public offering.
<PAGE>
5. COMPONENTS OF NET ASSETS
Common stock, $1 par value, 125,000,000
shares authorized to the Fund .............................. $6,807,044
Accumulated undistributed income:
Net investment income ...................................... 45,438
Net realized gain on investments ........................... 196,985
Net unrealized appreciation of investments ................. 181,675
----------
Total net assets ............................................ $7,231,142
==========
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. FINANCIAL HIGHLIGHTS
Selected data for each share of the Fund outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
DIVIDEND GROWTH FUND DIVIDEND GROWTH FUND DIVIDEND GROWTH
A CLASS INSTITUTIONAL CLASS FUND B CLASS
-------------------- -------------------- ---------------
12/29/93/1/ 12/29/93/1/ 9/06/94/7/
TO TO TO
10/31/94 10/31/94 10/31/94
<S> <C> <C> <C>
Net asset value, beginning of period ............................. $ 10.000 $ 10.000 $ 10.900
Income (loss) from investment operations:
Net investment income ........................................... 0.136 0.201 0.027
Net realized and unrealized gain (loss) from
security transactions ............. 0.784 0.749 (0.077)
--------- --------- --------
Total from investment operations ................................ 0.920 0.950 (0.050)
Less distributions:
Dividends from net investment income ............................ (0.090) (0.090) (0.030)
--------- --------- --------
Total distributions ............................................ (0.090) (0.090) (0.030)
--------- --------- --------
Net asset value, end of period ................................... $ 10.830 $ 10.860 $ 10.820
========= ========= ========
Total return/2/ .................................................. 11.09% 11.45% (0.46%)
Ratios/supplemental data:
Net assets, end of period (000 omitted) ......................... $ 4,600 $ 2,516 $ 115
Ratio of expenses to average net assets ......................... 1.25%/3/ 0.95%/5/ 1.95%/8/
Ratio of net investment income to average net assets ............ 1.96%/4/ 2.26%/6/ 1.26%/9/
Portfolio turnover rate ......................................... 180% 180% 180%
</TABLE>
- --------------
/1/ Date of initial public offering; ratios and total return have been
annualized.
/2/ Total return does not include maximum sale charge of 5.75% nor the 1%
limited contingent deferred sales charge that would apply in the event of
certain redemptions within 12 months of purchase for Dividend Growth Fund A
Class or the contingent deferred sales charge which varies from 1%-4%
depending upon the holding period for Dividend Growth Fund B Class.
/3/ Ratio of expenses to average net assets prior to expense limitation was
3.26% for the period ended October 31, 1994.
/4/ Ratio of net investment loss to average net assets prior to expense
limitation was (0.05%) for the period ended October 31, 1994.
/5/ Ratio of expenses to average net assets prior to expense limitation was
2.96% for the period ended October 31, 1994.
/6/ Ratio of net investment income to average net assets prior to expense
limitation was 0.25% for the period ended October 31, 1994.
/7/ Date of initial public offering; ratios have been annualized and total
return has not been annualized.
/8/ Ratio of expenses to average net assets prior to expense limitation was
3.96% for the period ended October 31, 1994.
/9/ Ratio of net investment loss to average net assets prior to expense
limitation was (0.75%) for the period ended October 31, 1994.
12
<PAGE>
DELAWARE GROUP DELAWARE FUND, INC--
DIVIDEND GROWTH FUND
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Directors
Delaware Group Delaware Fund, Inc--Dividend Growth Fund
We have audited the accompanying statement of net assets of Delaware Group
Delaware Fund, Inc--Dividend Growth Fund as of October 31, 1994, and the
related statements of operations and changes in net assets, and the financial
highlights 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
investments owned as of October 31, 1994 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides
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--Dividend Growth Fund at October 31, 1994, the
results of its operations, the changes in its net assets, and the financial
highlights for the period from December 29, 1993 (date of initial public
offering) to October 31, 1994, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Philadelphia, Pennsylvania
December 1, 1994
13
<PAGE>
<TABLE>
<CAPTION>
BOARD MEMBERS OTHER AFFILIATED OFFICERS
<S> <C> <C>
MR. WAYNE A. STORK MR. ANTHONY D. KNERR MR. KEITH E. MITCHELL
Chairman Consultant President and CEO
Delaware Group of Funds Anthony Knerr & Associates Delaware Distributors, L.P.
Philadelphia, PA New York, NY
MR. DAVID K. DOWNES
MR. WALTER P. BABICH MS. ANN R. LEVEN President
Board Chairman Deputy Treasurer Delaware Management Trust Company
Citadel Constructors, Inc. National Gallery of Art
King of Prussia, PA Washington, DC MR. GEORGE M. CHAMBERLAIN, JR.
Secretary
MR. JOHN K. CASTLE MR. W. THACHER LONGSTRETH Delaware Group of Funds
Chairman Vice Chairman
Castle Harlan, Inc. Packquisition Corp.
New York, NY Philadelphia, PA
DR. JOHN J. CONNOLLY MR. CHARLES E. PECK
President and CEO former Chairman and CEO
Castle Connolly Medical Ltd. The Ryland Group, Inc.
New York, NY Columbia, MD
MR. JOHN H. DURHAM MR. BRIAN F. WRUBLE
former Chairman President and CEO
Delaware Group of Funds Delaware Group of Funds
Philadelphia, PA Philadelphia, PA
MR. LEONARD M. HARLAN
President
Castle Harlan, Inc.
New York, NY
</TABLE>
<PAGE>
DELAWARE GROUP OF FUNDS
FOR GROWTH OF CAPITAL FOR TAX-FREE
Trend Fund CURRENT INCOME
DelCap Fund Tax-Free USA Fund
Value Fund Tax-Free Insured Fund
Tax-Free USA
FOR TOTAL RETURN Intermediate Fund
Dividend Growth Fund Tax-Free Pennsylvania Fund
International Equity Fund
Decatur Total Return Fund MONEY MARKET FUNDS
Decatur Income Fund Delaware Cash Reserve
Delaware Fund U.S. Government Money Fund
Tax-Free Money Fund
FOR CURRENT INCOME
Delchester Fund CLOSED-END EQUITY/INCOME*
U.S. Government Fund Dividend and Income Fund
Treasury Reserves Global Dividend and
Intermediate Fund Income Fund
This annual report is for the information of shareholders of Dividend Growth
Fund, but it may be used with prospective investors when preceded or
accompanied by a current PROSPECTUS, which gives details about charges,
expenses, investment objectives and operating policies of the Fund. Summary
investment results are documented in the current Statement of Additional
Information. If used with prospective investors, this report must also be
accompanied by a Dividend Growth Fund Performance Update for the most recently
completed calendar quarter. The figures in this report represent past results.
The return and principal value of an investment in the Fund will fluctuate so
that shares, when redeemed, may be worth more or less than their original cost.
*Delaware Group Dividend and Income Fund and Delaware Group Global Dividend and
Income Fund purchases can be made through any broker who is registered with the
New York Stock Exchange.
<PAGE>
The Delaware Group includes funds with a wide range of investment
objectives. Stock funds, income funds, tax-free funds, money market funds and
closed-end equity/income funds give investors the ability to create a portfolio
that fits their personal financial goals.
For a prospectus of any Delaware Group fund, contact your financial adviser
or call the Delaware Group at 800-523-4640 or 215-988-1333 in Philadelphia.
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 CREDIT UNION OR ANY
BANK, ARE NOT OBLIGATIONS OF ANY CREDIT UNION OR ANY BANK, AND INVOLVE
INVESTMENT RISK, INCLUDING POSSIBLE LOSS OF PRINCIPAL. SHARES OF THE FUND ARE
NOT CREDIT UNION OR BANK DEPOSITS.
INVESTMENT MANAGER
Delaware Management Company, Inc.
Philadelphia
INTERNATIONAL AFFILIATE
Delaware International Advisers Ltd.
London
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
Philadelphia
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING
AND TRANSFER AGENT
Delaware Service Company, Inc.
Philadelphia
12/94-PP-AR-039
<PAGE>
DELAWARE GROUP
A TRADITION OF SOUND INVESTING SINCE 1929
PHOTO OF VARIOUS COLONIAL OBJECTS
1994
ANNUAL
REPORT
DELAWARE
GROUP
============
Dividend
Growth Fund
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<NAME> DELAWARE GROUP DELAWARE FUND, INC.
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<NAME> DELAWARE FUND
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 6-MOS
<FISCAL-YEAR-END> OCT-31-1994 OCT-31-1994
<PERIOD-END> OCT-31-1994 APR-30-1995
<INVESTMENTS-AT-COST> 548,734,004 549,488,049
<INVESTMENTS-AT-VALUE> 573,625,598 585,600,829
<RECEIVABLES> 14,280,157 11,230,619
<ASSETS-OTHER> 5,352 5,352
<OTHER-ITEMS-ASSETS> 54,507 86,766
<TOTAL-ASSETS> 587,965,614 596,923,566
<PAYABLE-FOR-SECURITIES> 35,928,758 24,447,439
<SENIOR-LONG-TERM-DEBT> 0 0
<OTHER-ITEMS-LIABILITIES> 1,405,066 2,781,444
<TOTAL-LIABILITIES> 37,333,824 27,228,883
<SENIOR-EQUITY> 30,585,251 30,950,825
<PAID-IN-CAPITAL-COMMON> 485,652,967 491,385,601
<SHARES-COMMON-STOCK> 25,339,619 25,531,291
<SHARES-COMMON-PRIOR> 26,123,607 25,339,619
<ACCUMULATED-NII-CURRENT> 2,742,632 2,602,082
<OVERDISTRIBUTION-NII> 0 0
<ACCUMULATED-NET-GAINS> 6,759,346 8,643,395
<OVERDISTRIBUTION-GAINS> 0 0
<ACCUM-APPREC-OR-DEPREC> 24,891,594 36,112,780
<NET-ASSETS> 456,073,556 469,897,222
<DIVIDEND-INCOME> 9,758,456 4,940,878
<INTEREST-INCOME> 14,212,081 7,862,577
<OTHER-INCOME> 0 0
<EXPENSES-NET> 5,290,626 2,648,599
<NET-INVESTMENT-INCOME> 18,679,911 10,154,856
<REALIZED-GAINS-CURRENT> 7,247,608 9,523,165
<APPREC-INCREASE-CURRENT> (16,013,608) 11,221,186
<NET-CHANGE-FROM-OPS> 9,913,911 30,899,207
<EQUALIZATION> 0 0
<DISTRIBUTIONS-OF-INCOME> 15,343,261 8,364,821
<DISTRIBUTIONS-OF-GAINS> 29,288,645 6,294,837
<DISTRIBUTIONS-OTHER> 0 0
<NUMBER-OF-SHARES-SOLD> 1,561,930 1,141,776
<NUMBER-OF-SHARES-REDEEMED> 4,229,098 1,592,069
<SHARES-REINVESTED> 1,883,180 641,965
<NET-CHANGE-IN-ASSETS> (28,948,212) 19,062,893
<ACCUMULATED-NII-PRIOR> 2,368,055 2,742,632
<ACCUMULATED-GAINS-PRIOR> 33,304,104 6,759,346
<OVERDISTRIB-NII-PRIOR> 0 0
<OVERDIST-NET-GAINS-PRIOR> 0 0
<GROSS-ADVISORY-FEES> 2,913,609 1,425,167
<INTEREST-EXPENSE> 0 0
<GROSS-EXPENSE> 5,290,626 2,648,599
<AVERAGE-NET-ASSETS> 473,727,264 452,583,116
<PER-SHARE-NAV-BEGIN> 19.430 18.000
<PER-SHARE-NII> 0.615 0.327
<PER-SHARE-GAIN-APPREC> (0.285) 0.653
<PER-SHARE-DIVIDEND> 0.600 0.330
<PER-SHARE-DISTRIBUTIONS> 1.160 0.250
<RETURNS-OF-CAPITAL> 0 0
<PER-SHARE-NAV-END> 18.000 18.400
<EXPENSE-RATIO> 0.97 1.00
<AVG-DEBT-OUTSTANDING> 0 0
<AVG-DEBT-PER-SHARE> 0 0
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<SERIES>
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<NAME> DELAWARE FUND
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<PERIOD-TYPE> 12-MOS 6-MOS
<FISCAL-YEAR-END> OCT-31-1994 OCT-31-1994
<PERIOD-END> OCT-31-1994 APR-30-1995
<INVESTMENTS-AT-COST> 548,734,004 549,488,049
<INVESTMENTS-AT-VALUE> 573,625,598 585,600,829
<RECEIVABLES> 14,280,157 11,230,619
<ASSETS-OTHER> 5,352 5,352
<OTHER-ITEMS-ASSETS> 54,507 86,766
<TOTAL-ASSETS> 587,965,614 596,923,566
<PAYABLE-FOR-SECURITIES> 35,928,758 24,447,439
<SENIOR-LONG-TERM-DEBT> 0 0
<OTHER-ITEMS-LIABILITIES> 1,405,066 2,781,444
<TOTAL-LIABILITIES> 37,333,824 27,228,883
<SENIOR-EQUITY> 30,585,251 30,950,825
<PAID-IN-CAPITAL-COMMON> 485,652,967 491,385,601
<SHARES-COMMON-STOCK> 31,575 90,053
<SHARES-COMMON-PRIOR> 0 31,575
<ACCUMULATED-NII-CURRENT> 2,742,632 2,602,082
<OVERDISTRIBUTION-NII> 0 0
<ACCUMULATED-NET-GAINS> 6,759,346 8,643,395
<OVERDISTRIBUTION-GAINS> 0 0
<ACCUM-APPREC-OR-DEPREC> 24,891,594 36,112,780
<NET-ASSETS> 567,796 1,655,628
<DIVIDEND-INCOME> 9,758,456 4,940,878
<INTEREST-INCOME> 14,212,081 7,862,577
<OTHER-INCOME> 0 0
<EXPENSES-NET> 5,290,626 2,648,599
<NET-INVESTMENT-INCOME> 18,679,911 10,154,856
<REALIZED-GAINS-CURRENT> 7,247,608 9,523,165
<APPREC-INCREASE-CURRENT> (16,013,608) 11,221,186
<NET-CHANGE-FROM-OPS> 9,913,911 30,899,207
<EQUALIZATION> 0 0
<DISTRIBUTIONS-OF-INCOME> 3,727 15,712
<DISTRIBUTIONS-OF-GAINS> 0 11,657
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<NUMBER-OF-SHARES-SOLD> 31,368 57,939
<NUMBER-OF-SHARES-REDEEMED> 0 973
<SHARES-REINVESTED> 207 1,512
<NET-CHANGE-IN-ASSETS> (28,948,212) 19,062,893
<ACCUMULATED-NII-PRIOR> 2,368,055 2,742,632
<ACCUMULATED-GAINS-PRIOR> 33,304,104 6,759,346
<OVERDISTRIB-NII-PRIOR> 0 0
<OVERDIST-NET-GAINS-PRIOR> 0 0
<GROSS-ADVISORY-FEES> 2,913,609 1,425,167
<INTEREST-EXPENSE> 0 0
<GROSS-EXPENSE> 5,290,626 2,648,599
<AVERAGE-NET-ASSETS> 353,984 989,886
<PER-SHARE-NAV-BEGIN> 18.340 17.980
<PER-SHARE-NII> 0.070 0.306
<PER-SHARE-GAIN-APPREC> (0.280) 0.624
<PER-SHARE-DIVIDEND> 0.150 0.270
<PER-SHARE-DISTRIBUTIONS> 0 0.250
<RETURNS-OF-CAPITAL> 0 0
<PER-SHARE-NAV-END> 17.980 18.390
<EXPENSE-RATIO> 1.81 1.83
<AVG-DEBT-OUTSTANDING> 0 0
<AVG-DEBT-PER-SHARE> 0 0
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<PERIOD-TYPE> 12-MOS 6-MOS
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<PERIOD-END> OCT-31-1994 APR-30-1995
<INVESTMENTS-AT-COST> 548,734,004 549,488,049
<INVESTMENTS-AT-VALUE> 573,625,598 585,600,829
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<SENIOR-EQUITY> 30,585,251 30,950,825
<PAID-IN-CAPITAL-COMMON> 485,652,967 491,385,601
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<SHARES-COMMON-PRIOR> 3,703,352 5,214,057
<ACCUMULATED-NII-CURRENT> 2,742,632 2,602,082
<OVERDISTRIBUTION-NII> 0 0
<ACCUMULATED-NET-GAINS> 6,759,346 8,643,395
<OVERDISTRIBUTION-GAINS> 0 0
<ACCUM-APPREC-OR-DEPREC> 24,891,594 36,112,780
<NET-ASSETS> 93,990,438 98,141,833
<DIVIDEND-INCOME> 9,758,456 4,940,878
<INTEREST-INCOME> 14,212,081 7,862,577
<OTHER-INCOME> 0 0
<EXPENSES-NET> 5,290,626 2,648,599
<NET-INVESTMENT-INCOME> 18,679,911 10,154,856
<REALIZED-GAINS-CURRENT> 7,247,608 9,523,165
<APPREC-INCREASE-CURRENT> (16,013,608) 11,221,186
<NET-CHANGE-FROM-OPS> 9,913,911 30,899,207
<EQUALIZATION> 0 0
<DISTRIBUTIONS-OF-INCOME> 2,958,346 1,914,873
<DISTRIBUTIONS-OF-GAINS> 4,503,721 1,332,622
<DISTRIBUTIONS-OTHER> 0 0
<NUMBER-OF-SHARES-SOLD> 1,850,567 681,166
<NUMBER-OF-SHARES-REDEEMED> 750,002 751,819
<SHARES-REINVESTED> 410,140 186,077
<NET-CHANGE-IN-ASSETS> (28,948,212) 19,062,893
<ACCUMULATED-NII-PRIOR> 2,368,055 2,742,632
<ACCUMULATED-GAINS-PRIOR> 33,304,104 6,759,346
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<OVERDIST-NET-GAINS-PRIOR> 0 0
<GROSS-ADVISORY-FEES> 2,913,609 1,425,167
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<GROSS-EXPENSE> 5,290,626 2,648,599
<AVERAGE-NET-ASSETS> 87,450,541 94,644,463
<PER-SHARE-NAV-BEGIN> 19.460 18.030
<PER-SHARE-NII> 0.653 0.344
<PER-SHARE-GAIN-APPREC> (0.293) 0.646
<PER-SHARE-DIVIDEND> 0.630 0.360
<PER-SHARE-DISTRIBUTIONS> 1.160 0.250
<RETURNS-OF-CAPITAL> 0 0
<PER-SHARE-NAV-END> 18.030 18.410
<EXPENSE-RATIO> 0.81 0.83
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<AVG-DEBT-PER-SHARE> 0 0
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<CIK> 0000027801
<NAME> DELAWARE GROUP DELAWARE FUND, INC.
<SERIES>
<NUMBER> 021
<NAME> DEVON FUND
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 6-MOS
<FISCAL-YEAR-END> OCT-31-1994 OCT-31-1994
<PERIOD-END> OCT-31-1994 APR-30-1995
<INVESTMENTS-AT-COST> 6,989,936 9,468,905
<INVESTMENTS-AT-VALUE> 7,171,611 10,045,022
<RECEIVABLES> 217,629 310,525
<ASSETS-OTHER> 16,234 0
<OTHER-ITEMS-ASSETS> 82 10,553
<TOTAL-ASSETS> 7,405,556 10,366,100
<PAYABLE-FOR-SECURITIES> 10,244 595,635
<SENIOR-LONG-TERM-DEBT> 0 0
<OTHER-ITEMS-LIABILITIES> 164,170 128,203
<TOTAL-LIABILITIES> 174,414 723,838
<SENIOR-EQUITY> 667,163 866,095
<PAID-IN-CAPITAL-COMMON> 6,139,881 8,059,589
<SHARES-COMMON-STOCK> 424,790 618,257
<SHARES-COMMON-PRIOR> 0 424,790
<ACCUMULATED-NII-CURRENT> 45,438 22,983
<OVERDISTRIBUTION-NII> 0 0
<ACCUMULATED-NET-GAINS> 196,985 117,478
<OVERDISTRIBUTION-GAINS> 0 0
<ACCUM-APPREC-OR-DEPREC> 181,675 576,117
<NET-ASSETS> 4,599,958 6,880,301
<DIVIDEND-INCOME> 132,962 99,282
<INTEREST-INCOME> 23,954 18,682
<OTHER-INCOME> 0 0
<EXPENSES-NET> 55,733 43,679
<NET-INVESTMENT-INCOME> 101,183 74,285
<REALIZED-GAINS-CURRENT> 196,985 120,457
<APPREC-INCREASE-CURRENT> 181,675 394,442
<NET-CHANGE-FROM-OPS> 479,843 589,184
<EQUALIZATION> 0 0
<DISTRIBUTIONS-OF-INCOME> 32,915 67,833
<DISTRIBUTIONS-OF-GAINS> 0 144,950
<DISTRIBUTIONS-OTHER> 0 0
<NUMBER-OF-SHARES-SOLD> 509,283 255,869
<NUMBER-OF-SHARES-REDEEMED> 87,664 83,241
<SHARES-REINVESTED> 3,171 20,839
<NET-CHANGE-IN-ASSETS> 7,231,142 2,411,120
<ACCUMULATED-NII-PRIOR> 0 45,438
<ACCUMULATED-GAINS-PRIOR> 0 196,985
<OVERDISTRIB-NII-PRIOR> 0 0
<OVERDIST-NET-GAINS-PRIOR> 0 0
<GROSS-ADVISORY-FEES> 29,901 22,061
<INTEREST-EXPENSE> 0 0
<GROSS-EXPENSE> 150,560 95,914
<AVERAGE-NET-ASSETS> 3,372,950 5,249,788
<PER-SHARE-NAV-BEGIN> 10.000 10.830
<PER-SHARE-NII> 0.136 0.099
<PER-SHARE-GAIN-APPREC> 0.784 0.661
<PER-SHARE-DIVIDEND> 0.090 0.140
<PER-SHARE-DISTRIBUTIONS> 0 0.320
<RETURNS-OF-CAPITAL> 0 0
<PER-SHARE-NAV-END> 10.830 11.130
<EXPENSE-RATIO> 1.25 1.25
<AVG-DEBT-OUTSTANDING> 0 0
<AVG-DEBT-PER-SHARE> 0 0
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<SERIES>
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<PERIOD-TYPE> 12-MOS 6-MOS
<FISCAL-YEAR-END> OCT-31-1994 OCT-31-1994
<PERIOD-END> OCT-31-1994 APR-30-1995
<INVESTMENTS-AT-COST> 6,989,936 9,468,905
<INVESTMENTS-AT-VALUE> 7,171,611 10,045,022
<RECEIVABLES> 217,629 310,525
<ASSETS-OTHER> 16,234 0
<OTHER-ITEMS-ASSETS> 82 10,553
<TOTAL-ASSETS> 7,405,556 10,366,100
<PAYABLE-FOR-SECURITIES> 10,244 595,635
<SENIOR-LONG-TERM-DEBT> 0 0
<OTHER-ITEMS-LIABILITIES> 164,170 128,203
<TOTAL-LIABILITIES> 174,414 723,838
<SENIOR-EQUITY> 667,163 866,095
<PAID-IN-CAPITAL-COMMON> 6,139,881 8,059,589
<SHARES-COMMON-STOCK> 10,593 40,557
<SHARES-COMMON-PRIOR> 0 10,593
<ACCUMULATED-NII-CURRENT> 45,438 22,983
<OVERDISTRIBUTION-NII> 0 0
<ACCUMULATED-NET-GAINS> 196,985 117,478
<OVERDISTRIBUTION-GAINS> 0 0
<ACCUM-APPREC-OR-DEPREC> 181,675 576,117
<NET-ASSETS> 114,619 450,270
<DIVIDEND-INCOME> 132,962 99,282
<INTEREST-INCOME> 23,954 18,682
<OTHER-INCOME> 0 0
<EXPENSES-NET> 55,733 43,679
<NET-INVESTMENT-INCOME> 101,183 74,285
<REALIZED-GAINS-CURRENT> 196,985 120,457
<APPREC-INCREASE-CURRENT> 181,675 394,442
<NET-CHANGE-FROM-OPS> 479,843 589,184
<EQUALIZATION> 0 0
<DISTRIBUTIONS-OF-INCOME> 85 3,071
<DISTRIBUTIONS-OF-GAINS> 0 7,067
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<NUMBER-OF-SHARES-SOLD> 10,585 29,040
<NUMBER-OF-SHARES-REDEEMED> 0 5
<SHARES-REINVESTED> 8 929
<NET-CHANGE-IN-ASSETS> 7,231,142 2,411,120
<ACCUMULATED-NII-PRIOR> 0 45,438
<ACCUMULATED-GAINS-PRIOR> 0 196,985
<OVERDISTRIB-NII-PRIOR> 0 0
<OVERDIST-NET-GAINS-PRIOR> 0 0
<GROSS-ADVISORY-FEES> 29,901 22,061
<INTEREST-EXPENSE> 0 0
<GROSS-EXPENSE> 150,560 95,914
<AVERAGE-NET-ASSETS> 56,485 287,142
<PER-SHARE-NAV-BEGIN> 10.900 10.820
<PER-SHARE-NII> 0.027 0.094
<PER-SHARE-GAIN-APPREC> (0.077) 0.626
<PER-SHARE-DIVIDEND> 0.030 0.120
<PER-SHARE-DISTRIBUTIONS> 0 0.320
<RETURNS-OF-CAPITAL> 0 0
<PER-SHARE-NAV-END> 10.820 11.100
<EXPENSE-RATIO> 1.95 1.95
<AVG-DEBT-OUTSTANDING> 0 0
<AVG-DEBT-PER-SHARE> 0 0
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<SERIES>
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<PERIOD-TYPE> 12-MOS 6-MOS
<FISCAL-YEAR-END> OCT-31-1994 OCT-31-1994
<PERIOD-END> OCT-31-1994 APR-30-1995
<INVESTMENTS-AT-COST> 6,989,936 9,468,905
<INVESTMENTS-AT-VALUE> 7,171,611 10,045,022
<RECEIVABLES> 217,629 310,525
<ASSETS-OTHER> 16,234 0
<OTHER-ITEMS-ASSETS> 82 10,553
<TOTAL-ASSETS> 7,405,556 10,366,100
<PAYABLE-FOR-SECURITIES> 10,244 595,635
<SENIOR-LONG-TERM-DEBT> 0 0
<OTHER-ITEMS-LIABILITIES> 164,170 128,203
<TOTAL-LIABILITIES> 174,414 723,838
<SENIOR-EQUITY> 667,163 866,095
<PAID-IN-CAPITAL-COMMON> 6,139,881 8,059,589
<SHARES-COMMON-STOCK> 231,780 207,281
<SHARES-COMMON-PRIOR> 0 231,780
<ACCUMULATED-NII-CURRENT> 45,438 22,983
<OVERDISTRIBUTION-NII> 0 0
<ACCUMULATED-NET-GAINS> 196,985 117,478
<OVERDISTRIBUTION-GAINS> 0 0
<ACCUM-APPREC-OR-DEPREC> 181,675 576,117
<NET-ASSETS> 2,516,565 2,311,691
<DIVIDEND-INCOME> 132,962 99,282
<INTEREST-INCOME> 23,954 18,682
<OTHER-INCOME> 0 0
<EXPENSES-NET> 55,733 43,679
<NET-INVESTMENT-INCOME> 101,183 74,285
<REALIZED-GAINS-CURRENT> 196,985 120,457
<APPREC-INCREASE-CURRENT> 181,675 394,442
<NET-CHANGE-FROM-OPS> 479,843 589,184
<EQUALIZATION> 0 0
<DISTRIBUTIONS-OF-INCOME> 22,745 25,836
<DISTRIBUTIONS-OF-GAINS> 0 47,947
<DISTRIBUTIONS-OTHER> 0 0
<NUMBER-OF-SHARES-SOLD> 314,972 67,505
<NUMBER-OF-SHARES-REDEEMED> 85,393 99,292
<SHARES-REINVESTED> 2,201 7,288
<NET-CHANGE-IN-ASSETS> 7,231,142 2,411,120
<ACCUMULATED-NII-PRIOR> 0 45,438
<ACCUMULATED-GAINS-PRIOR> 0 196,985
<OVERDISTRIB-NII-PRIOR> 0 0
<OVERDIST-NET-GAINS-PRIOR> 0 0
<GROSS-ADVISORY-FEES> 29,901 22,061
<INTEREST-EXPENSE> 0 0
<GROSS-EXPENSE> 150,560 95,914
<AVERAGE-NET-ASSETS> 2,562,384 1,812,588
<PER-SHARE-NAV-BEGIN> 10.000 10.860
<PER-SHARE-NII> 0.201 0.148
<PER-SHARE-GAIN-APPREC> 0.749 0.622
<PER-SHARE-DIVIDEND> 0.090 0.160
<PER-SHARE-DISTRIBUTIONS> 0 0.320
<RETURNS-OF-CAPITAL> 0 0
<PER-SHARE-NAV-END> 10.860 11.150
<EXPENSE-RATIO> 0.95 0.95
<AVG-DEBT-OUTSTANDING> 0 0
<AVG-DEBT-PER-SHARE> 0 0
</TABLE>
