<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 PROSPECTUS
INSTITUTIONAL FEBRUARY 28, 1995
-----------------------------------------------------------------
1818 MARKET STREET, PHILADELPHIA, PA 19103
FOR MORE INFORMATION ABOUT THE TREASURY RESERVES INTERMEDIATE FUND
INSTITUTIONAL CLASS
CALL THE DELAWARE GROUP AT 800-828-5052.
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 Institutional Class (the
"Class") of shares of the Fund's Treasury Reserves Intermediate Series (the
"Series"). The Series offers shares of the Class for purchase only by certain
enumerated institutions at net asset value, without the imposition of a
front-end or contingent deferred sales charge and without a 12b-1 charge. See
Buying Shares.
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.
This Prospectus relates only to the Class 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 number. 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 A Class and
the Treasury Reserves Intermediate Fund B Class. Shares of the Treasury
Reserves Intermediate Fund A Class carry a front-end sales charge and are
subject to ongoing distribution expenses. Shares of the Treasury Reserves
Intermediate Fund B Class are subject to ongoing distribution expenses and a
contingent deferred sales charge upon redemption.
<TABLE>
<S> <C>
TABLE OF CONTENTS
COVER PAGE . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SYNOPSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SUMMARY OF EXPENSES . . . . . . . . . . . . . . . . . . . . . . 3
FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . 4
INVESTMENT OBJECTIVE AND POLICIES
SUITABILITY . . . . . . . . . . . . . . . . . . . . . . . . . 5
INVESTMENT STRATEGY . . . . . . . . . . . . . . . . . . . . . 5
BUYING SHARES . . . . . . . . . . . . . . . . . . . . . . . . . 8
REDEMPTION AND EXCHANGE . . . . . . . . . . . . . . . . . . . . 10
DIVIDENDS AND DISTRIBUTIONS . . . . . . . . . . . . . . . . . . 12
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
CALCULATION OF NET ASSET VALUE PER SHARE . . . . . . . . . . . 13
MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . . . . . . 14
</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 Treasury Reserves Intermediate Series offers the Treasury Reserves
Intermediate Fund Institutional Class, the Treasury Reserves Intermediate Fund
A Class and the Treasury Reserves Intermediate Fund B 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
Treasury Reserves Intermediate Series. One billion four hundred million shares
of such capital stock have been allocated to these classes as follows: two
hundred million shares have been allocated to Treasury Reserves Intermediate
Fund Institutional Class, one billion shares have been allocated to Treasury
Reserves Intermediate Fund A Class and two hundred million shares have been
allocated to Treasury Reserves Intermediate Fund B 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.
PURCHASE PRICE
Shares of the Class offered by this Prospectus are available at net asset
value, without a front-end or contingent deferred sales charge and are not
subject to distribution fees under a Rule 12b-1 distribution plan. See Buying
Shares.
INVESTMENT OBJECTIVE
The objective of the 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
Shares of the Fund are redeemed or exchanged at the net asset value
calculated after receipt of the redemption or exchange request. See Redemption
and Exchange.
2
<PAGE> 5
SUMMARY OF EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
- ---------------------------------------------------------------------------------
<S> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) . . . . . . . . . . . . . . . . None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price) . . . . . . . . . . . . . . . . None
Redemption Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . None*
Exchange Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . None**
</TABLE>
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
- ---------------------------------------------------------------------------------
<S> <C>
Management Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.50%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Other Operating Expenses . . . . . . . . . . . . . . . . . . . . . . 0.26%
----
Total Operating Expenses . . . . . . . . . . . . . . . . . . . . . 0.76%
====
</TABLE>
The purpose of this table is to assist the investor in understanding the
various costs and expenses that an investor in the Class will bear directly or
indirectly. *CoreStates Bank, N.A. currently charges $7.50 per redemption for
redemptions payable by wire. **Exchanges are subject to the requirements of
each fund and a front-end sales charge may apply. See Treasury Reserves
Intermediate Fund A Class and Treasury Reserves Intermediate Fund B Class for
expense information about those classes.
The following example illustrates the expenses that an investor would pay
on a $1,000 investment over various time periods assuming (1) a 5% annual rate
of return and (2) redemption at the end of each time period. As noted in the
table above, the Fund charges no redemption fees.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$8 $24 $42 $94
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.
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(1/3) 12/31/91(1) 12/31/90(1) 12/28/89(1) 12/29/88(1)
<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 . . . . . . . . . . . . 0.681 0.696 0.754 0.816 0.828 0.857 0.744
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 . . . . . (0.169) 0.536 0.564 1.236 0.878 0.877 0.644
------- ------- ------- ------- ------- ------ ------
LESS DISTRIBUTIONS
- ------------------
Dividends (from net investment income) . . . (0.681) (0.696) (0.754) (0.816) (0.828) (0.857) (0.744)
Distributions (from capital gains) . . . . . none none none none none none none
Returns of Capital . . . . . . . . . . . . . none none none none none none none
------ ------- ------- ------- ------ ------ ------
Total Distributions . . . . . . . . . . . . (0.681) (0.696) (0.754) (0.816) (0.828) (0.857) (0.744)
------ ------- ------- ------- ------ ------ ------
Net Asset Value, End of Period . . . . . . . $8.990 $ 9.840 $10.000 $10.190 $9.770 $9.720 $9.700
====== ======= ======= ======= ====== ====== ======
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN . . . . . . . . . . . . . . . . (1.74%) 5.44% 5.77%(4) 13.21%(4) 9.48% 9.44% 6.78%
- ------------
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (000's omitted) . . $37,238 $47,700 $52,403 $146,598 $12,811 $3,933 $5,740
Ratio of Expenses to Average Daily Net Assets 0.76% 0.74% 0.75%(5) 0.75%(5) 0.84% 0.82% 0.75%
Ratio of Net Investment Income to Average
Daily Net Assets . . . . . . . . . . . . . 7.25% 6.91% 7.58%(6) 8.11%(6) 8.56% 8.87% 7.59%
Portfolio Turnover Rate . . . . . . . . . . . 148% 171% 77% 42% 175% 311% 146%
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
PERIOD
9/2/87(1/2)
THROUGH
12/31/87
<S> <C>
Net Asset Value, Beginning of Period . . . . $9.770
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net Investment Income . . . . . . . . . . . . 0.192
Net Gains or Losses on Securities
(both realized and unrealized) . . . . . . 0.030
------
Total From Investment Operations . . . . . 0.222
------
LESS DISTRIBUTIONS
- ------------------
Dividends (from net investment income) . . . (0.192)
Distributions (from capital gains) . . . . . none
Returns of Capital . . . . . . . . . . . . . none
------
Total Distributions . . . . . . . . . . . . (0.192)
------
Net Asset Value, End of Period . . . . . . . $9.800
======
- --------------------------------------------------------------------
TOTAL RETURN . . . . . . . . . . . . . . . . 5.61%
- ------------
- --------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (000's omitted) . . $10,599
Ratio of Expenses to Average Daily Net Assets (2)
Ratio of Net Investment Income to Average
Daily Net Assets . . . . . . . . . . . . . (2)
Portfolio Turnover Rate . . . . . . . . . . . (2)
</TABLE>
- ----------------------
(1) The financial highlights for the period prior to June 1, 1992 (the date
Treasury Reserves Intermediate Fund Institutional Class was first offered
for public sale) are derived from data of the Investors Series I class,
which like the Treasury Reserves Intermediate Fund Institutional Class,
was not subject to Rule 12b-1 distribution expenses. Shares of Investors
Series I class were converted into shares of Investors Series II class,
then referred to as the Treasury Reserves Intermediate Fund class, on June
1, 1992 pursuant to a Plan of Recapitalization approved by shareholders of
the Investors Series I class. Beginning May 2, 1994, Treasury Reserves
Intermediate Fund class became known as Treasury Reserves Intermediate
Fund A Class.
(2) September 2, 1987 was the date of the initial public offering of Investors
Series I class (see Note 1); the ratios of expenses and net investment
income to average daily net assets and portfolio turnover have been
omitted as management believes that such ratios for this relatively short
of a time period are not meaningful.
(3) The per share data and ratios for the Investors Series I class and the
Treasury Reserves Intermediate Fund Institutional Class have been combined
for 1992. For the five months ended May 31, 1992, the Investors Series I
class' operating expenses and net investment income per share were $.031
and $.325, respectively. For the seven months ended December 31, 1992, the
Treasury Reserves Intermediate Fund Institutional Class' operating
expenses and net investment income per share were $.045 and $.429,
respectively. All net investment income was distributed to shareholders.
(4) Total return for 1991 and 1992 reflect the expense limitations referenced
in Notes 5 and 6.
(5) Ratio of expenses to average daily net assets prior to expense limitation
was 0.78% for 1992 and 0.84% for 1991 for Treasury Reserves Intermediate
Fund Institutional Class. See Note 1.
(6) Ratio of net investment income to average daily net assets prior to
expense limitation was 7.54% for 1992 and 8.02% for 1991 for Treasury
Reserves Intermediate Fund Institutional Class. See Note 1.
4
<PAGE> 7
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, where the
income stream can be left to compound on a tax-deferred basis.
The Series' objective is also suitable for investors 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.
5
<PAGE> 8
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 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.
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.
6
<PAGE> 9
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.
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<PAGE> 10
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 purchases; (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.
BUYING SHARES
The Distributor serves as the national distributor for the Fund. Shares of
the Class may be purchased directly by contacting the Fund or its agent or
through authorized investment dealers. All purchases are at net asset value.
There is no sales charge.
INVESTMENT INSTRUCTIONS GIVEN ON BEHALF OF PARTICIPANTS IN AN
EMPLOYER-SPONSORED RETIREMENT PLAN ARE MADE IN ACCORDANCE WITH DIRECTIONS
PROVIDED BY THE EMPLOYER. EMPLOYEES CONSIDERING PURCHASING SHARES OF THE CLASS
AS PART OF THEIR RETIREMENT PROGRAM SHOULD CONTACT THEIR EMPLOYER FOR DETAILS.
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<PAGE> 11
Shares of the Class are available for purchase only by (a) retirement
plans introduced by persons not associated with brokers or dealers that are
primarily engaged in the retail securities business and rollover individual
retirement accounts from such plans; (b) tax-exempt employee benefit plans of
the Manager or its affiliates and securities dealer firms with a selling
agreement with the Distributor; (c) institutional advisory accounts of the
Manager or its affiliates and those having client relationships with Delaware
Investment Advisers, a division of the Manager, or its affiliates and their
corporate sponsors, as well as subsidiaries and related employee benefit plans
and rollover individual retirement accounts from such institutional advisory
accounts; (d) banks, trust companies and similar financial institutions
investing for their own account or for the account of their trust customers for
whom such financial institution is exercising investment discretion in
purchasing shares of the Class; and (e) registered investment advisers
investing on behalf of clients that consist solely of institutions and high
net-worth individuals having at least $1,000,000 entrusted to the adviser for
investment purposes, but only if the adviser is not affiliated with a broker or
dealer and derives compensation for its services exclusively from its clients
for such advisory services.
TREASURY RESERVES INTERMEDIATE FUND A CLASS AND
TREASURY RESERVES INTERMEDIATE FUND B CLASS
In addition to offering the Treasury Reserves Intermediate Fund
Institutional Class of shares, the Series also offers the Treasury Reserves
Intermediate Fund A Class and Treasury Reserves Intermediate Fund B Class,
which are described in a separate prospectus relating only to those classes.
Shares of Treasury Reserves Intermediate Fund A Class and Treasury Reserves
Intermediate Fund B Class may be purchased through authorized investment
dealers or directly by contacting the Fund or its agent. The Treasury Reserves
Intermediate Fund A Class carries a front-end sales charge and has annual 12b-1
expenses equal to a maximum of .30%. The maximum front-end sales charge as a
percentage of the offering price is 3.00% (3.10% as a percentage of the amount
invested) and is reduced on certain transactions of $100,000 or more. The
Treasury Reserves Intermediate Fund B Class has no front-end sales charge, but
is subject to annual 12b-1 expenses equal to a maximum of 1%. Shares of
Treasury Reserves Intermediate Fund B Class and certain shares of the Treasury
Reserves Intermediate Fund A Class may be subject to a contingent deferred
sales charge upon redemption. Sales or service compensation available in
respect of such classes, therefore, differs from that available in respect of
the Treasury Reserves Intermediate Fund Institutional Class. All three classes
of shares of the Series have a proportionate interest in the underlying
portfolio of securities of the Series. Total Operating Expenses incurred by the
Treasury Reserves Intermediate Fund A Class as a percentage of average daily
net assets for the fiscal year ended December 31, 1994 were 0.91%, including
12b-1 expenses. Based on expenses incurred by the Treasury Reserves
Intermediate Fund A Class during its fiscal year ended December 31, 1994, the
expenses of the Treasury Reserves Intermediate Fund B Class are expected to be
1.76%, including 12b-1 expenses, for the fiscal year ending December 31, 1995.
See Part B for performance information about the Treasury Reserves Intermediate
Fund A Class and the Treasury Reserves Intermediate Fund B Class. To obtain a
prospectus relating to such classes, contact the Distributor.
HOW TO BUY SHARES
The Series makes it easy to invest by mail, by wire, by exchange and by
arrangement with your investment dealer. In all instances, investors must
qualify to purchase shares of the Class.
INVESTING DIRECTLY BY MAIL
1. Initial Purchases--An Investment Application must be completed, signed and
sent with a check payable to Treasury Reserves Intermediate Fund Institutional
Class, 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 Institutional
Class. Your check should be identified with your name(s) and account number.
INVESTING DIRECTLY BY WIRE
You may purchase shares by requesting your bank to transmit funds by wire
to CoreStates Bank, N.A., ABA #031000011, account number 0114-2596 (include
your name(s) and your account number for the Series and class in which you are
investing).
1. Initial Purchases--Before you invest, telephone the Fund's Client Services
Department at 800-828-5052 to get an account number. If you do not call first,
it may delay processing your investment. In addition, you must promptly send
your Investment Application to Treasury Reserves Intermediate Fund
Institutional Class, 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 must advise your Client
Services Representative by telephone at 800-828-5052 prior to sending your
wire.
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<PAGE> 12
INVESTING BY EXCHANGE
If you have an investment in another mutual fund in the Delaware Group and
you qualify to purchase shares of the Class, you may write and authorize an
exchange of part or all of your investment into the Class. Shares of Treasury
Reserves Intermediate Fund B Class and the Class B Shares of the other funds in
the Delaware Group offering such a class of shares may not be exchanged into
the Class. If you wish to open an account by exchange, call your Client
Services Representative at 800-828-5052 for more information.
INVESTING THROUGH YOUR INVESTMENT DEALER
You can make a purchase of Class shares through most investment dealers
who, as part of the service they provide, must transmit orders promptly. They
may charge for this service.
PURCHASE PRICE AND EFFECTIVE DATE
The purchase price (net asset value) is determined as of the close of
regular trading on the New York Stock Exchange (ordinarily, 4 p.m., Eastern
time) on days when 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 share price 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 cancelled 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.
REDEMPTION AND EXCHANGE
REDEMPTION AND EXCHANGE REQUESTS MADE ON BEHALF OF PARTICIPANTS IN AN
EMPLOYER-SPONSORED RETIREMENT PLAN ARE MADE IN ACCORDANCE WITH DIRECTIONS
PROVIDED BY THE EMPLOYER. EMPLOYEES SHOULD THEREFORE CONTACT THEIR EMPLOYER FOR
DETAILS.
Your shares will be redeemed or exchanged based on the net asset value
next determined after we receive your request in good order. Redemption and
exchange requests received in good order after the time the net asset value of
shares is determined, as noted above, will be processed on the next business
day. See Purchase Price and Effective Date under Buying Shares. Except as
otherwise noted below, for a redemption request to be in "good order," you must
provide your Class account number, account registration, and the total number
of shares or dollar amount of the transaction. 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 800-828-5052.
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. The Fund
reserves the right to reject a written or telephone redemption request or delay
payment of redemption proceeds if there has been a recent change to the
shareholder's address of record.
Shares of the Class may be exchanged into any other Delaware Group mutual
fund provided: (1) the investment satisfies the eligibility and other
requirements set forth in the prospectus of the fund being acquired, including
the payment of any applicable front-end sales charge; and (2) the shares of the
fund being acquired are in a state where that fund is registered. If exchanges
are made into other shares that are eligible for purchase only by those
permitted to purchase shares of the Class, such exchange will be exchanged at
net asset value. Shares of the Class may not be exchanged into the Class B
Shares of the funds in the Delaware Group. 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.
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<PAGE> 13
Different redemption and exchange methods are outlined below. There is no
fee charged by the Fund or the Distributor for redeeming or exchanging your
shares. You may also have your investment dealer arrange to have your shares
redeemed or exchanged. Your investment dealer may charge for this service.
All authorizations given by shareholders 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
YOU 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 for Retirement Plans.
See Part B for additional information.
WRITTEN REDEMPTION AND EXCHANGE
You can write to the Fund at 1818 Market Street, Philadelphia, PA 19103 to
redeem some or all of your Class shares or to request an exchange of any or all
of your shares into another mutual fund in the Delaware Group, subject to the
same conditions and limitations as other exchanges noted above. 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 may require a signature guarantee. Each signature
guarantee must be supplied by an eligible guarantor institution. The Fund
reserves the right to reject a signature guarantee supplied by an eligible
institution based on its creditworthiness. The Fund may require further
documentation from corporations, executors, retirement plans, administrators,
trustees or guardians.
The redemption request is effective at the net asset value next determined
after it is received in good order. Payment is normally mailed the next
business day, but no later than seven days, after receipt of your request. The
Fund does not issue certificates for shares unless you submit a specific
request. If your shares are in certificate form, the certificate must accompany
your request and also be in good order.
Shareholders also may submit their written request for redemption or
exchange by facsimile transmission at the following number: 215-972-8864.
TELEPHONE REDEMPTION AND EXCHANGE
To get the added convenience of the telephone redemption and exchange
methods, you must have the Transfer Agent hold your shares (without charge) for
you. If you choose to have your shares in certificate form, you can only redeem
or exchange by written request and you must return your certificates.
The Telephone Redemption service enabling redemption proceeds to be mailed
to the account 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.
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 Class shares which are reasonably believed to be genuine. With
respect to such telephone transactions, the Fund will follow reasonable
procedures to confirm that instructions communicated by telephone are genuine
(including verification of a form of personal identification) as, if it does
not, the Fund or the Transfer Agent may be liable for any losses due to
unauthorized or fraudulent transactions. A written confirmation will be
provided for all purchase, exchange and redemption transactions initiated by
telephone. By exchanging shares by telephone, 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
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.
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<PAGE> 14
TELEPHONE REDEMPTION--PROCEEDS TO YOUR BANK
Redemption proceeds of $1,000 or more can be transferred to your
predesignated bank account by wire or by check. You should authorize this
service when you open your account. If you change your predesignated bank
account, the Fund requires a written authorization and may require that you
have your signature guaranteed. For your protection, your authorization must be
on file. If you request a wire, your funds will normally be sent the next
business day. CoreStates Bank, N.A.'s fee (currently $7.50) will be deducted
from your redemption. If you ask for a check, it will normally be mailed the
next business day, but no later than seven days, after receipt of your request
to your predesignated bank account. There are no fees for this method, but the
mail time may delay getting funds into your bank account. Simply call your
Client Services Representative prior to the time the net asset value is
determined, as noted above.
TELEPHONE EXCHANGE
You or your investment dealer of record can exchange shares into any fund
in the Delaware Group under the same registration. As with the written exchange
service, telephone exchanges are subject to the same conditions and limitations
as other exchanges noted above. Telephone exchanges may be subject to
limitations as to amounts or frequency.
DIVIDENDS AND DISTRIBUTIONS
The Fund declares a dividend to all shareholders of record of the Class at
the time the net asset value per share 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 Class shares 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 the Class will not incur any
distribution fee under the Series' 12b-1 Plans which apply to the Treasury
Reserves Intermediate Fund A Class and the Treasury Reserves Intermediate Fund
B Class.
The dividends are declared daily and paid monthly on the last business day
of each month. Dividends and distributions, if any, will be automatically
reinvested in a shareholder's account at net asset value unless the shareholder
elects otherwise. 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.
Both types of dividends, if any, are automatically reinvested in your account
at net asset value.
For the fiscal year ended December 31, 1994, dividends totaling $0.681 per
share of the Class were paid from net investment income.
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, even
though received 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, received in
additional shares, are taxable to those investors who are subject to income
taxes as long-term capital gains, regardless of the length of time an investor
has owned shares in the Series. The Series 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.
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<PAGE> 15
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 portfolios or series of a mutual fund). Any
loss incurred on sale or exchange of the Series' shares which had been held for
six months or less will be treated as a long-term capital loss to the extent of
capital gain dividends received with respect to such shares.
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.
CALCULATION OF NET ASSET VALUE PER SHARE
The purchase and redemption price of the Class is the net asset value
("NAV") per share next determined after the order is received. The NAV is
computed as of the close of regular trading on the New York Stock Exchange
(ordinarily, 4 p.m., Eastern time) on days when 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 that the Class will not incur any of the
expenses under the Series' 12b-1 Plans and Treasury Reserves Intermediate Fund
A and B Classes alone will bear the 12b-1 Plan fees payable under their
respective Plans. Due to the specific distribution expenses and other costs
that will be allocable to each class, the dividends paid to each class of the
Series may vary. However, the NAV per share of each class is expected to be
equivalent.
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<PAGE> 16
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.
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 transaction 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.
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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.
PERFORMANCE INFORMATION
From time to time, the Series may quote yield or total return performance
of the Class in advertising and other types of literature. The current yield
for the Class will be calculated by dividing the annualized net investment
income earned by the Class during a recent 30-day period by the net asset value
per share on the last day of the period. The yield formula provides for
semi-annual compounding which assumes that net investment income is earned and
reinvested at a constant rate and annualized at the end of a six-month period.
Total return will be based on a hypothetical $1,000 investment, reflecting the
reinvestment of all distributions at net asset value. Each presentation will
include the average annual total return for one-, five- and ten-year (or life
of fund, if applicable) periods. The Series may also advertise aggregate and
average total return information concerning the Class over additional periods
of time.
Yield and net asset value fluctuate and are not guaranteed. Past
performance is not an indication of future results.
STATEMENTS AND CONFIRMATIONS
You will receive monthly statements of your account as well as
confirmations of all investments and redemptions. You should examine statements
and confirmations immediately and promptly report any discrepancy by calling
your Client Services Representative.
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 Fund's investments and performance. The Fund's fiscal year ends on December
31.
DISTRIBUTION AND SERVICE
The Distributor, Delaware Distributors, L.P. (which formerly conducted
business as Delaware Distributors, Inc.), serves as the national distributor
for the Series under an Amended and Restated Distribution Agreement dated May
2, 1994. It bears all of the costs of promotion and distribution.
The Transfer Agent, Delaware Service Company, Inc., serves as the
shareholder servicing, dividend disbursing and transfer agent for the Series
under an Agreement dated June 29, 1988. The unaffiliated directors review
service fees paid to the Transfer Agent. Certain recordkeeping and other
shareholder services that otherwise would be performed by the Transfer Agent
may be performed by certain other entities and the Transfer Agent may elect to
enter into an agreement to pay such other entities for those services. In
addition, participant account maintenance fees may be assessed for certain
recordkeeping provided as part of retirement plan and administration service
packages. These fees are based on the number of participants in the plan and
the various services selected by the employer. Fees will be quoted upon request
and are subject to change.
The Distributor and the Transfer Agent are also indirect, wholly-owned
subsidiaries of DMH.
EXPENSES
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
ratio of expenses to average daily net assets for the Class was 0.76% for the
fiscal year ended December 31, 1994.
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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 as 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.
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 A Class and
the Treasury Reserves Intermediate Fund B Class of shares which represent a
proportionate interest in the assets of the Series and have the same voting and
other rights and preferences as the Class, except that shares of the Class may
not vote on matters affecting the Series' Distribution Plans under Rule 12b-1
relating to the Treasury Reserves Intermediate Fund A Class and the Treasury
Reserves Intermediate Fund B Class. Two hundred million shares each have been
allocated to the Treasury Reserves Intermediate Fund Institutional Class and
the Treasury Reserves Intermediate Fund B Class and one billion shares have
been allocated to the Treasury Reserves Intermediate Fund A Class.
Until May 31, 1992, the Series offered two retail classes of shares,
Investors Series II class (now the Treasury Reserves Intermediate Fund Class)
and the Investors Series I class. Shares of Investors Series I class were
offered with a 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 was known as Treasury Reserves
Intermediate Fund (Institutional) class and Treasury Reserves Intermediate Fund
A Class was known as the Treasury Reserves Intermediate Fund class. The
Treasury Reserves Intermediate Fund B Class of the Series was 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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<PAGE> 21
For more information contact the Delaware Group at 800-828-5052.
INVESTMENT MANAGER
Delaware Management Company, Inc.
One Commerce Square
Philadelphia, PA 19103
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
<TABLE>
<S> <C>
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING [PHOTO OF GEORGE WASHINGTON CROSSING THE DELAWARE RIVER]
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
</TABLE>
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-047-2/95-ALG
Printed in the U.S.A.
TREASURY
RESERVES
INTERMEDIATE
FUND
- ------------
INSTITUTIONAL
PROSPECTUS
FEBRUARY 28, 1995
DELAWARE
GROUP
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