<PAGE> 1
SUPPLEMENT DATED APRIL 15, 1995
TO THE CURRENT PROSPECTUSES
OF THE FOLLOWING DELAWARE GROUP FUNDS
DELAWARE GROUP DELAWARE FUND, INC., DELAWARE GROUP TREND FUND, INC.,
DELAWARE GROUP VALUE FUND, INC., DELAWARE GROUP DECATUR FUND, INC.,
DELAWARE GROUP DELCAP FUND, INC., DELAWARE GROUP DELCHESTER HIGH-YIELD
BOND FUND, INC., DELAWARE GROUP GOVERNMENT FUND, INC., DELAWARE GROUP
TAX-FREE FUND, INC., DELAWARE GROUP TREASURY RESERVES, INC., DELAWARE
GROUP TAX-FREE MONEY, INC., DELAWARE GROUP CASH RESERVE, INC.
On March 29, 1995, shareholders of each of the above referenced Funds
or, as relevant, the series thereof, approved a new Investment Management
Agreement with Delaware Management Company, Inc. ("DMC"), an indirect
wholly-owned subsidiary of Delaware Management Holdings, Inc. ("DMH"). The
approval of new Investment Management Agreements was subject to the completion
of the merger (the "Merger") between DMH and a wholly-owned subsidiary of
Lincoln National Corporation ("Lincoln National") which occurred on April 3,
1995. Accordingly, the previous Investment Management Agreements terminated and
the new Investment Management Agreements became effective on that date.
As a result of the Merger, DMC and its two affiliates, Delaware
Service Company, Inc., the Funds' shareholder servicing, dividend disbursing
and transfer agent and Delaware Distributors, L.P., the Funds' national
distributor became indirect wholly-owned subsidiaries of Lincoln National.
Lincoln National, with headquarters in Fort Wayne, Indiana, is a diversified
organization with operations in many aspects of the financial services
industry, including insurance and investment management.
Under the new Investment Management Agreements, DMC will be paid at
the same annual fee rates and on the same terms as it was under the previous
Investment Management Agreements. In addition, the investment approach and
operation of each Fund and, as relevant, each series of a Fund, will remain
substantially unchanged.
PS-OTH-4/95
<PAGE> 2
DELAWARE GROUP
TREASURY RESERVES, INC.
TREASURY RESERVES
INTERMEDIATE SERIES
PROSPECTUS SUPPLEMENT
FOR RESIDENTS OF TEXAS
Treasury Reserves Intermediate Fund may invest in a variety of securities
including, but not limited to, U.S. Treasury Securities. Securities which are
not issued by the U.S. Treasury may present investment risks which are
different (and in some instances may be greater) than those of U.S. Treasury
Securities. Fund assets may also include, among other securities, Government
National Mortgage Association (GNMA) securities, collateralized mortgage
obligations that are fully backed by securities issued or guaranteed by the
U.S. government, its agencies and instrumentalities, mortgage-backed securities
issued or guaranteed by U.S. government agencies and instrumentalities, and
repurchase agreements. In addition, up to 20% of the Fund's assets, in the
aggregate, may be invested in any combination of: (i) asset-backed securities
if rated AAA (or having an equivalent rating); (ii) corporate notes and bonds
rated A or above; and (iii) other specified securities.
PS-15TX
<PAGE> 3
TREASURY RESERVES INTERMEDIATE FUND P R O S P E C T U S
A CLASS SHARES FEBRUARY 28, 1995
B 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 Treasury Reserves, Inc. (the "Fund") is a
professionally-managed mutual fund of the series type. This Prospectus
describes the Treasury Reserves Intermediate Fund A Class ("Class A Shares")
and the Treasury Reserves Intermediate Fund B Class ("Class B Shares") (such
classes, collectively, the "Classes") of the Fund's Treasury Reserves
Intermediate Series (the "Series"). The Series' objective is to seek a high,
stable level of current income while attempting to minimize fluctuations in
principal and provide maximum liquidity. The Series intends to achieve its
objective by investing its assets in a diversified 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.
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, and Class B Shares may be purchased at a price equal to the next
determined net asset value per share. The Class A Shares are subject to a
maximum front-end sales charge of 3.00% and annual 12b-1 Plan expenses. The
Class B Shares are subject to a contingent deferred sales charge ("CDSC") which
may be imposed on redemptions made within three years of purchase and 12b-1
Plan expenses which are higher than those to which Class A Shares are subject
and, except in the case of certain purchases of Class B Shares acquired by
exchange, are assessed against the Class B Shares for no longer than
approximately five years after purchase. See Summary of Expenses, and Automatic
Conversion of Class B Shares under Buying Shares. These alternatives permit an
investor to choose the method of purchasing shares that is most beneficial
given the amount of the purchase, the length of time the investor expects to
hold the shares and other circumstances. See Buying Shares.
The minimum initial investment for each of the Classes is $1,000.
Subsequent investments must be at least $25 with respect to the Class A Shares
and $100 with respect to the Class B Shares. Class B Shares are also subject to
a maximum purchase limitation of $250,000. The Fund will therefore reject any
order for purchase of more than $250,000 for Class B Shares. See Buying Shares
and Retirement Planning.
This Prospectus relates only to the Classes and sets forth information
that you should read and consider before you invest. Please retain it for
future reference. Part B of the registration statement, dated February 28,
1995, as it may be amended from time to time, contains additional information
about the Series and has been filed with the Securities and Exchange
Commission. Part B is incorporated by reference into this Prospectus and is
available, without charge, by writing to Delaware Distributors, L.P. at the
above address or by calling the above numbers. The Fund's financial statements
appear in its Annual Report, which will accompany any response to requests for
Part B.
The Series also offers the Treasury Reserves Intermediate Fund
Institutional Class. That class is available only to certain enumerated
institutions, has no front-end or contingent deferred sales charge and is not
subject to annual 12b-1 Plan expenses.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
COVER PAGE . . . . . . . . . . . . . . . . . . . . . . 1
SYNOPSIS . . . . . . . . . . . . . . . . . . . . . . . 2
SUMMARY OF EXPENSES . . . . . . . . . . . . . . . . . . 3
FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . . 4
INVESTMENT OBJECTIVE AND POLICIES
SUITABILITY . . . . . . . . . . . . . . . . . . . . . 6
INVESTMENT STRATEGY . . . . . . . . . . . . . . . . . 6
THE DELAWARE DIFFERENCE
PLANS AND SERVICES . . . . . . . . . . . . . . . . . 10
RETIREMENT PLANNING . . . . . . . . . . . . . . . . . . 12
BUYING SHARES 13
REDEMPTION AND EXCHANGE . . . . . . . . . . . . . . . . 21
DIVIDENDS AND DISTRIBUTIONS . . . . . . . . . . . . . . 25
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . 26
CALCULATION OF OFFERING PRICE AND
NET ASSET VALUE PER SHARE . . . . . . . . . . . . . . 27
MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . . 27
</TABLE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
BE SURE TO CONSULT YOUR FINANCIAL ADVISER WHEN MAKING INVESTMENTS. MUTUAL FUNDS
CAN BE A VALUABLE PART OF YOUR FINANCIAL PLAN; HOWEVER, SHARES OF THE FUND ARE
NOT FDIC OR NCUSIF INSURED, ARE NOT GUARANTEED BY ANY CREDIT UNION OR ANY BANK,
ARE NOT OBLIGATIONS OF ANY CREDIT UNION OR ANY BANK, AND INVOLVE INVESTMENT
RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. SHARES OF THE FUND ARE NOT
CREDIT UNION OR BANK DEPOSITS.
- -------------------------------------------------------------------------------
1
<PAGE> 4
SYNOPSIS
CAPITALIZATION
The Series offers three classes of shares; Class A Shares, Class B Shares
and the Treasury Reserves Intermediate Fund Institutional Class. The Fund has
an authorized capital of three billion shares of capital stock with a par value
of $.001 per share, of which two billion shares have been allocated to the
Series. One billion four hundred million shares of such capital stock have been
allocated to these classes, as follows: one billion shares have been allocated
to the Class A Shares, two hundred million shares have been allocated to the
Class B Shares and two hundred million shares have been allocated to the
Treasury Reserves Intermediate 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., 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 CHARGE
The price of the Class A Shares includes a maximum front-end sales charge
of 3.00% of the offering price, which is equivalent to 3.10% of the amount
invested, 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. Such shares are also subject to annual 12b-1 Plan expenses.
The price of the Class B Shares is equal to the net asset value per share.
Class B Shares are subject to a CDSC of: (i) 2% if shares are redeemed within
two years of purchase; and (ii) 1% if shares are redeemed during the third 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
which are assessed against the Class B Shares for no longer than approximately
five years after purchase. See Buying Shares and Automatic Conversion of Class
B Shares thereunder; and Distribution (12b-1) and Service under Management of
the Fund.
MINIMUM INVESTMENT
The minimum initial investment for each of the Classes is $1,000 (see Part
B or contact your investment dealer for each Retirement Plan minimum) and
subsequent investments must be at least $25 for the Class A Shares and $100 for
the Class B Shares. Class B Shares are also subject to a maximum purchase
limitation of $250,000. See Buying Shares.
INVESTMENT OBJECTIVE
The objective of the Series is to seek high, stable income by investing 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. See Investment Objective and Policies.
OPEN-END INVESTMENT COMPANY
The Fund, which was organized as a Pennsylvania business trust in 1981 and
reorganized as a Maryland corporation in 1990, is an open-end management
investment company. The Series' portfolio of assets is diversified for purposes
of the Investment Company Act of 1940. See Shares under Management of the Fund.
INVESTMENT MANAGEMENT FEES
The Manager furnishes investment management services to the Fund, subject
to the supervision and direction of the Board of Directors. Under the
Investment Management Agreement, the annual compensation paid to the Manager is
equal to 1/2 of 1% of the average daily net assets, less a proportionate share
of all directors' fees paid to the unaffiliated directors by the Series. See
Management of the Fund.
REDEMPTION AND EXCHANGE
The Class A Shares of the Series are redeemed or exchanged at the net
asset value calculated after receipt of the redemption or exchange request.
Neither the Series nor the Distributor assesses a charge for redemptions or
exchanges of the Class A Shares, except for certain redemptions of such shares
purchased at net asset value, which may be subject to a contingent deferred
sales charge if such purchase triggered the payment of a dealer's commission.
The Class B Shares of the Series are redeemed or exchanged at the net asset
value calculated after receipt of the redemption or exchange request, less, in
the case of redemptions, any applicable CDSC. Neither the Series nor the
Distributor assesses any additional charges for redemptions or exchanges of the
Class B Shares. See Redemption and Exchange.
2
<PAGE> 5
SUMMARY OF EXPENSES
A general comparison of the sales arrangements and other expenses
applicable to Class A and Class B Shares follows:
<TABLE>
<CAPTION>
CLASS A CLASS B
SHAREHOLDER TRANSACTION EXPENSES SHARES SHARES
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) . . . . . . . . . . . . . 3.00% None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price) . . . . . . . . . . . . . None None
Contingent Deferred Sales Charge
(as a percentage of original purchase price or redemption
proceeds, whichever is lower) . . . . . . . . . . . . . . . . None* 2%*
Redemption Fees . . . . . . . . . . . . . . . . . . . . . . . . None** None**
</TABLE>
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES CLASS A CLASS B
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS) SHARES SHARES
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Management Fees . . . . . . . . . . . . . . . . . . . . . . . . 0.50% 0.50%
12b-1 Plan Expenses (including service fees) . . . . . . . . . 0.15%+*** 1.00%+
Other Operating Expenses . . . . . . . . . . . . . . . . . . . 0.26% 0.26%++
----- -----
Total Operating Expenses . . . . . . . . . . . . . . . . . 0.91%*** 1.76%
===== =====
</TABLE>
The purpose of this table is to assist the investor in understanding the
various costs and expenses that an investor in the Classes will bear directly
or indirectly. *With respect to the 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 financial advisers through
whom such purchases are effected, a contingent deferred sales charge of 1% will
be imposed in the event of certain redemptions within 12 months of purchase
("Limited CDSC"). The Class B Shares are subject to a CDSC of: (i) 2% if shares
are redeemed within the first two years of purchase; (ii) 1% if shares are
redeemed during the third year following purchase; and (iii) 0% thereafter. See
Contingent Deferred Sales Charge for Certain Purchases of Class A Shares Made
at Net Asset Value under Redemption and Exchange and Deferred Sales Charge
Alternative--Class B Shares under Buying Shares. **CoreStates Bank, N.A.
currently charges $7.50 per redemption for redemptions payable by wire. ***The
actual 12b-1 Plan expenses to be paid and, consequently, the "Total Operating
Expenses" of the Class A Shares, may be somewhat more (but the 12b-1 expenses
may be no more than .15%) or somewhat less (but the 12b-1 expenses may be no
less than .10%) because of the formula adopted by the Board of Directors for
use in calculating the 12b-1 Plan expenses beginning June 1, 1992. See
Distribution (12b-1) and Service. +Class A Shares and Class B Shares are
subject to separate 12b-1 Plans. Long-term shareholders may pay more than the
economic equivalent of the maximum front-end sales charges permitted by the
rules of the National Association of Securities Dealers, Inc. ("NASD"). See
Distribution (12b-1) and Service. ++"Other Operating Expenses" for Class B
Shares are estimates based upon the actual expenses incurred by the Class A
Shares for its fiscal year ended December 31, 1994. Also, see Treasury Reserves
Intermediate Fund Institutional Class for expense information about that class.
The following example illustrates the expenses that an investor would pay
on a $1,000 investment over various time periods assuming (1) a 5% annual rate
of return and (2) redemption at the end of each time period. As noted in the
table above, the Fund charges no redemption fees with respect to the Class A
Shares and, if shares are redeemed within three years after purchase, the Fund
charges a CDSC with respect to the Class B Shares.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A SHARES $39(1) $58 $79 $139 CLASS B SHARES $38 $65 $95(2) $155(2)
</TABLE>
An investor would pay the following expenses on the same $1,000 investment
assuming no redemption at the end of the period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A SHARES $39 $58 $79 $139 CLASS B SHARES $18 $55 $95(2) $155(2)
</TABLE>
(1) Under certain circumstances, a Limited CDSC, which has not been reflected
in this calculation, may be imposed in the event of certain redemptions
within 12 months of purchase. See Contingent Deferred Sales Charge for
Certain Purchases of Class A Shares Made at Net Asset Value under
Redemption and Exchange.
(2) At the end of no more than approximately five years after purchase, Class
B Shares will be automatically converted into Class A Shares. The example
above assumes conversion of Class B Shares at the end of year five.
However, the conversion may occur as late as three months after the fifth
anniversary of purchase, during which time the higher 12b-1 Plan fees
payable by Class B Shares will continue to be assessed. See Automatic
Conversion of Class B Shares under Buying Shares for a description of the
automatic conversion feature. Years six through ten reflect expenses of
the Class A Shares. The conversion will constitute a tax-free exchange for
federal income tax purposes. See Taxes.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.
3
<PAGE> 6
FINANCIAL HIGHLIGHTS
The following financial highlights are derived from the financial statements of
Delaware Group Treasury Reserves, Inc.-Treasury Reserves Intermediate Series
and have been audited by Ernst & Young LLP, independent auditors. The data
should be read in conjunction with the financial statements, related notes,
and the report of Ernst & Young LLP covering such financial information and
highlights, all of which are incorporated by reference into Part B. Further
information about the Series' performance is contained in its Annual Report to
shareholders. A copy of the Series' Annual Report (including the report of
Ernst & Young LLP) may be obtained from the Fund upon request at no charge.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
YEAR ENDED
12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/28/89 12/29/88
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . $9.840 $10.000 $10.190 $9.770 $9.720 $9.700 $9.800
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net Investment Income . . . . . . . . . . 0.667 0.681 0.740 0.799 0.814 0.843 0.730
Net Gains or Losses on Securities (both
realized and unrealized) . . . . . . . . (0.850) (0.160) (0.190) 0.420 0.050 0.020 (0.100)
------- -------- ------- ------- ------- ------- -------
Total From Investment Operations . . . (0.183) 0.521 0.550 1.219 0.864 0.863 0.630
------- -------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS
- ------------------
Dividends (from net investment income) . (0.667) (0.681) (0.740) (0.799) (0.814) (0.843) (0.730)
Distributions (from capital gains) . . . none none none none none none none
Returns of Capital . . . . . . . . . . . none none none none none none none
------- -------- ------- ------- ------- ------- -------
Total Distributions . . . . . . . . . . (0.667) (0.681) (0.740) (0.799) (0.814) (0.843) (0.730)
------- -------- ------- ------- ------- ------- -------
Net Asset Value, End of Period . . . . . $8.990 $9.840 $10.000 $10.190 $9.770 $9.720 $9.700
======= ======== ======= ======= ======= ======= =======
- -------------------------------------------------------- ------- -------------------------------------------------------
TOTAL RETURN(2) . . . . . . . . . . . . . (1.88%) 5.31% 5.62%(2) 13.04%(2) 9.32% 9.28% 6.63%
- ---------------
- ------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (000's omitted) $789,525 $1,126,031 $861,829 $144,129 $107,739 $107,637 $132,859
Ratio of Expenses to Average
Daily Net Assets . . . . . . . . . . . 0.91% 0.88% 0.87%(3) 0.90%(3) 0.99% 0.97% 0.90%
Ratio of Net Investment Income to Average
Daily Net Assets . . . . . . . . . . . 7.10% 6.77% 7.03%(4) 7.96%(4) 8.41% 8.72% 7.44%
Portfolio Turnover Rate . . . . . . . . . 148% 171% 77% 42% 175% 311% 146%
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
PERIOD
11/24/85(1)
YEAR ENDED THROUGH
12/31/87 12/25/86 12/26/85
<S> <C> <C> <C>
Net Asset Value, Beginning of Period . . $9.980 $10.040 $10.000
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net Investment Income . . . . . . . . . . 0.695 0.836 0.057
Net Gains or Losses on Securities (both
realized and unrealized) . . . . . . . . (0.180) (0.060) 0.040
------- ------- -------
Total From Investment Operations . . . 0.515 0.776 0.097
------- ------- -------
LESS DISTRIBUTIONS
- ------------------
Dividends (from net investment income) . (0.695) (0.836) (0.057)
Distributions (from capital gains) . . . none none none
Returns of Capital . . . . . . . . . . . none none none
------- ------- -------
Total Distributions . . . . . . . . . . (0.695) (0.836) (0.057)
------- ------- -------
Net Asset Value, End of Period . . . . . $9.800 $9.980 $10.040
======= ======= =======
- ---------------------------------------------------- ----------------------
TOTAL RETURN(2) . . . . . . . . . . . . . 5.46% 7.89%(2) (1)
- ---------------
- --------------------------------------------------- ----------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (000's omitted) $138,818 $182,727 $8,070
Ratio of Expenses to Average
Daily Net Assets . . . . . . . . . . . 1.06% 1.02%(3) (1)
Ratio of Net Investment Income to Average
Daily Net Assets . . . . . . . . . . . 6.86% 7.85%(4) (1)
Portfolio Turnover Rate . . . . . . . . . 304% 39% (1)
</TABLE>
- ------------------------
(1) November 24, 1985 was the date of the initial public offering of the
Treasury Reserves Intermediate Fund class (now, known as Treasury
Reserves Intermediate Fund A Class); the ratios of expenses and net
investment income to average daily net assets, total return and portfolio
turnover have been omitted as management believes that such ratios for
this relatively short period are not meaningful.
(2) Does not reflect maximum front-end sales charge, currently, 3.00% nor the
1% Limited CDSC that would apply in the event of certain redemptions
within 12 months of purchase. See Contingent Deferred Sales Charge for
Certain Purchases of Class A Shares Made at Net Asset Value. Total return
for 1986, 1991 and 1992 reflect the expense limitations referenced in
Notes 3 and 4.
(3) Ratio of expenses to average daily net assets prior to expense limitation
was 0.90% for 1992, 0.99% for 1991 and 1.08% for 1986 for the Treasury
Reserves Intermediate Fund class.
(4) Ratio of net investment income prior to expense limitation to average
daily net assets was 7.01% for 1992, 7.87% for 1991 and 7.79% for 1986 for
the Treasury Reserves Intermediate Fund class.
4
<PAGE> 7
FINANCIAL HIGHLIGHTS
(Continued)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
CLASS B SHARES
---------------
PERIOD
5/2/94(1)
THROUGH
12/31/94
<S> <C>
Net Asset Value, Beginning of Period . . . . . . . . . $9.430
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net Investment Income . . . . . . . . . . . . . . . . . 0.399
Net Gains or Losses on Securities (both realized
and unrealized) . . . . . . . . . . . . . . . . . . . (0.440)
------
Total From Investment Operations . . . . . . . . . . (0.041)
------
LESS DISTRIBUTIONS
- ------------------
Dividends (from net investment income) . . . . . . . . (0.399)
Distributions (from capital gains) . . . . . . . . . . none
Returns of Capital . . . . . . . . . . . . . . . . . . none
------
Total Distributions . . . . . . . . . . . . . . . . . (0.399)
------
Net Asset Value, End of Period . . . . . . . . . . . . $8.990
======
- -----------------------------------------------------------------------------
TOTAL RETURN . . . . . . . . . . . . . . . . . . . . . (0.44%)(1/2)
- ------------
- -----------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (000's omitted) . . . . . . . $6,282
Ratio of Expenses to Average Daily Net Assets . . . . . 1.76%(1)
Ratio of Net Investment Income to Average
Daily Net Assets . . . . . . . . . . . . . . . . . . 6.25%(1)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . 148%
</TABLE>
- ----------------------------
(1) Date of initial public offering; ratios have been annualized and total
return has not been annualized.
(2) Total return does not reflect any applicable contingent deferred
sales charge.
5
<PAGE> 8
INVESTMENT OBJECTIVE
AND POLICIES
The Series seeks to provide a high stable level of income, while
attempting to minimize fluctuations in principal and provide maximum liquidity.
It seeks to do this 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. The
Series may also invest up to 20% of its assets in corporate notes and bonds,
certificates of deposit and obligations of both U.S. and foreign banks,
commercial paper and certain asset-backed securities.
The Series is not a money market fund. A money market fund is designed for
stability of principal; consequently, the level of income fluctuates. The
Series is designed for greater stability of income at a relatively higher
level; consequently, the principal value will fluctuate over time.
The level of income will vary depending on interest rates and the
portfolio. However, since longer-term rates are generally less volatile than
short-term rates, the level of income for the Series may be less volatile than,
for example, a money market fund.
Because the Series invests in longer-term securities than a money market
fund, the value of shares will fluctuate. When interest rates rise, the share
value will tend to fall, and when interest rates fall, the share value will
tend to rise. See Investment Strategy.
SUITABILITY
The Series' objective of a high stable income stream is suited for
longer-term investments, such as tax-deferred Retirement Plans (e.g., IRA,
401(k), Profit Sharing, etc.), where the income stream can be left to compound
on a tax-deferred basis.
The Series' objective is also suitable for individuals who want a stable
and high income flow, the security associated with U.S. government-backed
investments and the convenience and liquidity of mutual funds. Also, ownership
of Series shares reduces the bookkeeping and administrative inconveniences
connected with direct purchases of these instruments.
Investors should consider asset value fluctuation as well as yield in
making an investment decision. Therefore, the Series may not be suitable for
investors whose overriding objective is stability of principal. That is an
objective of the Delaware Group money market funds. Also, the Series is not
designed for the investor who is willing to assume the risks involved in
maximizing the yield or capital gain potential of a long-term bond portfolio.
These are objectives of other fixed income funds in the Delaware Group of funds
that are generally available through registered investment dealers.
INVESTMENT STRATEGY
The Series will attempt to provide you with yields higher than those
available in money market funds or bank money market accounts by extending its
portfolio maturities.
The yield curves, as shown in the chart below, reflect the additional
return that may be obtained by a moderate extension of maturities.
YIELD CURVE
TREASURY RESERVES
INTERMEDIATE FUND
<TABLE>
<CAPTION>
12/31/93 12/31/94
<S> <C> <C>
3 Month 3.075 5.682
6 Month 3.287 6.495
1 Year 3.578 7.162
2 Year 4.234 7.690
3 Year 4.514 7.778
5 Year 5.197 7.827
7 Year 5.339 7.827
10 Year 5.792 7.827
30 Year 6.346 7.876
</TABLE>
The Series expects to have an average portfolio maturity in the shaded area
indicated above. The yields to maturity in the curves are for unmanaged
Treasury securities with various remaining maturities. The black line shows the
yield curve at December 31, 1993. The blue line represents the yield curve as
of December 31, 1994. The data were obtained from Federal Reserve Statistical
Release H.15 (519). These are not necessarily indicative of future performance
or yield curves. The yield curve changes over time and short rates may
occasionally be higher than intermediate rates.
6
<PAGE> 9
MATURITY RESTRICTIONS
The Series seeks to reduce the effects of interest rate volatility on
principal by limiting the average effective maturity (as that term is defined
in Part B) to no more than three to five years.
If in the judgment of the Manager rates are low, it will tend to shorten
the average effective maturity to three years or less. Conversely, if in its
judgment rates are high, it will tend to extend the average effective maturity
to five years or less. The Manager will increase the proportion of short-term
instruments when short-term yields are higher. The Manager also has the ability
to purchase individual securities with a remaining maturity of up to 15 years.
QUALITY RESTRICTIONS
The Series will invest primarily in securities issued or guaranteed by the
U.S. government (e.g., Treasury Bills and Notes), its agencies (e.g., Federal
Housing Administration) or instrumentalities (e.g., Federal Home Loan Bank) or
government-sponsored corporations (e.g., Federal National Mortgage
Association), and repurchase agreements and publicly- and privately-issued
mortgage-backed securities collateralized by such securities. The Series may
invest up to 20% of its assets in (1) corporate notes and bonds rated A or
above, (2) certificates of deposit and obligations of both U.S. and foreign
banks if they have assets of at least one billion dollars, (3) commercial paper
rated P-1 by Moody's Investors Service ("Moody's") and/or A-1 by Standard and
Poor's Corporation ("S&P") and (4) certain asset-backed securities rated Aaa by
Moody's or AAA by S&P.
The value of your shares will fluctuate in response to general interest
rate changes. When rates rise, the value of securities in the portfolio will
generally fall. Conversely, when rates fall, the value of securities in the
portfolio will generally rise.
INVESTMENT TECHNIQUES
To achieve its objective, the Series may use certain hedging techniques
which might not be conveniently available to individuals. These techniques will
be used at the Manager's discretion to protect the Series' principal value.
The Series may purchase put options, write secured put options, write
covered call options, purchase call options and enter into closing
transactions.
A put option purchased by the Series gives it 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 due to
a rise in interest rates. However, the Series must pay a premium for this
right, whether it exercises it or not. The Series will only purchase put
options to the extent that the premiums on all outstanding put options do not
exceed 2% of the Series' total assets.
A put option written by the Series obligates it to buy the security
underlying the option at the exercise price during the option period, and the
purchaser of the option has the right to sell the security to the Series.
During the option period, the Series, as writer of the put option, may be
assigned an exercise notice by the broker/dealer through whom the option was
sold requiring the Series to make payment of the exercise price against
delivery of the underlying security. This obligation terminates upon expiration
of the put option or at such earlier time at which the writer effects a closing
purchase transaction. The Series will only write put options on a secured
basis. The advantage to the Series of writing put options is that it receives
premium income. The disadvantage is that the Series may be required, when the
put is exercised, to purchase securities at higher prices than the current
market price.
A covered call option written by the Series obligates it to sell one of
its securities for an agreed price up to an agreed date. The advantage is that
the Series receives premium income, which may offset the cost of purchasing put
options. However, the Series may lose the potential market appreciation of the
security if the Manager's judgment is wrong and interest rates fall.
When the Series purchases a call option, in return for a premium paid by
the Series to the writer of the option, the Series obtains the right to buy the
security underlying the option at a specified exercise price at any time during
the term of the option. The writer of the call option, who receives the premium
upon writing the option, has the obligation, upon exercise of the option, to
deliver the underlying security against payment of the exercise price. The
advantage is that the Series may hedge against an increase in the price of
securities which it ultimately wishes to buy. However, the premium paid for the
call option plus any transaction costs will reduce the benefit, if any,
realized by the Series upon exercise of the option. The Series will only
purchase call options to the extent that premiums paid on all outstanding call
options do not exceed 2% of the Series' total assets.
7
<PAGE> 10
Closing transactions essentially let the Series offset put options or call
options prior to exercise or expiration. If the Series cannot effect closing
transactions, it may have to hold a security it would otherwise sell or deliver
a security it might want to hold.
The Series may use both Exchange-traded and over-the-counter options.
Certain over-the-counter options may be illiquid. The Series will not invest
more than 10% of its assets in illiquid securities.
The Series may invest in futures contracts and options on such futures
contracts subject to certain limitations.
Futures contracts are agreements for the purchase or sale for future
delivery of securities. When a futures contract is sold, the Series incurs a
contractual obligation to deliver the securities underlying the contract at a
specified price on a specified date during a specified future month. A purchase
of a futures contract means the acquisition of a contractual right to obtain
delivery to the Series of the securities called for by the contract at a
specified price during a specified future month. The Series will not enter into
futures contracts to the extent that more than 5% of the Series' assets are
required as futures contract margin deposits and will not engage in such
transactions to the extent that obligations relating to such transactions
exceed 20% of the Series' assets.
The Series may also purchase and write options to buy or sell futures
contracts. Options on futures are similar to options on securities 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 actually to
purchase or sell the futures contract, at a specified exercise price at any
time during the period of the option.
The principal purpose of the purchase or sale of futures contracts for the
Series is to protect the Series against the adverse effects of fluctuations in
interest rates without actually buying or selling such securities. To the
extent that interest rates move in an unexpected direction, however, the Series
may not achieve the anticipated benefits of futures contracts or options on
such futures contracts 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 would prevent the Series from closing
out its option positions relating to futures.
The Series may invest in mortgage-backed securities issued or guaranteed
by the U.S. government, its agencies or instrumentalities. In addition, the
Series may invest up to 35% of 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 and REMICs issued by private entities are not government securities
and are not directly guaranteed by any 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 invests in privately-issued
CMOs and REMICs only if they are rated at the time of purchase in the two
highest grades by a nationally-recognized rating agency. Certain of the CMOs in
which the Series may invest 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).
As noted and subject to the limitations set forth above, the Series may
also invest in securities which are backed by assets such as receivables on
home equity and credit card 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 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 the 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.
8
<PAGE> 11
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 risks of investing in such
asset-backed securities, see Part B.
The Series may also use repurchase agreements which are at least 100%
collateralized by securities in which the Series can invest directly.
Repurchase agreements help the Series to invest cash on a temporary basis.
Under a repurchase agreement, the Series acquires ownership and possession of a
security, and the seller agrees to buy the security back at a specified time
and higher price. If the seller is unable to repurchase the security, the
Series could experience delays and losses in liquidating the securities. To
minimize this possibility, the Series considers the creditworthiness of banks
and dealers when entering into repurchase agreements.
PORTFOLIO LOAN TRANSACTIONS
The Series may loan up to 25% of its assets to qualified broker/dealers or
institutional investors for their use relating to short sales or other security
transactions.
The major risk to which the Series would be exposed on a loan transaction
is the risk that the borrower would go bankrupt at a time when the value of the
security goes up. Therefore, the Series will only enter into loan arrangements
after a review of all pertinent facts by the Manager, subject to overall
supervision by the Board of Directors, including the creditworthiness of the
borrowing broker, dealer or institution and then only if the consideration to
be received from such loans would justify the risk. Creditworthiness will be
monitored on an ongoing basis by the Manager.
* * *
The Series may invest in restricted securities, including securities
eligible for resale without registration pursuant to Rule 144A ("Rule 144A
Securities") under the Securities Act of 1933. Rule 144A permits many privately
placed and legally restricted securities to be freely traded among certain
institutional buyers such as the Series. The Series may invest no more than 10%
of the value of its net assets in illiquid securities.
While maintaining oversight, the Board of Directors has delegated to the
Manager the day-to-day functions of determining whether or not individual Rule
144A Securities are liquid for purposes of the Series' 10% limitation on
investments in illiquid assets. The Board has instructed the Manager to
consider the following factors in determining the liquidity of a Rule 144A
Security: (i) the frequency of trades and trading volume for the security; (ii)
whether at least three dealers are willing to purchase or sell the security and
the number of potential purchasers; (iii) whether at least two dealers are
making a market in the security; (iv) the nature of the security and the nature
of the marketplace trades (e.g., the time needed to dispose of the security,
the method of soliciting offers, and the mechanics of transfer).
If the Manager determines that a Rule 144A Security which was previously
determined to be liquid is no longer liquid and, as a result, the Series'
holdings of illiquid securities exceed the Series' 10% limit on investment in
such securities, the Manager will determine what action shall be taken to
ensure that the Series continues to adhere to such limitation.
* * *
Part B further clarifies the Series' investment policies as well as the
methods used to determine maturity. A brief discussion of those factors that
materially affected the Series' performance during its most recently completed
fiscal year appears in the Series' Annual Report.
9
<PAGE> 12
THE DELAWARE DIFFERENCE
PLANS AND SERVICES
The Delaware Difference is our commitment to provide you with superior
information and quality service on your investments in the Delaware Group of
funds.
SHAREHOLDER PHONE DIRECTORY
INVESTOR INFORMATION CENTER
800-523-4640
(PHILADELPHIA 215-988-1333)
FUND INFORMATION; LITERATURE;
PRICE, YIELD AND PERFORMANCE FIGURES
SHAREHOLDER SERVICE CENTER
800-523-1918
(PHILADELPHIA 215-988-1241)
INFORMATION ON EXISTING REGULAR INVESTMENT
ACCOUNTS AND RETIREMENT PLAN ACCOUNTS;
WIRE INVESTMENTS; WIRE LIQUIDATIONS;
TELEPHONE LIQUIDATIONS; TELEPHONE EXCHANGES
DELAPHONE
800-362-FUND (800-362-3863)
SHAREHOLDER SERVICES
During business hours, you can call the Fund's Shareholder Service Center.
The representatives can answer any of your 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
anytime to get current yield information. Current yield and total return
information may also be included in advertisements and information given to
shareholders. Yield information is computed on an annual basis over a 30-day
period.
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 seven days a week, 24 hours a day.
ACCOUNT STATEMENTS
A statement of account will be mailed each quarter summarizing all
transactions during the period. A confirmation statement will be sent following
all transactions other than dividend reinvestment. 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 be
permitted to invest your distributions in certain other funds in the Delaware
Group, subject to the exceptions noted below as well as the eligibility and
minimum purchase requirements set forth in each fund's prospectus.
Reinvestments of distributions into Class A Shares of the Series or other
Delaware Group funds may be effected without a front-end sales charge. Class B
Shares of the Series or other Delaware Group funds acquired through
reinvestments of distributions will not be subject to a contingent deferred
sales charge if those shares are later redeemed. See Automatic Conversion of
Class B Shares under Buying Shares for information concerning the automatic
conversion of Class B Shares acquired by reinvesting dividends.
Holders of Class A Shares of the Series may not reinvest their
distributions in the Class B Shares of any fund in the Delaware Group,
including the Series. Holders of Class B Shares of the Series may reinvest
their distributions only in the Class B Shares of the funds in the Delaware
Group which offer that class of shares (the "Class B Funds"). See Class B Funds
under Buying Shares for a list of the funds offering Class B Shares. For more
information about reinvestments, please call the Shareholder Service Center.
10
<PAGE> 13
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
the exceptions noted below as well as the eligibility and minimum purchase
requirements set forth in each fund's prospectus. Shareholders of Class B
Shares of the Series are permitted to exchange all or part of their Class B
Shares only into the corresponding class of shares of the Class B Funds,
subject to the minimum purchase and other requirements set forth in each fund's
prospectus. Exchanges are not permitted between Class A Shares and Class B
Shares of any of the funds of the Delaware Group. See Redemption and Exchange.
Except as noted below, permissible exchanges can be made without payment
of a front-end sales charge or the imposition of a contingent deferred sales
charge at the time of the exchange, as applicable. Persons exchanging into the
Class A Shares from a fund in the Delaware Group offered without a front-end
sales charge may be required to pay the applicable front-end sales charge. See
Investing by Exchange under How to Buy Shares and Redemption and Exchange.
See Redemption and Exchange for additional information on exchanges.
WEALTH BUILDER OPTION
You may be permitted to 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 and Class B
Shares. See Redemption and Exchange.
RIGHT OF ACCUMULATION
With respect to Class A Shares, the Right of Accumulation feature allows
the combining of Class A Shares and Class B Shares of the Series that are
currently owned with the dollar amount of new purchases of Class A Shares for a
reduced front-end sales charge. Under the COMBINED PURCHASES PRIVILEGE, this
includes certain shares owned in certain other funds in the Delaware Group. See
Buying Shares.
LETTER OF INTENTION
With respect to Class A Shares, the Letter of Intention feature permits
the aggregation of purchases over a 13-month period to obtain a reduced
front-end sales charge. See Part B.
12-MONTH REINVESTMENT PRIVILEGE
The 12-Month Reinvestment Privilege permits shareholders to reinvest
proceeds of Class A Shares redeemed, within one year from the redemption,
without a front-end sales charge. See Part B.
FINANCIAL INFORMATION ABOUT THE SERIES
Each fiscal year, you will receive an audited annual report and an
unaudited semi-annual report. These reports provide detailed information about
the Series' investments and performance. The Fund's fiscal year ends on
December 31.
THE DELAWARE DIGEST
You will receive newsletters covering topics of interest about your
investment alternatives and services from the Delaware Group.
11
<PAGE> 14
RETIREMENT PLANNING
An investment in the Series may also 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.
Prototype Profit Sharing and Money Purchase Pension Plans are each subject
to a one-time fee of $200 per plan, or $300 for paired plans. No such fee is
charged for owner-only plans. All Prototype Profit Sharing and Money Purchase
Pension Plans are subject to an annual maintenance fee of $30 per participant
account. Each of the other Retirement Plans described below (other than 401(k)
Defined Contribution Plans) is subject to an annual maintenance fee of $15 for
each participant's account, regardless of the number of funds selected. Annual
maintenance fees for 401(k) Defined Contribution Plans are based on the number
of participants in the Plan and the services selected by the employer. Fees are
quoted upon request. All of the fees noted above are subject to change.
Additional information about fees is contained in Part B. The minimum initial
investment in the Classes (as available) for each Plan is $250; subsequent
investments must be at least $25.
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 Treasury Reserves Intermediate
Fund Institutional Class. For additional information on any of the Plans and
Delaware's retirement services, call the Shareholder Service Center or see Part
B.
INDIVIDUAL RETIREMENT ACCOUNT ("IRA")
Individuals, even if they participate in an employer-sponsored retirement
plan, may establish their own retirement program for investments in each of the
Classes. Contributions to an IRA may be tax-deductible and earnings are
tax-deferred. Under the Tax Reform Act of 1986, the tax deductibility of IRA
contributions is restricted, and in some cases eliminated, for individuals who
participate in certain employer-sponsored retirement plans and whose annual
income exceeds certain limits. Existing IRAs and future contributions up to the
IRA maximums, whether deductible or not, still earn on a tax-deferred basis.
SIMPLIFIED EMPLOYEE PENSION PLAN ("SEP/IRA")
A SEP/IRA may be established by an employer who wishes to sponsor a
tax-sheltered retirement program by making contributions on behalf of all
eligible employees. Each of the Classes is available for investment by a
SEP/IRA.
SALARY REDUCTION SIMPLIFIED EMPLOYEE PENSION PLAN ("SAR/SEP")
Offers employers with 25 or fewer eligible employees the ability to
establish a SEP/IRA that permits salary deferral contributions. An employer may
also elect to make additional contributions to this Plan. Class B Shares are
not available for purchase by such Plans.
403(b)(7) DEFERRED COMPENSATION PLAN
Permits employees of public school systems or of certain types of
non-profit organizations to enter into a deferred compensation arrangement for
the purchase of shares of each of the Classes.
457 DEFERRED COMPENSATION PLAN
Permits employees of state and local governments and certain other
entities to enter into a deferred compensation arrangement for the purchase of
shares of each of the Classes.
PROTOTYPE PROFIT SHARING OR MONEY PURCHASE PENSION PLAN
Offers self-employed individuals, partnerships and corporations a
tax-qualified plan which provides for the investment of contributions in Class
A Shares. 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. An employer may elect to make profit sharing
contributions and/or matching contributions into the Plan. Class B Shares are
not available for purchase by such Plans.
12
<PAGE> 15
BUYING SHARES
PURCHASE AMOUNTS
The minimum initial purchase for each of the Classes is $1,000. Subsequent
purchases must be $25 or more with respect to the Class A Shares and $100 or
more with respect to the Class B Shares. Retirement Plans have other minimums.
Refer to Part B or call the Shareholder Service Center for more information on
these Plans. Class B Shares are also subject to a maximum purchase limitation
of $250,000.
ALTERNATIVE PURCHASE ARRANGEMENTS
Shares may be purchased at a price equal to the next determined net asset
value per share, plus 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").
Class A Shares. An investor who elects the front-end sales charge
alternative acquires Class A Shares. Although Class A Shares incur a sales
charge when they are purchased, generally they are not subject to any sales
charge when they are redeemed, but are subject to annual 12b-1 Plan expenses of
up to a maximum of .30% (currently, no more than .15% pursuant to Board action)
of average daily net assets of such shares. See Contingent Deferred Charges 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 they are subject to a sales charge if
they are redeemed within three 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 by the Series to the Distributor, dealers or others for providing
personal service and/or maintaining shareholder accounts) of average daily net
assets of such shares for no longer than approximately five 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 no more than
approximately five years after purchase, the Class B Shares are automatically
converted into Class A Shares. See Automatic Conversion of Class B Shares. Such
conversion will constitute a tax-free exchange for federal income tax purposes.
See Taxes.
The alternative purchase arrangements permit investors in the Series to
choose the method of purchasing shares that is most beneficial given the amount
of their purchase, the length of time they expect to hold their shares and
other relevant circumstances. Investors should determine whether under their
particular circumstances it is more advantageous to incur a front-end sales
charge by purchasing Class A Shares or to have the entire initial purchase
price invested in the Series with the investment thereafter being subject to a
CDSC, if shares are redeemed within three years of purchase, by purchasing
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 the deferred 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% (currently,
no more than .15%), whereas shares acquired under the deferred sales charge
alternative are subject to higher annual 12b-1 Plan expenses of 1% for no more
than approximately five years after purchase. See Automatic Conversion of Class
B Shares. However, because front-end sales charges are deducted at the time of
purchase, such investors would not have all their funds invested initially.
Certain other investors might determine it to be more advantageous to have all
their funds invested initially, although they would be subject to a CDSC for up
to three years after purchase as well as annual 12b-1 Plan expenses of 1% until
the shares are automatically converted into Class A Shares. The 12b-1 Plan
distribution expenses with respect to the Class B Shares will be offset to the
extent any return is realized on the additional funds initially invested under
the deferred sales charge alternative. However, there can be no assurance as to
the return, if any, that will be realized on such additional funds.
For the distribution and related services provided to, and the expenses
borne on behalf of, the Series, the Distributor and others will be paid, in the
case of the Class A Shares, from the proceeds of the front-end sales charge and
12b-1 Plan fees and, in the case of the Class B Shares, from the proceeds of
the 12b-1 Plan fees and, if applicable, the CDSC incurred upon redemption
within three years of purchase. Sales personnel may receive different
compensation for selling Class A or Class B Shares. INVESTORS SHOULD UNDERSTAND
THAT THE PURPOSE AND FUNCTION OF THE 12B-1 PLAN AND THE CDSC WITH RESPECT TO
THE CLASS B SHARES ARE THE SAME AS THOSE OF THE 12B-1 PLAN AND THE FRONT-END
SALES CHARGE WITH RESPECT TO THE CLASS A SHARES IN THAT THE FEES AND CHARGES
PROVIDE FOR THE FINANCING OF THE DISTRIBUTION OF THE RESPECTIVE CLASSES. SEE
12B-1 DISTRIBUTION PLANS--CLASS A AND CLASS B SHARES.
13
<PAGE> 16
Dividends paid by the Series with respect to the Class A and Class B
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
Shares will be borne exclusively by such shares. See Calculation of Offering
Price and Net Asset Value Per Share. The shareholders of the Class A and Class
B Shares each have an exchange privilege by which they may exchange their Class
A Shares or Class B Shares for the Class A Shares or Class B Shares,
respectively, of certain other Delaware Group funds. See Exchange Privilege
under The Delaware Difference and Redemption and Exchange.
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 with respect to both Class A and Class B
Shares.
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 3.00%. See Calculation of Offering Price and
Net Asset Value Per Share. Lower front-end sales charges apply for larger
purchases. See the table below. The Class A Shares represent a proportionate
interest in the Series' assets and are subject to annual 12b-1 Plan expenses.
See Distribution (12b-1) and Service under Management of the Fund.
REDUCED FRONT-END SALES CHARGE
Purchases of $100,000 or more at the offering price carry a reduced
front-end sales charge as shown in the following table.
<TABLE>
<CAPTION>
Treasury Reserves Intermediate Fund A Class
- --------------------------------------------------------------------------------------------
Front-End Sales Dealer's
Charge as % of Concession**
Amount of Purchase Offering Amount as % of
Price Invested Offering Price
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $100,000 3.00% 3.10% 2.50%
$100,000 but under $250,000 2.50 2.56 2.00
$250,000 but under $500,000 2.00 2.04 1.60
$500,000 but under $1,000,000* 1.50 1.52 1.20
</TABLE>
* There is no front-end sales charge on purchases of $1 million or more but,
under certain limited circumstances, a 1% Limited CDSC may apply with
respect to Class A Shares.
- --------------------------------------------------------------------------------
The Fund must be notified when a sale takes place which would qualify for the
reduced front-end sales charge on the basis of previous purchases and 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 dealers up to the full 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.
** Financial institutions or their affiliated brokers may receive an agency
transaction fee in the percentages set forth above.
- --------------------------------------------------------------------------------
For initial purchases of Class A Shares of $1,000,000 or more made on or
after June 1, 1993, a dealer's commission may be paid by the Distributor to
financial advisers through whom such purchases are effected in accordance with
the following schedule:
<TABLE>
<CAPTION>
DEALER'S COMMISSION
-------------------
AMOUNT OF PURCHASE (as a percentage of amount purchased)
- ------------------
<S> <C>
Up to $3 million .60%
Next $2 million up to $5 million .40
Amount over $5 million .20
</TABLE>
14
<PAGE> 17
In determining a financial adviser's eligibility for the dealer's
commission, purchases of Class A Shares of other Delaware Group funds as to
which a Limited CDSC applies may be aggregated with those of the Class A Shares
of the Series. Financial advisers should contact the Distributor concerning the
applicability and calculation of the dealer's commission in the case of
combined purchases. 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. The Distributor
also should be consulted concerning the availability of and program for these
payments.
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 in the Class A Shares with your holdings in the
Class B Shares of the Series and, except as noted below, shares of the other
funds in the Delaware Group, you can reduce the front-end sales charges of any
additional purchases of Class A Shares. Except for shares of Delaware Group
Premium Fund, Inc. beneficially owned in connection with ownership of variable
insurance products, shares of other funds which do not carry a front-end sales
charge or CDSC may not be included unless they were acquired through an
exchange from one of the other Delaware Group funds which carried a front-end
sales charge or CDSC.
This privilege permits you to combine your purchases and holdings with
those of your spouse, your children under 21 and any trust, fiduciary or
retirement account for the benefit of such family members.
It also permits you to use these combinations under a Letter of Intention.
This 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
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 Transfer Agent about
the operation of these features. See Reduced Front-End Sales Charges under
Buying Shares.
BUYING AT NET ASSET VALUE
Class A Shares of the 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 officers,
directors and employees (including former officers and directors and former
employees who had been employed for at least ten years) and members of their
immediate families of the Manager, any affiliate, any of the funds in the
Delaware Group, certain of their agents and registered representatives and
employees of authorized investment dealers and by employee benefit plans for
such entities. Individual purchases include retirement accounts and must be for
accounts in the name of the individual or a qualifying family member. Purchases
of Class A Shares may be made by clients of registered representatives of an
authorized investment dealer at net asset value within six months of a change
of the registered representative's employment, if the purchase is funded by
proceeds from an investment where a front-end sales charge has been assessed
and the redemption of the investment did not result in the imposition of a
contingent deferred sales charge or other redemption charge. Purchase of Class
A Shares also may be made at net asset value by bank employees that provide
services in connection with agreements between the bank and unaffiliated
brokers or dealers concerning sales of Class A Shares. Also, 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.
15
<PAGE> 18
Investments of Class A Shares made by plan level and/or participant
retirement accounts that are for the purpose of repaying a loan taken from such
accounts, will be made at net asset value. Loan repayments made to a Delaware
Group account in connection with loans originated from accounts previously
maintained by another investment firm will also be invested at net asset value.
The Series must be notified in advance that an investment qualifies for
purchase at net asset value.
GROUP INVESTMENT PLANS
Group Investment Plans (e.g., SEP/IRA, SAR/SEP, Prototype Profit Sharing,
Pension and 401(k) Defined Contribution Plans) may also benefit from the
reduced front-end sales charges relating to the Class A Shares set forth in the
table on page 14, based on total plan assets. In addition, 403(b)(7) and 457
Retirement Plan Accounts may also 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
would be used in determining the applicable front-end sales charge reduction.
Employees participating in such Group Investment Plans may also combine the
investments made in their plan account when determining the front-end sales
charge on purchases to non-retirement Delaware Group investment accounts.
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. The Class B Shares are being sold without a
front-end sales charge so that the Series will invest the full amount of the
investor's purchase payment. The Distributor currently anticipates compensating
dealers or brokers for selling Class B Shares at the time of purchase from its
own funds in an amount equal to no more than 2% the dollar amount purchased. As
discussed below, however, Class B Shares are subject to annual 12b-1 Plan
expenses and, if shares are redeemed within three years of purchase, a CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to the
Distributor and others for the distribution and related services provided to,
and the related expenses borne on behalf of, the Series for the benefit of the
Class B Shares in connection with the sale of the Class B Shares, including the
compensation paid to dealers or brokers for selling Class B Shares. Payments to
the Distributor and others under the 12b-1 Plan relating to the Class B Shares
may be in an amount equal to no more than 1%. The combination of the CDSC and
the proceeds of the 12b-1 Plan fees facilitates the ability of the Series to
sell the Class B Shares without a front-end sales charge being deducted 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 of the Class B
Shares described in this Prospectus. Such schedule may be higher than the CDSC
schedule relating to the Class B Shares acquired as a result of the exchange.
See Redemption and Exchange.
AUTOMATIC CONVERSION OF CLASS B SHARES
Except for shares acquired through a reinvestment of dividends, Class B
Shares held for five years after purchase are eligible for automatic conversion
into Class A Shares. The Fund will effect conversions of Class B Shares into
Class A Shares only four times in any calendar year, on the last business day
of the second full week of March, June, September and December (each, a
"Conversion Date"). If the fifth 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 fifth 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 fifth anniversary falls on
the day after a Conversion Date, that shareholder will have to hold Class B
Shares for as long as an additional three months after the fifth anniversary
after purchase before the shares will automatically convert into Class A
Shares.
Class B Shares of a fund acquired through a 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.
16
<PAGE> 19
CONTINGENT DEFERRED SALES CHARGE
Class B Shares redeemed within three years of purchase may be subject to a
CDSC at the rates set forth below, charged as a percentage of the dollar amount
subject thereto. 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 the 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 B Shares of the Series even if those
shares are later exchanged for Class B Shares of another Delaware Group fund
and, 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
into which the shares have been exchanged. Accordingly, no CDSC will be imposed
on increases in net asset value above the initial purchase price. In addition,
no CDSC will be assessed on redemption of shares received upon reinvestment of
dividends or capital gains distributions.
The following table sets forth the rates of the CDSC for the Class B
Shares of the Series:
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE
(AS A PERCENTAGE OF
YEAR AFTER DOLLAR AMOUNT
PURCHASE MADE SUBJECT TO CHARGE)
------------- ------------------
<S> <C>
0-2 2%
3 1%
4 and thereafter None
</TABLE>
During the fourth year after purchase and, thereafter, until converted
automatically into Class A Shares of the Series, the Class B Shares will
continue to be subject to annual 12b-1 Plan expenses of 1% of average daily net
assets representing 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% (currently, no more than .15%) of average daily net assets
representing such shares.
In determining whether a CDSC is applicable to a redemption, the
calculation will be determined in a manner that results in the lowest possible
rate being charged. Therefore, with respect to the Class B Shares, it will be
assumed that the redemption is first for shares held over three years or shares
acquired pursuant to reinvestment of dividends or distributions and then of
shares held longest during the three-year period. The charge will not be
applied to dollar amounts representing an increase in the net asset value since
the time of purchase. All investments made during a calendar month, regardless
of when during 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 in connection with the
following redemptions: (i) redemptions effected pursuant to 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 IRA, 403(b)(7) Deferred Compensation Plan or 457 Deferred
Compensation Plan due to death or disability.
12b-1 DISTRIBUTION PLANS--CLASS A AND CLASS B SHARES
Pursuant to the distribution plans adopted by the Fund pursuant to Rule
12b-1 under the Investment Company Act of 1940, the Series is permitted to pay
the Distributor annual distribution fees payable monthly up to a maximum of
.30% (currently, no more than .15%) of the average daily net assets of the
Class A Shares and 1% of the average daily net assets of the Class B Shares in
order to compensate the Distributor for providing distribution and related
services and bearing certain expenses of each Class. The Class B Shares' 12b-1
Plan is designed to permit an investor to purchase Class B Shares through
dealers or brokers without the assessment of a front-end sales charge and at
the same time permit the Distributor to compensate dealers and brokers in
connection with the sale of the Class B Shares. In this regard, the purpose and
function of the 12b-1 Plan and the CDSC with respect to the Class B Shares are
the same as those of the front-end sales charge and 12b-1 Plan with respect to
the Class A Shares in that the fees and charges provide for the financing of
the distribution of the respective Classes. For more detailed discussion of the
12b-1 Plans relating to the Class A and Class B Shares, see Distribution
(12b-1) and Service.
17
<PAGE> 20
OTHER PAYMENTS TO DEALERS--CLASS A AND CLASS B 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.
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.
CLASS B FUNDS
The following funds currently offer Class B Shares: DMC Tax-Free Income
Trust-Pennsylvania, Delaware Group Delchester High-Yield Bond Fund, Inc.,
Delaware Group Government Fund, Inc., Delaware Group Value Fund, Inc., Delaware
Group Cash Reserve, Inc., Tax-Free USA Fund, Tax-Free Insured Fund and Tax-Free
USA Intermediate Fund of Delaware Group Tax-Free Fund, Inc., Delaware Group
DelCap Fund, Inc., Delaware Fund and Dividend Growth Fund of Delaware Group
Delaware Fund, Inc., Decatur Income Fund and Decatur Total Return Fund of
Delaware Group Decatur Fund, Inc., Delaware Group Trend Fund, Inc.,
International Equity Series, Global Bond Series and Global Assets Series of
Delaware Group Global & International Funds, Inc. and the Series.
TREASURY RESERVES INTERMEDIATE FUND INSTITUTIONAL CLASS
In addition to offering the Class A and Class B Shares, the Series also
offers the Treasury Reserves Intermediate Fund Institutional Class of shares,
which is described in a separate prospectus relating to that class of shares.
That class may be purchased 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. Such Treasury Reserves Intermediate Fund Institutional Class shares
generally are distributed directly by the Distributor and do not have a
front-end or contingent deferred sales charge or a 12b-1 fee. Sales or service
compensation available in respect of such class, therefore, differs from that
available in respect of the Class A Shares and the Class B Shares. All three
classes of the Series' shares have a proportionate interest in the underlying
portfolio of securities of the Series. Total Operating Expenses incurred by the
Treasury Reserves Intermediate Fund Institutional Class as a percentage of
average daily net assets for the fiscal year ended December 31, 1994 were
0.76%. See Part B for performance information about Treasury Reserves
Intermediate Fund Institutional Class. To obtain a prospectus which describes
the Treasury Reserves Intermediate Fund Institutional Class, contact the
Distributor.
18
<PAGE> 21
DIVIDEND ORDERS
SOME SHAREHOLDERS WANT THE DIVIDENDS EARNED IN ONE FUND AUTOMATICALLY
INVESTED IN ANOTHER DELAWARE GROUP FUND WITH A DIFFERENT INVESTMENT OBJECTIVE.
For more information on the requirements of the other funds, see Dividend
Reinvestment Plan under The Delaware Difference or call the Shareholder Service
Center.
HOW TO BUY SHARES
The Series 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 must be completed, signed and
sent with a check payable to Treasury Reserves Intermediate Fund A Class or B
Class, depending upon which Class is being purchased, to P.O. Box 7977,
Philadelphia, PA 19101.
2. Subsequent Purchases--Additional purchases may be made at any time by
mailing a check payable to Treasury Reserves Intermediate Fund A Class or B
Class, depending upon which Class is being purchased. 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, and should be used
when you are making additional purchases. You can expedite processing by
including an investment slip with 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 series and class in which you are
investing).
1. Initial Purchases--Before you invest, telephone the Fund's Shareholder
Service Center to get an account number. If you do not call first, it may delay
processing your investment. In addition, you must promptly send your Investment
Application to Treasury Reserves Intermediate Fund A Class or B Class,
depending upon which Class is being purchased, to P.O. Box 7977, Philadelphia,
PA 19101.
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.
INVESTING BY EXCHANGE
If you have an investment in another mutual fund in the Delaware Group,
you may write and authorize an exchange of part or all of your investment into
shares of the Series. If you wish to open an account by exchange, call the
Shareholder Service Center for more information.
Exchanges will not be permitted between Class A Shares and Class B Shares
of the Series or between the Class A Shares and Class B Shares of any other
funds in the Delaware Group. Class B Shares of any of the Class B Funds may be
exchanged for Class B Shares of the Series. Class B Shares of the Series
acquired by exchange will continue to carry the contingent deferred sales
charge and automatic conversion schedules of the fund from which the exchange
is made. Consequently, investors that purchase Class B Shares of the Series by
exchange may be subject to the higher 12b-1 Plan fees applicable to Class B
Shares longer than investors that purchase Class B Shares of the Series
directly if the shares exchanged for Series shares are of a Class B Fund having
a longer conversion feature than that of the Series. The holding period of the
Class B Shares of the Series will be added to that of the exchanged shares for
purposes of determining the time of the automatic conversion into Class A
Shares of the Series.
19
<PAGE> 22
Permissible exchanges into the Classes of the Series will be made without
a front-end sales charge imposed by the Series or, at the time of the exchange,
a contingent deferred sales charge imposed by the fund from which the exchange
is being made, except for exchanges into Class A Shares 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).
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 WISH YOUR EMPLOYER OR BANK TO MAKE REGULAR INVESTMENTS DIRECTLY TO
YOUR ACCOUNT FOR YOU (for example: payroll deduction, pay by phone, annuity
payments). The Series also accepts preauthorized recurring government and
private payments by Electronic Fund Transfer, which avoids mail time and check
clearing holds on payments such as social security, federal salaries, Railroad
Retirement benefits, etc.
2. Automatic Investing Plan
THE AUTOMATIC INVESTING PLAN ENABLES YOU TO MAKE REGULAR MONTHLY
INVESTMENTS WITHOUT WRITING OR MAILING CHECKS. You may authorize the Fund to
transfer a designated amount monthly from your checking account to your Class
account. Many shareholders use this as an automatic savings plan for IRAs and
other purposes. 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 Class
account, you are obligated to reimburse the Series.
PURCHASE PRICE AND EFFECTIVE DATE
The offering price and net asset value of the Class A and Class B 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 such exchange is open.
The effective date of a purchase made through an investment dealer is the
date the order is received by the Series. 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 of shares is determined, as
noted above. Those received after such time will be effective the next business
day.
THE CONDITIONS OF YOUR PURCHASE
The Fund reserves the right to reject any purchase or exchange. If a
purchase is 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, upon 60 days' written notice, to redeem accounts that remain under
$1,000 as a result of redemptions. An investor making the minimum initial
investment will 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.
20
<PAGE> 23
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 tax-advantaged funds, equity funds or more aggressive
bond funds. Exchanges are subject to the requirements of each fund and all
exchanges of shares from one fund or class to another pursuant to this
privilege constitute taxable events. See Taxes. You may want to call us for
more information or 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.
Your shares will be redeemed or exchanged 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. Except as otherwise noted below, for a redemption request to be in
"good order," you must provide your Class account number, account registration,
and the total number of shares or dollar amount of the transaction. If a holder
of Class B Shares submits a redemption request for a specific dollar amount,
the Fund will redeem that number of shares necessary to deduct the applicable
CDSC and tender to the shareholder the requested amount to the extent enough
shares are then held in the shareholder account. With regard to exchanges, you
must also provide the name of the fund you want to receive the proceeds.
Exchange instructions and redemption requests must be signed by the record
owner(s) exactly as the shares are registered. You may request a redemption or
an exchange by calling the Fund at 800-523-1918 (in Philadelphia,
215-988-1241). The Fund reserves the right to reject exchange requests at any
time. The Fund may suspend or terminate, or amend the terms of, the exchange
privilege upon 60 days' written notice to shareholders.
The Fund will not honor check or wire redemptions for Class shares
recently purchased by check unless it is reasonably satisfied that the purchase
check has cleared, which may take up to 15 days from the purchase date. The
Fund may honor written redemption requests, but will not mail the proceeds
until it is reasonably satisfied the purchase check has cleared. You can avoid
this potential delay if you purchase shares by wiring Federal Funds. You may
call the Shareholder Service Center to determine if your funds are available
for redemption. 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.
Class A Shares may be exchanged for certain of the shares of the other
funds in the Delaware Group, including other Class A Shares, subject to the
eligibility and minimum purchase requirements set forth in each fund's
prospectus. All Delaware Group funds offer Class A Shares. Class A Shares may
not be exchanged for Class B Shares of the funds offering such shares. Class B
Shares of the Series may be exchanged only for the Class B Shares of any of the
Class B Funds. See Exchange Privilege under The Delaware Difference. In each
instance, permissible exchanges are subject to the minimum purchase and other
requirements set forth in each prospectus.
Permissible exchanges may be made at net asset value provided: (1) the
investment satisfies the eligibility and minimum purchase requirements set
forth in the prospectus of the fund being acquired; and (2) the shares of the
fund being acquired are in a state where that fund is registered.
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.
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Holders of the Class B Shares that exchange their shares ("outstanding
Class B Shares") for the Class B Shares of other Class B Funds ("new Class B
Shares") will not be subject to a CDSC that might otherwise be due upon
redemption of the outstanding Class B Shares. However, such shareholders will
continue to be subject to the CDSC and automatic conversion schedules of the
outstanding Class B Shares described in this Prospectus and any CDSC assessed
upon redemption will be charged by the Series. Such schedule may be higher than
the CDSC schedule relating to the new Class B Shares acquired as a result of
the exchange. For purposes of computing the CDSC that may be payable upon a
disposition of the new Class B Shares, the holding period for the outstanding
Class B Shares is added to the holding period of the new Class B Shares.
Different redemption and exchange methods are outlined below. Except for
the CDSC with respect to redemption of Class B Shares and the Limited CDSC with
respect 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
also have your investment dealer arrange to have your shares redeemed or
exchanged. Your investment dealer may charge for this service.
All authorizations given by shareholders with respect to an account,
including selection of any of the features described below, shall continue in
effect until revoked or modified in writing and until such time as such written
revocation or modification has been received by the Fund or its agent.
All exchanges involve a purchase of shares of the fund into which the
exchange is made. As with any purchase, an investor should obtain and carefully
read that fund's prospectus before buying shares in an exchange. The prospectus
contains more complete information about the fund, including charges and
expenses.
CHECKWRITING FEATURE
PURCHASERS OF CLASS A SHARES CAN REQUEST SPECIAL CHECKS BY MARKING THE BOX
ON THE INVESTMENT APPLICATION.
The checks must be drawn for $500 or more and, unless otherwise indicated
on the Investment Application or your checkwriting authorization form, must be
signed by all owners of the account.
Because the value of shares fluctuates, you cannot use checks to close
your account. The Checkwriting Feature is not available with respect to the
Class B Shares and for Retirement Plans, with respect to the Class A Shares.
See Part B for additional information.
WRITTEN REDEMPTION
You can write to the Fund at 1818 Market Street, Philadelphia, PA 19103 to
redeem some or all of your Class A or Class B 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.
The redemption request is effective at the net asset value next determined
after it is received in good order. Class B Shares may be subject to a CDSC and
Class A Shares may be subject to a Limited CDSC with respect to certain shares
purchased at net asset value. Payment is normally mailed the next business day,
but no later than seven days, after receipt of your request. If your Class A
Shares are in certificate form, the certificate must accompany your request and
also be in good order. The Fund only issues certificates for Class A Shares if
a shareholder submits a specific request. The Fund does not issue certificates
for Class B Shares.
WRITTEN EXCHANGE
You can also write to the Fund (at 1818 Market Street, Philadelphia, PA
19103) to request an exchange of any or all of your Class A or Class B 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 can
only redeem or exchange by written request and you must return your
certificates.
The Telephone Redemption service enabling you to have redemption proceeds
mailed to your address of record and the Telephone Exchange service, both of
which are described below, are automatically provided unless the Fund receives
written notice from the shareholder to the contrary. The Fund reserves the
right to modify, terminate or suspend these procedures upon 60 days' written
notice to shareholders. It may be difficult to reach the Fund by telephone
during periods when market or economic conditions lead to an unusually large
volume of telephone requests.
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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, the shareholder is acknowledging prior receipt
of a prospectus for the fund into which shares are being exchanged.
TELEPHONE REDEMPTION--CHECK TO YOUR ADDRESS
OF RECORD
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 record address. Checks will be payable to
the shareholder(s) of record. Payment is normally mailed the next business day,
but no more than seven days, after receipt of the request. 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 Shares and the Limited CDSC which may be applicable to purchases
made at net asset value with respect to the Class A Shares, there are no fees
for this method, but the mail time may delay getting funds into your bank
account. Simply call the Fund's Shareholder Service Center prior to the time
the offering price and net asset value are determined, as noted above.
If expedited payment by check or wire could adversely affect the Series,
the Fund may take up to seven days to pay.
TELEPHONE EXCHANGE
The Telephone Exchange feature is a convenient and efficient way to adjust
your investment holdings as your liquidity requirements and investment
objectives change.
You or your investment dealer of record can authorize an exchange of
shares into a money market fund in the Delaware Group with just a phone call.
Any such exchange is subject to the same conditions and limitations as other
exchanges noted above.
This service is useful if you are anticipating a major expenditure and
want to move a portion of your investment into a fund where stability of
principal is paramount. The Delaware Group money market fund investment
minimums apply.
Your Class A or Class B Shares can also be exchanged into other funds 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 PLAN
1. Regular Plans
This plan provides holders of the Class A Shares with a consistent monthly
(or quarterly) payment. THIS IS PARTICULARLY USEFUL TO SHAREHOLDERS LIVING ON
FIXED INCOMES, SINCE IT PROVIDES 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. In the alternative, 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 after two business days. Except with respect to the Limited
CDSC which may be applicable to Class A Shares as noted below, there are no
fees for this method. You can initiate this 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 Series account, you must have your
signature guaranteed. Please call the Shareholder Service Center for additional
information.
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2. Retirement Plans
For shareholders eligible under the applicable Retirement Plan to receive
benefits in periodic payments, the Series' 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 with respect to Retirement Plans.
* * *
Shareholders should not purchase Class A Shares while participating in a
Systematic Withdrawal Plan. Also, redemptions of Class A Shares pursuant to a
Systematic Withdrawal Plan may be subject to a Limited CDSC if the original
purchase was made within the 12 months prior to the withdrawal at net asset
value and a dealer's commission has been paid on that purchase. See Contingent
Deferred Sales Charge for Certain Purchases of Class A Shares Made at Net Asset
Value. For more information on both of these plans, call the Shareholder
Service Center.
The Systematic Withdrawal Plan is not available with respect to the Class
B Shares.
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 investments (minimum of $100 per
fund) to be liquidated from their account and invested automatically into one
or more funds in the Delaware Group. Investments under this option are
exchanges and are therefore subject to the same conditions and limitations as
other exchanges of Class A and Class B Shares noted above.
Shareholders can also use the Wealth Builder Option to invest in the
Series through regular liquidations of shares in their accounts in other funds
in the Delaware Group subject to the same conditions and limitations as other
exchanges noted above. Shareholders can terminate their participation at any
time by written notice to the Fund. See Redemption and Exchange.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans.
CONTINGENT DEFERRED SALES CHARGE FOR CERTAIN PURCHASES OF CLASS A SHARES MADE
AT NET ASSET VALUE
For purchases of Class A Shares, a Limited CDSC will be imposed by the
Series upon certain redemptions of Class A Shares (or shares into which such
Class A Shares are exchanged) made within 12 months of purchase, if such
purchases were made at net asset value and triggered the payment by the
Distributor of the dealer's commission 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 into which the Class A Shares have been exchanged.
Redemptions of such Class A Shares held for more than 12 months will not
be subjected to the Limited CDSC and an exchange of such Class A Shares into
another Delaware Group fund will not trigger the imposition of the Limited CDSC
at the time of such exchange. The period a shareholder owns shares into which
Class A Shares are exchanged will count towards satisfying the 12-month holding
period. The Fund assesses the Limited CDSC if such 12-month period is not
satisfied irrespective of whether the redemption triggering its payment is of
the Class A Shares of the Series or the Class A Shares into which the Class A
Shares of the Series have been exchanged.
In determining whether a Limited CDSC is payable, it will be assumed that
shares not subject to the Limited CDSC are the first redeemed followed by other
shares held for the longest period of time. The Limited CDSC will not be
imposed upon shares representing reinvested dividends or capital gains
distributions, or upon amounts representing share appreciation. All investments
made during a calendar month, regardless of when during the month the
investment occurred, will age one month on the last day of that month and each
subsequent month.
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The Limited CDSC will be waived in the following instances: (i)
redemptions effected pursuant to 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) 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) tax-free 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).
DIVIDENDS AND DISTRIBUTIONS
The Fund declares a dividend to all shareholders of record of the Classes
at the time the offering price of shares is determined. See Purchase Price and
Effective Date under Buying Shares. Thus, when redeeming shares, dividends
continue to accrue up to and including the date of redemption.
Purchases of shares of each Class by wire begin earning dividends when
converted into Federal Funds and available for investment, normally the next
business day after receipt. Purchases by check earn dividends upon conversion
to Federal Funds, normally one business day after receipt.
Each class of the Series will share proportionately in the investment
income and expenses of the Series, except that (i) the per share dividends and
distributions on the Class B Shares will be lower than the per share dividends
and distributions on the Class A Shares as a result of the higher expenses
under the 12b-1 Plan relating to the Class B Shares; and (ii) the per share
dividends and distributions on both the Class A Shares and the Class B Shares
will be lower than the per share dividends and distributions on the Treasury
Reserves Intermediate Fund Institutional Class as such class will not incur any
expenses under the 12b-1 Plans. See Distribution (12b-1) and Service under
Management of the Fund.
The dividends are declared daily and paid monthly on the last business day
of each month. Payment by check of cash dividends will ordinarily be mailed
within three business days after the payable date. Short-term capital gains
distributions, if any, may be paid quarterly, but in the discretion of the
Fund's Board of Directors might be distributed less frequently. Long-term
capital gains, if any, will be distributed annually.
The Series can have two types of dividends: income and capital gains.
Normally both types are automatically reinvested in your account unless you
elect otherwise. 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. If you elect to have your dividends and distributions in cash and
such dividends and distributions are in an amount of $25 or more, you may elect
the Delaware Group's MoneyLine service to enable such payments to be
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 this method. See Systematic Withdrawal
Plan for Class A Shares under Redemption and Exchange for information regarding
authorization of this service. This service is not available with respect to
Retirement Plans. (See The Delaware Difference for more information on
reinvestment options.)
For the fiscal year ended December 31, 1994, dividends totaling $0.667 and
$0.399 per share of the Class A Shares and Class B Shares, respectively, were
paid from net investment income.
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TAXES
The Series has qualified, and intends to continue to qualify, as a
regulated investment company under Subchapter M of the Internal Revenue Code
(the "Code"). As such, the Series will not be subject to federal income tax, or
to any excise tax, to the extent its earnings are distributed as provided in
the Code.
The Series intends to distribute substantially all of its net investment
income and net capital gains, if any. Dividends from net investment income or
net short-term capital gains will be taxable to you as ordinary income, whether
received in cash or in additional shares. No portion of the Series'
distributions will be eligible for the dividends-received deduction for
corporations.
Distributions paid by the Series from long-term capital gains, whether
received in cash or in additional shares, are taxable to those investors who
are subject to income taxes as long-term capital gains, regardless of the
length of time an investor has owned shares in the Series. The Series does not
seek to realize any particular amount of capital gains during a year; rather,
realized gains are a byproduct of Series management activities. Consequently,
capital gains distributions may be expected to vary considerably from year to
year. Also, for those investors subject to tax, if purchases of shares in the
Series are made shortly before the record date for a dividend or capital gains
distribution, a portion of the investment will be returned as a taxable
distribution.
Dividends which are declared in October, November or December 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 calendar year in which they are
declared.
The sale of shares of the Series is a taxable event and may result in a
capital gain or loss to shareholders subject to tax. Capital gain or loss may
be realized from an ordinary redemption of shares or an exchange of shares
between two mutual funds (or two series or portfolios of a mutual fund). Any
loss incurred on sale or exchange of a Series' shares 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 purchasing Series shares will be excluded from the federal
tax basis of any of such shares sold or exchanged within ninety (90) days of
their purchase (for purposes of determining gain or loss upon sale of such
shares) if the sale proceeds are reinvested in the Series or in another fund in
the Delaware Group of funds and a sales charge that would otherwise apply to
the reinvestment is reduced or eliminated. Any portion of such sales charge
excluded from the tax basis of the shares sold will be added to the tax basis
of the shares acquired in the reinvestment.
The automatic conversion of Class B Shares into Class A Shares at the end
of no longer than approximately five years after purchase will constitute a
tax-free exchange for federal tax purposes. Shareholders should consult their
own tax advisers regarding specific questions as to federal, state, local or
foreign taxes. See Automatic Conversion of Class B Shares under Buying Shares.
In addition to federal taxes, shareholders may be subject to state and
local taxes on distributions. Distributions of interest income and capital
gains realized from certain types of U.S. government securities may be exempt
from state personal income taxes. Shares of the Series are exempt from
Pennsylvania county personal property taxes.
Each year, the Fund will mail you information on the tax status of the
Series' dividends and distributions. Shareholders will also receive each year
information as to the portion of dividend income, if any, that is derived from
U.S. government securities that are exempt from state income tax. Of course,
shareholders who are not subject to tax on their income would not be required
to pay tax on amounts distributed to them by the Series.
The Fund is required to withhold 31% of taxable dividends, capital gains
distributions, and redemptions paid to shareholders who have not complied with
IRS taxpayer identification regulations. You may avoid this withholding
requirement by certifying on your Account Registration Form your proper
Taxpayer Identification Number and by certifying that you are not subject to
backup withholding.
The tax discussion set forth above is included for general information
only. Prospective investors should consult their own tax advisers concerning
the federal, state, local or foreign tax consequences of an investment in the
Series.
See Accounting and Tax Issues in Part B for additional information on tax
matters relating to the Series and its shareholders.
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<PAGE> 29
CALCULATION OF OFFERING
PRICE AND NET ASSET VALUE
PER SHARE
Class A Shares are purchased at the offering price and Class B Shares are
purchased at the net asset value ("NAV") per share. The offering price of the
Class A Shares consists of the NAV per share next determined 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 such exchange is open.
The NAV per share is computed by adding the value of all securities and
other assets in the portfolio, deducting any liabilities (expenses and fees are
accrued daily) and dividing by the number of shares outstanding. Portfolio
securities for which market quotations are available are priced at market
value. Short-term investments having a maturity of less than 60 days are valued
at amortized cost, which approximates market value. All other securities are
valued at their fair value as determined in good faith and in a method approved
by the Fund's Board of Directors.
Each of the Series' three classes will bear, pro-rata, all of the common
expenses of the Series. The net asset values of all outstanding shares of each
class of the Series will be computed on a pro-rata basis for each outstanding
share based on the proportionate participation in the Series represented by the
value of shares of that class. All income earned and expenses incurred by the
Series will be borne on a pro-rata basis by each outstanding share of a class,
based on each class' percentage in the Series represented by the value of
shares of such classes, except the Treasury Reserves Intermediate Fund
Institutional Class will not incur any of the expenses under the Series' 12b-1
Plans and the Class A and Class B 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 dividends
paid to each class of the Series may vary. However, the NAV per share of each
class is expected to be equivalent.
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 Series.
The Manager and its predecessors have been managing the funds in the
Delaware Group since 1938. On December 31, 1994, the Manager and its affiliate,
Delaware International Advisers Ltd., were supervising in the aggregate more
than $24 billion in assets in the various institutional (approximately
$15,456,416,000) and investment company (approximately $9,253,901,000)
accounts.
The Manager is an indirect, wholly-owned subsidiary of Delaware Management
Holdings, Inc. ("DMH"). By reason of its percentage ownership of DMH common
stock and through Voting Trust Agreements with certain other DMH shareholders,
Legend Capital Group, L.P. ("Legend") controls DMH and the Manager. As General
Partners of Legend, Leonard M. Harlan and John K. Castle have the ability to
direct the voting of more than a majority of the shares of DMH common stock and
thereby control the Manager.
On December 12, 1994, DMH entered into a merger agreement with Lincoln
National Corporation ("Lincoln National") and a newly-formed subsidiary of
Lincoln National. Pursuant to that agreement, the new subsidiary will be merged
with and into DMH. This merger will result in DMH becoming a wholly-owned
subsidiary of Lincoln National. The transaction is expected to close in the
early spring of 1995, subject to the receipt of all regulatory approvals and
satisfaction of conditions precedent to closing, including the approval
described below. Lincoln National, with headquarters in Fort Wayne, Indiana, is
a diversified organization with operations in many aspects of the financial
services industry, including insurance and investment management.
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<PAGE> 30
The Manager manages the Series' portfolio, makes investment decisions and
implements them. The Manager also pays the salaries of all the directors,
officers and employees of the Fund who are affiliated with the Manager. For
these services, the Manager is paid an annual fee of 1/2 of 1% of the average
daily net assets of the Series, less a proportionate share of all directors'
fees paid to the unaffiliated directors by the Series. Investment management
fees paid by the Series were 0.50% of average daily net assets for the fiscal
year ended December 31, 1994.
Completion of the above-described merger transaction will result in an
assignment, and consequently a termination, of the existing investment
management agreement between the Manager and the Fund. Series shareholders will
be asked to vote on a new investment management agreement with the Manager, to
become effective at or about the time the trans-action is to be completed. It
is not anticipated that there will be any changes in the compensation or other
material terms of the existing investment management agreement as a result of
the transaction. Details of the transaction are included in the proxy
materials furnished to shareholders entitled to vote at the shareholder meeting
called to consider the matter.
Roger A. Early has assumed primary responsibility for making day-to-day
investment decisions for the Series as of July 18, 1994. Mr. Early has an
undergraduate degree in economics from the University of Pennsylvania's Wharton
School and an MBA in finance and accounting from the University of Pittsburgh.
He is also a CPA and a CFA. Prior to joining the Delaware Group, Mr. Early was
a portfolio manager for Federated Investment Counseling's fixed income group,
with over $1 billion in assets.
In making investment decisions for the Series, Mr. Early consults
regularly with Paul E. Suckow, Dorothea M. Dutton and Gary A. Reed. Mr. Suckow
is the 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. Ms. Dutton, a
Chartered Financial Analyst and a graduate of the University of Washington,
joined the Delaware Group in 1986 as a vice president for fixed income. Mr.
Reed, also a Chartered Financial Analyst, is a graduate of the University of
Chicago with an MA from Columbia University. He joined the Delaware Group in
1989 as a vice president for fixed income. It is not anticipated that there
will be any changes in the personnel responsible for managing the Series as a
result of the above-described merger transaction.
PORTFOLIO TRADING PRACTICES
Portfolio trades are generally made on a net basis without brokerage
commissions. However, the price may include a mark-up or mark-down. Banks,
brokers or dealers are selected by the Manager to execute the Series' portfolio
transactions.
Although the Series trades principally to seek a high level of income and
stability of principal and not for profits, the portfolio turnover may be high,
particularly if interest rates are volatile. The degree of portfolio activity
may affect brokerage costs of the Series and taxes payable by shareholders.
During the fiscal years ended December 31, 1993 and 1994, the Series' portfolio
turnover rates were 171% and 148%, respectively. See Portfolio Turnover under
Trading Practices and Brokerage in Part B.
The Manager 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 Manager 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.
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<PAGE> 31
PERFORMANCE INFORMATION
From time to time, the Series may quote yield or total return performance
of the Classes in advertising and other types of literature. The current yield
for a Class will be calculated by dividing the annualized net investment income
earned by that Class during a recent 30-day period by the maximum offering
price per share on the last day of the period. The yield formula provides for
semi-annual compounding which assumes that net investment income is earned and
reinvested at a constant rate and annualized at the end of a six-month period.
Total return will be based on a hypothetical $1,000 investment, reflecting the
reinvestment of all distributions at net asset value and (i) in the case of
Class A Shares, the impact of the maximum front-end sales charge at the
beginning of each specified period and (ii) in the case of Class B Shares, the
deduction of any applicable CDSC at the end of the relevant period. Each
presentation will include the average annual total return for a one-year period
and five- and ten-year periods, as relevant. The Series may also advertise
aggregate and average total return information concerning a Class over
additional periods of time. In addition, the Series may present total return
information that does not reflect the deduction of the maximum front-end sales
charge or any applicable CDSC. In this case, such total return information
would be more favorable than total return information which includes deductions
of the maximum front-end sales charge or any applicable CDSC.
Yield and net asset value fluctuate and are not guaranteed. Past
performance is not an indication 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 an Amended and Restated Distribution Agreement dated as of
May 2, 1994.
The Fund has adopted a distribution plan under Rule 12b-1 for the Class A
Shares and a separate distribution plan under Rule 12b-1 for the Class B Shares
(the "Plans"). The Plans permit the Series to pay the Distributor from the
assets of the respective Classes a monthly fee for its services and expenses in
distributing and promoting sales of shares. These expenses include, among other
things, preparing and distributing advertisements, sales literature, and
prospectuses and reports used for sales purposes, compensating sales and
marketing personnel, holding special promotions for specified periods of time,
and paying distribution and maintenance fees to brokers, dealers and others. In
connection with the promotion of Class A and Class B 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 each Class and increase sales of each Class. In addition, the Series
may make payments from the assets of the respective Class directly to others,
such as banks, who aid in the distribution of Class shares or provide services
in respect of a Class, pursuant to agreements with the Series.
The 12b-1 Plan expenses relating to the Class B Shares are also used to
pay the Distributor for advancing the commission costs to dealers with respect
to the initial sale of such shares.
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The aggregate fees paid by the Series from the assets of the respective
Classes to the Distributor and others under the Plans may not exceed .30% of
the Class A Shares' average daily net assets in any year, and 1% (.25% of which
are service fees to be paid by the Series to the Distributor, dealers and
others, for providing personal service and/or maintaining shareholder accounts)
of the Class B Shares' average daily net assets in any year. The Class A and
Class B Shares will not incur any distribution expenses beyond these limits,
which may not be increased without shareholder approval. The Distributor may,
however, incur additional expenses and make additional payments to dealers from
its own resources to promote the distribution of shares of the Classes.
On May 21, 1987, the Board of Directors set the fee for the Class A
Shares, pursuant to its Plan, at .15% of average daily net assets. This fee
was effective until May 31, 1992. Effective June 1, 1992, the Board of
Directors has determined that the annual fee payable on a monthly basis, under
the Plan will be equal to the sum of: (i) the amount obtained by multiplying
.10% by the average daily net assets represented by the Class A Shares which
were originally purchased in the Investors Series I class (which was converted
into the Class A Shares then known as Treasury Reserves Intermediate Fund
class) on June 1, 1992 pursuant to a Plan of Recapitalization approved by the
shareholders of the Investors Series I class), and (ii) the amount obtained by
multiplying .15% by the average daily net assets represented by all other Class
A Shares. While this is the method to be used to calculate the 12b-1 expenses
to be paid by the Class A Shares under its Plan, the fee is a Class A Shares'
expense so that all shareholders of the Class A Shares, regardless of whether
they originally purchased or received shares in the Investors Series I class,
the Treasury Reserves Intermediate Fund class (formerly the Investors Series II
class) or the Class A Shares, will bear 12b-1 expenses at the same rate. While
this describes the current formula for calculating the fees which will be
payable under the Class A Shares' Plan beginning June 1, 1992, such Plan
permits a full .30% on all Class A Shares' assets to be paid at any time
following appropriate Board approval. See Shares.
The Series' Plans do not apply to the Treasury Reserves Intermediate 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 Treasury Reserves Intermediate Fund Institutional Class shares.
While payments pursuant to the Plans may not exceed .30% annually with
respect to the Class A Shares and 1% annually with respect to the Class B
Shares, the Plans do not limit fees to amounts actually expended by the
Distributor. It is therefore possible that the Distributor may realize a profit
in any particular year. However, the Distributor currently expects that its
distribution expenses will likely equal or exceed payments to it under the
Plans. The monthly fees paid to the Distributor are subject to the review and
approval of the Fund's unaffiliated directors who may reduce the fees or
terminate the Plans at any time.
The 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.
The Transfer Agent, Delaware Service Company, Inc., serves as the
shareholder servicing, dividend disbursing and transfer agent for the Series
under an Agreement dated December 20, 1990. The unaffiliated directors review
service fees paid to the Transfer Agent.
The Distributor and the Transfer Agent are also indirect, wholly-owned
subsidiaries of DMH.
EXPENSES
The Series is responsible for all of its own expenses other than those
borne by the Manager under the Investment Management Agreement and those borne
by the Distributor under the Amended and Restated Distribution Agreement. The
Class A Shares' ratio of expenses to average daily net assets for the fiscal
year ended December 31, 1994 was 0.91%. Based on expenses incurred by the Class
A Shares during its fiscal year ended December 31, 1994, the expenses of the
Class B Shares are expected to be 1.76% for the fiscal year ending December 31,
1995. The ratio of each Class reflects the impact of its respective 12b-1 Plan.
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SHARES
The Treasury Reserves Intermediate Series is the second series of Delaware
Group Treasury Reserves, Inc., which is an open-end management investment
company, commonly known as a mutual fund. The Series' portfolio of assets is
diversified for purposes of the Investment Company Act of 1940. The Fund was
organized as a Pennsylvania business trust in 1981 and was reorganized as a
Maryland corporation in 1990. The authorized capital of the Fund consists of
three billion shares of common stock, of which two billion shares have been
allocated to the Treasury Reserves Intermediate Series. One billion shares have
been allocated to the Class A Shares and two hundred million shares each have
been allocated to the Class B Shares and the Treasury Reserves Intermediate
Fund Institutional Class shares.
Series' shares have a $.001 par value per share, equal voting rights,
except as noted below, and are equal in all other respects. Shares of the
Series will have a priority over shares of any other series of the Fund in the
assets and income of the Series and will vote separately on any matter that
affects only the Treasury Reserves Intermediate Series.
The Series also offers the Treasury Reserves Intermediate Fund
Institutional Class of shares as well as Class A and Class B Shares. Shares of
each class represent proportionate interests in the assets of the Series and
have the same voting and other rights and preferences as the other classes of
shares of the Series, except that shares of the Treasury Reserves Intermediate
Fund Institutional Class may not vote on matters affecting, the Distribution
Plans under Rule 12b-1 relating to the Class A and Class B Shares. Similarly,
the shareholders of the Class A Shares may not vote on matters affecting the
Series' Plan under Rule 12b-1 relating to the Class B Shares, and the
shareholders of the Class B Shares may not vote on matters affecting the
Series' Plan under Rule 12b-1 relating to the Class A Shares.
Until May 31, 1992, the Fund offered two retail classes of shares,
Investors Series I and Investors Series II (now Class A Shares). Investors
Series I class offered shares with a front-end sales charge, but without the
imposition of a Rule 12b-1 fee. Effective June 1, 1992, following shareholder
approval of a plan of recapitalization on May 15, 1992, shareholders of the
Investors Series I class had their shares converted into shares of the
Investors Series II class and became subject to the latter class' Rule 12b-1
charges. Effective at the same time, following approval by shareholders, the
name of the Investors Series was changed to the Treasury Reserves Intermediate
Series and the name of the Investors Series II class was changed to the
Treasury Reserves Intermediate Fund class. Until May 2, 1994, the Class A
Shares were known as the Treasury Reserves Intermediate Fund class. The Class B
Shares of the Series were not offered prior to May 2, 1994.
All Fund shares have noncumulative voting rights which means that the
holders of more than 50% of the Fund's shares voting for the election of
directors can elect 100% of the directors if they choose to do so. Under
Maryland law, the Fund is not required, and does not intend, to hold annual
meetings of shareholders unless, under certain circumstances, it is required to
do so under the Investment Company Act of 1940. Shareholders of 10% or more of
the Fund's shares may request that a special meeting be called to consider the
removal of a director.
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The Delaware Group includes 22 different funds with a wide range of
investment objectives. Stock funds, income funds, tax-free funds, money market
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 the Delaware Group at 800-523-4640, in
Philadelphia 215-988-1333.
<TABLE>
<S> <C>
INVESTMENT MANAGER
Delaware Management Company, Inc.
One Commerce Square
Philadelphia, PA 19103
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
[PHOTO OF GEORGE WASHINGTON CROSSING THE DELAWARE RIVER]
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young
One Commerce Square
Philadelphia, PA 19103
INDEPENDENT AUDITORS
Ernst & Young LLP
Two Commerce Square
Philadelphia, PA 19103
CUSTODIAN
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, NY 10260
P-022/P-054-2/95-ALG
Printed in the U.S.A.
TREASURY
RESERVES
INTERMEDIATE
FUND
- ------------
A CLASS
B CLASS
PROSPECTUS
FEBRUARY 28, 1995
DELAWARE
GROUP
</TABLE>
