<PAGE> 1
SUPPLEMENT DATED APRIL 15, 1995
TO THE CURRENT PROSPECTUSES
OF THE FOLLOWING DELAWARE GROUP FUNDS
DELAWARE GROUP DELAWARE FUND, INC., DELAWARE GROUP TREND FUND, INC.,
DELAWARE GROUP VALUE FUND, INC., DELAWARE GROUP DECATUR FUND, INC.,
DELAWARE GROUP DELCAP FUND, INC., DELAWARE GROUP DELCHESTER HIGH-YIELD
BOND FUND, INC., DELAWARE GROUP GOVERNMENT FUND, INC., DELAWARE GROUP
TAX-FREE FUND, INC., DELAWARE GROUP TREASURY RESERVES, INC., DELAWARE
GROUP TAX-FREE MONEY, INC., DELAWARE GROUP CASH RESERVE, INC.
On March 29, 1995, shareholders of each of the above referenced Funds
or, as relevant, the series thereof, approved a new Investment Management
Agreement with Delaware Management Company, Inc. ("DMC"), an indirect
wholly-owned subsidiary of Delaware Management Holdings, Inc. ("DMH"). The
approval of new Investment Management Agreements was subject to the completion
of the merger (the "Merger") between DMH and a wholly-owned subsidiary of
Lincoln National Corporation ("Lincoln National") which occurred on April 3,
1995. Accordingly, the previous Investment Management Agreements terminated and
the new Investment Management Agreements became effective on that date.
As a result of the Merger, DMC and its two affiliates, Delaware
Service Company, Inc., the Funds' shareholder servicing, dividend disbursing
and transfer agent and Delaware Distributors, L.P., the Funds' national
distributor became indirect wholly-owned subsidiaries of Lincoln National.
Lincoln National, with headquarters in Fort Wayne, Indiana, is a diversified
organization with operations in many aspects of the financial services
industry, including insurance and investment management.
Under the new Investment Management Agreements, DMC will be paid at
the same annual fee rates and on the same terms as it was under the previous
Investment Management Agreements. In addition, the investment approach and
operation of each Fund and, as relevant, each series of a Fund, will remain
substantially unchanged.
PS-OTH-4/95
<PAGE> 2
DELAWARE GROUP
VALUE 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 as 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.
PS-21VT-9/94-U
<PAGE> 3
VALUE FUND PROSPECTUS
INSTITUTIONAL January 30, 1995
---------------------------------------------------------------------
1818 MARKET STREET, PHILADELPHIA, PA 19103
FOR MORE INFORMATION ABOUT THE VALUE FUND INSTITUTIONAL CLASS CALL THE DELAWARE
GROUP AT 800-828-5052.
This Prospectus describes the Value Fund Institutional Class (the
"Class") of shares of Delaware Group Value Fund, Inc. (the "Fund"). The Fund
intends to achieve its objective of capital appreciation by investing primarily
in common stocks whose market values appear low relative to their underlying
value or future potential.
Shares of this Class are available for purchase only by certain
enumerated institutions and are offered at net asset value without the
imposition of a front-end or contingent deferred sales charge and without a
12b-1 charge. See Buying Shares.
This Prospectus relates only to the Class and sets forth information
that you should read and consider before you invest. Please retain it for
future reference. Part B of the Fund's registration statement, dated January
30, 1995, as it may be amended from time to time, contains additional
information about the Fund and has been filed with the Securities and Exchange
Commission. Part B is incorporated by reference into this Prospectus and is
available, without charge, by writing to Delaware Distributors, L.P. at the
above address or by calling the above number. The Fund's financial statements
appear in its Annual Report, which will accompany any response to requests for
Part B.
The Fund also offers the Value Fund A Class and the Value Fund B
Class. Shares of the Value Fund A Class carry a front-end sales charge and are
subject to ongoing distribution expenses. Shares of the Value Fund B Class are
subject to ongoing distribution expenses and a contingent deferred sales charge
upon redemption.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
COVER PAGE . . . . . . . . . . . . . . . . . . . . . 1
SYNOPSIS . . . . . . . . . . . . . . . . . . . . . . 2
SUMMARY OF EXPENSES . . . . . . . . . . . . . . . . . 3
FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . 4
INVESTMENT OBJECTIVE AND POLICY
INVESTMENT STRATEGY . . . . . . . . . . . . . . . . 5
SUITABILITY . . . . . . . . . . . . . . . . . . . . 7
BUYING SHARES . . . . . . . . . . . . . . . . . . . . 8
REDEMPTION AND EXCHANGE . . . . . . . . . . . . . . . 9
DIVIDENDS AND DISTRIBUTIONS . . . . . . . . . . . . . 11
TAXES . . . . . . . . . . . . . . . . . . . . . . . . 11
CALCULATION OF NET ASSET VALUE PER SHARE . . . . . . 12
MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . 13
APPENDIX A--RATINGS . . . . . . . . . . . . . . . . . 15
</TABLE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
BE SURE TO CONSULT YOUR FINANCIAL ADVISER WHEN MAKING INVESTMENTS. MUTUAL FUNDS
CAN BE A VALUABLE PART OF YOUR FINANCIAL PLAN; HOWEVER, SHARES OF THE FUND ARE
NOT FDIC OR NCUSIF INSURED, ARE NOT GUARANTEED BY ANY CREDIT UNION OR ANY BANK,
ARE NOT OBLIGATIONS OF ANY CREDIT UNION OR ANY BANK, AND INVOLVE INVESTMENT
RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. SHARES OF THE FUND ARE NOT
CREDIT UNION OR BANK DEPOSITS.
1
<PAGE> 4
SYNOPSIS
CAPITALIZATION
The Fund offers the Value Fund Institutional Class, the Value Fund A
Class and the Value Fund B Class. The Fund has a present authorized
capitalization of five hundred million shares of capital stock with a $.01 par
value per share. Fifty million shares of that stock have been allocated to the
Value Fund Institutional Class, one hundred fifty million shares have been
allocated to the Value Fund A Class and one hundred fifty million shares have
been allocated to the Value Fund B Class. See Shares under Management of the
Fund.
INVESTMENT MANAGER, DISTRIBUTOR AND SERVICE AGENT
Delaware Management Company, Inc. (the "Manager") is the investment
manager for the Fund. The Manager or its affiliate, Delaware International
Advisers Ltd., manages the other funds in the Delaware Group. Delaware
Distributors, L.P. (the "Distributor") is the national distributor for the Fund
and for all of the other mutual funds in the Delaware Group. Delaware Service
Company, Inc. (the "Transfer Agent") is the shareholder servicing, dividend
disbursing and transfer agent for the Fund and for all of the other mutual
funds in the Delaware Group. See Management of the Fund.
PURCHASE PRICE
Shares of the Class offered by this Prospectus are available at net
asset value, without a front-end or contingent deferred sales charge and are
not subject to distribution fees under a Rule 12b-1 distribution plan. See
Buying Shares.
INVESTMENT OBJECTIVE
The objective of the Fund is to seek capital appreciation by investing
primarily in common stocks whose market values appear low relative to their
underlying value or future potential. See Investment Objective and Policy.
SPECIAL CONSIDERATIONS
The Fund may enter into options for hedging purposes to counterbalance
portfolio volatility. While the Fund does not engage in options for speculative
purposes, there are risks which result from use of these instruments by the
Fund, and the investor should review the descriptions of such in this
Prospectus. See Investment Strategy under Investment Objective and Policy.
The Fund may invest up to 25% of its net assets in high-yield
securities (junk bonds) and greater risks may be involved with an investment in
the Fund. See Risk Factors under Suitability.
OPEN-END INVESTMENT COMPANY
The Fund, which was organized as a Maryland corporation in 1987, is a
diversified, open-end management investment company. 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 Fund. See
Management of the Fund.
REDEMPTION AND EXCHANGE
Shares of the Fund are redeemed or exchanged at the net asset value
calculated after receipt of the redemption or exchange request. See Redemption
and Exchange.
2
<PAGE> 5
SUMMARY OF EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
- --------------------------------------------------------------------------------
<S> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) . . . . . . . . . . . . . . . . None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price) . . . . . . . . . . . . . . . . None
Redemption Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . None*
Exchange Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . None**
<CAPTION>
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
- --------------------------------------------------------------------------------
<S> <C>
Management Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.74%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Other Operating Expenses . . . . . . . . . . . . . . . . . . . . . . 0.42%
-----
Total Operating Expenses . . . . . . . . . . . . . . . . . . . . . 1.16%
=====
</TABLE>
The purpose of this table is to assist the investor in understanding
the various costs and expenses that an investor in the Class will bear directly
or indirectly. *CoreStates Bank, N.A. currently charges $7.50 per redemption
for redemptions payable by wire. **Exchanges are subject to the requirements of
each fund and a front-end sales charge may apply. See Value Fund A Class and
Value Fund B Class for expense information about those classes.
The following example illustrates the expenses that an investor would
pay on a $1,000 investment over various time periods assuming (1) a 5% annual
rate of return and (2) redemption at the end of each time period. As noted in
the table above, the Fund charges no redemption fees.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$12 $37 $64 $141
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.
3
<PAGE> 6
FINANCIAL HIGHLIGHTS
The following financial highlights are derived from the financial statements of
Delaware Group Value Fund, Inc. 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 Fund's Annual
Report (including the report of Ernst & Young LLP) may be obtained from the
Fund upon request at no charge.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
PERIOD
11/9/92(3)
YEAR ENDED THROUGH YEAR ENDED
11/30/94(3) 11/30/93(3) 11/30/92 11/30/92(1) 11/30/91(1) 11/30/90(1)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . $20.140 $17.750 $17.090 $15.320 $11.050 $14.030
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net Investment Income . . . . . . . . . . . 0.195 0.092 0.004 0.060 (0.006) 0.149
Net Gains or Losses on Securities
(both realized and unrealized) . . . . . (0.685) 3.158 0.656 3.360 4.681 (2.269)
------- ------- ------- ------- ------- -------
Total From Investment Operations . . . . (0.490) 3.250 0.660 3.420 4.675 (2.120)
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS
- ------------------
Dividends (from net investment income) . . (0.080) (0.040) none none (0.155) (0.140)
Distributions (from capital gains) . . . . (0.170) (0.820) none (0.990) (0.250) (0.720)
Returns of Capital . . . . . . . . . . . . none none none none none none
------- ------- ------- ------- ------- -------
Total Distributions . . . . . . . . . . . (0.250) (0.860) none (0.990) (0.405) (0.860)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period . . . . . . $19.400 $20.140 $17.750 $17.750 $15.320 $11.050
======= ======= ======= ======= ======= =======
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN . . . . . . . . . . . . . . . (2.51%) 19.00% 3.86%(6) 22.99%(7) 43.61%(7) (16.14%)(7)
- ------------
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (000's omitted) . $ 6,385 $ 5,476 $ 1,558 $38,792 $12,041 $ 7,746
Ratio of Expenses to Average Daily
Net Assets . . . . . . . . . . . . . . . 1.16% 1.34% 1.63%(6) 1.93% 2.26% 1.79%
Ratio of Net Investment Income to Average
Daily Net Assets . . . . . . . . . . . . 1.05% 0.55% 0.69%(6) 0.39% (0.07%) 1.12%
Portfolio Turnover Rate . . . . . . . . . . 14% 32% 68%(6) 68% 99% 69%
</TABLE>
<TABLE>
<CAPTION>
PERIOD
6/24/87(1)/(2)
YEAR ENDED THROUGH
11/30/89(1) 11/30/88(1) 11/30/87
<S> <C> <C> <C>
Net Asset Value, Beginning of Period . . . $10.440 $ 7.740 $9.530
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net Investment Income . . . . . . . . . . . 0.131 0.054 0.058
Net Gains or Losses on Securities
(both realized and unrealized) . . . . . 3.529 2.691 (1.848)
------- ------- ------
Total From Investment Operations . . . . 3.660 2.745 (1.790)
------- ------- ------
LESS DISTRIBUTIONS
- ------------------
Dividends (from net investment income) . . (0.070) (0.045) none
Distributions (from capital gains) . . . . none none none
Returns of Capital . . . . . . . . . . . . none none none
------- ------- ------
Total Distributions . . . . . . . . . . . (0.070) (0.045) none
------- ------- ------
Net Asset Value, End of Period . . . . . . $14.030 $10.440 $7.740
======= ======= ======
- ----------------------------------------------------------------------------------------------
TOTAL RETURN . . . . . . . . . . . . . . . 35.28%(7)/(8) 35.57%(7)/(8) (18.78%)(2)/(7)/(8)
- ------------
- ----------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (000's omitted) . $11,055 $ 6,797 $8,780
Ratio of Expenses to Average Daily
Net Assets . . . . . . . . . . . . . . . 1.98%(4) 2.02%(4) 1.50%(2)/(4)
Ratio of Net Investment Income to Average
Daily Net Assets . . . . . . . . . . . . 1.14%(5) 0.35%(5) 1.74%(2)/(5)
Portfolio Turnover Rate . . . . . . . . . . 103% 66% 60%(6)
</TABLE>
- -----------------------
(1) Data are derived from data of the Value Fund A Class (until September
6, 1994, referred to as Value Fund class) and reflect the impact of
Rule 12b-1 distribution expenses paid by the Value Fund A Class. Value
Fund Institutional Class shares (until September 6, 1994, referred to
as Value Fund (Institutional) class) are not subject to Rule 12b-1
distribution expenses and per share data for periods beginning on and
after November 9, 1992 will not reflect the deduction of such
expenses.
(2) Date of initial public offering of the Value Fund A Class; ratios and
total return for this period have been annualized.
(3) Per share data are derived from data of the Value Fund Institutional
Class which commenced operations on November 9, 1992.
(4) Ratio of expenses to average daily net assets prior to expense
limitation was 2.16% for 1989, 2.23% for 1988 and 2.26% for 1987.
(5) Ratio of net investment income to average daily net assets prior to
expense limitation was 0.97% for 1989, 0.14% for 1988 and 0.99% for
1987.
(6) Ratios have been annualized and total return is not annualized.
(7) Does not reflect any maximum sales charges that are or were in effect
for the Value Fund A Class.
(8) Total return reflects the expense limitation referenced in Notes 4 and
5.
4
<PAGE> 7
INVESTMENT OBJECTIVE
AND POLICY
The objective of the Fund is capital appreciation. The strategy will
be to invest primarily in common stocks and issues convertible into common
stocks which, in the opinion of the Manager, have market values which appear
low relative to their underlying value or future earnings and growth potential.
Securities will be purchased that the Manager believes to be
undervalued in relation to asset value or long-term earning power of the
companies. The Manager may also invest in securities of companies where current
or anticipated favorable changes within a company provide an opportunity for
capital appreciation. The Manager's emphasis will be on securities of companies
that may be temporarily out of favor or whose value is not yet recognized by
the market.
The Manager will consider the financial strength of the company, the
nature of its management and any developments affecting the security, the
company or the industry. Securities may be out of favor due to a variety of
factors, such as lack of an institutional following, or unfavorable
developments affecting the issuer of the securities, such as poor earning
reports, dividend reductions or cyclical economic or business conditions. Other
securities considered by the Manager would include those of companies where
current or anticipated favorable changes such as a new product or service,
technological breakthrough, management change, projected takeovers, changes in
capitalization or redefinition of future corporate operations provide an
opportunity for capital appreciation. The Manager will also consider securities
where trading patterns suggest that significant positions are being accumulated
by officers of the company, outside investors or the company itself. The
Manager feels it may uncover situations where those who have a vested interest
in the company feel the securities are undervalued and have appreciation
potential.
Although the Fund will constantly strive to attain the objective of
long-term growth, there can be no assurance that it will be attained. If the
Manager believes that market conditions warrant, the Fund may employ options
strategies. Also, on a temporary, defensive basis, the Manager may invest in
fixed income obligations. The objective of the Fund may not be changed without
shareholder approval.
INVESTMENT STRATEGY
While management believes that the Fund's objective may best be
attained by investing in common stocks, the Fund may also invest in other
securities including, but not limited to, convertible securities, warrants,
preferred stocks, bonds and foreign securities. Although it is expected to
receive only minor emphasis, the Fund may also invest in fixed income
securities without regard to a minimum grade level in pursuit of its objective
where there are favorable changes in a company's earnings or growth potential
or where general economic conditions and the interest rate environment provide
an opportunity for declining interest rates and consequent appreciation in
these securities. See Suitability for more specific information on such
securities. The strategies employed are dependent upon the judgment of the
Manager.
In investing for capital appreciation, the Fund may hold securities
for any period of time. The degree of portfolio activity will affect brokerage
costs of the Fund and may affect taxes payable by the Fund's shareholders. See
Portfolio Trading Practices under Management of the Fund.
Should the market warrant a temporary, defensive approach, the Fund
may also invest in fixed income obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities, as well as money market
instruments, and corporate bonds rated A or above by Moody's Investors Service,
Inc. ("Moody's") or Standard & Poor's Corporation ("S&P"). (Appendix A to this
Prospectus describes these ratings.)
The Fund may write covered call options on individual issues as well
as write call options on stock indices. The Fund 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 Fund's
portfolio as well as the price movement of individual securities. The Fund does
not currently intend to write or purchase stock index options.
While there is no limit on the amount of the Fund's assets which may
be invested in covered call options, the Fund will not invest more than 2% of
its net assets in put options. The Fund will only use Exchange-traded options.
5
<PAGE> 8
The Fund may invest in restricted securities, including securities
eligible for resale without registration pursuant to Rule 144A ("Rule 144A
Securities") under the Securities Act of 1933. Rule 144A permits many privately
placed and legally restricted securities to be freely traded among certain
institutional buyers such as the Fund. The Fund may invest no more than 10% of
the value of its net assets in illiquid securities.
While maintaining oversight, the Board of Directors has delegated to
the Manager the day-to-day functions of determining whether or not individual
Rule 144A Securities are liquid for purposes of the Fund's 10% limitation on
investments in illiquid assets. The Board has instructed the Manager to
consider the following factors in determining the liquidity of a Rule 144A
Security: (i) the frequency of trades and trading volume for the security; (ii)
whether at least three dealers are willing to purchase or sell the security and
the number of potential purchasers; (iii) whether at least two dealers are
making a market in the security; (iv) the nature of the security and the nature
of the marketplace trades (e.g., the time needed to dispose of the security,
the method of soliciting offers, and the mechanics of transfer).
If the Manager determines that a Rule 144A Security which was
previously determined to be liquid is no longer liquid and, as a result, the
Fund's holdings of illiquid securities exceed the Fund's 10% limit on
investment in such securities, the Manager will determine what action shall be
taken to ensure that the Fund continues to adhere to such limitation.
CALL OPTIONS
WRITING COVERED CALL OPTIONS
A covered call option obligates the Fund to sell one of its securities
for an agreed price up to an agreed date. When the Fund writes a call, it
receives a premium and agrees to sell the callable securities to a purchaser of
a corresponding call during the call period (usually not more than nine months)
at a fixed exercise price regardless of market price changes during the call
period. The advantage is that the Fund receives premium income for the limited
purpose of offsetting the costs of purchasing put options or offsetting any
capital loss or decline in market value of the security. However, if the
Manager's forecast is wrong, the Fund 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 Fund the right to sell one of its securities
for an agreed price up to an agreed date. The advantage is that the Fund can be
protected should the market value of the security decline. However, the Fund
must pay a premium for this right which would be lost if the option is not
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 Fund offset a put option or
covered call option prior to its exercise or expiration. If the Fund 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 Fund 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 Fund may also experience delays in foreign
securities settlement.
The Fund will, from time to time, conduct foreign currency exchange
transactions on a spot (i.e., cash) basis at the spot rate prevailing in the
foreign currency exchange market or through entering into contracts to purchase
or sell foreign currencies at a future date (i.e., a "forward foreign currency"
contract or "forward" contract). Investors should be aware that there are costs
and risks associated with such currency transactions. The Fund may enter into
forward contracts to "lock in" the price of a security it has agreed to
purchase or sell, in terms of U.S. dollars or other currencies in which the
transaction will be consummated. When the Manager believes that the currency of
a particular foreign country may suffer a decline against the U.S. dollar or
against another currency, the Fund may enter into a forward contract to sell,
for a fixed amount of U.S. dollars or other appropriate currency, the amount of
foreign currency approximating the value of some
6
<PAGE> 9
or all of the Fund's securities denominated in such foreign currency. It is
impossible to predict precisely the market value of portfolio securities at the
expiration of the forward contract. Accordingly, it may be necessary for the
Fund to purchase or sell additional foreign currency on the spot market (and
bear the expense of such purchase or sale) if the market value of the security
is less than or greater than the amount of foreign currency the Fund is
obligated to deliver.
The Fund may incur gains or losses from currency transactions. No type
of foreign currency transaction will eliminate fluctuations in the prices of
the Fund's foreign securities or will prevent losses if the prices of such
securities should decline.
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.
REPURCHASE AGREEMENTS
The Fund may also use repurchase agreements that are at least 100%
collateralized by U.S. government securities. Repurchase agreements help the
Fund to invest cash on a temporary basis. The Fund may invest cash balances in
joint repurchase agreements with other Delaware Group funds. Under a repurchase
agreement, the Fund 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 Fund could experience
delays in liquidating the securities. To minimize this possibility, the Fund
considers the creditworthiness of banks and dealers when entering into
repurchase agreements.
PORTFOLIO LOAN TRANSACTIONS
The Fund may loan up to 25% of its assets to qualified broker/dealers
or institutional investors for their use relating to short sales or other
security transactions.
The major risk to which the Fund 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 Fund will only enter into loan
arrangements after a review of all pertinent facts by the Manager, subject to
overall supervision by the Board of Directors, including the creditworthiness
of the borrowing broker, dealer or institution and then only if the
consideration to be received from such loans would justify the risk.
Creditworthiness will be monitored on an ongoing basis by the Manager.
* * *
The Fund is permitted under certain circumstances to borrow money.
Investment securities will not be purchased while the Fund has an outstanding
borrowing.
Part B sets forth other more specific investment restrictions.
SUITABILITY
The Fund may be suitable for the patient investor interested in
long-term capital appreciation. Providing current income is not an objective of
the Fund. Any income produced is expected to be minimal. An investor should not
consider a purchase of Fund 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.
RISK FACTORS
The investor should be willing to accept the risks associated with
investments in domestic and international securities (and currency hedging
transactions in connection therewith), as these investments may be speculative
and subject the Fund to an additional risk. Investing in a company temporarily
out of favor may involve the risk that the anticipated favorable change may not
occur and, as a result, that security may decline in value or not appreciate as
expected. Although it will receive only minor emphasis in pursuit of its
objective, the Fund may also purchase, at times, lower rated or unrated
corporate bonds without regard to a grade minimum, which may be considered
speculative and may increase the portfolio's credit risk. Although the Fund
will not ordinarily purchase bonds rated below B by Moody's or S&P (i.e.,
high-yield, high-risk fixed income securities), it may do so if the Manager
believes that capital appreciation is likely. The Fund will not invest more
than 25% of its net assets in bonds rated below B. Investing in such lower
rated debt securities may involve certain risks not typically associated with
higher rated securities. Such bonds are considered very speculative and may
possibly be in default or have interest payments in arrears. Ownership of Fund
shares reduces the bookkeeping and administrative inconvenience connected with
direct purchases of these securities. See High-Yield, High-Risk Securities in
Part B for additional information on the risks associated with such securities.
Net asset value may fluctuate at times in response to market
conditions and, as a result, the Fund is not appropriate for a short-term
investor.
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<PAGE> 10
BUYING SHARES
The Distributor serves as the national distributor for the Fund.
Shares of the Class may be purchased directly by contacting the Fund or its
agent or through authorized investment dealers. All purchases are at net asset
value. There is no sales charge.
INVESTMENT INSTRUCTIONS GIVEN ON BEHALF OF PARTICIPANTS IN AN
EMPLOYER-SPONSORED RETIREMENT PLAN ARE MADE IN ACCORDANCE WITH DIRECTIONS
PROVIDED BY THE EMPLOYER. EMPLOYEES CONSIDERING PURCHASING SHARES OF THE CLASS
AS PART OF THEIR RETIREMENT PROGRAM SHOULD CONTACT THEIR EMPLOYER FOR DETAILS.
Shares of the Class are available for purchase only by:
(a) retirement plans introduced by persons not associated with brokers or
dealers that are primarily engaged in the retail securities business and
rollover individual retirement accounts from such plans; (b) tax-exempt
employee benefit plans of the Manager or its affiliates and securities dealer
firms with a selling agreement with the Distributor; (c) institutional advisory
accounts of the Manager or its affiliates and those having client relationships
with Delaware Investment Advisers, a division of the Manager, or its affiliates
and their corporate sponsors, as well as subsidiaries and related employee
benefit plans and rollover individual retirement accounts from such
institutional advisory accounts; (d) banks, trust companies and similar
financial institutions investing for the account of their trust customer for
whom such financial institution is exercising investment discretion in
purchasing shares of the Class and; (e) registered investment advisers
investing on behalf of clients that consist solely of institutions and high
net-worth individuals having at least $1,000,000 entrusted to the adviser for
investment purposes, but only if the adviser is not affiliated or associated
with a broker or dealer and derives compensation for its services exclusively
from its clients for such advisory services.
VALUE FUND A CLASS AND VALUE FUND B CLASS
In addition to offering the Value Fund Institutional Class of shares,
the Fund also offers the Value Fund A Class and Value Fund B Class, which are
described in a separate prospectus relating only to those classes. Shares of
Value Fund A Class and Value Fund B Class may be purchased through authorized
investment dealers or directly by contacting the Fund or its agent. The Value
Fund A Class carries a front-end sales charge and has annual 12b-1 expenses
equal to a maximum of .30%. The maximum front-end sales charge as a percentage
of the offering price is 5.75% (6.10% as a percentage of the amount invested)
and is reduced on certain transactions of $100,000 or more. The Value Fund B
Class has no front-end sales charge but is subject to annual 12b-1 expenses
equal to a maximum of 1%. Shares of Value Fund B Class and certain shares of
the Value Fund A Class may be subject to a contingent deferred sales charge
upon redemption. Sales or service compensation available in respect of such
classes, therefore, differs from that available in respect of the Value Fund
Institutional Class. All three classes of shares have a proportionate interest
in the underlying portfolio of securities of the Fund. Total Operating
Expenses incurred by the Value Fund A Class as a percentage of average daily
net assets for the fiscal year ended November 30, 1994 were 1.46%, including
12b-1 expenses. Based on expenses incurred by the Value Fund A Class during its
fiscal year ended November 30, 1994, the expenses of the Value Fund B Class are
expected to be 2.16%, including 12b-1 expenses, for the fiscal year ending
November 30, 1995. See Part B for performance information about the Value Fund
A Class and the Value Fund B Class. To obtain a prospectus relating to such
classes, contact the Distributor.
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<PAGE> 11
HOW TO BUY SHARES
The Fund makes it easy to invest by mail, by wire, by exchange and by
arrangement with your investment dealer. In all instances, investors must
qualify to purchase shares of the Class.
INVESTING DIRECTLY BY MAIL
1. Initial Purchases--An Investment Application must be completed, signed and
sent with a check payable to Value Fund Institutional Class, to 1818 Market
Street, Philadelphia, PA 19103.
2. Subsequent Purchases--Additional purchases may be made at any time by
mailing a check payable to Value Fund Institutional Class. Your check should be
identified with your name(s) and account number.
INVESTING DIRECTLY BY WIRE
You may purchase shares by requesting your bank to transmit funds by
wire to CoreStates Bank, N.A., ABA #031000011, account number 0114-2596
(include your name(s) and your account number for the class in which you are
investing).
1. Initial Purchases--Before you invest, telephone the Fund's Client Services
Department at 800-828-5052 to get an account number. If you do not call first,
it may delay processing your investment. In addition, you must promptly send
your Investment Application to Value Fund Institutional Class, to 1818 Market
Street, Philadelphia, PA 19103.
2. Subsequent Purchases--You may make additional investments anytime by wiring
funds to CoreStates Bank, N.A., as described above. You must advise your Client
Services Representative by telephone at 800-828-5052 prior to sending your
wire.
INVESTING BY EXCHANGE
If you have an investment in another mutual fund in the Delaware Group
and you qualify to purchase shares of the Class, you may write and authorize an
exchange of part or all of your investment into the Class. Shares of the Value
Fund B Class and the Class B Shares of the other funds in the Delaware Group
offering such a class of shares may not be exchanged into the Class. If you
wish to open an account by exchange, call your Client Services Representative
at 800-828-5052 for more information.
INVESTING THROUGH YOUR INVESTMENT DEALER
You can make a purchase of Class shares through most investment
dealers who, as part of the service they provide, must transmit orders
promptly. They may charge for this service.
PURCHASE PRICE AND EFFECTIVE DATE
The purchase price (net asset value) is determined as of the close of
regular trading on the New York Stock Exchange (ordinarily, 4 p.m., Eastern
time) on days when such exchange is open.
The effective date of a purchase made through an investment dealer is
the date the order is received by the Fund. The effective date of a direct
purchase is the day your wire, electronic transfer or check is received unless
it is received after the time the share price is determined, as noted above.
Those received after such time will be effective the next business day.
THE CONDITIONS OF YOUR PURCHASE
The Fund reserves the right to reject any purchase or exchange. If a
purchase is cancelled because your check is returned unpaid, you are
responsible for any loss incurred. The Fund can redeem shares from your
account(s) to reimburse itself for any loss, and you may be restricted from
making future purchases in any of the funds in the Delaware Group. The Fund
reserves the right, upon 60 days' written notice, to redeem accounts that
remain under $250 as a result of redemptions.
REDEMPTION AND EXCHANGE
REDEMPTION AND EXCHANGE REQUESTS MADE ON BEHALF OF PARTICIPANTS IN AN
EMPLOYER-SPONSORED RETIREMENT PLAN ARE MADE IN ACCORDANCE WITH DIRECTIONS
PROVIDED BY THE EMPLOYER. EMPLOYEES SHOULD THEREFORE CONTACT THEIR EMPLOYER FOR
DETAILS.
Your shares will be redeemed or exchanged based on the net asset value
next determined after we receive your request in good order. Redemption and
exchange requests received in good order after the time the net asset value of
shares is determined, as noted above, will be processed on the next business
day. See Purchase Price and Effective Date under Buying Shares. Except as
otherwise noted below, for a redemption request to be in "good order," you must
provide your Class account number, account registration, and the total number
of shares or dollar amount of the transaction. With regard to exchanges, you
must also provide the name of the fund you want to receive the proceeds.
Exchange instructions and redemption requests must be signed by the record
owner(s) exactly as the shares are registered. You may request a redemption or
an exchange by calling the Fund at 800-828-5052.
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<PAGE> 12
The Fund will honor written redemption requests of shareholders who
recently purchased shares by check, but will not mail the proceeds until it is
reasonably satisfied the purchase check has cleared, which may take up to 15
days from the purchase date. The Fund will not honor telephone redemptions for
Class shares recently purchased by check unless it is reasonably satisfied that
the purchase check has cleared. You can avoid this potential delay if you
purchase shares by wiring Federal Funds. The Fund reserves the right to reject
a written or telephone redemption request or delay payment of redemption
proceeds if there has been a recent change to the shareholder's address of
record.
Shares of the Class may be exchanged into any other Delaware Group
mutual fund provided: (1) the investment satisfies the eligibility and other
requirements set forth in the prospectus of the fund being acquired, including
the payment of any applicable front-end sales charge; and (2) the shares of the
fund being acquired are in a state where that fund is registered. If exchanges
are made into other shares that are eligible for purchase only by those
permitted to purchase shares of the Class, such exchange will be exchanged at
net asset value. Shares of the Class may not be exchanged into the Class B
Shares of the funds in the Delaware Group. The Fund reserves the right to
reject exchange requests at any time. The Fund may suspend or terminate, or
amend the terms of, the exchange privilege upon 60 days' written notice to
shareholders.
Different redemption and exchange methods are outlined below. There is
no fee charged by the Fund or the Distributor for redeeming or exchanging your
shares. You may also have your investment dealer arrange to have your shares
redeemed or exchanged. Your investment dealer may charge for this service.
All authorizations given by shareholders with respect to an account,
including selection of any of the features described below, shall continue in
effect until revoked or modified in writing and until such time as such written
revocation or modification has been received by the Fund or its agent.
All exchanges involve a purchase of shares of the fund into which the
exchange is made. As with any purchase, an investor should obtain and carefully
read that fund's prospectus before buying shares in an exchange. The prospectus
contains more complete information about the fund, including charges and
expenses.
WRITTEN REDEMPTION AND EXCHANGE
You can write to the Fund at 1818 Market Street, Philadelphia, PA
19103 to redeem some or all of your Class shares or to request an exchange of
any or all your Class shares into another mutual fund in the Delaware Group,
subject to the same conditions and limitations as other exchanges noted above.
The request must be signed by all owners of the account or your investment
dealer of record.
For redemptions of more than $50,000, or when the proceeds are not
sent to the shareholder(s) at the address of record, the Fund requires a
signature by all owners of the account and may require a signature guarantee.
Each signature guarantee must be supplied by an eligible guarantor institution.
The Fund reserves the right to reject a signature guarantee supplied by an
eligible institution based on its creditworthiness. The Fund may require
further documentation from corporations, executors, retirement plans,
administrators, trustees or guardians.
The redemption request is effective at the net asset value next
determined after it is received in good order. Payment is normally mailed the
next business day, but no later than seven days, after receipt of your request.
The Fund does not issue certificates for shares unless you submit a specific
request. If your shares are in certificate form, the certificate must accompany
your request and also be in good order.
Shareholders also may submit their written request for redemption or
exchange by facsimile transmission at the following number: 215-972-8864.
TELEPHONE REDEMPTION AND EXCHANGE
To get the added convenience of the telephone redemption and exchange
methods, you must have the Transfer Agent hold your shares (without charge) for
you. If you choose to have your shares in certificate form, you can only redeem
or exchange by written request and you must return your certificates.
The Telephone Redemption service enabling redemption proceeds to be
mailed to the account address of record and the Telephone Exchange service,
both of which are described below, are automatically provided unless the Fund
receives written notice from the shareholder to the contrary. The Fund reserves
the right to modify, terminate or suspend these procedures upon 60 days'
written notice to shareholders. It may be difficult to reach the Fund by
telephone during periods when market or economic conditions lead to an
unusually large volume of telephone requests.
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<PAGE> 13
Neither the Fund nor the Transfer Agent is responsible for any
shareholder loss incurred in acting upon written or telephone instructions for
redemption or exchange of Class shares which are reasonably believed to be
genuine. With respect to such telephone transactions, the Fund will follow
reasonable procedures to confirm that instructions communicated by telephone
are genuine (including verification of a form of personal identification) as,
if it does not, the Fund or the Transfer Agent may be liable for any losses due
to unauthorized or fraudulent transactions. A written confirmation will be
provided for all purchase, exchange and redemption transactions initiated by
telephone. By exchanging shares by telephone, the shareholder is acknowledging
prior receipt of a prospectus for the fund into which shares are being
exchanged.
TELEPHONE REDEMPTION--CHECK TO YOUR ADDRESS
OF RECORD
You or your investment dealer of record can have redemption proceeds
of $50,000 or less mailed to you at your record address. Checks will be
payable to the shareholder(s) of record. Payment is normally mailed the next
business day, but no more than seven days, after receipt of the request.
TELEPHONE REDEMPTION--PROCEEDS TO YOUR BANK
Redemption proceeds of $1,000 or more can be transferred to your
predesignated bank account by wire or by check. You should authorize this
service when you open your account. If you change your predesignated bank
account, the Fund requires a written authorization and may require that you
have your signature guaranteed. For your protection, your authorization must
be on file. If you request a wire, your funds will normally be sent the next
business day. CoreStates Bank, N.A.'s fee (currently $7.50) will be deducted
from your redemption. If you ask for a check, it will normally be mailed the
next business day, but no later than seven days, after receipt of your request
to your predesignated bank account. There are no fees for this method, but the
mail time may delay getting funds into your bank account. Simply call your
Client Services Representative prior to the time the net asset value is
determined, as noted above.
TELEPHONE EXCHANGE
You or your investment dealer of record can exchange shares into any
fund in the Delaware Group under the same registration. As with the written
exchange service, telephone exchanges are subject to the same conditions and
limitations as other exchanges noted above. Telephone exchanges may be subject
to limitations as to amounts or frequency.
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to distribute substantially all of its net capital
gains and net investment income earned during the year. Such payments, if any,
will be made once a year during the first quarter of the next fiscal year.
During the fiscal year ended November 30, 1994, a dividend of $0.080
per share of the Class was paid from net investment income and a distribution
of $0.170 per share was paid from realized securities profits. The Class paid a
dividend of $0.215 per share from net investment income and a capital gain of
$0.250 per share from realized securities profits on January 5, 1995 to
shareholders of record December 27, 1994.
Each class of the Fund will share proportionately in the investment
income and expenses of the Fund, except that the Class will not incur any
distribution fee under the 12b-1 Plans which apply to the Value Fund A Class
and the Value Fund B Class.
Both dividends and distributions, if any, are automatically reinvested
in your account at net asset value.
TAXES
The Fund 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 Fund 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 Fund intends to distribute substantially all of its net investment
income and net capital gains, if any. Dividends from net investment income or
net short-term capital gains will be taxable to you as ordinary income, even
though received in additional shares. For corporate investors, dividends from
net investment income will generally qualify in part for the corporate
dividends-received deduction. The portion of dividends paid by the Fund that so
qualifies will be designated each year in a notice mailed to the Fund's
shareholders. For the fiscal year ended November 30, 1994, 53% of the Fund's
dividends from net investment income qualified for the corporate
dividends-received deduction.
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<PAGE> 14
Distributions paid by the Fund from long-term capital gains, received
in additional shares, are taxable to those investors who are subject to income
taxes as long-term capital gains, regardless of the length of time an investor
has owned shares in the Fund. The Fund does not seek to realize any particular
amount of capital gains during a year; rather, realized gains are a byproduct
of Fund 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 Fund 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 Fund and received
by the shareholder on December 31 of the year declared.
The sale of shares of the Fund 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 Fund's shares which had been held for
six months or less will be treated as a long-term capital loss to the extent of
capital gain dividends received with respect to such shares.
In addition to federal taxes, shareholders may be subject to state and
local taxes on distributions. Distributions of interest income and capital
gains realized from certain types of U.S. government securities may be exempt
from state personal income taxes. Shares of the Fund are exempt from
Pennsylvania county personal property taxes.
Each year, the Fund will mail you information on the tax status of the
Fund's 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 Fund.
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
Fund.
See Accounting and Tax Issues and Distributions and Taxes in Part B
for additional information on tax matters relating to the Fund and its
shareholders.
CALCULATION OF NET ASSET
VALUE PER SHARE
The purchase and redemption price of the Class is the net asset value
("NAV") per share next determined after the order is received. The NAV is
computed as of the close of regular trading on the New York Stock Exchange
(ordinarily, 4 p.m., Eastern time) on days when such exchange is open.
The NAV per share is computed by adding the value of all securities
and other assets in the portfolio, deducting any liabilities (expenses and fees
are accrued daily) and dividing by the number of shares outstanding. Portfolio
securities for which market quotations are available are priced at market
value. 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 Fund's three classes will bear, pro-rata, all of the
common expenses of the Fund. The net asset values of all outstanding shares of
each class of the Fund will be computed on a pro-rata basis for each
outstanding share based on the proportionate participation in the Fund
represented by the value of shares of that class. All income earned and
expenses incurred by the Fund will be borne on a pro-rata basis by each
outstanding share of a class, based on each class' percentage in the Fund
represented by the value of shares of such classes, except that the Class will
not incur any of the expenses under the Fund's 12b-1 Plans and Value Fund A and
B Classes alone will bear the 12b-1 Plan fees payable under their respective
Plans. Due to the specific distribution expenses and other costs that will be
allocable to each class, the net asset value of and dividends paid to each
class of the Fund will vary.
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<PAGE> 15
MANAGEMENT OF THE FUND
DIRECTORS
The business and affairs of the Fund are managed under the direction
of its Board of Directors. Part B contains additional information regarding the
directors and officers.
INVESTMENT MANAGER
The Manager furnishes investment management services to the Fund.
The Manager and its predecessors have been managing the funds in the
Delaware Group since 1938. On November 30, 1994, the Manager and its affiliate,
Delaware International Advisers Ltd., were supervising in the aggregate more
than $24 billion in assets in the various institutional (approximately
$15,544,258,000) and investment company (approximately $9,237,192,000)
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.
On December 12, 1994, DMH entered into a merger agreement with Lincoln
National Corporation ("Lincoln National") and a newly-formed subsidiary of
Lincoln National. Pursuant to that agreement, the new subsidiary will be merged
with and into DMH. This merger will result in DMH becoming a wholly-owned
subsidiary of Lincoln National. The transaction is expected to close in the
early spring of 1995, subject to the receipt of all regulatory approvals and
satisfaction of conditions precedent to closing, including the approval
described below. Lincoln National, with headquarters in Fort Wayne, Indiana, is
a diversified organization with operations in many aspects of the financial
services industry, including insurance and investment management.
The Manager manages the Fund's 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 Fund, less all
directors' fees paid to unaffiliated directors. The Fund's fee is higher than
that paid by many other funds. The fee may be higher or lower than that paid by
funds with comparable investment objectives. Investment management fees paid by
the Fund for the fiscal year ended November 30, 1994 were 0.74% of average
daily net assets.
Completion of the above-described merger transaction will result in an
assignment, and consequently a termination, of the existing investment
management agreement between the Manager and the Fund. Subject to approval by
the Fund's Board, Fund shareholders will be asked to vote on a new investment
management agreement with the Manager, to become effective at or about the time
the transaction is to be completed. It is not anticipated that there will be
any changes in the compensation or other material terms of the existing
investment management agreement as a result of the transaction. Details of the
transaction will be included in the proxy materials to be furnished to
shareholders in connection with a shareholder meeting expected to be held some
time in early 1995.
Edward A. Trumpbour has primary responsibility for making day-to-day
investment decisions for the Fund. Mr. Trumpbour has been the Fund's Senior
Portfolio Manager since its inception. Mr. Trumpbour is a graduate of
Georgetown University with an MBA from the University of Pennsylvania's Wharton
School. Mr. Trumpbour joined the Delaware Group in 1985 as a portfolio analyst
for the equity team. He began his career as a senior auditor with E. F. Hutton
and later served as a research analyst at Gabelli & Company.
In making investment decisions for the Fund, Mr. Trumpbour consults
with Wayne A. Stork and Richard G. Unruh, Jr. Mr. Stork, Chairman of the Board
of the Manager and the Fund's Board of Directors, is a graduate of Brown
University and attended New York University's Graduate School of Business
Administration. Mr. Stork joined the Delaware Group in 1962 and has served in
various executive capacities at different times within the Delaware
organization. Mr. Unruh is a graduate of Brown University and received his MBA
from the University of Pennsylvania's Wharton School. He joined the Delaware
Group in 1982 after 19 years of investment management experience with Kidder,
Peabody & Co. Inc. Mr. Unruh was named an executive vice president of the Fund
in 1994. He is also a member of the Board of Directors of the Manager and was
an executive vice president of the Manager in 1994. He is on the Board of
Directors of Keystone Insurance Company and AAA Mid-Atlantic and is a former
president and current member of the Advisory Council of the Bond Club of
Philadelphia. It is not anticipated that there will be any changes in the
personnel responsible for managing the Fund as a result of the above-described
merger transaction.
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<PAGE> 16
PORTFOLIO TRADING PRACTICES
The Fund normally will not invest for short-term trading purposes.
However, the Fund 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 Fund and may affect taxes payable by the Fund's shareholders to the extent
of any net realized capital gains. Given the Fund's 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 Fund's portfolio at the
beginning of the year were replaced by the end of the year. The turnover rate
also may be affected by cash requirements from redemptions and repurchases of
Fund shares. During the past two fiscal years, the Fund's portfolio turnover
rates were 32% for 1993 and 14% for 1994.
The Fund uses its best efforts to obtain the best available price and
most favorable execution for portfolio transactions. Orders may be placed with
brokers or dealers who provide brokerage and research services to the Manager
or its advisory clients. These services may be used by the Manager in servicing
any of its accounts. Subject to best price and execution, the Fund may consider
a broker/dealer's sales of Fund shares in placing portfolio orders and may
place orders with broker/dealers that have agreed to defray certain Fund
expenses such as custodian fees.
PERFORMANCE INFORMATION
From time to time, the Fund may quote total return performance of the
Class in advertising and other types of literature. Total return will be based
on a hypothetical $1,000 investment, reflecting the reinvestment of all
distributions at net asset value. Each presentation will include the average
annual total return for one-, five- and ten-year periods, as relevant. The Fund
may also advertise aggregate and average total return information concerning
the Class over additional periods of time.
Because securities prices fluctuate, investment results of the Class
will fluctuate over time and past performance should not be considered as a
representation of future results.
STATEMENTS AND CONFIRMATIONS
You will receive quarterly statements of your account as well as
confirmations of all investments and redemptions. You should examine statements
and confirmations immediately and promptly report any discrepancy by calling
your Client Services Representative.
FINANCIAL INFORMATION ABOUT THE FUND
Each fiscal year, you will receive an audited annual report and an
unaudited semi-annual report. These reports provide detailed information about
the Fund's investments and performance. The Fund's fiscal year ends on November
30.
DISTRIBUTION AND SERVICE
The Distributor, Delaware Distributors, L.P. (which formerly conducted
business as Delaware Distributors, Inc.), serves as the national distributor
for the Fund under an Amended and Restated Distribution Agreement dated as of
September 6, 1994. It bears all of the costs of promotion and distribution.
The Transfer Agent, Delaware Service Company, Inc., serves as the
shareholder servicing, dividend disbursing and transfer agent for the Fund
under an Agreement dated June 29, 1988. The unaffiliated directors review
service fees paid to the Transfer Agent. Certain recordkeeping and other
shareholder services that otherwise would be performed by the Transfer Agent
may be performed by certain other entities and the Transfer Agent may elect to
enter into an agreement to pay such other entities for those services. In
addition, participant account maintenance fees may be assessed for certain
recordkeeping provided as part of retirement plan and administration service
packages. These fees are based on the number of participants in the plan and
the various services selected by the employer. Fees will be quoted upon request
and are subject to change.
The Distributor and the Transfer Agent are also indirect, wholly-owned
subsidiaries of DMH.
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<PAGE> 17
EXPENSES
The Fund is responsible for all of its own expenses other than those
borne by the Manager under the Investment Management Agreement and those borne
by the Distributor under the Amended and Restated Distribution Agreement. The
ratio of operating expenses to average daily net assets for the Class was 1.16%
for the fiscal year ended November 30, 1994.
SHARES
The Fund is a diversified, open-end management investment company,
commonly known as a mutual fund. The Fund was organized as a Maryland
corporation on January 16, 1987.
Fund 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. Share-holders 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 Fund also offers the Value Fund A Class and the Value Fund B Class
of shares which represent proportionate interests in the assets of the Fund and
have the same voting and other rights and preferences as the Class, except that
shares of the Class are not subject to, and may not vote on matters affecting,
the Distribution Plans under Rule 12b-1 relating to the Value Fund A Class and
the Value Fund B Class.
Prior to September 6, 1994, the Value Fund Institutional Class was
known as the Value Fund (Institutional) class and the Value Fund A Class was
known as the Value Fund class.
APPENDIX A--RATINGS
BONDS
Excerpts from Moody's description of its bond ratings: Aaa--judged to
be the best quality. They carry the smallest degree of investment risk;
Aa--judged to be of high quality by all standards; A--possess favorable
attributes and are considered "upper medium" grade obligations; Baa--considered
as medium grade obligations. Interest payments and principal security appear
adequate for the present but certain protective elements may be lacking or may
be characteristically unreliable over any great length of time; Ba--judged to
have speculative elements; their future cannot be considered as well assured.
Often the protection of interest and principal payments may be very moderate
and thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class; B--generally
lack characteristics of the desirable investment. Assurance of interest and
principal payments or of maintenance of other terms of the contract over any
long period of time may be small; Caa--are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to principal
or interest; Ca--represent obligations which are speculative in a high degree.
Such issues are often in default or have other marked shortcomings; C--the
lowest rated class of bonds and issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing.
Excerpts from S&P's description of its bond ratings:
AAA--highest grade obligations. They possess the ultimate degree of protection
as to principal and interest; AA--also qualify as high grade obligations, and
in the majority of instances differ from AAA issues only in a small degree;
A--strong ability to pay interest and repay principal although more susceptible
to changes in circumstances; BBB--regarded as having an adequate capacity to
pay interest and repay principal; BB, B, CCC, CC--regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions; C--reserved for income bonds on which no interest is being paid;
D--in default, and payment of interest and/or repayment of principal is in
arrears.
15
<PAGE> 18
For more information contact the Delaware
Group at 800-828-5052.
INVESTMENT MANAGER
Delaware Management Company, Inc.
One Commerce Square
Philadelphia, PA 19103
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
<TABLE>
<S> <C>
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING [PHOTO OF GEORGE WASHINGTON CROSSING THE DELAWARE RIVER]
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
</TABLE>
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young
One Commerce Square
Philadelphia, PA 19103
INDEPENDENT AUDITORS
Ernst & Young LLP
Two Commerce Square
Philadelphia, PA 19103
CUSTODIAN
Chemical Bank
450 West 33rd Street
New York, NY 10001
P-046-1/95-PP
Printed in the U.S.A.
Value
Fund
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Institutional
PROSPECTUS
JANUARY 30, 1995
DELAWARE
GROUP
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