<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>
-------------------------------------------------------------
PROSPECTUS
NOVEMBER 29, 1994
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DELCAP FUND
A CLASS SHARES
B CLASS SHARES
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1818 Market Street
Philadelphia, PA 19103
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For Prospectus and Performance:
Nationwide 800-523-4640
Philadelphia 988-1333
Information on Existing Accounts:
(SHAREHOLDERS ONLY)
Nationwide 800-523-1918
Philadelphia 988-1241
Dealer Services:
(BROKER/DEALERS ONLY)
Nationwide 800-362-7500
Philadelphia 988-1050
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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 6
Suitability 7
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The Delaware Difference
Plans and Services 8
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Retirement Planning 9
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Buying Shares 10
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Redemption and Exchange 18
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Dividends and Distributions 22
-------------------------------------------------------------
Taxes 23
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Calculation of Offering Price and
Net Asset Value Per Share 24
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Management of the Fund 24
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<PAGE>
This Prospectus describes the DelCap Fund A Class of
shares (the "Class A Shares") and the DelCap Fund B Class of
shares (the "Class B Shares") (collectively, the "Classes")
of the Concept I Series (the "Series") of Delaware Group
DelCap Fund, Inc. (the "Fund"), a professionally-managed
mutual fund of the series type. 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.
Class A Shares may be purchased at the public offering
price, which is equal to the next determined net asset value
per share, plus a front-end sales charge, and Class B Shares
may be purchased at a price equal to the next determined net
asset value per share. The Class A Shares are subject to a
maximum front-end sales charge of 5.75% and annual 12b-1 Plan
expenses. The Class B Shares are subject to a contingent
deferred sales charge ("CDSC") which may be imposed on
redemptions made within six years of purchase and 12b-1 Plan
expenses which are higher than those to which Class A Shares
are subject and are assessed against the Class B Shares for
no longer than approximately eight years after purchase. See
Summary of Expenses, and Automatic Conversion of Class B
Shares under Buying Shares. These alternatives permit an
investor to choose the method of purchasing shares that is
most beneficial given the amount of the purchase, the length
of time the investor expects to hold the shares and other
circumstances. See Buying Shares.
The minimum initial investment with respect to the Class
A Shares is $250 and with respect to the Class B Shares is
$1,000. Subsequent investments must be at least $25 with
respect to the Class A Shares and $100 with respect to the
Class B Shares. Class B Shares are also subject to a maximum
purchase limitation of $250,000. The Fund will therefore
reject any order for purchase of more than $250,000 for Class
B Shares. See Buying Shares.
This Prospectus relates only to the Classes and sets
forth information that you should read and consider before
you invest. Please retain it for future reference. Part B
of the Fund's registration statement, dated November 29,
1994, 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, Inc. at the above address or by calling the
above numbers. The Series' financial statements appear in
its Annual Report, which will accompany any response to
requests for Part B.
The Series also offers the DelCap Fund Institutional
Class. That class is available for purchase only by certain
enumerated institutions, has no front-end or contingent
deferred sales charge and is not subject to annual 12b-1 Plan
expenses.
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 three classes of shares: the Class A
Shares, the Class B Shares and the DelCap Fund Institutional
Class. The Fund has a present authorized capitalization of
five hundred million shares of capital stock with a $.01 par
value per share. One hundred fifty million shares of that
stock have been allocated to the Class A Shares, one hundred
fifty million shares have been allocated to the Class B
Shares and fifty million shares have been allocated to the
DelCap Fund Institutional Class. See Shares under Management
of the Fund.
Investment Manager, Distributor and Service Agent
Delaware Management Company, Inc. (the "Manager") is the
investment manager for the Fund. The Manager or its
affiliate, Delaware International Advisers Ltd., manages the
other funds in the Delaware Group. Delaware Distributors,
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.
Sales Charge
The price of the Class A Shares includes a maximum
front-end sales charge of 5.75% of the offering price, which
is equivalent to 6.10% of the amount invested, reduced on
certain transactions of at least $100,000 but under
$1,000,000. For purchases of $1,000,000 or more, the front-
end sales charge is eliminated. Class A Shares are also
subject to annual 12b-1 Plan expenses. The price of the
Class B Shares is equal to the net asset value per share.
Class B Shares are subject to a CDSC of: (i) 4% if
shares are redeemed within two years of purchase; (ii) 3% if
shares are redeemed during the third or fourth year following
purchase; (iii) 2% if shares are redeemed during the fifth
year following purchase; and (iv) 1% if shares are redeemed
during the sixth year following purchase. Class B Shares are
also subject to annual 12b-1 Plan expenses for no longer than
approximately eight years after purchase. See Buying Shares
and Automatic Conversion of Class B Shares thereunder; and
Distribution (12b-1) and Service under Management of the
Fund.
Minimum Investment
The minimum initial investment for the Class A Shares is
$250 and for the Class B Shares is $1,000 (see Part B or
contact your investment dealer for each Retirement Plan
minimum), and subsequent investments must be at least $25 for
the Class A Shares and $100 for the Class B Shares. Class B
Shares are also subject to a maximum purchase limitation of
$250,000. See Buying Shares.
Investment Objective
The objective of the Series is to seek 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
The Class A Shares of the Series are redeemed or
exchanged at the net asset value calculated after receipt of
the redemption or exchange request. Neither the Fund nor the
Distributor assesses a charge for redemptions or exchanges of
Class A Shares, except for certain redemptions of shares
purchased at net asset value which may be subject to a
contingent deferred sales charge if such purchases triggered
the payment of a dealer's commission. The Class B Shares are
redeemed or exchanged at the net asset value calculated after
receipt of the redemption or exchange request, less, in the
case of redemptions, any applicable CDSC. Neither the Fund
nor the Distributor assesses any additional charges for
redemptions or exchanges of the Class B Shares. See
Redemption and Exchange.
<PAGE>
SUMMARY OF EXPENSES
A general comparison of the sales arrangements and other
expenses applicable to the Class A and Class B Shares
follows:
Class A Class B
Shareholder Transaction Expenses Shares Shares
-------------------------------------------------------------
Maximum Sales Charge Imposed
on Purchases (as a
percentage of offering price)..... 5.75% None
Maximum Sales Charge Imposed on
Reinvested Dividends (as a
percentage of offering price)..... None None
Contingent Deferred Sales Charge
(as a percentage of original
purchase price or redemption
proceeds, whichever is lower)...... None* 4.00%*
Redemption Fees.................... None** None**
Annual Operating Expenses
(as a percentage of Class A Class B
average daily net assets) Shares Shares
-------------------------------------------------------------
Management Fees.................... 0.75% 0.75%
12b-1 Plan Expenses
(including service fees)........... 0.30%*** 1.00%***
Other Operating Expenses........... 0.30% 0.30%+
----- -----
Total Operating Expenses...... 1.35% 2.05%
===== =====
The purpose of this table is to assist the investor in
understanding the various costs and expenses that an investor
in either of the Classes will bear directly or indirectly.
*With respect to the Class A Shares, purchases of $1 million
or more may be made at net asset value; however, if in
connection with any such purchase, certain dealer commissions
are paid to financial advisers through whom such purchases
are effected, a contingent deferred sales charge of 1% will
be imposed in the event of certain redemptions within 12
months of purchase ("Limited CDSC"). The Class B Shares are
subject to a CDSC of: (i) 4% if shares are redeemed within
two years of purchase; (ii) 3% if shares are redeemed during
the third or fourth year following purchase; (iii) 2%
ifshares are redeemed during the fifth year following
purchase; (iv) 1% if shares are redeemed during the sixth
year following purchase; and (v) 0% thereafter. See
Contingent Deferred Sales Charge for Certain Purchases of
Class A Shares Made at Net Asset Value under Redemption and
Exchange, and Deferred Sales Charge Alternative - Class B
Shares under Buying Shares.
**CoreStates Bank, N.A. currently charges $7.50 per
redemption for redemptions payable by wire.
***Class A Shares and Class B Shares are subject to separate
12b-1 Plans. Long-term shareholders may pay more than the
economic equivalent of the maximum front-end sales charges
permitted by rules of the National Association of Securities
Dealers, Inc. (the "NASD"). See Distribution (12b-1) and
Service.
+"Other Operating Expenses" for Class B Shares are estimates
derived from actual expenses incurred by the Class A Shares
for its fiscal year ended September 30, 1994. Also, see
Delcap Fund Institutional Class for expense information about
that class.
The following example illustrates the expenses that an
investor would pay on a $1,000 investment over various time
periods assuming (1) a 5% annual rate of return and (2)
redemption at the end of each time period. As noted in the
table above, the Fund charges no redemption fees with respect
to the Class A Shares and, if shares are redeemed within six
years after purchase, the Fund charges a CDSC with respect to
the Class B Shares.
1 year 3 years 5 years 10 years
------ ------- ------- --------
Class A Shares $70/1/ $98 $127 $211
1 year 3 years 5 years 10 years
------ ------- ------- --------
Class B Shares $61 $94 $130 $220/2/
An investor would pay the following expenses on the same
$1,000 investment assuming no redemption at the end of the
period:
1 year 3 years 5 years 10 years
------ ------- ------- --------
Class A Shares $70 $98 $127 $211
1 year 3 years 5 years 10 years
------ ------- ------- --------
Class B Shares $21 $64 $110 $220/2/
/1/ Under certain circumstances, a Limited CDSC, which has
not been reflected in this calculation, may be imposed in
the event of certain redemptions within 12 months of
purchase. See Contingent Deferred Sales Charge for
Certain Purchases of Class A Shares Made at Net Asset
Value under Redemption and Exchange.
/2/ At the end of no more than approximately eight years
after purchase, Class B Shares will be automatically
converted into Class A Shares. The example above assumes
conversion of Class B Shares at the end of year eight.
However, the conversion may occur as late as three months
after the eighth anniversary of purchase, during which
time the higher 12b-1 Plan fees payable by Class B Shares
will continue to be assessed. See Automatic Conversion
of Class B Shares under Buying Shares for a description
of the automatic conversion feature. Years nine and ten
reflect expenses of the Class A Shares. The conversion
will constitute a tax-free exchange for federal income
tax purposes. See Taxes.
This example should not be considered a representation of
past or future expenses or performance. Actual expenses may
be greater or less than those shown.
<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>
Class A Shares
- -----------------------------------------------------------------
YearEnded
9/30/94 9/30/93 9/30/92 9/30/91 9/30/90
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period . . . . . . $26.080 $20.730 $21.470 $15.810 $19.060
Income (Loss) From In-
- ----------------------
vestment Operations
- -------------------
Net Investment
Income (Loss). . . (0.218) (0.125) (0.059) 0.064 0.419
Net Gains (Losses)
on Securities (both
realized and
unrealized). . . . 0.528 5.475 (0.651) 6.496 (3.219)
------- ------- ------- ------- -------
Total From
Investment
Operations. . . 0.310 5.350 (0.710) 6.560 (2.800)
------- ------- ------- ------- -------
Less Distributions
- ------------------
Dividends from
Net Investment
Income. . . . . . none none (0.030) (0.410) (0.160)
Distributions
from Capital
Gains . . . . . . (0.820) none none (0.490) (0.290)
Returns of
Capital. . . . . . none none none none none
---- ---- ---- ---- ----
Total Distri-
butions . . . . (0.820) none (0.030) (0.900) (0.450)
-------- ---- -------- -------- --------
Net Asset Value,
End of Period. . . $25.570 $26.080 $20.730 $21.470 $15.810
======= ======= ======= ======= =======
- -----------------------------------------------------------------
- ----------------
Total Return/2/. . 1.17% 25.81% (3.32%) 43.25% (14.99%)
- ------------
- -----------------------------------------------------------------
Ratios/Supplemental
- -------------------
Data
- ----
Net Assets, End
of Period (000's
omitted) . . . . . $890,787 $1,057,358 $993,125 $512,356 $155,392
Ratio of Expenses
to Average
Net Assets . . . . 1.35% 1.30% 1.39% 1.43% 1.41%
Ratio of Net
Investment Income
(Loss) to Average
Net Assets . . . . (0.68%) (0.43%) (0.26%) 0.63% 2.61%
Portfolio Turnover
Rate . . . . . . . 34% 51% 24% 33% 45%
Class A Shares
--------------------------
Period
Year 3/27/86/1/
Ended through
9/30/89 9/30/88 9/30/87 9/30/86
Net Asset Value,
Beginning of
Period . . . . . . $13.920 $14.930 $16.540 $9.530
Income (Loss) From In-
- ----------------------
vestment Operations
- -------------------
Net Investment
Income (Loss). . . 0.201 0.042 0.449 (0.013)
Net Gains (Losses)
on Securities (both
realized and
unrealized). . . . 5.059 (0.357) 5.361 7.023
----- ------- ------ -------
Total From
Investment
Operations. . . 5.260 (0.315) 5.810 7.010
----- ------- ------- -------
Less Distributions
- ------------------
Dividends from
Net Investment
Income. . . . . . (0.120) (0.430) none none
Distributions
from Capital
Gains . . . . . . none (0.265) (7.420) none
Returns of
Capital. . . . . . none none none none
---- ---- ---- ----
Total Distri-
butions . . . . (0.120) (0.695) (7.420) none
------- ------- -------- ----
Net Asset Value,
End of Period. . . $19.060 $13.920 $14.930 $16.540
======= ======= ======= =======
- -------------------------------------------------------------
Total Return/2/. . 38.15% (2.26) 63.07% 191.66%
- ------------
- -------------------------------------------------------------
Ratios/Supplemental
- -------------------
Data
- ----
Net Assets, End
of Period (000's
omitted) . . . . . $138,589 $114,122 $131,916 $4,347
Ratio of Expenses
to Average
Net Assets . . . . 1.44% 1.55% 1.39%/3/ 0.74%/3/
Ratio of Net
Investment Income
(Loss) to Average
Net Assets . . . . 1.28% 0.31% 7.11%/4/ (0.08%)/4/
Portfolio Turnover
Rate . . . . . . . 42% 77% 127% 293%
- --------------------------------------------
/1/Date of initial public offering; ratios and total return
have been annualized.
/2/ Does not reflect maximum sales charge of 5.75% nor the 1%
Limited CDSC that would apply in the event of certain
redemptions within 12 months of purchase. See Contingent
Deferred Sales Charge for Certain Purchases of Class A Shares
Made at Net Asset Value. Total return for 1987 and 1986
reflects the expense limitations referenced in Notes 3 and 4.
/3/ Ratio of expenses to average net assets prior to expense limitation
was 1.73% for 1987 and 1.21% for 1986.
/4/ Ratio of net investment income (loss) to average net assets prior to
expense limitation was 6.77% for 1987 and (0.55%) for 1986.
Class B Shares
----------------
Period
9/6/941
through
9/30/94
Net Asset Value,
Beginning of
Period . . . . . . $25.180
Income (Loss) From In-
- ----------------------
vestment Operations
- -------------------
Net Investment
Income (Loss). . . (0.008)
Net Gains
on Securities (both
realized and
unrealized). . . . 0.388
-------
Total From
Investment
Operations. . . 0.380
-------
Less Distributions
- ------------------
Dividends from
Net Investment
Income. . . . . . none
Distributions
from Capital
Gains . . . . . . none
Returns of
Capital. . . . . . none
----
Total Distri-
butions . . . . none
--------
Net Asset Value,
End of Period. . . $25.560
=======
- -------------------------------------------------------------
Total Return . . . 1.51%/2/
- ------------
- -------------------------------------------------------------
Ratios/Supplemental
- -------------------
Data
- ----
Net Assets, End
of Period (000's
omitted) . . . . . $287
Ratio of Expenses
to Average
Net Assets . . . . 2.05%
Ratio of Net
Investment Income
(Loss) to Average
Net Assets . . . . (1.38%)
Portfolio Turnover
Rate . . . . . . . 34%
</TABLE>
(1) Date of initial public offering; ratios have been annualized.
(2) Total return is not annualized, but is calculated on
aggregate basis and does not reflect any CDSC which varies from 1-4%
depending upon the holding period.
<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.
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>
THE DELAWARE DIFFERENCE
PLANS AND SERVICES
The Delaware Difference is our commitment to provide you
with superior information and quality service on your
investments in the Delaware Group of funds.
SHAREHOLDER PHONE DIRECTORY
Investor Information Center
800-523-4640
(Philadelphia 988-1333)
Fund Information
Literature
Price, Yield and
Performance Figures
Shareholder Service Center
800-523-1918
(Philadelphia 988-1241)
Information on Existing
Regular Investment
Accounts and Retirement
Plan Accounts
Wire Investments
Wire Liquidations
Telephone Liquidations
Telephone Exchanges
Delaphone
800-362-FUND
(800-362-3863)
Shareholder Services
During business hours, you can call the Fund's
Shareholder Service Center. The representatives can answer
any of your questions about your account, the Series, the
various service features and other funds in the Delaware
Group.
Performance Information
During business hours, you can call the Investor
Information Center to get current performance information.
Delaphone Service
Delaphone is an account inquiry service for investors
with Touch-Tone(R) phone service. It enables you to get
information on your account faster than the mailed statements
and confirmations seven days a week, 24 hours a day.
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 the
Shareholder Service Center.
Duplicate Confirmations
If your investment dealer is noted on your investment
application, we will send your dealer a duplicate
confirmation. This makes it easier for your investment
dealer to help you manage your investments.
Tax Information
Each year, the Fund will mail you information on the tax
status of your dividends and distributions.
Dividend Reinvestment Plan
You can elect to have your distributions (capital gains
and/or dividend income) paid to you by check or reinvested in
your account. Also, you may be permitted to invest your
distributions in certain other funds in the Delaware Group,
subject to the exceptions noted below as well as the
eligibility and minimum purchase requirements set forth in
each fund's prospectus.
Reinvestments of distributions into Class A Shares of
the Series or other Delaware Group funds may be effected
without a front-end sales charge. Class B Shares of the
Series or other Delaware Group funds acquired through
reinvestments of distributions will not be subject to a
contingent deferred sales charge if those shares are later
redeemed. See Automatic Conversion of Class B Shares under
Buying Shares for information concerning the automatic
conversion of Class B Shares acquired by reinvesting
dividends.
Holders of Class A Shares of the Series may not reinvest
their distributions in the Class B Shares of any fund in the
Delaware Group, including the Series. Holders of Class B
Shares of the Series may reinvest their distributions only in
the Class B Shares of the funds in the Delaware Group which
offer that class of shares (the "Class B Funds"). See Class
B Funds under Buying Shares for a list of the funds offering
Class B Shares. For more information about reinvestments,
please call the Shareholder Service Center.
<PAGE>
Exchange Privilege
The Exchange Privilege permits shareholders to exchange
all or part of their shares into shares of the other funds in
the Delaware Group, subject to the exceptions noted below as
well as the eligibility and minimum purchase requirements set
forth in each fund's prospectus. Shareholders of Class B
Shares of the Series are permitted to exchange all or part of
their Class B Shares only into the corresponding class of
shares of the Class B Funds, subject to the minimum purchase
and other requirements set forth in each fund's prospectus.
Exchanges are not permitted between Class A Shares and Class
B Shares of any of the funds of the Delaware Group. See
Redemption and Exchange.
Except as noted below, permissible exchanges can be made
without payment of a front-end sales charge or the imposition
of a contingent deferred sales charge at the time of the
exchange, as applicable. Persons exchanging into the Class A
Shares from a fund in the Delaware Group offered without a
front-end sales charge may be required to pay the applicable
front-end sales charge. See Investing by Exchange under How
to Buy Shares and Redemption and Exchange.
See Redemption and Exchange for additional information
on exchanges.
Wealth Builder Option
You may be permitted to elect to have amounts in your
account automatically invested in shares of other funds in
the Delaware Group. Investments under this feature are
exchanges and are therefore subject to the same conditions
and limitations as other exchanges of Class A and Class B
Shares. See Redemption and Exchange.
Right of Accumulation
With respect to Class A Shares, the Right of
Accumulation feature allows the combining of Class A Shares
and Class B Shares of the Series that are currently owned
with the dollar amount of new purchases of Class A Shares for
a reduced front-end sales charge. Under the Combined
Purchases Privilege, this includes certain shares owned in
other funds in the Delaware Group. See Buying Shares.
Letter of Intention
With respect to Class A Shares, the Letter of Intention
feature permits the aggregation of purchases over a 13-month
period to obtain a reduced front-end sales charge. See Part
B.
12-Month Reinvestment Privilege
The 12-Month Reinvestment Privilege permits shareholders
to reinvest proceeds of Class A Shares redeemed, within one
year from the redemption, without a front-end sales charge.
See Part B.
Financial Information about the Fund
Each fiscal year, you will receive an audited annual
report and an unaudited semi-annual report. These reports
provide detailed information about the Series' investments
and performance. The Fund's fiscal year ends on September
30.
RETIREMENT PLANNING
An investment in the Series may also be suitable for
tax-deferred Retirement Plans. Among the Retirement Plans
noted below, Class B Shares are available for investment only
by Individual Retirement Accounts, Simplified Employee
Pension Plans, 457 Deferred Compensation Plans and 403(b)(7)
Deferred Compensation Plans.
Prototype Profit Sharing and Money Purchase Pension
Plans are each subject to a one-time fee of $200 per plan, or
$300 for paired plans. No such fee is charged for owner-only
plans if the Delaware Group does not provide a Summary Plan
Description. In addition, these plans are subject to an
annual maintenance fee of $30 per participant account. Each
of the other Retirement Plans described below (other than
401(k) Defined Contribution Plans) is subject to an annual
maintenance fee of $15 for each participant's account,
regardless of the number of funds selected. Annual
maintenance fees for 401(k) Defined Contribution Plans are
based on the number of participants in the Plan and the
services selected by the employer. Fees are quoted upon
request. All of the fees noted above are subject to change.
Additional information about fees is contained in Part B.
The minimum initial investment in the Classes (as available)
for each Plan is $250; subsequent investments must be at
least $25.
Certain shareholder investment services available to
non-retirement plan shareholders may not be available to
Retirement Plan shareholders. Certain Retirement Plans may
qualify to purchase the DelCap Fund Institutional Class. For
additional information on any of the Plans and Delaware's
retirement services, call the Shareholder Service Center or
see Part B.
<PAGE>
Individual Retirement Account ("IRA")
Individuals, even if they participate in an employer-
sponsored retirement plan, may establish their own retirement
program for investments in each of the Classes.
Contributions to an IRA may be tax-deductible and earnings
are tax-deferred. Under the Tax Reform Act of 1986, the tax
deductibility of IRA contributions is restricted, and in some
cases eliminated, for individuals who participate in certain
employer-sponsored retirement plans and whose annual income
exceeds certain limits. Existing IRAs and future
contributions up to the IRA maximums, whether deductible or
not, still earn on a tax-deferred basis.
Simplified Employee Pension Plan ("SEP/IRA")
A SEP/IRA may be established on a group basis by an
employer who wishes to sponsor a tax-sheltered retirement
program by making IRA contributions on behalf of all eligible
employees. Each of the Classes is available for investment
by a SEP/IRA.
Salary Reduction Simplified Employee Pension Plan ("SAR/SEP")
Offers employers with 25 or fewer eligible employees the
ability to establish a SEP/IRA that permits salary deferral
contributions. An employer may also elect to make additional
contributions to this Plan. Class B Shares are not available
for purchase by such Plans.
403(b)(7) Deferred Compensation Plan
Permits employees of public school systems or of certain
types of non-profit organizations to enter into a deferred
compensation arrangement for the purchase of shares of each
of the Classes.
457 Deferred Compensation Plan
Permits employees of state and local governments and
certain other entities to enter into a deferred compensation
arrangement for the purchase of shares of each of the
Classes.
Prototype Profit Sharing or Money Purchase Pension Plan
Offers self-employed individuals, partnerships and
corporations a tax-qualified plan which provides for the
investment of contributions in Class A Shares. Class B
Shares are not available for purchase by such Plans.
Prototype 401(k) Defined Contribution Plan
Permits employers to establish a tax-qualified plan
based on salary deferral contributions. An employer may
elect to make profit sharing contributions and/or matching
contributions into the Plan. Class B Shares are not
available for purchase by such Plans.
BUYING SHARES
Purchase Amounts
The minimum initial purchase with respect to the Class A
Shares is $250 and with respect to the Class B Shares is
$1,000. Subsequent purchases must be $25 or more with
respect to the Class A Shares and $100 or more with respect
to the Class B Shares. Retirement Plans have other minimums.
Refer to Part B or call the Shareholder Service Center for
more information on these Plans. Class B Shares are also
subject to a maximum purchase limitation of $250,000.
Alternative Purchase Arrangements
Shares may be purchased at a price equal to the next
determined net asset value per share, plus a sales charge
which may be imposed, at the election of the purchaser, at
the time of the purchase with respect to Class A Shares
("front-end sales charge alternative") or on a contingent
deferred basis with respect to Class B Shares ("deferred
sales charge alternative").
Class A Shares. An investor who elects the front-end
sales charge alternative acquires Class A Shares. Although
Class A Shares incur a sales charge when they are purchased,
generally they are not subject to any sales charge when they
are redeemed but are subject to annual 12b-1 Plan expenses of
up to a maximum of .30% of average daily net assets of such
shares. See Contingent Deferred Sales Charge for Certain
Purchases of Class A Shares Made at Net Asset Value and
Distribution (12b-1) and Service. Certain purchases of Class
A Shares qualify for reduced front-end sales charges. See
Front-End Sales Charge Alternative - Class A Shares, below.
Class B Shares. An investor who elects the deferred
sales charge alternative acquires Class B Shares. Class B
Shares do not incur a front-end sales charge when they are
purchased, but they are subject to a sales charge if they are
redeemed within six years of purchase and are subject to
annual 12b-1 Plan expenses of up to a maximum of 1% (.25% of
which are service fees to be paid by the Series to the
Distributor, dealers or others for providing personal service
and/or maintaining shareholder accounts) of average daily net
assets of such shares for no longer than approximately eight
years after purchase. Class B Shares permit all of the
investor's dollars to work from the time the investment is
made. The higher 12b-1 Plan expenses paid by Class B Shares
will cause such shares to have a higher expense ratio and to
pay lower dividends than those related to the Class A Shares.
At the end of no more than approximately eight years after
purchase, the Class B Shares are automatically converted into
Class A Shares. See Automatic Conversion of Class B Shares.
Such conversion will constitute a tax-free exchange for
federal income tax purposes. See Taxes.
<PAGE>
The alternative purchase arrangements permit investors
in the Series to choose the method of purchasing shares that
is most beneficial given the amount of their purchase, the
length of time they expect to hold their shares and other
relevant circumstances. Investors should determine whether
under their particular circumstances it is more advantageous
to incur a front-end sales charge by purchasing Class A
Shares or to have the entire initial purchase price invested
in the Series with the investment thereafter being subject to
a CDSC, if shares are redeemed within six years of purchase,
by purchasing Class B Shares.
As an illustration, investors who qualify for
significantly reduced front-end sales charges on purchases of
Class A Shares, as described below, might elect the front-end
sales charge alternative because similar sales charge
reductions are not available for purchases under the deferred
sales charge alternative. Moreover, shares acquired under
the front-end sales charge alternative are subject to annual
12b-1 Plan expenses of up to .30%, whereas shares acquired
under the deferred sales charge alternative are subject to
higher annual 12b-1 Plan expenses of 1% for no more than
approximately eight years after purchase. See Automatic
Conversion of Class B Shares. However, because front-end
sales charges are deducted at the time of purchase, such
investors would not have all their funds invested initially.
Certain other investors might determine it to be more
advantageous to have all their funds invested initially,
although they would be subject to a CDSC for up to six years
after purchase as well as annual 12b-1 Plan expenses of 1%
until the shares are automatically converted into Class A
Shares. The 12b-1 Plan distribution expenses with respect to
the Class B Shares will be offset to the extent any return is
realized on the additional funds initially invested under the
deferred sales charge alternative. However, there can be no
assurance as to the return, if any, that will be realized on
such additional funds.
For the distribution and related services provided to,
and the expenses borne on behalf of, the Series, the
Distributor and others will be paid, in the case of the Class
A Shares, from the proceeds of the front-end sales charge and
12b-1 Plan fees and, in the case of the Class B Shares, from
the proceeds of the 12b-1 Plan fees and, if applicable, the
CDSC incurred upon redemption within six years of purchase.
Sales personnel may receive different compensation for
selling Class A or Class B Shares. INVESTORS SHOULD
UNDERSTAND THAT THE PURPOSE AND FUNCTION OF THE 12B-1 PLAN
AND THE CDSC WITH RESPECT TO THE CLASS B SHARES ARE THE SAME
AS THOSE OF THE 12B-1 PLAN AND THE FRONT-END SALES CHARGE
WITH RESPECT TO THE CLASS A SHARES IN THAT THE FEES AND
CHARGES PROVIDE FOR THE FINANCING OF THE DISTRIBUTION OF THE
RESPECTIVE CLASSES. See 12b-1 Distribution Plans - Class A
and Class B Shares.
Dividends paid by the Series with respect to the Class A
and Class B Shares, to the extent any dividends are paid,
will be calculated in the same manner at the same time, on
the same day and will be in the same amount, except that the
additional amount of 12b-1 Plan expenses relating to the
Class B Shares will be borne exclusively by such shares. See
Calculation of Offering Price and Net Asset Value Per Share.
The shareholders of the Class A and Class B Shares each have
an exchange privilege by which they may exchange their Class
A Shares or Class B Shares for the Class A Shares or Class B
Shares, respectively, of certain other Delaware Group funds.
See Exchange Privilege under The Delaware Difference and
Redemption and Exchange.
The NASD has adopted amendments to its Rules of Fair
Practice relating to investment company sales charges. The
Fund and the Distributor intend to operate in compliance with
these rules with respect to both Class A and Class B Shares.
Front-End Sales Charge Alternative - Class A Shares
The Class A Shares may be purchased at the offering
price which reflects a maximum front-end sales charge of
5.75%. See Calculation of Offering Price and Net Asset Value
Per Share. Lower sales charges apply for larger purchases.
See the table below. The Class A Shares represent a
proportionate interest in the Series' assets and are subject
to annual 12b-1 Plan expenses. See Distribution (12b-1) and
Service under Management of the Fund.
<PAGE>
Reduced Front-End Sales Charges
Purchases of $100,000 or more at the offering price
carry a reduced sales charge as shown in the following table.
DelCap Fund A Class
-------------------------------------------------------------
Dealer's
Front-End Concession**
Amount of Purchase Sales Charge as % of as % of
Offering Amount Offering
Price Invested Price
-------------------------------------------------------------
Less than $100,000 5.75% 6.10% 5.00%
$100,000 but
under $250,000 4.75 4.99 4.00
$250,000 but
under $500,000 3.50 3.63 3.00
$500,000 but
under $1,000,000* 3.00 3.09 2.60
* There is no front-end sales charge on purchases of $1
million or more but, under certain limited circumstances,
a 1% Limited CDSC may apply with respect to Class A Shares.
-------------------------------------------------------------
The Fund must be notified when a sale takes place which
would qualify for the reduced front-end sales charge on
the basis of previous purchases and current purchases.
The reduced front-end sales charge will be granted upon
confirmation of the shareholder's holdings by the Fund.
Such reduced front-end sales charges are not retroactive.
From time to time, upon written notice to all of its dealers,
the Distributor may hold special promotions for specified
periods during which the Distributor may reallow dealers up to
the full front-end sales charge shown above. In addition,
certain dealers who enter into an agreement to provide extra
training and information on Delaware Group products and services and
who increase sales of Delaware Group funds may receive an additional
concession of up to .15% of the offering price. Dealers who
receive 90% or more of the sales charge may be deemed to be
underwriters under the Securities Act of 1933.
** Financial institutions or their affiliated brokers may receive
an agency transaction fee in the percentages set forth above.
-------------------------------------------------------------
For initial purchases of Class A Shares of $1,000,000 or
more made on or after June 1, 1993, a dealer's commission may
be paid by the Distributor to financial advisers through whom
such purchases are effected in accordance with the following
schedule:
Dealer's Commission
-------------------
Amount of Purchase (as a percentage
------------------ of amount purchased)
Up to $2 million 1.00%
Next $1 million up to $3 million .75
Next $2 million up to $5 million .50
Amount over $5 million .25
In determining a financial adviser's eligibility for the
dealer's commission, purchases of Class A Shares of other
Delaware Group funds as to which a Limited CDSC applies may
be aggregated with those of the Class A Shares of the Series.
Financial advisers should contact the Distributor concerning
the applicability and calculation of the dealer's commission
in the case of combined purchases. Financial advisers also
may be eligible for a dealer's commission in connection with
certain purchases made under a Letter of Intention or
pursuant to an investor's Right of Accumulation. The
Distributor also should be consulted concerning the
availability of and program for these payments.
An exchange from other Delaware Group funds will not
qualify for payment of the dealer's commission, unless such
exchange is from a Delaware Group fund with assets as to
which a dealer's commission or similar payment has not been
previously paid. The schedule and program for payment of the
dealer's commission are subject to change or termination at
any time by the Distributor in its discretion.
Redemptions of Class A Shares purchased at net asset
value may result in the imposition of a Limited CDSC if the
dealer's commission described above was paid in connection
with the purchase of those shares. See Contingent Deferred
Sales Charge for Certain Purchases of Class A Shares Made at
Net Asset Value under Redemption and Exchange.
Combined Purchases Privilege
By combining your holdings in the Class A Shares with
your holdings in the Class B Shares of the Series and, except
as noted below, shares of the other funds in the Delaware
Group, you can reduce the front-end sales charges on any
additional purchases of Class A Shares. Except for shares of
Delaware Group Premium Fund, Inc. beneficially owned in
connection with ownership of variable insurance products,
shares of other funds which do not carry a front-end sales
charge or CDSC may not be included unless they were acquired
through an exchange from one of the other Delaware Group
funds which carried a front-end sales charge or CDSC.
This privilege permits you to combine your purchases and
holdings with those of your spouse, your children under 21,
and any trust, fiduciary or retirement account for the
benefit of such family members.
It also permits you to use these combinations under a
Letter of Intention. This allows you to make purchases over
a 13-month period and qualify the entire purchase for a
reduction in front-end sales charges on Class A Shares.
Combined purchases of $1,000,000 or more, including
certain purchases made pursuant to a Right of Accumulation or
under a Letter of Intention, may trigger the payment of a
dealer's commission and the applicability of a Limited CDSC.
Investors should consult their financial advisers or the
Transfer Agent about the operation of these features. See
Reduced Front-End Sales Charges under Buying Shares.
<PAGE>
Buying at Net Asset Value
Class A Shares may be purchased at net asset value under
the Delaware Group Dividend Reinvestment Plan and, under
certain circumstances, the 12-month Reinvestment Privilege
and the Exchange Privilege. (See The Delaware Difference and
Redemption and Exchange for additional information.)
Purchases of Class A Shares may be made at net asset
value by officers, directors and employees (including former
officers and directors and former employees who had been
employed for at least ten years) and members of their
immediate families of the Manager, any affiliate, any of the
funds in the Delaware Group, certain of their agents and
registered representatives and employees of authorized
investment dealers and by employee benefit plans for such
entities. Individual purchases include retirement accounts
and must be for accounts in the name of the individual or a
qualifying family member. Purchases of Class A Shares may be
made by clients of registered representatives of an
authorized investment dealer at net asset value within six
months of a change of the registered representative's
employment, if the purchase is funded by proceeds from an
investment where a front-end sales charge has been assessed
and the redemption of the investment did not result in the
imposition of a contingent deferred sales charge or other
redemption charge. Purchase of Class A Shares also may be
made at net asset value by bank employees that provide
services in connection with agreements between the bank and
unaffiliated brokers or dealers concerning sales of Class A
Shares. Also, officers, directors and key employees of
institutional clients of the Manager, or any of its
affiliates, may purchase Class A Shares at net asset value.
Moreover, purchases may be effected at net asset value for
the benefit of the clients of brokers, dealers and registered
investment advisers affiliated with a broker or dealer, if
such broker, dealer or investment adviser has entered into an
agreement with the Distributor providing specifically for the
purchase of Class A Shares in connection with special
investment products, such as wrap accounts or similar fee
based programs.
Investments in Class A Shares made by plan level and/or
participant retirement accounts that are for the purpose of
repaying a loan taken from such accounts will be made at net
asset value. Loan repayments made to a Delaware Group
account in connection with loans originated from accounts
previously maintained by another investment firm will also be
invested at net asset value.
Class A Shares may be deposited at net asset value,
without payment of a sales charge with respect to sales of
units of a unit investment trust ("Trust"), organized and
sponsored by Prudential Securities Incorporated dealers,
whose portfolio consists of Class A Shares and stripped
United States Treasury issued notes or bonds bearing no
current interest ("Treasury Obligations"). Unit holders of
the Trust may elect to invest cash distributions from the
Trust in Class A Shares at net asset value, including: (a)
distributions of any dividend income or other income received
by the Trust; (b) distributions of any net capital gains
received in respect of Class A Shares and proceeds of the
sale of Class A Shares of the Series not used to redeem units
of the Trust; and (c) proceeds from the maturity of the
Treasury Obligations at the termination date of the Trust.
The Fund must be notified in advance that an investment
qualifies for purchase of Class A Shares at net asset value.
Group Investment Plans
Group Investment Plans (e.g., SEP/IRA, SAR/SEP,
Prototype Profit Sharing, Pension and 401(k) Defined
Contribution Plans) may also benefit from the reduced front-
end sales charges relating to the Class A Shares set forth in
the table on page 12, based on total plan assets. In
addition, 403(b)(7) and 457 Retirement Plan Accounts may also
benefit from a reduced front-end sales charge on Class A
Shares based on the total amount invested by all participants
in the plan by satisfying the following criteria: (i) the
employer for which the plan was established has 250 or more
eligible employees and the plan lists only one broker of
record, or (ii) the plan includes employer contributions and
the plan lists only one broker of record. If a company has
more than one plan investing in the Delaware Group of funds,
then the total amount invested in all plans would be used in
determining the applicable sales charge reduction. Employees
participating in such Group Investment Plans may also combine
the investments made in their plan account when determining
the front-end sales charge on purchases to non-retirement
Delaware Group investment accounts.
For additional information on these Plans, including
Plan forms, applications, minimum investments and any
applicable account maintenance fees, contact your investment
dealer or the Distributor.
For other Retirement Plans and special services, see
Retirement Planning.
<PAGE>
Deferred Sales Charge Alternative - Class B Shares
Class B Shares may be purchased at net asset value
without the imposition of a front-end sales charge at the
time of purchase. The Class B Shares are being sold without
a front-end sales charge so that the Series will invest the
full amount of the investor's purchase payment. The
Distributor currently anticipates compensating dealers or
brokers for selling Class B Shares at the time of purchase
from its own funds in an amount equal to no more than 4% of
the dollar amount purchased. As discussed below, however,
Class B Shares are subject to annual 12b-1 Plan expenses and,
if shares are redeemed within six years of purchase, a CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees
are paid to the Distributor and others for the distribution
and related services provided to, and the related expenses
borne on behalf of, the Series for the benefit of the Class B
Shares in connection with the sale of the Class B Shares,
including the compensation paid to dealers or brokers for
selling Class B Shares. Payments to the Distributor and
others under the 12b-1 Plan relating to the Class B Shares
may be, annually, in an amount equal to no more than 1%. The
combination of the CDSC and the proceeds of the 12b-1 Plan
fees facilitates the ability of the Series to sell the Class
B Shares without a front-end sales charge being deducted at
the time of purchase.
Shareholders of the Class B Shares exercising the
exchange privilege described below will continue to be
subject to the CDSC schedule of the Class B Shares described
in this Prospectus. Such schedule may be higher than the
CDSC schedule relating to the Class B Shares acquired as a
result of the exchange. See Redemption and Exchange.
Automatic Conversion of Class B Shares
Except for shares acquired through a reinvestment of
dividends, Class B Shares held for eight years after purchase
are eligible for automatic conversion into Class A Shares.
The Fund will effect conversions of Class B Shares into Class
A Shares only four times in any calendar year, on the last
business day of the second full week of March, June,
September and December (each, a "Conversion Date"). If the
eighth anniversary after a purchase of Class B Shares falls
on a Conversion Date, an investor's Class B Shares will be
converted on that date. If the eighth anniversary occurs
between Conversion Dates, an investor's Class B Shares will
be converted on the next Conversion Date after such
anniversary. Consequently, if a shareholder's eighth
anniversary falls on the day after a Conversion Date, that
shareholder will have to hold Class B Shares for as long as
an additional three months after the eighth anniversary after
purchase before the shares will automatically convert into
Class A Shares.
Class B Shares of a fund acquired through reinvestment
of dividends will convert to the corresponding Class A Shares
of that fund (or, in the case of Delaware Group Cash Reserve,
Inc., the Delaware Cash Reserve Consultant Class) pro-rata
with Class B Shares of that fund not acquired through
dividend reinvestment.
All such automatic conversions of Class B Shares will
constitute tax-free exchanges for federal income tax
purposes. See Taxes.
Contingent Deferred Sales Charge
Class B Shares redeemed within six years of purchase may
be subject to a CDSC at the rates set forth below, charged as
a percentage of the dollar amount subject thereto. The
charge will be assessed on an amount equal to the lesser of
the net asset value at the time of purchase of the shares
being redeemed or the net asset value of the shares at the
time of redemption. For purposes of this formula, the "net
asset value at the time of purchase" will be the net asset
value at purchase of the Class B Shares of the Series even if
those shares are later exchanged for Class B Shares of
another Delaware Group fund and, in the event of an exchange
of the shares, the "net asset value of such shares at the
time of redemption" will be the net asset value of the shares
into which the shares have been exchanged. Accordingly, no
CDSC will be imposed on increases in net asset value above
the initial purchase price. In addition, no CDSC will be
assessed on redemption of shares received upon reinvestment
of dividends or capital gains distributions.
The following table sets forth the rates of the CDSC for
the Class B Shares of the Series:
Contingent Deferred
Sales Charge (as a
Percentage of
Dollar Amount
Year After Purchase Made Subject to Charge)
------------------------ -------------------
0-2 4%
3-4 3%
5 2%
6 1%
7 and thereafter None
During the seventh year after purchase and, thereafter, until
converted automatically into Class A Shares of the Series,
the Class B Shares will continue to be subject to annual
12b-1 Plan expenses of 1% of average daily net assets
representing those shares. See Automatic Conversion of Class
B Shares above. Investors are reminded that the Class A
Shares into which the Class B Shares will convert are subject
to ongoing annual 12b-1 Plan expenses of up to a maximum of
.30% of average daily net assets representing such shares.
<PAGE><
In determining whether a CDSC is applicable to a
redemption, the calculation will be determined in a manner
that results in the lowest applicable rate being charged.
Therefore, with respect to the Class B Shares, it will be
assumed that the redemption is first for shares held over six
years or shares acquired pursuant to reinvestment of
dividends or distributions and then of shares held longest
during the six-year period. The charge will not be applied
to dollar amounts representing an increase in the net asset
value since the time of purchase. All investments made
during a calendar month, regardless of when during the month
the investment occurred, will age one month on the last day
of that month and each subsequent month.
The CDSC is waived on redemptions of Class B Shares in
connection with the following redemptions: (i) redemptions
effected pursuant to the Fund's right to liquidate a
shareholder's account if the aggregate net asset value of the
shares held in the account is less than the then-effective
minimum account size; (ii) tax-free returns of excess
contributions to an IRA or 403(b)(7) Deferred Compensation
Plan; (iii) required minimum distributions from an IRA,
403(b)(7) Deferred Compensation Plan, or 457 Deferred
Compensation Plan; and (iv) distributions from an IRA,
403(b)(7) Deferred Compensation Plan or 457 Deferred
Compensation Plan due to death or disability.
12b-1 Distribution Plans - Class A and Class B Shares
Pursuant to the distribution plans adopted by the Fund
pursuant to Rule 12b-1 under the Investment Company Act of
1940, the Series is permitted to pay the Distributor annual
distribution fees payable monthly of .30% of the average
daily net assets of the Class A Shares and 1% of the average
daily net assets of the Class B Shares in order to compensate
the Distributor for providing distribution and related
services and bearing certain expenses of each Class. The
Class B Shares' 12b-1 Plan is designed to permit an investor
to purchase Class B Shares through dealers or brokers without
the assessment of a front-end sales charge and at the same
time permit the Distributor to compensate dealers and brokers
in connection with the sale of the Class B Shares. In this
regard, the purpose and function of the 12b-1 Plan and the
CDSC with respect to the Class B Shares are the same as those
of the front-end sales charge and 12b-1 Plan with respect to
the Class A Shares in that the fees and charges provide for
the financing of the distribution of the respective Classes.
For more detailed discussion of the 12b-1 Plans relating to
the Class A and Class B Shares, see Distribution (12b-1) and
Service.
Other Payments to Dealers -- Class A and Class B Shares
In addition, from time to time at the discretion of the
Distributor, all registered broker/dealers whose aggregate
sales of the Classes exceed certain limits as set by the
Distributor, may receive from the Distributor an additional
payment of up to .25% of the dollar amount of such sales.
The Distributor may also provide additional promotional
incentives or payments to dealers that sell shares of the
Delaware Group of funds. In some instances, these incentives
or payments may be offered only to certain dealers who
maintain, have sold or may sell certain amounts of shares.
In connection with the promotion of Delaware Group fund
shares, the Distributor may, from time to time, pay to
participate in dealer-sponsored seminars and conferences,
reimburse dealers for expenses incurred in connection with
preapproved seminars, conferences and advertising and may,
from time to time, pay or allow additional promotional
incentives to dealers, which shall include non-cash
concessions, such as certain luxury merchandise or a trip to
or attendance at a business or investment seminar at a luxury
resort, as part of preapproved sales contests. In addition,
as noted above, the Distributor may pay dealers a commission
in connection with net asset value purchases.
Class B Funds
The following funds currently offer Class B Shares: DMC
Tax-Free Income Trust-Pennsylvania, Delaware Group Delchester
High-Yield Bond Fund, Inc., Delaware Group Government Fund,
Inc., Treasury Reserves Intermediate Series of Delaware Group
Treasury Reserves, Inc., Delaware Group Cash Reserve, Inc.,
Tax-Free USA Fund, Tax-Free Insured Fund and Tax-Free USA
Intermediate Fund of Delaware Group Tax-Free Fund, Inc.,
Delaware Fund and Dividend Growth Fund of Delaware Group
Delaware Fund, Inc., Delaware Group Value Fund, Inc., Decatur
Income Fund and Decatur Total Return Fund of Delaware Group
Decatur Fund, Inc., Delaware Group Trend Fund, Inc.,
International Equity Series of Delaware Group Global &
International Funds, Inc. and the Series.
<PAGE>
DelCap Fund Institutional Class
In addition to offering the Class A and Class B Shares,
the Series also offers the DelCap Fund Institutional Class of
shares, which is described in a separate prospectus relating
to that class of shares. That class may be purchased only
by: (a) retirement plans introduced by persons not
associated with brokers or dealers that are primarily engaged
in the retail securities business and rollover individual
retirement accounts from such plans; (b) tax-exempt employee
benefit plans of the Manager or its affiliates and securities
dealer firms with a selling agreement with the Distributor;
(c) institutional advisory accounts of the Manager or its
affiliates and those having client relationships with
Delaware Investment Advisers, a division of the Manager, or
its affiliates and their corporate sponsors, as well as
subsidiaries and related employee benefit plans and rollover
individual retirement accounts from such institutional
advisory accounts; (d) banks, trust companies and similar
financial institutions investing for their own account or for
the account of their trust customers for whom such financial
institution is exercising investment discretion in purchasing
shares of the class; and (e) registered investment advisers
investing on behalf of clients that consist solely of
institutions and high net-worth individuals having at least
$1,000,000 entrusted to the adviser for investment purposes,
but only if the adviser is not affiliated or associated with
a broker or dealer and derives compensation for its services
exclusively from its clients for such advisory services.
Such DelCap Fund Institutional Class shares generally are
distributed directly by the Distributor and do not have a
front-end or contingent deferred sales charge or a 12b-1 fee.
Sales or service compensation available in respect of such
class, therefore, differs from that available in respect of
the Class A Shares and the Class B Shares. All three classes
of shares have a proportionate interest in the underlying
portfolio of securities of the Series. Total Operating
Expenses incurred by the DelCap Fund Institutional Class as a
percentage of average daily net assets for the fiscal year
ended September 30, 1994 were 1.05%. See Part B for
performance information about DelCap Fund Institutional
Class. To obtain a prospectus which describes the DelCap
Fund Institutional Class, contact the Distributor.
Dividend Orders
Some shareholders want the dividends earned in one fund
automatically invested in another Delaware Group fund with a
different investment objective. For more information on the
requirements of the other funds, see Dividend Reinvestment
Plan under The Delaware Difference or call the Shareholder
Service Center.
HOW TO BUY SHARES
The Fund makes it easy to invest by mail, by wire, by
exchange and by arrangement with your investment dealer.
Investing through Your Investment Dealer
You can make a purchase of shares of the Classes through
most investment dealers who, as part of the service they
provide, must transmit orders promptly. They may charge for
this service. If you want a dealer but do not have one, we
can refer you to one.
Investing by Mail
1. Initial Purchases--An Investment Application must be
completed, signed and sent with a check, payable to DelCap
Fund A Class or B Class, depending upon which Class is being
purchased, 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 A Class
or B Class, depending upon which Class is being purchased.
Your check should be identified with your name(s) and account
number. An investment slip (similar to a deposit slip) is
provided at the bottom of transaction confirmations and
dividend statements that you will receive from the Fund, and
should be used when you are making additional purchases. You
can expedite processing by including an investment slip with
your check when making additional purchases. Your investment
may be delayed if you send additional purchases by certified
mail.
Investing by Wire
You may purchase shares by requesting your bank to
transmit funds by wire to CoreStates Bank, N.A., ABA
#031000011, account number 0114-2596 (include your name(s)
and your account number for the Class in which you are
investing).
1. Initial Purchases--Before you invest, telephone the
Fund's Shareholder Service Center to get an account number.
If you do not call first, it may delay processing your
investment. In addition, you must promptly send your
Investment Application to DelCap Fund A Class or B Class,
depending upon which Class is being purchased, 1818 Market
Street, Philadelphia, PA 19103.
2. Subsequent Purchases--You may make additional
investments anytime by wiring funds to CoreStates Bank, N.A.,
as described above. You should advise the Fund's Shareholder
Service Center by telephone of each wire you send.
If you want to wire investments to a Retirement Plan
Account, call the Shareholder Service Center for special
wiring instructions.
<PAGE>
Investing by Exchange
If you have an investment in another mutual fund in the
Delaware Group, you may write and authorize an exchange of
part or all of your investment into shares of the Series. If
you wish to open an account by exchange, call the Shareholder
Service Center for more information.
Exchanges will not be permitted between Class A Shares
and Class B Shares of the Series or between the Class A
Shares and Class B Shares of any other funds in the Delaware
Group. Class B Shares of any of the Class B Funds may be
exchanged for Class B Shares of the Series. Class B Shares
of the Series acquired by exchange will continue to carry the
contingent deferred sales charge and the automatic conversion
schedules of the fund from which the exchange is made. The
holding period of the Class B Shares of the Series will be
added to that of the exchanged shares for purposes of
determining the time of the automatic conversion into Class A
Shares of the Series.
Permissible exchanges into the Classes of the Series
will be made without a front-end sales charge imposed by the
Fund or, at the time of the exchange, a contingent deferred
sales charge imposed by the fund from which the exchange is
being made, except for exchanges into Class A Shares from
funds not subject to a front-end sales charge (unless such
shares were acquired in an exchange from a fund subject to
such a charge or such shares were acquired through the
reinvestment of dividends).
Additional Methods of Adding to Your Investment
Call the Shareholder Service Center for more information
if you wish to use the following services:
1. Direct Deposit
You may wish your employer or bank to make regular
investments directly to your account for you (for example:
payroll deduction, pay by phone, annuity payments). The
Series also accepts preauthorized recurring government and
private payments by Electronic Fund Transfer, which avoids
mail time and check clearing holds on payments such as social
security, federal salaries, Railroad Retirement benefits,
etc.
2. Automatic Investing Plan
The Automatic Investing Plan enables you to make regular
monthly investments without writing or mailing checks. You
may authorize the Fund to transfer a designated amount
monthly from your checking account to your Class account.
Many shareholders use this as an automatic savings plan for
IRAs and other purposes. Shareholders should allow a
reasonable amount of time for initial purchases and changes
to these plans to become effective.
This option is not available to participants in the
following plans: SAR/SEP, SEP/IRA, Profit Sharing and Money
Purchase Pension Plans, 401(k) Defined Contribution Plans,
403(b)(7) Deferred Compensation Plans or 457 Deferred
Compensation Plans.
* * *
Should investments by these two methods be reclaimed or
returned for some reason, the Fund has the right to liquidate
your shares to reimburse the government or transmitting bank.
If there are insufficient funds in your Class account, you
are obligated to reimburse the Series.
Purchase Price and Effective Date
The offering price and net asset value of the Class A
and Class B Shares are determined as of the close of regular
trading on the New York Stock Exchange (ordinarily, 4 p.m.,
Eastern time) on days when such exchange is open.
The effective date of a purchase made through an
investment dealer is the date the order is received by the
Series. The effective date of a direct purchase is the day
your wire, electronic transfer or check is received, unless
it is received after the time the offering price or net asset
value of shares is determined, as noted above. Those
received after such time will be effective the next business
day.
The Conditions of Your Purchase
The Fund reserves the right to reject any purchase or
exchange. If a purchase is 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. An investor making the minimum initial
investment will be subject to involuntary redemption without
the imposition of a CDSC or Limited CDSC if he or she redeems
any portion of his or her account.
<PAGE>
REDEMPTION AND EXCHANGE
You can redeem or exchange your shares in a number of
different ways. The exchange service is useful if your
investment requirements change and you want an easy way to
invest in other equity funds, bond funds, tax-advantaged
funds or money market funds. This service is also useful if
you are anticipating a major expenditure and want to move a
portion of your investment into a fund that has the
checkwriting feature. Exchanges are subject to the
requirements of each fund and all exchanges of shares from
one fund or class to another pursuant to this privilege
constitute taxable events. See Taxes. You may want to call
us for more information or consult your financial adviser or
investment dealer to discuss which funds in the Delaware
Group will best meet your changing objectives and the
consequences of any exchange transaction.
Your shares will be redeemed or exchanged based on the
net asset value next determined after we receive your request
in good order subject, in the case of a redemption, to any
applicable CDSC or Limited CDSC. Redemption or exchange
requests received in good order after the time the offering
price and net asset value of shares are determined, as noted
above, will be processed on the next business day. See
Purchase Price and Effective Date under Buying Shares.
Except as otherwise noted below, for a redemption request to
be in "good order," you must provide your Class account
number, account registration, and the total number of shares
or dollar amount of the transaction. If a holder of Class B
Shares submits a redemption request for a specific dollar
amount, the Fund will redeem that number of shares necessary
to deduct the applicable CDSC and tender to the shareholder
the requested amount to the extent enough shares are then
held in the shareholder account. With regard to exchanges,
you must also provide the name of the fund you want to
receive the proceeds. Exchange instructions and redemption
requests must be signed by the record owner(s) exactly as the
shares are registered. You may request a redemption or an
exchange by calling the Fund at 800-523-1918 (in
Philadelphia, 988-1241). The Fund reserves the right to
reject exchange requests at any time. The Fund may suspend
or terminate, or amend the terms of, the exchange privilege
upon 60 days' written notice to shareholders.
The Fund will 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.
Class A Shares may be exchanged for certain of the
shares of the other funds in the Delaware Group, including
other Class A Shares, subject to the eligibility and minimum
purchase requirements set forth in each fund's prospectus.
All Delaware Group funds offer Class A Shares. Class A
Shares may not be exchanged for Class B Shares of the funds
offering such shares. Class B Shares of the Series may be
exchanged only for the Class B Shares of any of the Class B
Funds. See Exchange Privilege under The Delaware Difference.
In each instance, permissible exchanges are subject to the
minimum purchase and other requirements set forth in each
prospectus.
Permissible exchanges may be made at net asset value
provided: (1) the investment satisfies the eligibility and
minimum purchase requirements set forth in the prospectus of
the fund being acquired; and (2) the shares of the fund being
acquired are in a state where that fund is registered.
There is no front-end sales charge or fee for exchanges
made between shares of funds which both carry a front-end
sales charge. Any applicable front-end sales charge will
apply to exchanges from shares of funds not subject to a
front-end sales charge, except for transfers involving assets
that were previously invested in a fund with a front-end
sales charge and/or transfers involving the reinvestment of
dividends.
<PAGE>
Holders of the Class B Shares that exchange their shares
("outstanding Class B Shares") for the Class B Shares of
other Class B Funds ("new Class B Shares") will not be
subject to a CDSC that might otherwise be due upon redemption
of the outstanding Class B Shares. However, such
shareholders will continue to be subject to the CDSC and
automatic conversion schedules of the outstanding Class B
Shares described in this Prospectus and any CDSC assessed
upon redemption will be charged by the Fund. The Series'
CDSC schedule may be higher than the CDSC schedule relating
to the new Class B Shares acquired as a result of the
exchange. For purposes of computing the CDSC that may be
payable upon a disposition of the new Class B Shares, the
holding period for the outstanding Class B Shares is added to
the holding period of the new Class B Shares. The automatic
conversion schedule of the outstanding Class B Shares may be
longer than that of the new Class B Shares. Consequently, an
investment in new Class B Shares by exchange may subject an
investor to the higher 12b-1 fees applicable to Class B
Shares for a longer time than if the investment in new Class
B Shares was made directly.
Different redemption and exchange methods are outlined
below. Except for the CDSC with respect to redemption of
Class B Shares and the Limited CDSC with respect to certain
redemptions of Class A Shares purchased at net asset value,
there is no fee charged by the Fund or the Distributor for
redeeming or exchanging your shares, but such fees could be
charged in the future. You may also have your investment
dealer arrange to have your shares redeemed or exchanged.
Your investment dealer may charge for this service.
All authorizations given by shareholders with respect to
an account, including selection of any of the features
described below, shall continue in effect until revoked or
modified in writing and until such time as such written
revocation or modification has been received by the Fund or
its agent.
All exchanges involve a purchase of shares of the fund
into which the exchange is made. As with any purchase, an
investor should obtain and carefully read that fund's
prospectus before buying shares in an exchange. The
prospectus contains more complete information about the fund,
including charges and expenses.
Written Redemption
You can write to the Fund at 1818 Market Street,
Philadelphia, PA 19103 to redeem some or all of your Class A
or Class B Shares. The request must be signed by all owners
of the account or your investment dealer of record. For
redemptions of more than $50,000, or when the proceeds are
not sent to the shareholder(s) at the address of record, the
Fund requires a signature by all owners of the account and a
signature guarantee for each owner. Each signature guarantee
must be supplied by an eligible guarantor institution. The
Fund reserves the right to reject a signature guarantee
supplied by an eligible institution based on its
creditworthiness. The Fund may require further documentation
from corporations, executors, retirement plans,
administrators, trustees or guardians.
The redemption request is effective at the net asset
value next determined after it is received in good order.
Class B Shares may be subject to a CDSC and Class A Shares
may be subject to a Limited CDSC with respect to certain
shares purchased at net asset value. Payment is normally
mailed the next business day, but no later than seven days,
after receipt of your request. If your Class A Shares are in
certificate form, the certificate must accompany your request
and also be in good order. The Fund only issues certificates
for Class A Shares if a shareholder submits a specific
request. The Fund does not issue certificates for Class B
Shares.
Written Exchange
You can also write to the Fund (at 1818 Market Street,
Philadelphia, PA 19103) to request an exchange of any or all
of your Class A or Class B Shares into another mutual fund in
the Delaware Group, subject to the same conditions and
limitations as other exchanges noted above.
<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 Class A Shares in certificate form, you can only redeem
or exchange by written request and you must return your
certificates.
The Telephone Redemption service enabling you to have
redemption proceeds mailed to your address of record and the
Telephone Exchange service, both of which are described
below, are automatically provided unless the Fund receives
written notice from the shareholder to the contrary. The
Fund reserves the right to modify, terminate or suspend these
procedures upon 60 days' written notice to shareholders. It
may be difficult to reach the Fund by telephone during
periods when market or economic conditions lead to an
unusually large volume of telephone requests.
Neither the Fund nor the Transfer Agent is responsible
for any shareholder loss incurred in acting upon written or
telephone instructions for redemption or exchange of Series
shares which are reasonably believed to be genuine. With
respect to such telephone transactions, the Fund will follow
reasonable procedures to confirm that instructions
communicated by telephone are genuine (including verification
of a form of personal identification) as, if it does not, the
Fund or the Transfer Agent may be liable for any losses due
to unauthorized or fraudulent transactions. Instructions
received by telephone are generally tape recorded, and a
written confirmation will be provided for all purchase,
exchange and redemption transactions initiated by telephone.
By exchanging shares by telephone, the shareholder is
acknowledging prior receipt of a prospectus for the fund into
which shares are being exchanged.
Telephone Redemption--Check to Your Address of Record
The Telephone Redemption feature is a quick and easy
method to redeem shares. You or your investment dealer of
record can have redemption proceeds of $50,000 or less mailed
to you at your record address. Checks will be payable to the
shareholder(s) of record. Payment is normally mailed the
next business day, but no more than seven days, after receipt
of the request. This service is only available to
individual, joint and individual fiduciary-type accounts.
Telephone Redemption--Proceeds to Your Bank
Redemption proceeds of $1,000 or more can be transferred
to your predesignated bank account by wire or by check. You
should authorize this service when you open your account. If
you change your predesignated bank account, the Fund requires
an Authorization Form with your signature guaranteed. For
your protection, your authorization must be on file. If you
request a wire, your funds will normally be sent the next
business day. CoreStates Bank, N.A.'s fee (currently $7.50)
will be deducted from your redemption. If you ask for a
check, it will normally be mailed the next business day, but
no later than seven days, after receipt of your request to
your predesignated bank account. Except for any CDSC which
may be applicable to the Class B Shares and the Limited CDSC
which may be applicable to purchases made at net asset value
with respect to the Class A Shares, there are no fees for
this method, but the mail time may delay getting funds into
your bank account. Simply call the Fund's Shareholder
Service Center prior to the time the offering price and net
asset value are determined, as noted above.
If expedited payment by check or wire could adversely
affect the Series, the Fund may take up to seven days to pay.
Telephone Exchange
The Telephone Exchange feature is a convenient and
efficient way to adjust your investment holdings as your
liquidity requirements and investment objectives change. You
or your investment dealer of record can exchange Class A or
Class B Shares into any fund in the Delaware Group under the
same registration, subject to the same conditions and
limitations as other exchanges noted above. As with the
written exchange service, telephone exchanges are subject to
the requirements of each fund, as described above. Telephone
exchanges may be subject to limitations as to amounts or
frequency.
<PAGE>
Systematic Withdrawal Plan for Class A Shares
1. Regular Plans
This plan provides holders of the Class A Shares with a
consistent monthly (or quarterly) payment. This is
particularly useful to shareholders living on fixed incomes,
since it can provide them with a stable supplemental amount.
With accounts of at least $5,000, you may elect monthly
withdrawals of $25 (quarterly $75) or more. The Fund does
not recommend any particular monthly amount, as each
shareholder's situation and needs vary. Payments are
normally made by check. In the alternative, you may elect to
have your payments transferred from your Series account to
your predesignated bank account through the Delaware Group's
MoneyLine service. Your funds will normally be credited to
your bank account after two business days. Except with
respect to the Limited CDSC which may be applicable to Class
A Shares as noted below, there are no fees for this method.
You can initiate this service by completing an Authorization
Agreement. If the name and address on your bank account are
not identical to the name and address on your Series account,
you must have your signature guaranteed. Please call the
Shareholder Service Center for additional information.
2. Retirement Plans
For shareholders eligible under the applicable
Retirement Plan to receive benefits in periodic payments, the
Fund's Systematic Withdrawal Plan provides you with maximum
flexibility. A number of formulas are available for
calculating your withdrawals, depending upon whether the
distributions are required or optional. Withdrawals must be
for $25 or more; however, no minimum account balance is
required.
* * *
Shareholders should not purchase Class A Shares while
participating in a Systematic Withdrawal Plan. Also,
redemptions of Class A Shares pursuant to a Systematic
Withdrawal Plan may be subject to a Limited CDSC if the
original purchase was made within the 12 months prior to the
withdrawal at net asset value and a dealer's commission has
been paid on that purchase. See Contingent Deferred Sales
Charge for Certain Purchases of Class A Shares Made at Net
Asset Value. For more information on both of these plans,
please call the Shareholder Service Center.
The Systematic Withdrawal Plan is not available with
respect to the Class B Shares.
Wealth Builder Option
Shareholders may elect to invest in other mutual funds
in the Delaware Group through our Wealth Builder Option.
Under this automatic exchange program, shareholders can
authorize regular monthly amounts (minimum of $100 per fund)
to be liquidated from their Class account and invested
automatically into one or more funds in the Delaware Group.
Investments under this option are exchanges and are therefore
subject to the same conditions and limitations as other
exchanges of Class A and Class B Shares noted above.
Shareholders can also use the Wealth Builder Option to
invest in the Series through regular liquidations of shares
in their accounts in other funds in the Delaware Group,
subject to the same conditions and limitations as other
exchanges noted above. Shareholders can terminate their
participation at any time by written notice to the Fund. See
Redemption and Exchange.
This option is not available to participants in the
following plans: SAR/SEP, SEP/IRA, Profit Sharing and Money
Purchase Pension Plans, 401(k) Defined Contribution Plans,
403(b)(7) Deferred Compensation Plans or 457 Deferred
Compensation Plans.
Contingent Deferred Sales Charge for Certain Purchases of
Class A Shares Made at Net Asset Value
For purchases of Class A Shares, a Limited CDSC will be
imposed by the Fund upon certain redemptions of Class A
Shares (or shares into which such Class A Shares are
exchanged) made within 12 months of purchase, if such
purchases were made at net asset value and triggered the
payment by the Distributor of the dealer's commission
described above. See Buying Shares.
The Limited CDSC will be paid to the Distributor and
will be equal to the lesser of 1% of (1) the net asset value
at the time of purchase of the Class A Shares being redeemed
or (2) the net asset value of such Class A Shares at the time
of redemption. For purposes of this formula, the "net asset
value at the time of purchase" will be the net asset value at
purchase of the Class A Shares even if those shares are later
exchanged for shares of another Delaware Group fund and, in
the event of an exchange of Class A Shares, the "net asset
value of such shares at the time of redemption" will be the
net asset value of the shares into which the Class A Shares
have been exchanged.
<PAGE>
Redemptions of such Class A Shares held for more than 12
months will not be subjected to the Limited CDSC and an
exchange of such Class A Shares into another Delaware Group
fund will not trigger the imposition of the Limited CDSC at
the time of such exchange. The period a shareholder owns
shares into which Class A Shares are exchanged will count
towards satisfying the 12-month holding period. The Fund
assesses the Limited CDSC if such 12-month period is not
satisfied irrespective of whether the redemption triggering
its payment is of the Class A Shares of the Series or the
Class A Shares into which the Class A Shares of the Series
have been exchanged.
In determining whether a Limited CDSC is payable, it
will be assumed that shares not subject to the Limited CDSC
are the first redeemed followed by other shares held for the
longest period of time. The Limited CDSC will not be imposed
upon shares representing reinvested dividends or upon amounts
representing share appreciation. All investments made during
a calendar month, regardless of when during the month the
investment occurred, will age one month on the last day of
that month and each subsequent month.
The Limited CDSC will be waived in the following
instances: (i) redemptions effected pursuant to the Fund's
right to liquidate a shareholder's account if the aggregate
net asset value of the shares held in the account is less
than the then-effective minimum account size; (ii)
distributions to participants from a retirement plan
qualified under section 401(a) or 401(k) of the Internal
Revenue Code of 1986, as amended ("the Code"), or due to
death of a participant in such a plan; (iii) redemptions
pursuant to the direction of a participant or beneficiary of
a retirement plan qualified under section 401(a) or 401(k) of
the Code with respect to that retirement plan; (iv)
distributions from a section 403(b)(7) Plan or an Individual
Retirement Account ("IRA") due to death, disability, or
attainment of age 59 1/2; (v) tax-free returns of excess
contributions to an IRA; (vi) distributions by other employee
benefit plans to pay benefits; (vii) distributions described
in (ii), (iv), and (vi) above pursuant to a systematic
withdrawal plan; and (viii) redemptions by the classes of
shareholders who are permitted to purchase shares at net
asset value, regardless of the size of the purchase (see
Buying at Net Asset Value).
DIVIDENDS AND DISTRIBUTIONS
The Fund 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 if
necessary 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 A
Shares were paid from realized securities profits.
Each of the Classes will share proportionately in the
investment income and expenses of the Series, except that:
(i) the per share dividends and distributions on the Class B
Shares will be lower than the per share dividends and
distributions on the Class A Shares as a result of the higher
expenses under the 12b-1 Plan relating to the Class B Shares;
and (ii) the per share dividends and distributions on both
the Class A Shares and the Class B Shares will be lower than
the per share dividends and distributions on the DelCap Fund
Institutional Class as such class will not incur any expenses
under the Rule 12b-1 Plans. See Distribution (12b-1) and
Service under Management of the Fund.
Both dividends and distributions, if any, are
automatically reinvested in your account at net asset value
unless you elect otherwise. Any check in payment of
dividends or other distributions which cannot be delivered by
the Post Office or which remains uncashed for a period of
more than one year may be reinvested in the shareholder's
account at the then-current net asset value and the dividend
option may be changed from cash to reinvest. If you elect to
take your dividends and distributions in cash and such
dividends and distributions are in an amount of $25 or more,
you may elect the Delaware Group's MoneyLine service to
enable such payments to be transferred from your Series
account to your predesignated bank account. Your funds will
normally be credited to your bank account two business days
after the payment date. There are no fees for this method.
See Systematic Withdrawal Plan for Class A Shares under
Redemption and Exchange for information regarding
authorization of this service. (See The Delaware Difference
for more information on reinvestment options.)
<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,
whether received in cash or in additional shares. For
corporate investors, dividends from net investment income
will generally qualify in part for the corporate dividends-
received deduction. The portion of dividends paid by 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, whether received in cash or in additional shares, are
taxable to those investors who are subject to income taxes as
long-term capital gains, regardless of the length of time an
investor has owned shares in the Series. The Series does not
seek to realize any particular amount of capital gains during
a year; rather, realized gains are a byproduct of Series
management activities. Consequently, capital gains
distributions may be expected to vary considerably from year
to year. Also, for those investors subject to tax, if
purchases of shares in the Series are made shortly before the
record date for a dividend or capital gains distribution, a
portion of the investment will be returned as a taxable
distribution.
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.
All or a portion of the sales charge incurred in purchasing
Series shares will be excluded from the federal tax basis of
any of such shares sold or exchanged within ninety (90) days
of their purchase (for purposes of determining gain or loss
upon sale of such shares) if the sale proceeds are reinvested
in the Series or in another fund in the Delaware Group of
funds and a sales charge that would otherwise apply to the
reinvestment is reduced or eliminated. Any portion of such
sales charge excluded from the tax basis of the shares sold
will be added to the tax basis of the shares acquired in the
reinvestment.
The automatic conversion of Class B Shares into Class A
Shares at the end of no longer than approximately eight years
after purchase will constitute a tax-free exchange for
federal tax purposes. Shareholders should consult their own
tax advisers regarding specific questions as to federal,
state, local or foreign taxes. See Automatic Conversion of
Class B Shares under Buying Shares.
In addition to federal taxes, shareholders may be
subject to state and local taxes on distributions.
Distributions of interest income and capital gains realized
from certain types of U.S. government securities may be
exempt from state personal income taxes. Shares of the
Series are exempt from Pennsylvania county personal property
taxes.
Each year, the Fund will mail you information on the tax
status of the Series' dividends and distributions.
Shareholders will also receive each year information as to
the portion of dividend income, if any, that is derived from
U.S. government securities that are exempt from state income
tax. Of course, shareholders who are not subject to tax on
their income would not be required to pay tax on amounts
distributed to them by the Series.
The Fund is required to withhold 31% of taxable
dividends, capital gains distributions, and redemptions paid
to shareholders who have not complied with IRS taxpayer
identification regulations. You may avoid this withholding
requirement by certifying on your Account Registration Form
your proper Taxpayer Identification Number and by certifying
that you are not subject to backup withholding.
The tax discussion set forth above is included for
general information only. Prospective investors should
consult their own tax advisers concerning the federal, state,
local or foreign tax consequences of an investment in the
Series.
See Accounting and Tax Issues and Distributions and
Taxes in Part B for additional information on tax matters
relating to the Series and its shareholders.
<PAGE>
CALCULATION OF OFFERING PRICE AND NET ASSET VALUE PER SHARE
Class A Shares are purchased at the offering price and
Class B Shares are purchased at the net asset value ("NAV")
per share. The offering price of the Class A Shares consists
of the NAV per share next determined after the order is
received, plus any applicable front-end sales charges. The
offering price and NAV are computed as of the close of
regular trading on the New York Stock Exchange (ordinarily, 4
p.m., Eastern time) on days when such exchange is open.
The NAV per share is computed by adding the value of all
securities and other assets in the portfolio, deducting any
liabilities (expenses and fees are accrued daily) and
dividing by the number of shares outstanding. Portfolio
securities for which market quotations are available are
priced at market value. 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 DelCap Fund
Institutional Class will not incur any distribution fees
under the 12b-1 Plans and the Class A and Class B Shares
alone will bear the 12b-1 Plan expenses payable under their
respective Plans. Due to the specific distribution expenses
and other costs that will be allocable to each class, the net
asset value of and dividends paid to each class of the Fund
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 the
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 Series 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 the total return
performance of the Classes in advertising and other types of
literature. Total return will be based on a hypothetical
$1,000 investment, reflecting the reinvestment of all
distributions at net asset value and (i) in the case of Class
A Shares, the impact of the maximum front-end sales charge at
the beginning of each specified period and (ii) in the case
of Class B Shares, the deduction of any applicable CDSC at
the end of the relevant period. Each presentation will
include the average annual total return for one-, five- and
ten-year periods, as relevant. The Series may also advertise
aggregate and average total return information concerning a
Class over additional periods of time. In addition, the
Series may present total return information that does not
reflect the deduction of the maximum front-end sales charge
or any applicable CDSC.
Because securities prices fluctuate, investment results
of the Classes will fluctuate over time and past performance
should not be considered as a representation of future
results.
Distribution (12b-1) and Service
The Distributor, Delaware Distributors, Inc., serves as
the national distributor for the Fund under an Amended and
Restated Distribution Agreement dated as of September 6,
1994.
The Fund has adopted a distribution plan under Rule 12b-
1 for the Class A Shares and a separate distribution plan
under Rule 12b-1 for the Class B Shares (the "Plans"). The
Plans permit the Series to pay the Distributor from the
assets of the respective Class a monthly fee for its services
and expenses in distributing and promoting sales of shares.
These expenses include, among other things, preparing and
distributing advertisements, sales literature, and
prospectuses and reports used for sales purposes,
compensating sales and marketing personnel, holding special
promotions for specified periods of time, and paying
distribution and maintenance fees to brokers, dealers and
others. In connection with the promotion of Class A and
Class B Shares, the Distributor may, from time to time, pay
to participate in dealer-sponsored seminars and conferences,
and reimburse dealers for expenses incurred in connection
with preapproved seminars, conferences and advertising. The
Distributor may pay or allow additional promotional
incentives to dealers as part of preapproved sales contests
and/or to dealers who provide extra training and information
concerning a Class and increase sales of the Class. In
addition, the Series may make payments from the assets of the
respective Class directly to others, such as banks, who aid
in the distribution of Class shares or provide services in
respect of a Class, pursuant to service agreements with the
Series.
<PAGE>
The 12b-1 Plan expenses relating to the Class B Shares
are also used to pay the Distributor for advancing the
commission costs to dealers with respect to the initial sale
of such shares.
The aggregate fees paid by the Series from the assets of
the respective Class to the Distributor and others under the
Plans may not exceed .30% of the Class A Shares' average
daily net assets in any year, and 1% (.25% of which arefees
to be paid by the Series to the Distributor, dealers and
others, for providing personal service and/or maintaining
shareholder accounts) of the Class B Shares' average daily
net assets in any year. The Class A and Class B Shares will
not incur any distribution expenses beyond these limits,
which may not be increased without shareholder approval. The
Distributor may, however, incur additional expenses and make
additional payments to dealers from its own resources to
promote the distribution of shares of the Classes.
The Fund's Plans do not apply to the DelCap Fund
Institutional Class of shares. Those shares are not included
in calculating the Plans' fees, and the Plans are not used to
assist in the distribution and marketing of Delcap Fund
Institutional Class shares.
While payments pursuant to the Plans may not exceed .30%
annually with respect to the Class A Shares and 1% annually
with respect to the Class B Shares, the Plans do not limit
fees to amounts actually expended by the Distributor. It is
therefore possible that the Distributor may realize a profit
in any particular year. However, the Distributor currently
expects that its distribution expenses will likely equal or
exceed payments to it under the Plans. The monthly fees paid
to the Distributor are subject to the review and approval of
the Fund's unaffiliated directors who may reduce the fees or
terminate the Plans at any time.
The staff of the Securities and Exchange Commission
("SEC") has proposed amendments to Rule 12b-1 and other
related regulations that could impact Rule 12b-1 Distribution
Plans. The Fund intends to amend the Plans, if necessary, to
comply with any new rules or regulations the SEC may adopt
with respect to Rule 12b-1.
The Transfer Agent, Delaware Service Company, Inc.,
serves as the shareholder servicing, dividend disbursing and
transfer agent for the Series under an Agreement dated June
29, 1988. The unaffiliated directors review service fees
paid to the Transfer Agent.
The Distributor and the Transfer Agent are also
indirect, wholly-owned subsidiaries of DMH.
Expenses
The Series is responsible for all of its own expenses
other than those borne by the Manager under the Investment
Management Agreement and those borne by the Distributor under
the Amended and Restated Distribution Agreement. The Class A
Shares' ratio of expenses to average daily net assets for the
fiscal year ended September 30, 1994 was 1.35%. The expense
ratio of the Class A Shares reflects the impact of its 12b-1
Plan. The Class B Shares' ratio of expenses to average daily
net assets is expected to be 2.05%, based on the expenses
incurred by the Class A Shares during 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 Institutional
Class of shares as well as the Class A and Class B Shares.
Shares of each class represent proportionate interests in the
assets of the Series and have the same voting and other
rights and preferences as the other classes of the Series,
except that shares of the DelCap Fund Institutional Class are
not subject to, and may not vote on matters affecting, the
Distribution Plans under Rule 12b-1 relating to the Class A
and Class B Shares. Similarly, the shareholders of the Class
A Shares may not vote on matters affecting the Fund's Plan
under Rule 12b-1 relating to the Class B Shares, and the
shareholders of the Class B Shares may not vote on matters
affecting the Fund's Plan under Rule 12b-1 relating to the
Class A Shares.
Prior to September 6, 1994, the DelCap Fund A Class was
known as the DelCap Fund class and the DelCap Fund
Institutional Class was known as the DelCap Fund
(Institutional) class.
<PAGE>
------------------------
DELCAP FUND
------------------------
A CLASS
------------------------
B CLASS
------------------------
P R O S P E C T U S
------------------------
NOVEMBER 29, 1994
DELAWARE
GROUP
------
<PAGE>
The Delaware Group includes 20 different funds with a
wide range of investment objectives. Stock funds, income
funds, tax-free funds, money market funds and closed-end
equity funds give investors the ability to create a portfolio
that fits their personal financial goals. For more
information contact your financial adviser or call the
Delaware Group at 800-523-4640, in Philadelphia 215-988-1333.
INVESTMENT MANAGER
Delaware Management Company, Inc.
One Commerce Square (Photo of George Washington
Philadelphia, PA 19103 crossing the Delaware
NATIONAL DISTRIBUTOR 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
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.
