<PAGE>
DELAWARE GROUP
DELCAP FUND, INC.
PROSPECTUS SUPPLEMENT FOR RESIDENTS OF VERMONT
While not a fundamental policy, under normal market
conditions, the Fund invests principally in securities issued by
small to mid-cap companies, those having a market
capitalization generally of less than $3 billion. As a general
matter, small to mid-cap companies may have more limited product
lines, markets and financial resources than large-
cap companies. In addition, securities of small and mid-cap
companies, generally, may trade less frequently (and with a
lesser volume), may be more volatile and may be somewhat less
liquid than securities issued by larger capitalization companies.
<PAGE>
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PROSPECTUS
NOVEMBER 29, 1994
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DELCAP FUND INSTITUTIONAL
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1818 Market Street
Philadelphia, PA 19103
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For more information about the
DelCap Fund Institutional Class
call the Delaware Group at 800-828-5052.
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TABLE OF CONTENTS
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Cover Page 1
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Synopsis 2
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Summary of Expenses 3
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Financial Highlights 4
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Investment Objective and Policy
Investment Strategy 5
Suitability 6
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Buying Shares 7
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Redemption and Exchange 9
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Dividends and Distributions 10
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Taxes 11
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Calculation of Net Asset Value Per Share 12
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Management of the Fund 12
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Delaware Group DelCap Fund, Inc. (the "Fund") is a
professionally-managed mutual fund of the series type. This
Prospectus describes the DelCap Fund Institutional Class (the
"Class") of the Fund's Concept I Series (the "Series"). The
Series intends to achieve its objective of long-term capital
appreciation by investing its assets in a diversified
portfolio of securities offering significant growth
opportunity.
Shares of this Class are available for purchase only by
certain enumerated institutions and are offered at net asset
value without the imposition of a front-end or contingent
deferred sales charge and without a 12b-1 charge. See Buying
Shares.
This Prospectus relates only to the Class and sets forth
information that you should read and consider before you
invest. Please retain it for future reference. Part B of
the Fund's registration statement, dated November 29, 1994,
as it may be amended from time to time, contains additional
information about the Fund and has been filed with the
Securities and Exchange Commission. Part B is incorporated
by reference into this Prospectus and is available, without
charge, by writing to Delaware Distributors, Inc. 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 DelCap Fund A Class and the
DelCap Fund B Class. Shares of the DelCap Fund A Class carry
a front-end sales charge and are subject to ongoing
distribution expenses. Shares of the DelCap Fund B Class are
subject to ongoing distribution expenses and a contingent
deferred sales charge upon redemption.
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.
<PAGE>
SYNOPSIS
Capitalization
The Series offers the DelCap Fund Institutional Class,
the DelCap Fund A Class and the DelCap Fund B Class. The
Fund has a present authorized capitalization of five hundred
million shares of capital stock with a $.01 par value per
share. Fifty million shares of that stock have been
allocated to the DelCap Fund Institutional Class, one hundred
fifty million shares have been allocated to the DelCap A Fund
Class and one hundred fifty million shares have been
allocated to the DelCap 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,
Inc. (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 long-term capital
growth by investing in common stocks and securities
convertible into common stocks of companies that have a
demonstrated history of growth and have the potential to
support continued growth. See Investment Objective and
Policy.
Special Considerations
The Series may enter into options for hedging purposes
to counterbalance portfolio volatility. While the Series
does not engage in options for speculative purposes, there
are risks which result from use of these instruments by the
Series, and the investor should review the descriptions of
such in this Prospectus. See Investment Strategy under
Investment Objective and Policy.
Open-End Investment Company
The Fund, which was organized as a Maryland corporation
in 1985, is an open-end management investment company and the
Series' portfolio of assets is diversified. 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 3/4 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.
<PAGE>
SUMMARY OF EXPENSES
Shareholder Transaction Expenses
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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**
Annual Operating Expenses
(as a percentage of
average daily net assets)
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Management Fees . . . . . . . . . . . . . . . . . 0.75%
12b-1 Fees. . . . . . . . . . . . . . . . . . . . None
Other Operating Expenses. . . . . . . . . . . . . 0.30%
----
Total Operating Expenses . . . . . . . . . . 1.05%
=====
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 DelCap Fund A Class
and DelCap 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.
1 year 3 years 5 years 10 years
------ ------- ------- --------
$11 $33 $58 $128
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.
<PAGE>
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FINANCIAL HIGHLIGHTS
The following financial highlights are derived from the
financial statements of Delaware Group DelCap Fund - Concept
I 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 Fund's 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.
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<TABLE>
<CAPTION>
Period
Year 11/9/92/3/
Ended through YearEnded
9/30/94 9/30/93 9/30/93/1/ 9/30/92/1/ 9/30/91/1/
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period . . . . . . $26.140 $22.000 $20.730 $21.470 $15.810
Income (Loss) From In-
- ---------------
vestment Operations
- -------------------
Net Investment
Income (Loss). . . (0.080) (0.027) (0.125) (0.059) 0.064
Net Gains (Losses)
on Securities (both
realized and
nrealized). . . . 0.470 4.167 5.475 (0.651) 6.496
------- ------- ------- ------- -------
Total From
Investment
Operations. . . 0.390 4.140 5.350 (0.710) 6.560
----- ----- ------ ------- ------
Less Distributions
- ------------------
Dividends from
Net Investment
Income. . . . . . none none none (0.030) (0.410)
Distributions
from Capital
Gains . . . . . . (0.820) none none none (0.490)
Returns of
Capital. . . . . . none none none none none
---- ---- ---- ---- ----
Total Distri-
butions . . . (0.820) none none (0.030) (0.900)
------- ---- ---- ------- -------
Net Asset Value,
End of Period. . $25.710 $26.140 $26.080 $20.730 $21.470
======= ======= ======= ======= =======
- -----------------------------------------------------------------
Total Return . . . 1.48% 21.31% 25.81%/5/ (3.32%)/5/ 43.25%/5/
- ------------
- -----------------------------------------------------------------
Ratios/Supplemental
- -------------------
Data
- ----
Net Assets, End
of Period (000's
Omitted) . . . . $110,126 $85,588 $1,057,358 $993,125 $512,356
Ratio of Expenses
to Average
Net Assets . . . 1.05% 1.02% 1.30% 1.39% 1.43%
Ratio of Net
Investment Income
(Loss) to Average
Net Assets . . . (0.38%) (0.15%) (0.43%) (0.26%) 0.63%
Portfolio Turnover
Rate . . . . . . 34% 51% 51% 24% 33%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Period
3/27/86/1/2/
Year Ended through
9/30/90/1/ 9/30/89/1/ 9/30/88/1/ 9/30/87/1/ 9/30/86
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period . . . . . $19.060 $13.920 $14.930 $16.540 $9.530
Income (Loss) From In-
- ---------------
vestment Operations
- -------------------
Net Investment
Income (Loss). . . 0.419 0.201 0.042 0.449 (0.013)
Net Gains (Losses)
on Securities (both
realized and
unrealized). . . . (3.219) 5.059 (0.357) 5.361 7.023
------- ------- ------- ------ ------
Total From
Investment
Operations. . . (2.800) 5.260 (0.315) 5.810 7.010
------- ------- ------- ------- ------
Less Distributions
- ------------------
Dividends from
Net Investment
Income. . . . . . (0.160) (0.120) (0.430) none none
Distributions
from Capital
Gains . . . . . . (0.290) none (0.265) (7.420) none
Returns of
Capital. . . . . . none none none none none
---- ---- ---- ---- ----
Total Distri-
butions . . . . (0.450) (0.120) (0.695) (7.420) none
-------- -------- ------- ------- ----
Net Asset Value,
End of Period. . . $15.810 $19.060 $13.920 $14.930 $16.540
======= ======= ======= ======= =======
- -----------------------------------------------------------------
Total Return . . (14.99%)/5/ 38.15%/5/ (2.26%)/5/ 3.07%/4/5/ 191.66%/4/5/
- ------------
- -----------------------------------------------------------------
Ratios/Supplemental
- -------------------
Data
- ----
Net Assets, End
of Period (000's
omitted) . . . . . $155,392 $138,589 $114,122 $131,916 $4,347
Ratio of Expenses
to Average
Net Assets . . . . 1.41% 1.44% 1.55% 1.39%/6/ 0.74%/6/
Ratio of Net
Investment Income
(Loss) to Average
Net Assets . . . . 2.61% 1.28% 0.31% 7.11%/7/ (0.08%)/7/
Portfolio Turnover
Rate . . . . . . . 45% 42% 77% 127% 293%
</TABLE>
/1/ Data are derived from data of the DelCap Fund A Class
(prior to September 6, 1994, referred to as the DelCap
Fund class) and reflect the impact of Rule 12b-1
distribution expenses paid by the DelCap Fund A Class.
DelCap Fund Institutional Class shares (prior to
September 6, 1994, referred to as the DelCap Fund
(Institutional) class) are not subject to Rule 12b-1
distribution expenses and per share data for periods
beginning on and after November 9, 1992 will not
reflect the deduction of such expenses.
/2/ Date of initial public offering of the DelCap Fund A
Class; ratios and total return have been annualized.
/3/ Date of initial public offering of the DelCap Fund
Institutional Class; ratios and total return for this
period have been annualized.
/4/ Total return for 1987 and 1986 reflects the expense
limitation referenced in Notes 6 and 7.
/5/ Total return data is derived from performance of the
DelCap Fund A Class, but does not reflect the maximum
sales charge of 5.75% applicable to that class nor the
1% limited contingent deferred sales charge that would
apply in the event of certain redemptions within 12
months of purchase.
/6/ Ratio of expenses to average net assets prior to
expense limitation was 1.73% for 1987 and 1.21% for
1986.
/7/ Ratio of net investment income (loss) to average net
assets prior to expense limitation was 6.77% for 1987
and (0.55%) for 1986.
<PAGE>
INVESTMENT OBJECTIVE AND POLICY
The objective of the Series is long-term capital growth.
The strategy will be to invest primarily in common stocks
that, in the judgment of the Manager, are of superior quality
and those securities convertible into such common stocks.
Securities purchased will be of companies whose earnings
the Manager believes will grow more rapidly than the average
of those listed in the Standard & Poor's ("S&P") 500 Stock
Index. The Manager's emphasis will be on the securities of
companies that, in its judgment, have the characteristics
that will enable them to grow faster than the economy as
measured by the Index.
This judgment will be based on the financial strength of
the company, the expertise of its management, the growth
potential of the company within its industry and the growth
potential of the industry itself.
The Manager will focus primarily on those securities of
companies it believes have established themselves within
their industry while maintaining growth potential. If the
Manager believes that market conditions warrant, the Series
may employ certain option strategies involving the activities
and instruments described below. Also, on a temporary,
defensive basis, the Manager may invest in fixed income
obligations.
Although the Series will constantly strive to attain the
objective of long-term capital growth, there can be no
assurance that it will be attained. The objective of the
Series may not be changed without shareholder approval.
INVESTMENT STRATEGY
The Series will attempt to achieve its objective by
exceeding the return of common stocks as measured by the S&P
500 Stock Index. While management believes its objective may
best be attained by investing in common stocks, the Series
may also invest in other securities including, but not
limited to, convertible securities, warrants, preferred
stocks, bonds and foreign securities. The strategies
employed are dependent upon the judgment of the Manager.
In investing for capital appreciation, the Series may
hold securities for any period of time.
Should the market warrant a temporary, defensive
approach, the Series may also invest in fixed income
obligations issued or guaranteed by the U.S. government, its
agencies or instrumentalities as well as corporate bonds of
investment quality rated Baa or above by Moody's Investors
Service, Inc. or BBB or above by S&P. (Appendix A in Part B
describes these ratings.)
The Series may write covered call options on individual
issues as well as write call options on stock indices. The
Series may also purchase put options on individual issues and
on stock indices. The Manager will employ these techniques
in an attempt to protect appreciation attained, to offset
capital losses and to take advantage of the liquidity
available in the option markets. The ability to hedge
effectively using options on stock indices will depend, in
part, on the correlation between the composition of the index
and the Series' portfolio as well as the price movement of
individual securities. The Manager may also write covered
call options to achieve income to offset the cost of
purchasing put options.
While there is no limit on the amount of the Series'
assets which may be invested in covered call options, the
Series will not invest more than 2% of its net assets in put
options. The Series will only use Exchange-traded options.
Call Options
Writing Covered Call Options
A covered call option obligates the Series to sell one
of its securities for an agreed price up to an agreed date.
The advantage is that the Series receives premium income,
which may offset any decline in market value of the security.
However, if the Manager's forecast is wrong, the Series may
not fully participate in the market appreciation if the
security's price rises.
Writing a Call Option on Stock Indices
Writing a call option on stock indices is similar to the
writing of a call option on an individual stock. Stock
indices used will include, but not be limited to, the S&P 100
and the S&P Over-The-Counter ("OTC") 250.
Put Options
Purchasing a Put Option
A put option gives the Series the right to sell one of
its securities for an agreed price up to an agreed date. The
advantage is that the Series can be protected should the
market value of the security decline. However, the Series
must pay a premium for this right whether or not the put
option is exercised.
Purchasing a Put Option on Stock Indices
Purchasing a protective put option on stock indices is
similar to the purchase of protective puts on an individual
stock. Indices used will include, but not be limited to, the
S&P 100 and the S&P OTC 250.
Closing Transactions
Closing transactions essentially let the Series offset a
put option or covered call option prior to its exercise or
expiration. If the Series cannot effect a closing
transaction, it may have to hold a security it would
otherwise sell or deliver a security it might want to hold.
<PAGE>
Foreign Securities
The Series may invest up to 25% of its assets in foreign
securities. Foreign markets may be more volatile than U.S.
markets. Such investments involve sovereign risk in addition
to the normal risks associated with American securities.
These risks include political risks, foreign taxes and
exchange controls and currency fluctuations. For example,
foreign portfolio investments may fluctuate in value due to
changes in currency rates (i.e., the value of foreign
investments would increase with a fall in the value of the
dollar, and decrease with a rise in the value of the dollar)
and control regulations apart from market fluctuations. The
Series may also experience delays in foreign securities
settlement.
The Fund's Custodian for its foreign securities is
Morgan Guaranty Trust Company of New York, located at 60 Wall
Street, New York, New York 10260.
American Depository Receipts
The Series may make foreign investments through the
purchase and sale of sponsored or unsponsored American
Depository Receipts ("ADRs"). ADRs are receipts typically
issued by a U.S. bank or trust company which evidence
ownership of underlying securities issued by a foreign
corporation. "Sponsored" ADRs are issued jointly by the
issuer of the underlying security and a depository, whereas
"unsponsored" ADRs are issued without participation of the
issuer of the deposited security. Holders of unsponsored
ADRs generally bear all the costs of such facilities and the
depository of an unsponsored facility frequently is under no
obligation to distribute shareholder communications received
from the issuer of the deposited security or to pass through
voting rights to the holders of such receipts in respect of
the deposited securities. Therefore, there may not be a
correlation between information concerning the issuer of the
security and the market value of an unsponsored ADR.
Repurchase Agreements
The Series may also use repurchase agreements that 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. The Series may
invest cash balances in joint repurchase agreements with
other Delaware Group funds. 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 in
liquidating the securities. To minimize this possibility,
the Series considers the creditworthiness of banks and
dealers when entering into repurchase agreements.
* * *
The Series is permitted under certain circumstances to
borrow money. Investment securities will not be purchased
while the Series has an outstanding borrowing.
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.
Part B sets forth other more specific investment
restrictions.
SUITABILITY
The Series may be suitable for the patient investor
interested in long-term capital appreciation. The investor
should be willing to accept the risks associated with
investments in domestic and international securities.
Ownership of Series shares reduces the bookkeeping and
administrative inconveniences connected with direct purchases
of these securities.
Net asset value may fluctuate at times in response to
market conditions and, as a result, the Series is not
appropriate for a short-term investor.
This Series is designed primarily for long-term capital
appreciation. Providing current income is not an objective
of the Series. Any income produced is expected to be
minimal. An investor should not consider a purchase of
Series shares as equivalent to a complete investment program.
The Delaware Group includes a family of funds generally
available through registered investment dealers which may be
used in concert to create a more complete investment program.
<PAGE>
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.
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 the account of their
trust customer 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.
DelCap Fund A Class and DelCap Fund B Class
In addition to offering the DelCap Fund Institutional
Class, the Series also offers the DelCap Fund A Class and the
DelCap Fund B Class, which are described in a separate
prospectus relating only to those classes. Shares of DelCap
Fund A Class and DelCap Fund B Class may be purchased through
authorized investment dealers or directly by contacting the
Fund or its agent. The DelCap 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 5.75% (6.10% as a
percentage of the amount invested) and is reduced on certain
transactions of $100,000 or more. The DelCap 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 the DelCap Fund
B Class and certain shares of the DelCap 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 DelCap Fund Institutional Class.
All three classes of shares have a proportionate interest in
the underlying portfolio of securities of the Fund. Total
Operating Expenses incurred by the DelCap Fund A Class as a
percentage of average daily net assets for the fiscal year
ended September 30, 1994 were 1.35%. Total Operating
Expenses expected to be incurred by the DelCap Fund B Class
are 2.05%, based on expenses incurred by the DelCap Fund A
Class during the fiscal year ended September 30, 1994. See
Part B for performance information about DelCap Fund A Class
and DelCap Fund B Class. To obtain a prospectus relating to
the DelCap Fund A Class and the DelCap Fund B Class, contact
the Distributor.
<PAGE>
HOW TO BUY SHARES
The Fund makes it easy to invest by mail, by wire, by
exchange and by arrangement with your investment dealer. In
all instances, investors must qualify to purchase the Class.
Investing Directly by Mail
1. Initial Purchases--An Investment Application must be
completed, signed and sent with a check, payable to DelCap
Fund Institutional Class, to 1818 Market Street,
Philadelphia, PA 19103.
2. Subsequent Purchases--Additional purchases may be made
at any time by mailing a check payable to DelCap 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 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 DelCap Fund Institutional
Class, to 1818 Market Street, Philadelphia, PA 19103.
2. Subsequent Purchases--You may make additional
investments anytime by wiring funds to CoreStates Bank, N.A.,
as described above. You must advise your Client Services
Representative by telephone at 800-828-5052 prior to sending
your wire.
Investing by Exchange
If you have an investment in another mutual fund in the
Delaware Group and you qualify to purchase shares of the
Class, you may write and authorize an exchange of part or all
of your investment into the Class. Shares of the DelCap 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
Fund. The effective date of a direct purchase is the day
your wire, electronic transfer or check is received, unless
it is received after the time the share price is determined,
as noted above. 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 $250 as a result of
redemptions.
<PAGE>
REDEMPTION AND EXCHANGE
Redemption and exchange requests made on behalf of
participants in an employer-sponsored retirement plan are
made in accordance with directions provided by the employer.
Employees should therefore contact their employer for
details.
Your shares will be redeemed or exchanged 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 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 honor written redemption requests of
shareholders who recently purchased shares by check, but will
not mail the proceeds until it is reasonably satisfied the
purchase check has cleared, which may take up to 15 days from
the purchase date. The Fund will not honor telephone
redemptions for Class shares recently purchased by check
unless it is reasonably satisfied that the purchase check has
cleared. You can avoid this potential delay if you purchase
shares by wiring Federal Funds. The Fund reserves the right
to reject a written or telephone redemption request or delay
payment of redemption proceeds if there has been a recent
change to the shareholder's address of record.
Shares of 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.
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.
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 your Class
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.
<PAGE>
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.
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 will make payments from the Series' net
investment income and net realized securities profits, if
any, twice a year. The first payment normally will be made
during the first quarter of the next fiscal year. The second
payment would be made near the end of the calendar year to
comply with certain requirements of the Internal Revenue
Code.
During the fiscal year ended September 30, 1994,
distributions totaling $0.82 per share of the Class were paid
from realized securities profits.
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 fees under the 12b-
1 Plans which apply to the DelCap Fund A Class and the DelCap
Fund B Class.
Both dividends and distributions, if any, are
automatically reinvested in your account at net asset value.
<PAGE>
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. For corporate
investors, dividends from net investment income will
generally qualify in part for the corporate dividends-
received deduction. The portion of dividends paid by the
Series that so qualifies will be designated each year in a
notice from the Fund to the Series' shareholders.
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.
Although dividends generally will be treated as
distributed when paid, dividends which are declared in
October, November, or December to shareholders of record on a
specified date in one of those months, but which, for
operational reasons, may not be paid to the shareholder until
the following January, will be treated for tax purposes as if
paid by the Series and received by the shareholder on
December 31 of the year declared.
The sale of shares of 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 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 and Distributions and
Taxes in Part B for additional information on tax matters
relating to the Series and its shareholders.
<PAGE>
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. Foreign securities expressed in
foreign currency values will be converted into U.S. dollar
values at the mean between the currencies' bid and offered
quotations. 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
DelCap 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 net asset value of and dividends
paid to each class of the Series will vary.
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 September 30,
1994, the Manager and its affiliate, Delaware International
Advisers Ltd., were supervising in the aggregate more than
$26 billion in assets in the various institutional
(approximately $16,650,361,000) and investment company
(approximately $9,569,289,000) 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 a
Voting Trust Agreement 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.
The Manager manages the Series' portfolio and makes
investment decisions which are implemented by the Fund's
Trading Department. 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 3/4 of 1% of the average daily net
assets of the Series, less all directors' fees paid to
unaffiliated directors by the Series. The Series' fee is
higher than that paid by many other funds. The fee may be
higher or lower than that paid by funds with comparable
investment objectives. Investment management fees paid by
the Fund for the fiscal year ended September 30, 1994 were
0.75% of average daily net assets.
Edward N. Antoian has primary responsibility for making
day-to-day investment decisions for the Fund. He has been
the Fund's Senior Portfolio Manager since its inception. A
graduate of The State University of New York at Albany with
an MBA in Finance from the University of Pennsylvania's
Wharton School, Mr. Antoian began his career with Price
Waterhouse. Prior to joining the Delaware Group in June
1984, he worked in the Institutional Equity Department of
E.F. Hutton in Philadelphia. A Chartered Financial Analyst,
Mr. Antoian is a member of the Philadelphia Finance
Association and the Philadelphia Securities Association.
<PAGE>
In making investment decisions for the Fund, Mr. Antoian
regularly consults with Wayne A. Stork, David G. Kern, David
C. Dalrymple and other members of Delaware's equity
department. Mr. Stork, Chairman of Delaware Management
Company, Inc. and the Fund's Board of Directors, is a
graduate of Brown University and attended New York
University's Graduate School of Business Administration. Mr.
Kern and Mr. Dalrymple are Assistant Portfolio Managers. Mr.
Kern has been working with Mr. Antoian since 1990. He is a
graduate of Lehigh University. Mr. Dalrymple, a CFA, has
been working with Mr. Antoian since 1991 and is a graduate of
Clarkson University with an MBA from Cornell's Johnson School
of Management.
Portfolio Trading Practices
The Series normally will not invest for short-term
trading purposes. However, the Series may sell securities
without regard to the length of time they have been held.
The degree of portfolio activity will affect brokerage costs
of the Series and may affect taxes payable by the Series'
shareholders. Given the Series' investment objective, its
annual portfolio turnover rate may exceed 100%. A turnover
rate of 100% would occur, for example, if all the investments
in the Series' portfolio at the beginning of the year were
replaced by the end of the year. The turnover rate also may
be affected by cash requirements from redemptions and
repurchases of Series shares. For the fiscal years ended
September 30, 1993 and 1994, the Series' portfolio turnover
rates were 51% and 34%, respectively.
The Series 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 Series 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 total return
performance of the Class in advertising and other types of
literature. Total return will be based on a hypothetical
$1,000 investment, reflecting the reinvestment of all
distributions at net asset value. Each presentation will
include the average annual total return for one-, five- and
ten-year periods, as relevant. The Series may also advertise
aggregate and average total return information concerning the
Class over additional periods of time.
Because securities prices fluctuate, investment results
of the Class will fluctuate over time and past performance
should not be considered as a representation of future
results.
Statements and Confirmations
You will receive quarterly statements of your account 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 Fund
Each fiscal year, you will receive an audited annual
report and an unaudited semi-annual report. These reports
provide detailed information about the Fund's investments and
performance. The Fund's fiscal year ends on September 30.
<PAGE>
Distribution and Service
The Distributor, Delaware Distributors, Inc., serves as
the national distributor for the Fund under an Amended and
Restated Distribution Agreement dated as of September 6,
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 operating expenses to average daily net assets for the
Class was 1.05% for the fiscal year ended September 30, 1994.
Shares
The Fund is an open-end management investment company,
commonly known as a mutual fund, and the Series' portfolio of
assets is diversified. The Concept I Series is the first
and, at this time, only series of the Fund. The Fund was
organized as a Maryland corporation in September 1985.
The Series' shares have a par value of $.01, equal
voting rights, except as noted below, and are equal in all
other respects. 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.
The Series also offers the DelCap Fund A Class and the
DelCap Fund B Class of shares which represent proportionate
interests 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 are not subject to, and may not vote
on matters affecting, the Distribution Plans under Rule 12b-1
relating to the DelCap Fund A Class and the DelCap Fund B
Class.
Prior to September 6, 1994, the DelCap Fund
Institutional Class was known as the DelCap Fund
(Institutional) class and the DelCap Fund A Class was known
as the DelCap Fund class.
<PAGE>
For more information contact the Delaware Group at 800-
828-5052.
INVESTMENT MANAGER
Delaware Management Company, Inc.
One Commerce Square (Photo of George
Philadelphia, PA 19103 Washington crossing
NATIONAL DISTRIBUTOR the Delaware River)
Delaware Distributors, Inc.
1818 Market Street
Philadelphia, PA 19103
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING AND
TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young
One Commerce Square
Philadelphia, PA 19103
INDEPENDENT AUDITORS
Ernst & Young LLP
Two Commerce Square
Philadelphia, PA 19103
CUSTODIAN
Chemical Bank
450 West 33rd Street
New York, NY 10001
----------------------------
DELCAP FUND INSTITUTIONAL
----------------------------
----------------------------
P R O S P E C T U S
----------------------------
NOVEMBER 29, 1994
DELAWARE
GROUP
--------
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.
