<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
File No. 33-11419
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [_]
--------
Post-Effective Amendment No. 15 [X]
---------
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 15
--------
DELAWARE GROUP VALUE FUND, INC.
- -------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
1818 Market Street, Philadelphia, Pennsylvania 19103
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (215) 751-2923
George M. Chamberlain, Jr., 1818 Market Street, Philadelphia, PA 19103
- -------------------------------------------------------------------------------
(Name and Address of Agent for Service)
Approximate Date of Public Offering: January 29, 1996
----------------
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
---------
X on January 29, 1996 pursuant to paragraph (b)
--------
60 days after filing pursuant to paragraph (a)(1)
---------
on (date) pursuant to paragraph (a)(1)
---------
75 days after filing pursuant to paragraph (a)(2)
---------
on (date) pursuant to paragraph (a)(2) of Rule 485
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Registrant has registered an indefinite amount of securities
under the Securities Act of 1933 pursuant to Section 24(f)
of the Investment Company Act of 1940. Registrant's 24f-2 Notice
for its most recent fiscal year was filed on January 26, 1996.
<PAGE>
Form N-1A
File No. 33-11419
Delaware Group Value Fund, Inc.
--- C O N T E N T S ---
This Post-Effective Amendment No. 15 to Registration File No. 33-11419
includes the following:
1. Facing Page
2. Contents Page
3. Cross-Reference Sheet
4. Part A - Prospectuses
5. Part B - Statement of Additional Information
6. Part C - Other Information
7. Signatures
<PAGE>
Form N-1A
File No. 33-11419
Delaware Group Value Fund, Inc.
CROSS-REFERENCE SHEET*
---------------------
PART A
------
Location in
Item No. Description Prospectuses
- -------- ----------- ------------
A Class/ Institutional
B Class/ Class
C Class
1 Cover Page......................... Cover Cover
2 Synopsis........................... Synopsis, Synopsis,
Summary of Summary of
Expenses Expenses
3 Condensed Financial Information.... Financial Financial
Highlights Highlights
4 General Description of Registrant.. Investment Investment
Objective and Objective
Policy, Shares and Policy,
Shares
5 Management of the Fund............. Management of Management
the Fund of the Fund
6 Capital Stock and Other Securities.Delaware Difference, Dividends
Dividends and and
Distributions, Distributions,
Taxes, Shares Taxes,
Shares
7 Purchase of Securities Being Offered Cover, Cover,
Buying Shares, Buying
Calculation of Shares,
Offering Price Calculation
and Net Asset of Net Asset
Value Per Share, Value Per
Management of Share,
the Fund Management
of the Fund
8 Redemption or Repurchase........... Buying Shares, Buying
Redemption and Shares,
Exchange Redemption
and
Exchange
9 Legal Proceedings.................. None None
* This filing relates to Registrant's Value Fund A Class, Value Fund B Class and
Value Fund C Class which are combined in one prospectus, and Value Fund
Institutional Class, which has its own prospectus. The four classes have a
common Part B and Part C.
<PAGE>
Form N-1A
File No. 33-11419
Delaware Group Value Fund, Inc.
CROSS REFERENCE SHEET
---------------------
PART B
------
Location in Statement
Item No. Description of Additional Information
- -------- ----------- -------------------------
10 Cover Page......................... Cover
11 Table of Contents.................. Table of Contents
12 General Information and History.... General Information
13 Investment Objectives and Policies. Investment Policies and
Portfolio Techniques
14 Management of the Registrant....... Officers and Directors
15 Control Persons and Principal
Holders of Securities............ Officers and Directors
16 Investment Advisory and Other
Services......................... Plan Under Rule 12b-1
for the Fund Classes (under
Purchasing Shares),
Investment Management
Agreement, Officers
and Directors, General
Information, Financial
Statements
17 Brokerage Allocation............... Trading Practices and
Brokerage
18 Capital Stock and Other Securities. Capitalization and
Noncumulative Voting
(under General Information)
19 Purchase, Redemption and Pricing
of Securities Being Offered...... Purchasing Shares, Determining
Offering Price and Net Asset
Value, Redemption and
Repurchase, Exchange Privilege
20 Tax Status......................... Accounting and Tax
Issues, Distributions
and Taxes
21 Underwriters....................... Purchasing Shares
22 Calculation of Performance Data.... Performance Information
23 Financial Statements............... Financial Statements
<PAGE>
Form N-1A
File No. 33-11419
Delaware Group Value Fund, Inc.
CROSS REFERENCE SHEET
---------------------
PART C
------
Location in
Item No. Description Part C
- -------- ----------- -----------
24 Financial Statements and Exhibits................... Item 24
25 Persons Controlled by or under Common
Control with Registrant............................ Item 25
26 Number of Holders of Securities..................... Item 26
27 Indemnification..................................... Item 27
28 Business and Other Connections of Investment Adviser Item 28
29 Principal Underwriters.............................. Item 29
30 Location of Accounts and Records.................... Item 30
31 Management Services................................. Item 31
32 Undertakings........................................ Item 32
<PAGE>
--------------------------------------
VALUE FUND
--------------------------------------
A CLASS
--------------------------------------
B CLASS
--------------------------------------
C CLASS
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P R O S P E C T U S
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JANUARY 29, 1996
The Delaware Group includes funds
with a wide range of investment
objectives. Stock funds, income
funds, tax-free funds, money market
funds, global and international 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 Delaware Group at
800-523-4640.
INVESTMENT MANAGER
Delaware Management Company, Inc.
One Commerce Square
Philadelphia, PA 19103
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
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
<PAGE>
VALUE FUND PROSPECTUS
JANUARY 29, 1996
A CLASS SHARES
B CLASS SHARES
C CLASS SHARES
1818 MARKET STREET, PHILADELPHIA, PA 19103
FOR PROSPECTUS AND PERFORMANCE: NATIONWIDE 800-523-4640
INFORMATION ON EXISTING ACCOUNTS: (SHAREHOLDERS ONLY)
NATIONWIDE 800-523-1918
DEALER SERVICES: (BROKER/DEALERS ONLY)
NATIONWIDE 800-362-7500
This Prospectus describes the Value Fund A Class of shares (the "Class
A Shares"), the Value Fund B Class of shares (the "Class B Shares") and the
Value Fund C Class of shares (the "Class C Shares") (collectively, the
"Classes") 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.
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. Class B Shares and Class C Shares may be purchased at a price equal to
the next determined net asset value per share. Class A Shares are subject to a
maximum front-end sales charge of 4.75% and annual 12b-1 Plan expenses of up to
.30%. 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 annual
12b-1 Plan expenses of 1%, which are assessed against the Class B Shares for
approximately eight years after purchase. See Automatic Conversion of Class B
Shares under Buying Shares. Class C Shares are subject to a CDSC which may be
imposed on redemptions made within 12 months of purchase and annual 12b-1 Plan
expenses of 1%, which are assessed against the Class C Shares for the life of
the investment. See Summary of Expenses. These alternatives permit an investor
to choose the method of purchasing shares that is most suitable for his or her
needs. In choosing the most suitable class, an investor should consider the
differences among the Classes, including the effect of sales charges and 12b-1
Plan expenses, given the amount of the purchase, the length of time the investor
expects to hold the shares and other circumstances. See Buying Shares.
This Prospectus relates only to the Classes listed above 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 29, 1996, 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 numbers. 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 Institutional Class. That class
is available for purchase only by certain investors. A prospectus for the Value
Fund Institutional Class can be obtained by writing to Delaware Distributors,
L.P. at the above address or by calling the above number.
-1-
<PAGE>
TABLE OF CONTENTS
COVER PAGE RETIREMENT PLANNING
SYNOPSIS BUYING SHARES
SUMMARY OF EXPENSES REDEMPTION AND EXCHANGE
FINANCIAL HIGHLIGHTS DIVIDENDS AND DISTRIBUTIONS
INVESTMENT OBJECTIVE AND POLICY TAXES
INVESTMENT STRATEGY CALCULATION OF OFFERING PRICE AND
SUITABILITY AND CERTAIN RISK FACTORS NET ASSET VALUE PER SHARE
THE DELAWARE DIFFERENCE MANAGEMENT OF THE FUND
PLANS AND SERVICES APPENDIX A--INVESTMENT ILLUSTRATIONS
APPENDIX B--RATINGS
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 BANK OR ANY CREDIT UNION,
ARE NOT OBLIGATIONS OF ANY BANK OR ANY CREDIT UNION, AND INVOLVE INVESTMENT
RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. SHARES OF THE FUND ARE NOT BANK
OR CREDIT UNION DEPOSITS.
-2-
<PAGE>
SYNOPSIS
CAPITALIZATION
The Fund offers four classes of shares: Class A Shares, Class B
Shares, Class C Shares and the Value Fund Institutional Class of shares. 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 million
shares to the Class B Shares, fifty million shares to the Class C Shares and
fifty million shares to the Value 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., also manages the other funds in the Delaware Group. Delaware
Distributors, L.P. (the "Distributor") is the national distributor for the Fund
and for all of the other mutual funds in the Delaware Group. Delaware Service
Company, Inc. (the "Transfer Agent") is the shareholder servicing, dividend
disbursing and transfer agent for the Fund and for all of the other mutual funds
in the Delaware Group. See Management of the Fund.
SALES CHARGES
The price of the Class A Shares includes a maximum front-end sales
charge of 4.75% of the offering price, which, based on the net asset value per
share of the Class A Shares as of the end of the Fund's most recent fiscal year,
is equivalent to 5.01% of the amount invested. The sales charge is 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 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 subject to annual 12b-1 Plan
expenses for approximately eight years after purchase. See Automatic Conversion
of Class B Shares under Buying Shares.
The price of the Class C Shares is equal to the net asset value per
share. Class C Shares are subject to a CDSC of 1% if shares are redeemed within
12 months of purchase. Class C Shares are subject to annual 12b-1 Plan expenses
for the life of the investment.
See Buying Shares and Distribution (12b-1) and Service under
Management of the Fund.
PURCHASE AMOUNTS
Generally, the minimum initial investment is $1,000 for Class A
Shares, Class B Shares and Class C Shares. Subsequent investments in any Class
generally must be at least $100. Each purchase of Class B Shares is subject to
a maximum purchase limitation of $250,000. For Class C Shares, each purchase
must be in an amount that is less than $1,000,000. An investor may exceed the
maximum purchase limitations for Class B Shares and Class C Shares by making
cumulative purchases over a period of time. An investor should keep in mind,
however, that reduced front-end sales charges apply to investments of $100,000
or more of Class A Shares, which are subject to lower annual 12b-1 Plan expenses
than Class B Shares and Class C Shares and generally are not subject to a CDSC.
The minimum and maximum purchase amounts for retirement plans may vary. See
Buying Shares.
-3-
<PAGE>
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. For further details, see Investment
Objective and Policy.
RISK FACTORS AND 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 that result from use of these instruments by the Fund,
and the investor should review the descriptions of these risks 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, higher
risk bonds (commonly known as junk bonds) and other lower rated securities, and,
consequently, greater risks may be involved with an investment in the Fund. See
Risk Factors under Suitability and Certain Risk Factors. The Fund does not
presently intend to invest more than 5% of its net assets in securities of this
type.
OPEN-END INVESTMENT COMPANY
The Fund, which was organized as a Maryland corporation in 1987, is an
open-end management investment company and its portfolio of assets is
diversified as defined by the Investment Company Act of 1940 (the "1940 Act").
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
Class A Shares of the Fund may be 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 CDSC if such purchases triggered
the payment of a dealer's commission. See Front-End Sales Charge Alternative-
Class A Shares under Buying Shares. Class B and Class C Shares may be redeemed
or exchanged at the net asset value calculated after receipt of the redemption
or exchange request subject, in the case of redemptions, to any applicable CDSC.
Neither the Fund nor the Distributor assesses any charges other than the CDSC
for redemptions or exchanges of Class B or Class C Shares. There are certain
limitations on an investor's ability to exchange shares between the various
classes of shares that are offered. See Redemption and Exchange.
-4-
<PAGE>
SUMMARY OF EXPENSES
A general comparison of the sales arrangements and other expenses
applicable to Class A, Class B and Class C Shares follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHAREHOLDER TRANSACTION EXPENSES SHARES SHARES SHARES
- ------------------------------------------------ -------- -------- --------
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)............. 4.75% None None
Maximum Sales Charge Imposed on Reinvested
Dividends (as a percentage of offering price)... None None None
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price or
redemption proceeds, whichever is lower)........ None* 4.00%* 1.00%*
Redemption Fees................................. None** None** None**
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE CLASS A CLASS B CLASS C
DAILY NET ASSETS) SHARES SHARES SHARES
- ------------------------------------------------ ------- ------- -------
Management Fees................................. 0.75% 0.75% 0.75%
12b-1 Expenses (including service fees)......... 0.30%+ 1.00%+ 1.00%+
Other Operating Expenses........................ 0.43% 0.43% 0.43%++
------- ------- -------
Total Operating Expenses................... 1.48% 2.18% 2.18%
======= ======= =======
</TABLE>
-5-
<PAGE>
The purpose of this table is to assist the investor in understanding the
various costs and expenses that an investor in any of the Classes will bear
directly or indirectly.
*With respect to 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 the financial adviser through whom such
purchase is effected, a contingent deferred sales charge of 1% will be imposed
on certain redemptions within 12 months of purchase ("Limited CDSC"). 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; (iv) 1% if shares are redeemed during the sixth year
following purchase; and (v) 0% thereafter. Class C Shares are subject to a CDSC
of 1% if the shares are redeemed within 12 months of purchase. See Contingent
Deferred Sales Charge for Certain Redemptions of Class A Shares Made at Net
Asset Value under Redemption and Exchange; Deferred Sales Charge Alternative
- - Class B Shares and Level Sales Charge Alternative - Class C Shares under
Buying Shares.
**CoreStates Bank, N.A. currently charges $7.50 per redemption for
redemptions payable by wire.
+Class A Shares, Class B Shares and Class C 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 under Management of the Fund.
++"Other Operating Expenses" for Class C Shares are estimates based on the
actual expenses incurred by the Class A Shares for the fiscal year ended
November 30, 1995.
See Value Fund Institutional Class under Buying Shares for expense
information for 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, (2) redemption at the end of each time period and (3) with respect to
Class B Shares and Class C Shares, payment of a CDSC at the time of redemption,
if applicable.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------- ------- ------- -----------
<S> <C> <C> <C> <C>
CLASS A SHARES $62(1) $92 $124 $216
CLASS B SHARES $62 $98 $137 $234(2)
CLASS C SHARES $32 $68 $117 $251
</TABLE>
-6-
<PAGE>
An investor would pay the following expenses on the same $1,000
investment, assuming no redemption at the end of the period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------- ------- ------- -----------
<S> <C> <C> <C> <C>
CLASS A SHARES $62(1) $92 $124 $216
CLASS B SHARES $22 $68 $117 $234(2)
CLASS C SHARES $22 $68 $117 $251
</TABLE>
(1) Generally, the Fund does not assess a redemption charge upon redemption of
Class A Shares. Under certain circumstances, however, a Limited CDSC,
which has not been reflected in this calculation, may be imposed on certain
redemptions within 12 months of purchase. See Contingent Deferred Sales
Charge for Certain Redemptions of Class A Shares Made at Net Asset Value
under Redemption and Exchange.
(2) At the end of 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 the eighth year. 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. Information for the ninth and tenth
years reflects expenses of the Class A Shares. See Automatic Conversion of
Class B Shares under Buying Shares for a description of the automatic
conversion feature.
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.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
-7-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A SHARES
-------------------------------------------------------------------------------------------------------
PERIOD
6/24/87(1)
YEAR ENDED THROUGH
11/30/95 11/30/94 11/30/93 11/30/92 11/30/91 11/30/90 11/30/89 11/30/88 11/30/87
Net Asset Value, Beginning
of Period................. $19.320 $20.070 $17.750 $15.320 $11.050 $14.030 $10.440 $7.740 $9.530
INCOME FROM INVESTMENT
OPERATIONS
- ---------------------------
Net Investment Income...... 0.253 0.142 0.033 0.060 (0.006) 0.149 0.131 0.054 0.058
Net Gains or Losses on
Securities (both realized
and unrealized............ 3.597 (0.687) 3.147 3.360 4.681 (2.269) 3.529 2.691 (1.848)
------- ------- ------- ------- ------- ------- ------- ------- -------
Total From Investment
Operations............ 3.850 (0.545) 3.180 3.420 4.675 (2.120) 3.660 2.745 (1.790)
------- ------- ------- ------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS
- ---------------------------
Dividends (from net
investment income)........ (0.160) (0.035) (0.040) none (0.155) (0.140) (0.070) (0.045) none
Distributions (from
capital gains)............ (0.250) (0.170) (0.820) (0.990) (0.250) (0.720) none none none
Returns of Capital......... none none none none none none none none none
------- ------- ------- ------- ------- ------- ------- ------- -------
Total Distributions.... (0.410) (0.205) (0.860) (0.990) (0.405) (0.860) (0.070) (0.045) none
------- ------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of
Period.................... $22.760 $19.320 $20.070 $17.750 $15.320 $11.050 $14.030 $10.440 $7.740
======= ======= ======= ======= ======= ======= ======= ======= =======
- -----------------------------
TOTAL RETURN(2)............ 20.39% (2.78%) 18.59% 22.99% 43.61% (16.14%) 35.28%(3) 35.57%(3) (18.78%)(3)
- --------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period
(000's omitted)........... $177,011 $179,498 $151,384 $38,792 $12,041 $7,746 $11,055 $6,797 $8,780
Ratio of Expenses to
Average Daily Net Assets.. 1.48% 1.46% 1.64% 1.93% 2.26% 1.79% 1.98%(4) 2.02%(4) 1.50%(4)
Ratio of Net Investment
Income to Average Daily
Net Assets................ 1.18% 0.75% 0.25% 0.39% (0.07%) 1.12% 1.14%(5) 0.35%(5) 1.74%(5)
Portfolio Turnover Rate.... 65% 14% 32% 68% 99% 69% 103% 66% 60%
</TABLE>
- ----------------------------------------
(1) Date of initial public offering; ratios and total return have been
annualized.
(2) Does not reflect maximum front-end sales charge that is or was in effect
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 Redemptions of Class A Shares Made At Net Asset Value.
(3) Total return reflects the expense limitation referenced in Notes 4 and 5.
(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.
-8-
<PAGE>
<TABLE>
<CAPTION>
CLASS B SHARES CLASS C SHARES
-------------------------- --------------
PERIOD PERIOD
YEAR 9/6/94(1) 11/29/95(2)
ENDED THROUGH THROUGH
11/30/95 11/30/94 11/30/95
<S> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $19.300 $20.280 $22.510
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net Investment Income....................................... 0.141 0.011 none
Net Gains or Losses on Securities
(both realized and unrealized)......................... 3.549 (0.991) 0.250
------- ------- -------
Total From Investment Operations.......................... 3.690 (0.980) 0.250
------- ------- -------
LESS DISTRIBUTIONS
- ------------------
Dividends (from net investment income)...................... (0.150) none none
Distributions (from capital gains).......................... (0.250) none none
Returns of Capital.......................................... none none none
Total Distributions....................................... (0.400) none none
------- ------- -------
Net Asset Value, End of Period.............................. $22.590 $19.300 $22.760
======= ======= =======
- ----------------------------------------------------------
TOTAL RETURN................................................ 19.55%(3) (4.83%)(3) (4)
- ------------
- -----------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (000's omitted)................... $5,788 $1,455 $5
Ratio of Expenses to Average Daily Net Assets............... 2.18% 2.16% (4)
Ratio of Net Investment Income to Average Daily Net Assets.. 0.48% 0.05% (4)
Portfolio Turnover Rate..................................... 65% 14% (4)
</TABLE>
- ----------------------------------------
(1) Date of initial public offering; ratios have been annualized, but total
return has not been annualized.
(2) Date of initial public offering.
(3) Total return does not include any applicable CDSC, which varies from 1-4%,
depending on the holding period.
(4) The ratios of expenses and net investment income to average daily net
assets, portfolio turnover and total return have been omitted as management
believes that such ratios, portfolio turnover and total return for this
relatively short period are not meaningful.
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<PAGE>
INVESTMENT OBJECTIVE AND POLICY
The objective of the Fund is capital appreciation. The Fund's strategy is to
invest primarily in common stocks and issues convertible into common stocks
which, in the opinion of the Manager, have market values that 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.
While not a fundamental policy, under normal market conditions, the Company
intends to invest 65% of its net assets 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.
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, 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 capital
appreciation, 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. Fixed income securities are expected to
receive only minor emphasis. The Fund may invest without regard to a minimum
grade level where there are favorable changes in a company's earnings or growth
potential or where general economic conditions and/or the interest rate
environment provide an opportunity for appreciation in these securities.
Investment characteristics and certain risks associated with the types of
securities in which the Fund will generally invest are described in this section
of the Prospectus. See Suitability and Certain Risk Factors for more specific
information and risks associated with foreign and lower rated 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
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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 Ratings Group ("S&P").
(Appendix B 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/or 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 options on stock indices.
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.
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 function 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; and (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 to take 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.
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<PAGE>
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 U.S. 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 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.
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<PAGE>
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 AND CERTAIN RISK FACTORS
The Fund may be suitable for investors interested in long-term capital
appreciation. Providing current income is not an objective of the Fund. Any
income produced is expected to be minimal. Investors 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 together to create a more
complete investment program.
Ownership of Fund shares reduces the bookkeeping and administrative
inconvenience that would be involved with direct purchases of the Fund's
portfolio 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.
RISK FACTORS
Investors should be willing to accept the risks associated with investments
in domestic and international securities (and currency hedging transactions in
connection with international investing). Investing in international securities
may be speculative and subject the Fund to additional risks. 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.
The Fund may also purchase, at times, lower rated or unrated securities,
including corporate bonds and convertible securities without regard to a grade
minimum, which may be considered speculative and may increase the portfolio's
credit risk. Although the Fund will ordinarily place minor emphasis on fixed
income securities and will not typically purchase bonds or other securities
rated below B by Moody's or
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<PAGE>
S&P (i.e., high-yield, high-risk securities), it may do so if the Manager
believes that capital appreciation is likely. While the Fund is authorized to
invest up to 25% of its net assets in securities rated below B, it does not
presently intend to invest more than 5% of its net assets in securities of this
type. Investing in such lower rated securities may involve certain risks not
typically associated with higher rated securities. Such securities are
considered very speculative and may possibly be in default or have interest
payments in arrears. See High-Yield, High-Risk Securities in Part B for
additional information on the risks associated with such securities. See
Appendix B to this Prospectus for more rating information.
Additional information about the types of securities in which the Fund will
typically invest and related risk factors is included under Investment Strategy.
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<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
FUND INFORMATION; LITERATURE; PRICE,
YIELD AND PERFORMANCE FIGURES
SHAREHOLDER SERVICE CENTER
800-523-1918
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.
Our representatives can answer any questions about your account, the Fund,
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. Delaphone is available seven days a
week, 24 hours a day.
STATEMENTS AND CONFIRMATIONS
You will receive quarterly statements of your account summarizing all
transactions during the period. A confirmation statement will be sent following
all transactions other than those involving a reinvestment of distributions. 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
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 Fund or of other
Delaware Group funds are made without a front-end sales charge. Reinvestments
of distributions into Class B Shares of the Fund or of other Delaware Group
funds or into Class C Shares of the Fund or of other Delaware Group funds are
also made without any sales charge and will not be subject to a CDSC if later
redeemed. See Automatic Conversion of
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<PAGE>
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 Fund may not reinvest their distributions
into Class B Shares or Class C Shares of any fund in the Delaware Group,
including the Fund. Holders of Class B Shares of the Fund may reinvest their
distributions only into Class B Shares of the funds in the Delaware Group which
offer that class of shares (the "Class B Funds"). Similarly, holders of Class C
Shares of the Fund may reinvest their distributions only into Class C Shares of
the funds in the Delaware Group which offer that class of shares (the "Class C
Funds"). See Class B Funds and Class C Funds under Buying Shares for a list of
the funds offering those classes of shares. For more information about
reinvestments, call the Shareholder Service Center.
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 certain
exceptions and limitations. For additional information on exchanges, see
Investing by Exchange under How to Buy Shares and Redemption and Exchange.
WEALTH BUILDER OPTION
You may 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, Class B and Class C Shares. See Redemption and
Exchange.
RIGHT OF ACCUMULATION
With respect to Class A Shares, the Right of Accumulation feature allows you
to combine the value of your current holdings of Class A Shares, Class B Shares
and Class C Shares of the Fund with the dollar amount of new purchases of Class
A Shares to qualify for a reduced front-end sales charge. Under the COMBINED
PURCHASES PRIVILEGE, you may also include certain shares that you own in other
funds in the Delaware Group. See Buying Shares.
LETTER OF INTENTION
The Letter of Intention feature permits you to obtain a reduced front-end
sales charge on purchases of Class A Shares by aggregating certain of your
purchases of Delaware Group fund shares over a 13-month period. See Buying
Shares and Part B.
12-MONTH REINVESTMENT PRIVILEGE
The 12-Month Reinvestment Privilege permits you to reinvest proceeds of Class
A Shares within one year of the date of redemption, without a front-end sales
charge. See Part B.
DELAWARE GROUP ASSET PLANNER
Delaware Group Asset Planner is an asset allocation service that gives
investors, working with a professional financial adviser, the ability to more
easily design and maintain investments in a diversified selection of Delaware
Group mutual funds. The Asset Planner service offers a choice of four
predesigned allocation strategies (each with a different risk/reward profile)
made up of separate investments in predetermined percentages of Delaware Group
funds. With the guidance of a financial adviser, investors may also tailor a
Strategy that meets their personal needs and goals. See How to Buy Shares under
Buying Shares.
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.
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<PAGE>
RETIREMENT PLANNING
An investment in the Fund may 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.
Retirement plans may be subject to plan establishment fees, annual
maintenance fees and/or other administrative or trustee fees. Fees are based
upon the number of participants in the plan as well as the services selected.
Additional information about fees is included in retirement plan materials.
Fees are quoted upon request. 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 Value Fund
Institutional Class. For additional information on any of the plans and
Delaware's retirement services, call the Shareholder Service Center or see Part
B.
INDIVIDUAL RETIREMENT ACCOUNT ("IRA")
Individuals, even if they participate in an employer-sponsored retirement
plan, may establish their own retirement program for investments in each of the
Classes. Contributions to an IRA may be tax-deductible and earnings are tax-
deferred. Under the Tax Reform Act of 1986, the tax deductibility of IRA
contributions is restricted, and in some cases eliminated, for individuals who
participate in certain employer-sponsored retirement plans and whose annual
income exceeds certain limits. Existing IRAs and future contributions up to the
IRA maximums, whether deductible or not, still earn on a tax-deferred basis.
SIMPLIFIED EMPLOYEE PENSION PLAN ("SEP/IRA")
A SEP/IRA may be established by an employer who wishes to sponsor a tax-
sheltered retirement program by making contributions on behalf of all eligible
employees. Each of the Classes is available for investment by a SEP/IRA.
SALARY REDUCTION SIMPLIFIED EMPLOYEE PENSION PLAN ("SAR/SEP")
Offers employers with 25 or fewer eligible employees the ability to establish
a SEP/IRA that permits salary deferral contributions. An employer may also
elect to make additional contributions to this plan. Class B Shares are not
available for purchase by such plans.
403(B)(7) DEFERRED COMPENSATION PLAN
Permits employees of public school systems or of certain types of non-profit
organizations to enter into a deferred compensation arrangement for the purchase
of shares of each of the Classes.
457 DEFERRED COMPENSATION PLAN
Permits employees of state and local governments and certain other entities
to enter into a deferred compensation arrangement for the purchase of shares of
each of the Classes.
PROTOTYPE PROFIT SHARING OR MONEY PURCHASE PENSION PLAN
Offers self-employed individuals, partnerships and corporations a tax-
qualified plan which provides for the investment of contributions in Class A
Shares or Class C 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 for investment in Class A Shares or Class C Shares. Class B
Shares are not available for purchase by such plans.
ALLIED PLANS
Class A Shares are available for purchase by participants in 401(k) Defined
Contribution
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<PAGE>
Plans ("Allied Plans") which are made available under a joint venture agreement
between the Distributor and another institution through which mutual funds are
marketed and which allow investments in Class A Shares of designated Delaware
Group funds ("eligible Delaware Group fund shares"), as well as shares of
designated classes of non-Delaware Group funds ("eligible non-Delaware Group
fund shares"). Class B Shares and Class C Shares are not eligible for purchase
by Allied Plans.
With respect to purchases made in connection with an Allied Plan, the value
of eligible Delaware Group and eligible non-Delaware Group fund shares held by
the Allied Plan may be combined with the dollar amount of new purchases by that
Allied Plan to obtain a reduced front-end sales charge on additional purchases
of eligible Delaware Group fund shares. See Front-End Sales Charge Alternative -
Class A Shares under Buying Shares.
Participants in Allied Plans may exchange all or part of their eligible
Delaware Group fund shares for other eligible Delaware Group fund shares or for
eligible non-Delaware Group fund shares at net asset value without payment of a
front-end sales charge. However, exchanges of eligible fund shares, both
Delaware Group and non-Delaware Group, which were not subject to a front-end
sales charge, will be subject to the applicable sales charge if exchanged for
eligible Delaware Group fund shares to which a sales charge applies. No sales
charge will apply if the eligible fund shares were previously acquired through
the exchange of eligible shares on which a sales charge was already paid or
through the reinvestment of dividends. See Investing by Exchange.
The Limited CDSC is applicable to redemptions of net asset value purchases
from an Allied Plan on which a dealer's commission has been paid. Waivers of
the Limited CDSC, as described below under Waiver of Limited Contingent Deferred
Sales Charge-Class A Shares, apply to redemptions by participants in Allied
Plans, except in the case of exchanges between eligible Delaware Group and non-
Delaware Group fund shares. When eligible Delaware Group fund shares are
exchanged into eligible non-Delaware Group fund shares, the Limited CDSC will be
imposed at the time of the exchange, unless the joint venture agreement
specifies that the amount of the CDSC will be paid by the financial adviser or
selling dealer. See Contingent Deferred Sales Charge for Certain Redemptions of
Class A Shares Made at Net Asset Value under Redemption and Exchange.
A dealer's commission may be payable on purchases of eligible Delaware Group
fund shares under an Allied Plan. In determining a financial adviser's
eligibility for a dealer's commission on net asset value purchases of eligible
Delaware Group fund shares in connection with Allied Plans, all participant
holdings in the Allied Plan will be aggregated. See Front-End Sales Charge
Alternative - Class A Shares under Buying Shares.
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<PAGE>
BUYING SHARES
PURCHASE AMOUNTS
Generally, the minimum initial purchase is $1,000 for Class A Shares, Class B
Shares and Class C Shares. Subsequent purchases of shares of any Class generally
must be $100 or more. Shares purchased under the Uniform Gifts to Minors Act or
Uniform Transfers to Minors Act are subject to a minimum initial purchase of
$250 and a minimum subsequent purchase of $25. In addition, there is a maximum
purchase limitation of $250,000 on each purchase of Class B Shares; for Class C
Shares, each purchase must be in an amount that is less than $1,000,000. An
investor may exceed these maximum purchase limitations by making cumulative
purchases over a period of time. In doing so, an investor should keep in mind
that reduced front-end sales charges are available on investments of $100,000 or
more in Class A Shares, and that Class A Shares (i) are subject to lower annual
12b-1 Plan expenses than Class B Shares and Class C Shares and (ii) generally
are not subject to a CDSC.
For retirement plans, the maximum purchase limitations apply only to the
initial purchase of Class B Shares or Class C Shares by the plan. Minimum
purchase requirements do not apply to retirement plans other than IRAs for which
there is a minimum initial purchase of $250, and a minimum subsequent purchase
of $25, regardless of which class is selected.
ALTERNATIVE PURCHASE ARRANGEMENTS
Shares may be purchased at a price equal to the next determined net asset
value per share, subject to 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") or Class C
Shares ("level sales charge alternative").
Class A Shares. An investor who elects the front-end sales charge
alternative acquires Class A Shares. Class A Shares incur a sales charge when
they are purchased but generally are not subject to any sales charge when they
are redeemed. Class A Shares 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 Redemptions 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 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 to the
Distributor, dealers or others for providing personal service and/or maintaining
shareholder accounts) of average daily net assets of such shares for
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 approximately eight years after purchase, the Class B
Shares will automatically be converted into Class A Shares. See Automatic
Conversion of Class B Shares, below.
Class C Shares. An investor who elects the level sales charge alternative
acquires Class C Shares. Class C Shares do not incur a front-end sales charge
when they are purchased, but are subject to a sales charge if they are redeemed
within 12 months 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 to the
Distributor, dealers or others for providing personal service and/or maintaining
shareholder accounts) of average daily net assets of such shares for the life of
the investment. The higher 12b-1 Plan expenses paid by Class C Shares will
cause such shares to have a higher expense ratio and to pay lower dividends than
those related to the Class A Shares. Unlike Class B Shares, Class C Shares do
not convert to another class.
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<PAGE>
The alternative purchase arrangements described above permit investors in the
Fund to choose the method of purchasing shares that is most suitable given the
amount of their purchase, the length of time they expect to hold their shares
and other relevant circumstances. Investors should determine whether, given
their particular circumstances, it is more advantageous to purchase Class A
Shares and incur a front-end sales charge, purchase Class B Shares and have the
entire initial purchase amount invested in the Fund with their investment being
subject to a CDSC if they redeem shares within six years of purchase, or
purchase Class C Shares and have the entire initial purchase amount invested in
the Fund with their investment being subject to a CDSC if they redeem shares
within 12 months of purchase. In addition, investors should consider the level
of annual 12b-1 Plan expenses to which each of the Classes is subject and, in
comparing Class B Shares to Class C Shares, the desirability of an automatic
conversion feature, which is available only for 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 under either the deferred sales charge alternative or the
level 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 Class B Shares acquired under the deferred sales charge
alternative are subject to annual 12b-1 Plan expenses of up to 1% for
approximately eight years after purchase (see Automatic Conversion of Class B
Shares) and Class C Shares acquired under the level sales charge alternative are
subject to annual 12b-1 Plan expenses of up to 1% for the life of the
investment. However, because front-end sales charges are deducted from the
purchase amount at the time of purchase, investors who buy Class A Shares will
not have their full purchase amount invested in the Fund.
Certain other investors might determine it to be more advantageous to
purchase Class B Shares and have all their money 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 up to 1% until the shares are automatically
converted into Class A Shares. Still other investors might determine it to be
more advantageous to purchase Class C Shares and have all of their funds
invested initially, recognizing that they would be subject to a CDSC for just 12
months after purchase but that Class C Shares do not offer a conversion feature,
so their shares would be subject to annual 12b-1 Plan expenses of up to 1% for
the life of the investment. The higher 12b-1 Plan expenses on Class B Shares
and Class C Shares will be offset to the extent a return is realized on the
additional money initially invested under the deferred sales charge alternative
or the level sales charge alternative. However, there can be no assurance as to
the return, if any, that will be realized on such additional money.
Prospective investors should refer to Appendix A to this Prospectus for an
illustration of the potential impact on a long-term shareholder's investment in
the Fund under each of the purchase options.
For the distribution and related services provided to, and the expenses borne
on behalf of, the Fund, 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 and the Class C Shares, from
the proceeds of the 12b-1 Plan fees and, if applicable, the CDSC incurred upon
redemption. Sales personnel may receive different compensation for selling
Class A, Class B and Class C Shares. Investors should understand that the
purpose and function of the respective 12b-1 Plans and the CDSCs applicable to
Class B Shares and Class C Shares are the same as those of the 12b-1 Plan and
the front-end sales charge applicable to Class A Shares in that such fees and
charges provide for the financing of the distribution of the respective Classes.
See 12b-1 Distribution Plans - Class A, Class B and Class C Shares.
Dividends paid by the Fund with respect to the Class A, Class B and Class C
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
and the Class C Shares will be borne exclusively by such shares. See
Calculation of Offering Price and Net Asset Value Per Share.
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<PAGE>
The NASD has adopted certain rules relating to investment company sales
charges. The Fund and the Distributor intend to operate in compliance with
these rules.
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 4.75%. See Calculation of Offering Price and
Net Asset Value Per Share.
Purchases of $100,000 or more carry a reduced front-end sales charge as shown
in the following table.
<TABLE>
<CAPTION>
VALUE FUND A CLASS
- --------------------------------------------------------------------------------
Dealer's
Front-End Sales Charge as % of Commission***
Amount of Purchase Offering Amount as % of
Price Invested** Offering Price
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $100,000 4.75% 5.01% 4.00%
$100,000 but under $250,000 3.75 3.92 3.00
$250,000 but under $500,000 2.50 2.55 2.00
$500,000 but under $1,000,000* 2.00 2.03 1.60
</TABLE>
* There is no front-end sales charge on purchases of Class A Shares of $1
million or more but, under certain limited circumstances, a 1% Limited CDSC
may apply upon redemption of such shares.
** Based on the net asset value per share of the Class A Shares as of the end
of the Fund's most recent fiscal year.
*** Financial institutions or their affiliated brokers may receive an agency
transaction fee in the percentages set forth above.
- --------------------------------------------------------------------------------
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 or
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 to dealers up to the full amount of the 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 commission 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.
- --------------------------------------------------------------------------------
-19-
<PAGE>
For initial purchases of Class A Shares of $1,000,000 or more, a dealer's
commission may be paid by the Distributor to financial advisers through whom
such purchases are made, in accordance with the following schedule:
<TABLE>
<CAPTION>
DEALER'S
COMMISSION
--------------
(as a percent-
AMOUNT age of amount
OF PURCHASE purchased)
- -----------
<S> <C>
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
</TABLE>
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 Fund.
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. Financial advisers should contact the
Distributor concerning the applicability and calculation of the dealer's
commission in the case of combined purchases.
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 Redemptions of Class A Shares Made at Net Asset Value under
Redemption and Exchange.
COMBINED PURCHASES PRIVILEGE
By combining your holdings of Class A Shares with your holdings of Class B
Shares and/or Class C Shares of the Fund and shares of the other funds in the
Delaware Group, except those noted below, you can reduce the front-end sales
charges on any additional purchases of Class A Shares. Shares of Delaware Group
Premium Fund, Inc. beneficially owned in connection with ownership of variable
insurance products may be combined with other Delaware Group fund holdings.
Shares of other funds that do not carry a front-end sales charge or CDSC may not
be included unless they were acquired through an exchange from a Delaware Group
fund that does carry 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. A
Letter of Intention 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 at
net asset value 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 Shareholder Service Center about the operation of these
features. See Front-End Sales Charge Alternative - Class A Shares under Buying
Shares.
BUYING AT NET ASSET VALUE
Class A Shares may be purchased at net asset value under the Delaware Group
Dividend
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<PAGE>
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 current and
former officers, directors and employees (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. Purchases of Class A Shares
also may be made at net asset value by bank employees who provide services in
connection with agreements between the bank and unaffiliated brokers or dealers
concerning sales of shares of Delaware Group funds. 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.
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 benefit from the reduced
front-end sales charges relating to the Class A Shares set forth in the table on
page 19, based on total plan assets. In addition, 403(b)(7) and 457 Retirement
Plan Accounts may 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 will
be aggregated to determine the applicable front-end sales charge reduction on
each purchase, both initial and subsequent, if, at the time of each such
purchase, it notifies the Fund that it qualifies for the reduction. Employees
participating in such Group Investment Plans may also combine the investments
held in their plan account to determine the front-end sales charge applicable to
purchases in non-retirement Delaware Group investment accounts if, at the time
of each such purchase, they notify the Fund that they are eligible to combine
purchase amounts held in their plan account.
-21-
<PAGE>
For additional information on these plans, including plan forms,
applications, minimum investments and any applicable account maintenance fees,
contact your investment dealer or the Distributor.
For other retirement plans and special services, see Retirement Planning.
DEFERRED SALES CHARGE ALTERNATIVE - CLASS B SHARES
Class B Shares may be purchased at net asset value without the imposition of
a front-end sales charge and, as a result, the Fund 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 assets 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 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 providing distribution and related services, and
bearing related expenses, in connection with the sale of Class B Shares. These
payments support the compensation paid to dealers or brokers for selling Class B
Shares. Payments to the Distributor and others under the Class B 12b-1 Plan may
be in an amount equal to no more than 1% annually. The combination of the CDSC
and the proceeds of the 12b-1 Plan fees facilitates the ability of the Fund to
sell the Class B Shares without deducting a front-end sales charge at the time
of purchase.
Shareholders of the Fund's Class B Shares exercising the exchange privilege
described below will continue to be subject to the CDSC schedule for the Fund's
Class B Shares described in this Prospectus, even after the exchange. Such CDSC
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 three additional 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.
LEVEL SALES CHARGE ALTERNATIVE - CLASS C SHARES
Class C Shares may be purchased at net asset value without the imposition of
a front-end sales charge and, as a result, the Fund will invest the full amount
of the investor's purchase payment. The Distributor currently anticipates
compensating dealers or brokers for selling Class C Shares at the time of
purchase from its own assets in an
-22-
<PAGE>
amount equal to no more than 1% of the dollar amount purchased. As discussed
below, however, Class C Shares are subject to annual 12b-1 Plan expenses and, if
redeemed within 12 months of purchase, a CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to the
Distributor and others for providing distribution and related services, and
bearing related expenses, in connection with the sale of Class C Shares. These
payments support the compensation paid to dealers or brokers for selling Class C
Shares. Payments to the Distributor and others under the Class C 12b-1 Plan may
be in an amount equal to no more than 1% annually.
Shareholders of the Fund's Class C Shares who exercise the exchange privilege
described below will continue to be subject to the CDSC schedule for the Fund's
Class C Shares described in this Prospectus. See Redemption and Exchange.
CONTINGENT DEFERRED SALES CHARGE - CLASS B SHARES AND CLASS C SHARES
Class B Shares redeemed within six years of purchase may be subject to a CDSC
at the rates set forth below and Class C Shares redeemed within 12 months of
purchase may be subject to a CDSC of 1%. CDSCs are charged as a percentage of
the dollar amount subject to the CDSC. 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 those shares at the time of redemption.
No CDSC will be imposed on increases in net asset value above the initial
purchase price. In addition, no CDSC will be assessed on redemptions of shares
received through reinvestments of dividends or capital gains distributions. For
purposes of this formula, the "net asset value at the time of purchase" will be
the net asset value at purchase of either the Class B Shares or the Class C
Shares of the Fund, even if those shares are later exchanged for shares of
another Delaware Group fund. 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 that were acquired in the exchange.
The following table sets forth the rates of the CDSC for the Class B Shares
of the Fund:
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 Fund, the Class B Shares will still be
subject to the annual 12b-1 Plan expenses of up to 1% of average daily net
assets of 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.
In determining whether a CDSC is applicable to a redemption of Class B
Shares, it will be assumed that shares held for more than six years are redeemed
first, followed by shares acquired through the reinvestment of dividends or
distributions, and finally by shares held longest during the six-year period.
With respect to the Class C Shares, it will be assumed that shares held for more
than 12 months are redeemed first followed by shares acquired through the
reinvestment of dividends or distributions, and
-23-
<PAGE>
finally by shares held for 12 months or less. All investments made during a
calendar month, regardless of what day of 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 certain redemptions of Class B Shares and Class C
Shares. See Waiver of Contingent Deferred Sales Charge -Class B and Class C
Shares under Redemption and Exchange.
12B-1 DISTRIBUTION PLANS-- CLASS A, CLASS B AND CLASS C SHARES
Under the distribution plans adopted by the Fund in accordance with Rule
12b-1 under the 1940 Act, the Fund is permitted to pay the Distributor annual
distribution fees of up to .30% of the average daily net assets of the Class A
Shares, 1% of the average daily net assets of the Class B Shares and 1% of the
average daily net assets of the Class C Shares. These fees, which are payable
monthly, compensate the Distributor for providing distribution and related
services and bearing certain expenses of each Class. The 12b-1 Plans applicable
to the Class B Shares and the Class C Shares are designed to permit an investor
to purchase Class B Shares or Class C Shares through dealers or brokers without
the assessment of a front-end sales charge while enabling the Distributor to
compensate dealers and brokers for the sale of such shares. For a more detailed
discussion of the 12b-1 Plans relating to the Class A, Class B and Class C
Shares, see Distribution (12b-1) and Service under Management of the Fund.
OTHER PAYMENTS TO DEALERS -- CLASS A, CLASS B AND CLASS C 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.
Subject to pending amendments to the NASD's Rules of Fair Practice, 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. Payment of non-cash compensation to dealers is
currently under review by the NASD and the Securities and Exchange Commission.
It is likely that the NASD's Rules of Fair Practice will be amended such that
the ability of the Distributor to pay non-cash compensation as described above
will be restricted in some fashion. The Distributor intends to comply with the
NASD's Rules of Fair Practice as they may be amended. In addition, as noted
above, the Distributor may pay dealers a commission in connection with net asset
value purchases.
CLASS B FUNDS AND CLASS C FUNDS
The following funds currently offer Class B Shares and Class C Shares:
Delaware Group Delchester High-Yield Bond Fund, Inc., Delaware Group Government
Fund, Inc., Limited-Term Government Fund of Delaware Group Limited-Term
Government Funds, Inc., Delaware Group Cash Reserve, Inc., Tax-Free
-24-
<PAGE>
USA Fund, Tax-Free Insured Fund and Tax-Free USA Intermediate Fund of Delaware
Group Tax-Free Fund, Inc., Delaware Group DelCap Fund, Inc., Delaware Fund and
Devon Fund of Delaware Group Delaware Fund, Inc., Decatur Income Fund and
Decatur Total Return Fund of Delaware Group Decatur Fund, Inc., Delaware Group
Trend Fund, Inc., International Equity Series, Global Bond Series and Global
Assets Series of Delaware Group Global & International Funds, Inc., DMC Tax-Free
Income Trust-Pennsylvania and the Fund.
VALUE FUND INSTITUTIONAL CLASS
In addition to offering the Class A, Class B and Class C Shares, the Fund
also offers the Value Fund Institutional Class of shares, which is described in
a separate prospectus relating to that class of shares and is available for
purchase only by certain investors. Value Fund Institutional Class shares
generally are distributed directly by the Distributor and do not have a front-
end sales charge, a CDSC or a Limited CDSC, and are not subject to 12b-1 Plan
distribution expenses. To obtain a prospectus which describes the Value Fund
Institutional Class, contact the Distributor by writing to the address or by
calling the telephone number listed on the cover of this Prospectus.
DIVIDEND ORDERS
YOU MAY HAVE THE DIVIDENDS EARNED IN ONE FUND AUTOMATICALLY INVESTED IN
ANOTHER DELAWARE GROUP FUND WITH A DIFFERENT INVESTMENT OBJECTIVE. For more
information, 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 or, in the case of a retirement
account, an appropriate retirement plan application, must be completed, signed
and sent with a check payable to Value Fund A Class, Value Fund B Class or Value
Fund C Class at 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 A Class, Value Fund B Class or Value Fund C Class.
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. Use of this investment slip can help expedite processing of 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, processing
of your investment may be
-25-
<PAGE>
delayed. In addition, you must promptly send your Investment Application or, in
the case of a retirement account, an appropriate retirement plan application, to
Value Fund A Class, Value Fund B Class or Value Fund C Class at 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.
DELAWARE GROUP ASSET PLANNER
To invest in Delaware Group funds using the Asset Planner service, you should
complete a Delaware Group Asset Planner Account Registration Form, which is
available only from a financial adviser. The sales charge on the investment is
determined by the individual sales charges of the underlying funds and their
percentage allocation in the selected Strategy. The minimum initial investment
per Strategy is $2,000; subsequent investments must be at least $100.
Individual fund minimums do not apply to investments made using the Asset
Planner service. Class A, Class B and Class C Shares are available for use
inside the Asset Planner service; however, only "like" class shares may be used
within the same Strategy.
An annual maintenance fee, currently $35 per Strategy, is due at the time of
initial investment and by September 30th of each subsequent year. The fee,
payable to Delaware Service Company, Inc. to defray extra costs associated with
administering the Asset Planner service, will be deducted automatically from one
of your fund accounts if not paid by September 30th. See Part B.
Investors will receive a customized quarterly Strategy Report summarizing all
Delaware Group Asset Planner investment performance and account activity during
the prior period. Confirmation statements will be sent following all
transactions other than those involving a reinvestment of distributions.
Certain shareholder services are not available to investors using the Asset
Planner service, due to its special design. These include Delaphone,
Checkwriting, Wealth Builder Option and Letter of Intention. Systematic
Withdrawal Plans are available after the account has been open for two years.
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 Fund. If you wish to open an account by exchange, call the
Shareholder Service Center for more information. All exchanges are subject to
the eligibility and minimum purchase requirements set forth in each fund's
prospectus.
Shareholders of Class A Shares may exchange all or part of their shares for
certain of the shares of other funds in the Delaware Group, including other
Class A Shares, but may not exchange their shares for Class B Shares or Class C
Shares of the Fund or for Class B Shares or Class C Shares of any other fund in
the Delaware Group. Shareholders of Class B Shares of the Fund are permitted to
exchange all or part of their Class B Shares only into the corresponding class
of shares of the Class B Funds. Similarly, shareholders of Class C Shares of
the Fund are permitted to exchange all or part of their Class C Shares only into
the corresponding class of shares of the Class C Funds. Class B Shares of the
Fund and Class C Shares of the Fund acquired by exchange will continue to carry
the CDSC and, in the case of Class B Shares, the automatic conversion schedule
of the fund from which the exchange is made. The holding period of the Class B
Shares of the Fund acquired by exchange
-26-
<PAGE>
will be added to that of the shares that were exchanged for purposes of
determining the time of the automatic conversion into Class A Shares of the
Fund.
Permissible exchanges into Class A Shares of the Fund will be made without a
front-end sales charge imposed by the Fund, except for exchanges 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). Permissible exchanges into Class B
Shares or Class C Shares of the Fund will be made without the imposition of a
CDSC by the fund from which the exchange is being made at the time of the
exchange.
See Allied Plans under Retirement Planning for information on exchanges by
participants in an Allied Plan.
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 HAVE YOUR EMPLOYER OR BANK MAKE REGULAR INVESTMENTS DIRECTLY TO YOUR
ACCOUNT FOR YOU (for example: payroll deduction, pay by phone, annuity
payments). The Fund 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 Fund account. Many
shareholders use this as an automatic savings plan. 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
account, you are obligated to reimburse the Fund.
PURCHASE PRICE AND EFFECTIVE DATE
The offering price and net asset value of the Class A, Class B and Class C
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 the 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 offering price or net asset value of shares is
determined, as noted above. Purchase orders 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 order. If a purchase is
canceled because your check is returned unpaid, you are responsible for any loss
incurred. The Fund can redeem shares from your account(s) to reimburse
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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 to reject
purchase orders paid by third-party checks or checks that are not drawn on a
domestic branch of a United States financial institution. If a check drawn on a
foreign financial institution is accepted, you may be subject to additional bank
charges for clearance and currency conversion.
The Fund also reserves the right, following shareholder notification, to
charge a service fee on non-retirement accounts that have remained below the
minimum stated account balance for a period of three or more consecutive months.
Holders of such accounts may be notified of their insufficient account balance
and advised that they have until the end of the current calendar quarter to
raise their balance to the stated minimum. If the account has not reached the
minimum balance requirement by that time, the Fund will charge a $9 fee for that
quarter and each subsequent calendar quarter until the account is brought up to
the minimum balance. The service fee will be deducted from the account during
the first week of each calendar quarter for the previous quarter, and will be
used to help defray the cost of maintaining low-balance accounts. No fees will
be charged without proper notice and no CDSC will apply to such assessments.
The Fund also reserves the right, upon 60 days' written notice, to
involuntarily redeem accounts that remain under a Class' minimum initial
purchase amount as a result of redemptions. An investor making the minimum
initial investment may 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.
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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, tax-advantaged funds, bond 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 constitute taxable
events. See Taxes. Further, in order for an exchange to be processed, shares of
the fund being acquired must be registered in the state where the acquiring
shareholder resides. You may want to 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. You
may also call the Delaware Group directly for fund information.
Your shares will be redeemed or exchanged at a price 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. A shareholder submitting a redemption request may indicate that he or
she wishes to receive redemption proceeds of a specific dollar amount. In the
case of such a request, and in the case of certain redemptions from retirement
plan accounts, the Fund will redeem the number of shares necessary to deduct the
applicable CDSC in the case of Class B or Class C Shares or, if applicable, the
Limited CDSC in the case of Class A Shares and tender to the shareholder the
requested amount, assuming the shareholder holds enough shares in his or her
account for the redemption to be processed in this manner. Otherwise, the amount
tendered to the shareholder upon redemption will be reduced by the amount of the
applicable CDSC or Limited CDSC.
Except as noted below, for a redemption request
to be in "good order," you must provide your account number, account
registration, and the total number of shares or dollar amount of the
transaction. For exchange requests, 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. The
Fund may suspend, 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 that the purchase check has cleared, which may take up to 15 days from
the purchase date. The Fund will not honor telephone redemptions for 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.
There is no front-end sales charge or fee for exchanges made between shares
of funds which both carry a front-end sales charge. Any applicable front-end
sales charge will apply to exchanges from shares of funds not subject to a
front-end sales charge, except for transfers involving assets that were
previously invested in a fund with a front-end sales charge and/or transfers
involving the reinvestment of dividends.
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Holders of Class B Shares or Class C Shares that exchange their shares
("Original Shares") for Class B shares of other Class B Funds or Class C shares
of other Class C Funds, as applicable (in each case, "New Shares"), will not be
subject to a CDSC that might otherwise be due upon redemption of the Original
Shares. However, such shareholders will continue to be subject to the CDSC and,
in the case of Class B Shares, the automatic conversion schedule of the Original
Shares as described in this Prospectus and any CDSC assessed upon redemption
will be charged by the Fund. In an exchange of Class B Shares, the Fund's CDSC
schedule may be higher than the CDSC schedule relating to the New Shares
acquired as a result of the exchange. For purposes of computing the CDSC that
may be payable upon a disposition of the New Shares, the period of time that an
investor held the Original Shares is added to the period of time that an
investor held the New Shares. With respect to Class B Shares, the automatic
conversion schedule of the Original Shares may be longer than that of the New
Shares. Consequently, an investment in New Shares by exchange may subject an
investor to the higher 12b-1 fees applicable to Class B Shares for a longer
period of time than if the investment in New Shares were made directly.
Various redemption and exchange methods are outlined below. Except for the
CDSC applicable to certain redemptions of Class B and Class C Shares and the
Limited CDSC applicable 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 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, including selection of any of the
features described below, shall continue in effect until such time as a 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 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.
Payment is normally mailed the next business day, but no later than seven
days, after receipt of your redemption request. If your Class A Shares are in
certificate form, the certificate must accompany your request and also be in
good order. The Fund issues certificates for Class A Shares only if a
shareholder submits a specific request. The Fund does not issue certificates for
Class B Shares or Class C Shares.
WRITTEN EXCHANGE
You may also write to the Fund (at 1818 Market Street, Philadelphia, PA
19103) to request an exchange of any or all of your shares into another mutual
fund in the Delaware Group, subject to the same conditions and limitations as
other exchanges noted above.
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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 may
only redeem or exchange by written request and you must return your
certificates.
The Telephone Redemption - Check to Your Address of Record service and the
Telephone Exchange service, both of which are described below, are automatically
provided unless you notify the Fund in writing that you do not wish to have such
services available with respect to your account. 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 Fund 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, you are acknowledging prior receipt of a
prospectus for the fund into which your 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 address of record. Checks will be payable to the
shareholder(s) of record. Payment is normally mailed the next business day, but
no later 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 Class B and Class C Shares and the
Limited CDSC which may be applicable to certain Class A Shares, there are no
fees for this redemption 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 Fund, the
Fund may take up to seven days to pay.
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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 your
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.
SYSTEMATIC WITHDRAWAL PLANS
1. Regular Plans
This plan provides shareholders 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.
You may elect to have your payments transferred from your Fund account to your
predesignated bank account through the Delaware Group's MoneyLine service. Your
funds will normally be credited to your bank account two business days after the
payment date. Except for the Limited CDSC which may be applicable to Class A
Shares and the CDSC which may be applicable to Class B Shares and Class C Shares
as noted below, there are no fees for this redemption method. You can initiate
the MoneyLine 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
Fund 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. The MoneyLine service is not available for
retirement plans.
* * *
Shareholders should not purchase Class A Shares while participating in a
Systematic Withdrawal Plan. Also, redemptions of Class A Shares via a
Systematic Withdrawal Plan may be subject to a Limited CDSC if the original
purchase was made at net asset value within the 12 months prior to the
withdrawal and a dealer's commission has been paid on that purchase. See
Contingent Deferred Sales Charge for Certain Redemptions of Class A Shares Made
at Net Asset Value, below.
With respect to Class B Shares and Class C Shares redeemed via a Systematic
Withdrawal Plan, any applicable CDSC will be waived if, on the date that the
Plan is established, the annual amount selected to be withdrawn is less than 12%
of the account balance. If the annual amount selected to be withdrawn exceeds
12% of the account balance on the date that the Systematic Withdrawal Plan is
established, all redemptions under the Plan will be subject to the applicable
CDSC. Whether a waiver of the CDSC is available or not, the first shares to be
redeemed for each Systematic Withdrawal Plan payment will be those not subject
to a CDSC because they have either satisfied the required holding period or were
acquired through the reinvestment of distributions. The 12% annual limit will
be reset
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on the date that any Systematic Withdrawal Plan is modified (for example, a
change in the amount selected to be withdrawn or the frequency or date of
withdrawals), based on the balance in the account on that date. See Waiver of
Contingent Deferred Sales Charge - Class B and Class C Shares, below.
For more information on Systematic Withdrawal Plans, call the Shareholder
Service Center.
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 Fund account and invested automatically into an account
in one or more funds in the Delaware Group. If, in connection with the Wealth
Builder Option, a shareholder wishes to open a new account in such other fund or
funds to receive the automatic investment, such new account must meet such other
fund's minimum initial purchase requirements. Investments under this option are
exchanges and are therefore subject to the same conditions and limitations as
other exchanges noted above.
Shareholders can use the Wealth Builder Option to invest in the Fund 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 REDEMPTIONS OF CLASS A SHARES MADE
AT NET ASSET VALUE
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
acquired in the exchange.
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 Fund or the Class A Shares acquired in the exchange.
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
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imposed upon shares representing reinvested dividends or capital gains
distributions, or upon amounts representing share appreciation. All investments
made during a calendar month, regardless of what day of the month the investment
occurred, will age one month on the last day of that month and each subsequent
month.
WAIVER OF LIMITED CONTINGENT DEFERRED SALES CHARGE - CLASS A SHARES
The Limited CDSC for Class A Shares on which a dealer's commission has been
paid will be waived in the following instances: (i) redemptions that result
from the Fund's right to liquidate a shareholder's account if the aggregate net
asset value of the shares held in the account is less than the then-effective
minimum account size; (ii) distributions to participants from a retirement plan
qualified under section 401(a) or 401(k) of the Internal Revenue Code of 1986,
as amended ("the Code"), or due to death of a participant in such a plan; (iii)
redemptions pursuant to the direction of a participant or beneficiary of a
retirement plan qualified under section 401(a) or 401(k) of the Code with
respect to that retirement plan; (iv) distributions from a section 403(b)(7)
Plan or an IRA due to death, disability, or attainment of age 59 1/2; (v)
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
under Buying Shares).
WAIVER OF CONTINGENT DEFERRED SALES CHARGE -CLASS B AND CLASS C SHARES
The CDSC is waived on redemptions of Class B Shares in connection with the
following redemptions: (i) redemptions that result from the Fund's right to
liquidate a shareholder's account if the aggregate net asset value of the shares
held in the account is less than the then-effective minimum account size; (ii)
returns of excess contributions to an IRA or 403(b)(7) Deferred Compensation
Plan; (iii) required minimum distributions from an IRA, 403(b)(7) Deferred
Compensation Plan or 457 Deferred Compensation Plan; and (iv) distributions from
an account if the redemption results from the death of all registered owners of
the account (in the case of accounts established under the Uniform Gifts to
Minors or Uniform Transfers to Minors Acts or trust accounts, the waiver applies
upon the death of all beneficial owners) or a total and permanent disability (as
defined in Section 72 of the Code) of all registered owners occurring after the
purchase of the shares being redeemed.
The CDSC is waived on redemptions of Class C Shares in connection with the
following redemptions: (i) redemptions that result from the Fund's right to
liquidate a shareholder's account if the aggregate net asset value of the shares
held in the account is less than the then-effective minimum account size; (ii)
returns of excess contributions to an IRA, 403(b)(7) Deferred Compensation Plan,
Profit Sharing Plan, Money Purchase Pension Plan or 401(k) Defined Contribution
Plan; (iii) required minimum distributions from an IRA, 403(b)(7) Deferred
Compensation Plan, 457 Deferred Compensation Plan, Profit Sharing Plan, Money
Purchase Pension Plan or 401(k) Defined Contribution Plan; (iv) distributions
from a 403(b)(7) Deferred Compensation Plan, 457 Deferred Compensation Plan,
Profit Sharing Plan or 401(k) Defined Contribution Plan, under hardship
provisions of the plan; (v) distributions from a 403(b)(7) Deferred Compensation
Plan, 457 Deferred Compensation Plan, Profit Sharing Plan, Money Purchase
Pension Plan or a 401(k) Defined Contribution Plan upon attainment of normal
retirement age under the plan or upon separation from service; (vi)
distributions from an IRA on or after attainment of age 59 1/2; and (vii)
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distributions from an account if the redemption results from the death of all
registered owners of the account (in the case of accounts established under the
Uniform Gifts to Minors or Uniform Transfers to Minors Acts or trust accounts,
the waiver applies upon the death of all beneficial owners) or a total and
permanent disability (as defined in Section 72 of the Code) of all registered
owners occurring after the purchase of the shares being redeemed.
In addition, the CDSC will be waived on Class B and Class C Shares redeemed
in accordance with a Systematic Withdrawal Plan if the annual amount selected to
be withdrawn under the Plan does not exceed 12% of the value of the account on
the date that the Systematic Withdrawal Plan was established or modified.
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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
generally be made once a year during the first quarter following the end of the
Fund's fiscal year.
Each of the Classes will share proportionately in the investment income and
expenses of the Fund, except that the per share dividends from net investment
income on the Class A Shares, the Class B Shares and the Class C Shares will
vary due to the expenses under the 12b-1 Plan applicable to each Class.
Generally, the dividends per share on Class B Shares and Class C Shares can be
expected to be lower than the dividends per share on Class A Shares because the
expenses under the 12b-1 Plans relating to Class B and Class C Shares will be
higher than the expenses under the 12b-1 Plan relating to Class A Shares. 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 United
States 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 choose Delaware Group's
MoneyLine service and have such payments transferred from your Fund 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 the
MoneyLine service. See Systematic Withdrawal Plans under Redemption and Exchange
for information regarding authorization of this service. This service is not
available for retirement plans. (See The Delaware Difference for more
information on reinvestment options.)
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TAXES
The Fund has qualified, and intends to continue to qualify, as a regulated
investment company under Subchapter M of 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, 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 Fund that so
qualifies will be designated each year in a notice to the Fund's shareholders.
For the fiscal year ended November 30, 1995, 42.37% of the Fund's dividends from
net investment income qualified for the corporate dividends-received deduction.
Distributions paid by the Fund 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 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. All or a portion of
the sales charge incurred in acquiring Fund shares will be excluded from the
federal tax basis of any of such shares sold or exchanged within 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 Fund 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
approximately eight years after purchase will be tax-free for federal tax
purposes. 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 Fund are exempt from Pennsylvania
county personal property taxes.
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Each year, the Fund will mail to 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.
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.
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CALCULATION OF OFFERING PRICE AND NET ASSET VALUE PER SHARE
Class A Shares are purchased at the offering price per share, while Class B
Shares and Class C Shares are purchased at the net asset value ("NAV") per
share. The offering price per share of Class A Shares consists of the NAV per
share next computed 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 the 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 four 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 Value Fund Institutional Class will not incur
any distribution fees under the Fund's 12b-1 Plans and the Class A, Class B and
Class C Shares alone will bear the 12b-1 Plan expenses payable under their
respective 12b-1 Plans. Due to the specific distribution expenses and other
costs that will be allocable to each class, the net asset value of each class of
the Fund will vary.
-39-
<PAGE>
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 Fund's
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, 1995, the Manager and its affiliate, Delaware
International Advisers Ltd., were supervising in the aggregate more than $27
billion in assets in the various institutional (approximately $17,389,902,000)
and investment company (approximately $10,383,560,000) accounts.
The Manager is an indirect, wholly-owned subsidiary of Delaware Management
Holdings, Inc. ("DMH"). On April 3, 1995, a merger between DMH and a wholly-
owned subsidiary of Lincoln National Corporation ("Lincoln National") was
completed. DMH and the Manager are now wholly-owned subsidiaries, and subject to
the ultimate control, 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. In connection with the merger, a new Investment Management Agreement
between the Fund and the Manager was executed following shareholder approval.
The Manager manages the Fund's portfolio and makes investment decisions which
are implemented by the Fund's Trading Department. The Manager also administers
the Fund's affairs and 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 the unaffiliated directors. The
Fund's fee is higher than that paid by many other funds and 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, 1995
were 0.75% of average daily net assets.
Effective August 21, 1995, David C. Dalrymple assumed primary responsibility
for making day-to-day investment decisions for the Fund. Prior to then, Mr.
Dalrymple served as an assistant portfolio manager of Delaware Group DelCap
Fund, Inc. Mr. Dalrymple holds a BS in Business Administration from Clarkson
College in Potsdam, NY, and an MBA from Cornell Johnson School of Management in
Ithaca, NY. Prior to joining the Delaware Group in 1991, he spent five years as
an assistant portfolio manager for Lord Abbett and Co. in New York. Mr.
Dalrymple is a Chartered Financial Analyst and a member of the Financial
Analysts of Philadelphia.
In making investment decisions for the Fund, Mr. Dalrymple 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 named an executive vice
president of the Manager in 1994. He is on the Board of Directors of Keystone
Insurance Company
-40-
<PAGE>
and AAA Mid-Atlantic and is a former president and current member of the
Advisory Council of the Bond Club of Philadelphia.
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 that net
capital gains are realized. Given the Fund's investment objective, its annual
portfolio turnover rate may exceed 100%. A turnover rate of 100% would occur 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 for redemptions and repurchases of Fund shares. During the past
two fiscal years, the Fund's portfolio turnover rates were 14% for 1994 and 65%
for 1995.
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 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 and Class C 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 Fund may also advertise aggregate and average total return
information concerning a Class over additional periods of time. In addition,
the Fund may present total return information that does not reflect the
deduction of the maximum front-end sales charge or any applicable CDSC. In this
case, such total return information would be more favorable than total return
information which includes deductions of the maximum front-end sales charge or
any applicable CDSC.
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, L.P. (which formerly conducted
business as Delaware Distributors, Inc.), serves as the national distributor for
the Fund under a Distribution Agreement dated April 3, 1995, as amended on
November 29, 1995.
The Fund has adopted a separate distribution plan under Rule 12b-1 for each
of the Class A Shares, the Class B Shares and the Class C Shares (the "Plans").
The Plans permit the Fund to pay the Distributor from the assets of the
respective Classes a monthly fee for its services and expenses in distributing
and promoting sales of shares. These expenses include, among other things,
preparing and distributing advertisements, sales literature, and prospectuses
and reports used for sales purposes, compensating sales and marketing personnel,
holding special promotions for specified periods of time, and paying
distribution and maintenance fees to brokers, dealers and others. In connection
with the promotion of Class A, Class B and Class C
-41-
<PAGE>
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 Fund 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 Fund.
The 12b-1 Plan expenses relating to each of the Class B Shares and the Class
C 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 Fund from the assets of the respective Classes
to the Distributor and others under the Plans may not exceed .30% of the Class A
Shares' average daily net assets in any year, and 1% (.25% of which are service
fees to be paid by the Fund to the Distributor, dealers and others, for
providing personal service and/or maintaining shareholder accounts) of each of
the Class B Shares' and the Class C Shares' average daily net assets in any
year. The Class A, Class B and Class C 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 Value 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 Value 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 each of the Class
B Shares and the Class C 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 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 directors annually review service fees paid
to the Transfer Agent.
The Distributor and the Transfer Agent are indirect, wholly-owned
subsidiaries of DMH.
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 Distribution Agreement. The ratios of expenses to
average daily net assets for the fiscal year ended November 30, 1995 were 1.48%
for Class A Shares and 2.18% for Class B Shares. The Fund anticipates that the
expense ratio for Class C Shares will be identical to the expense ratio for
Class B Shares. The ratio of each Class reflects the impact of its 12b-1 Plan.
SHARES
The Fund is an open-end management investment company and its portfolio of
assets is diversified as defined by the 1940 Act. Commonly known as a mutual
fund, the Fund was organized as a Maryland corporation on January 16, 1987.
-42-
<PAGE>
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 1940 Act. 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.
In addition to Class A Shares, Class B Shares and Class C Shares, the Fund
also offers the Value Fund Institutional Class shares. Shares of each class
represent proportionate interests in the assets of the Fund and have the same
voting and other rights and preferences as the other classes of the Fund, except
that shares of the Value Fund Institutional Class are not subject to, and may
not vote on matters affecting, the Plans. Similarly, as a general matter,
shareholders of Class A Shares, Class B Shares and Class C Shares may vote only
on matters affecting the Plan that relates to the class of shares that they
hold. However, the Class B Shares may vote on any proposal to increase
materially the fees to be paid by the Fund under the Plan relating to the Class
A Shares.
Prior to September 6, 1994, the Value Fund A Class was known as the Value
Fund class and the Value Fund Institutional Class was known as the Value Fund
(Institutional) class.
-43-
<PAGE>
APPENDIX A - INVESTMENT ILLUSTRATIONS
ILLUSTRATIONS OF THE POTENTIAL IMPACT ON INVESTMENT BASED ON PURCHASE OPTION
<TABLE>
<CAPTION>
$10,000 Purchase
Scenario 1 Scenario 2 Scenario 3 Scenario 4
No Redemption Redeem 1st Year Redeem 3rd Year Redeem 5th Year
-------------------------- ------------------------- ------------------------- -------------------------
Year Class A Class B Class C Class A Class B Class C Class A Class B Class C Class A Class B Class C
---- ------- -------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 9,525 10,000 10,000 9,525 10,000 10,000 9,525 10,000 10,000 9,525 10,000 10,000
1 10,478 10,930 10,930 10,478 10,530 10,830+ 10,478 10,930 10,930 10,478 10,930 10,930
2 11,525 11,946 11,946 11,525 11,946 11,946 11,525 11,946 11,946
3 12,678 13,058 13,058 12,678 12,758 13,058+ 12,678 13,058 13,058
4 13,946 14,272 14,272 13,946 14,272 14,272
5 15,340 15,599 15,599 15,340 15,399 15,599+
6 16,874 17,050 17,050
7 18,562 18,636 18,636
8 20,418+ 20,369 20,369
9 22,459 22,405* 22,263
10 24,705 24,646* 24,333
*This assumes that Class B Shares were converted to Class A Shares at the end of the eighth year.
</TABLE>
<TABLE>
<CAPTION>
$250,000 Purchase
Scenario 1 Scenario 2 Scenario 3 Scenario 4
No Redemption Redeem 1st Year Redeem 3rd Year Redeem 5th Year
--------------------------- -------------------------- -------------------------- --------------------------
Year Class A Class B Class C Class A Class B Class C Class A Class B Class C Class A Class B Class C
---- -------- -------- ------- ------- ------- -------- ------- ------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 243,750 250,000 250,000 243,750 250,000 250,000 243,750 250,000 250,000 243,750 250,000 250,000
1 268,125 273,250 273,250 268,125 263,250 270,750+ 268,125 273,250 273,250 268,125 273,250 273,250
2 294,938 298,662 298,662 294,938 298,662 298,662 294,938 298,662 298,662
3 324,431 326,438 326,438 324,431 318,938 326,438+ 324,431 326,438 326,438
4 356,874+ 356,797 356,797 356,874+ 356,797 356,797
5 392,562 389,979 389,979 392,562 384,979 389,979
6 431,818 426,247 426,247
7 475,000 465,888 465,888
8 522,500 509,215 509,215
9 574,750 560,137* 556,572
10 632,225 616,150* 608,333
*This assumes that Class B Shares were converted to Class A Shares at the end of the eighth year.
</TABLE>
Assumes a hypothetical return for Class A of 10% per year, a hypothetical return
for Class B of 9.3% per year for years 1-8 and 10% for years 9-10, and a
hypothetical return for Class C of 9.3% per year. Hypothetical returns vary due
to the different expense structures for each Class and do not represent actual
performance.
Class A purchase subject to appropriate sales charge breakpoint (4.75% @
$10,000; 3.75% @ $100,000; 2.50% @ $250,000).
Class B purchase assessed appropriate CDSC upon redemption (4%-4%-3%-3%-2%-1% in
years 1-2-3-4-5-6).
Class C purchase assessed 1% CDSC upon redemption in year 1.
Figures marked "+" identify which class offers the greater return potential
based on investment amount and holding period.
-44-
<PAGE>
APPENDIX B -- 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.
-45-
<PAGE>
_________________________________
VALUE FUND INSTITUTIONAL
_________________________________
_________________________________
For more information contact Delaware
Group at 800-828-5052.
INVESTMENT MANAGER P R O S P E C T U S
Delaware Management Company, Inc.
One Commerce Square _________________________________
Philadelphia, PA 19103
NATIONAL DISTRIBUTOR JANUARY 29, 1996
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
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 DELAWARE
New York, NY 10001 GROUP
_______
<PAGE>
PROSPECTUS
VALUE FUND INSTITUTIONAL JANUARY 29, 1996
_____________________________________________________________________
1818 MARKET STREET, PHILADELPHIA, PA 19103
FOR MORE INFORMATION ABOUT THE VALUE FUND INSTITUTIONAL CLASS
CALL 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
investors 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 29, 1996,
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, Value Fund B Class and Value
Fund C Class. Shares of these classes are subject to sales charges and other
expenses, which may affect their performance. A prospectus for these classes can
be obtained by writing to Delaware Distributors, L.P. at the above address or by
calling 800-523-4640.
-1-
<PAGE>
TABLE OF CONTENTS
COVER PAGE BUYING SHARES
SYNOPSIS REDEMPTION AND EXCHANGE
SUMMARY OF EXPENSES DIVIDENDS AND DISTRIBUTIONS
FINANCIAL HIGHLIGHTS TAXES
INVESTMENT OBJECTIVE AND POLICY CALCULATION OF NET ASSET VALUE
INVESTMENT STRATEGY PER SHARE
SUITABILITY AND CERTAIN RISK MANAGEMENT OF THE FUND
FACTORS APPENDIX A--RATINGS
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 BANK OR ANY CREDIT UNION,
ARE NOT OBLIGATIONS OF ANY BANK OR ANY CREDIT UNION, AND INVOLVE INVESTMENT
RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. SHARES OF THE FUND ARE NOT BANK
OR CREDIT UNION DEPOSITS.
-2-
<PAGE>
SYNOPSIS
CAPITALIZATION
The Fund offers the Value Fund Institutional Class, Value Fund A Class,
Value Fund B Class and Value Fund C 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 to the Value
Fund A Class, one hundred million shares to the Value Fund B Class, fifty
million shares to the Value Fund C 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., also 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. For further details, see Investment
Objective and Policy.
RISK FACTORS AND 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 that result from use of these instruments by the Fund,
and the investor should review the descriptions of these risks 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, higher risk
bonds (commonly known as junk bonds) and other lower rated securities, and,
consequently, greater risks may be involved with an investment in the Fund. See
Risk Factors under Suitability and Certain Risk Factors. The Fund does not
presently intend to invest more than 5% of its net assets in securities of this
type.
OPEN-END INVESTMENT COMPANY
The Fund, which was organized as a Maryland corporation in 1987, is an
open-end management investment company. The Fund's portfolio of assets is
diversified as defined by the Investment Company Act of 1940 (the "1940 Act").
See Shares under Management of the Fund.
-3-
<PAGE>
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 Class are redeemed or exchanged at the net asset value
calculated after receipt of the redemption or exchange request. See Redemption
and Exchange.
-4-
<PAGE>
SUMMARY OF EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
---------------------------------------------------------------
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)................... None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price)................... None
Redemption Fees....................................... None*
Exchange Fees......................................... None**
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
---------------------------------------------------------------
Management Fees....................................... 0.75%
12b-1 Fees............................................ None
Other Operating Expenses.............................. 0.43%
-----
Total Operating Expenses........................... 1.18%
=====
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, Value Fund B Class and Value Fund C Class for
expense information about those classes.
The following example illustrates the expenses that an investor would pay
on a $1,000 investment over various time periods, assuming (1) a 5% annual rate
of return and (2) redemption at the end of each time period. As noted in the
table above, the Fund charges no redemption fees.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$12 $37 $65 $143
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.
-5-
<PAGE>
________________________________________________________________________________
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.
________________________________________________________________________________
-6-
<PAGE>
<TABLE>
<CAPTION>
PERIOD
11/9/92(3)
YEAR ENDED THROUGH
11/30/95(3) 11/30/94(3) 11/30/93(3) 11/30/92 11/30/92(1) 11/30/91(1)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........... $19.400 $20.140 $17.750 $17.090 $15.320 $11.050
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net Investment Income.......................... 0.297 0.195 0.092 0.004 0.060 (0.006)
Net Gains or Losses on Securities
(both realized and unrealized)........... 3.628 (0.685) 3.158 0.656 3.360 4.681
------- ------- ------- ------- ------- -------
Total From Investment Operations............. 3.925 (0.490) 3.250 0.660 3.420 4.675
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS
- ------------------
Dividends (from net investment income)......... (0.215) (0.080) (0.040) none none (0.155)
Distributions (from capital gains)............. (0.250) (0.170) (0.820) none (0.990) (0.250)
Returns of Capital............................. none none none none none none
------- ------- ------- ------- ------- -------
Total Distributions.......................... (0.465) (0.250) (0.860) none (0.990) (0.405)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period................. $22.860 $19.400 $20.140 $17.750 $17.750 $15.320
======= ======= ======= ======= ======= =======
- --------------------------------------------
TOTAL RETURN................................... 20.76% (2.51%) 19.00% 3.86% 22.99%(5) 43.61%(5)
- ------------
- ------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (000's omitted)...... $7,294 $6,385 $5,476 $1,558 $38,792 $12,041
Ratio of Expenses to Average Daily Net Assets.. 1.18% 1.16% 1.34% 1.63% 1.93% 2.26%
Ratio of Net Investment Income
to Average Daily Net Assets.................. 1.48% 1.05% 0.55% 0.69% 0.39% (0.07%)
Portfolio Turnover Rate........................ 65% 14% 32% 68% 68% 99%
</TABLE>
<TABLE>
<CAPTION>
PERIOD
6/24/87(1)(2)
YEAR ENDED THROUGH
11/30/90(1) 11/30/89(1) 11/30/88(1) 11/30/87
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........... $14.030 $10.440 $7.740 $9.530
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net Investment Income.......................... 0.149 0.131 0.054 0.058
Net Gains or Losses on Securities
(both realized and unrealized)........... (2.269) 3.529 2.691 (1.848)
------- ------- ------- -------
Total From Investment Operations............. (2.120) 3.660 2.745 (1.790)
------- ------- ------- -------
LESS DISTRIBUTIONS
- ------------------
Dividends (from net investment income)......... (0.140) (0.070) (0.045) none
Distributions (from capital gains)............. (0.720) none none none
Returns of Capital............................. none none none none
------- ------- ------- -------
Total Distributions.......................... (0.860) (0.070) (0.045) none
------- ------- ------- -------
Net Asset Value, End of Period................. $11.050 $14.030 $10.440 $ 7.740
======= ======= ======= =======
- --------------------------------------------
TOTAL RETURN................................... (16.14%)(5) 35.28%(5)(6) 35.57%(5)(6) (18.78%)(5)(6)
- ------------
- ------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (000's omitted)...... $7,746 $11,055 $6,797 $8,780
Ratio of Expenses to Average Daily Net Assets.. 1.79% 1.98%(7) 2.02%(7) 1.50%(7)
Ratio of Net Investment Income
to Average Daily Net Assets.................. 1.12% 1.14%(8) 0.35%(8) 1.74%(8)
Portfolio Turnover Rate........................ 69% 103% 66% 60%
</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. Ratios have been
annualized but total return has not been annualized.
(4) Ratios have been annualized but total return has not been annualized.
(5) Does not reflect any maximum sales charges that are or were in effect for
the Value Fund A Class.
(6) Total return reflects the expense limitation referenced in Notes 7 and 8.
(7) 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.
(8) 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.
-7-
<PAGE>
INVESTMENT OBJECTIVE AND POLICY
The objective of the Fund is capital appreciation. The Fund's strategy is to
invest primarily in common stocks and issues convertible into common stocks
which, in the opinion of the Manager, have market values that 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.
While not a fundamental policy, under normal market conditions, the Company
intends to invest 65% of its net assets 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.
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, 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 capital
appreciation, 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. Fixed income securities are expected to
receive only minor emphasis. The Fund may invest without regard to a minimum
grade level where there are favorable changes in a company's earnings or growth
potential or where general economic conditions and/or the interest rate
environment provide an opportunity for appreciation in these securities.
Investment characteristics and certain risks associated with the types of
securities in which the Fund will generally invest are described in this section
of the Prospectus. See Suitability and Certain Risk Factors for more specific
information and risks associated with foreign and lower rated 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
-7-
<PAGE>
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 Ratings Group ("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/or 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 options on stock indices.
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.
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 function 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; and (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 to take 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.
-8-
<PAGE>
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 U.S. 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 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
-9-
<PAGE>
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 AND CERTAIN RISK FACTORS
The Fund may be suitable for investors interested in long-term capital
appreciation. Providing current income is not an objective of the Fund. Any
income produced is expected to be minimal. Investors 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 together to create a more
complete investment program.
Ownership of Fund shares reduces the bookkeeping and administrative
inconvenience that would be involved with direct purchases of the Fund's
portfolio 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.
RISK FACTORS
Investors should be willing to accept the risks associated with investments
in domestic and international securities (and currency hedging transactions in
connection with international investing). Investing in international securities
may be speculative and subject the Fund to additional risks. 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.
The Fund may also purchase, at times, lower rated or unrated securities,
including corporate bonds and convertible securities without regard to a grade
minimum, which may be considered speculative and may increase the portfolio's
credit risk. Although the Fund will ordinarily place minor emphasis on fixed
income securities and will not typically purchase bonds or other securities
rated below B by Moody's or S&P (i.e., high-yield, high-risk securities), it may
do so if the Manager believes that capital appreciation is likely.
-10-
<PAGE>
While the Fund is authorized to invest up to 25% of its net assets in securities
rated below B, it does not presently intend to invest more than 5% of its net
assets in securities of this type. Investing in such lower rated securities may
involve certain risks not typically associated with higher rated securities.
Such securities are considered very speculative and may possibly be in default
or have interest payments in arrears. See High-Yield, High-Risk Securities in
Part B for additional information on the risks associated with such securities.
See Appendix A to this Prospectus for more rating information.
Additional information about the types of securities in which the Fund will
typically invest and related risk factors is included under Investment Strategy.
-11-
<PAGE>
BUYING SHARES
The Distributor serves as the national distributor for the Fund. Shares of
the Class may be purchased directly by contacting the Fund or its agent or
through authorized investment dealers. All purchases of shares of the Class are
at net asset value. There is no front-end or contingent deferred 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 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.
VALUE FUND A CLASS,VALUE FUND B CLASS AND VALUE FUND C CLASS
In addition to offering the Value Fund Institutional Class of shares, the
Fund also offers the Value Fund A Class, Value Fund B Class and Value Fund C
Class, which are described in a separate prospectus relating only to those
classes. Shares of Value Fund A Class, Value Fund B Class and Value Fund C
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 4.75%
and is reduced on certain transactions of $100,000 or more. The Value Fund B
Class and Value Fund C Class have no front-end sales charge but are subject to
annual 12b-1 expenses equal to a maximum of 1%. Shares of Value Fund B Class and
Value Fund C Class and certain shares of the Value Fund A Class may be subject
to a contingent deferred sales charge upon redemption. To obtain a prospectus
relating to such classes, contact the Distributor by writing to the address on
the cover of this Prospectus or by calling 800-523-4640.
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 or, in the case of a retirement
plan account, an appropriate retirement plan application, must be completed,
signed and sent with a check payable to Value Fund Institutional
-12-
<PAGE>
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 or, in the case of a retirement plan account, an
appropriate retirement plan 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. However, shares of
the Value Fund B Class and Value Fund C Class and the Class B Shares and Class C
Shares of the other funds in the Delaware Group offering such classes 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 promptly transmit orders to the Fund.
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 the 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. Purchase
orders 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 order. If a purchase is
canceled because your check is returned unpaid, you are responsible for any loss
incurred. The Fund can redeem shares from your account(s) to reimburse itself
for any loss, and you may be restricted from making future purchases in any of
the funds in the Delaware Group. The Fund reserves the right to reject
purchases by third-party checks or checks that are not drawn on a domestic
branch of a United States financial institution. If a check drawn on a foreign
financial institution is accepted, you may be subject to additional bank charges
for clearance and currency conversion.
-13-
<PAGE>
The Fund also reserves the right, upon 60 days' written notice, to
involuntarily redeem accounts that remain under $250 as a result of redemptions.
-14-
<PAGE>
REDEMPTION AND EXCHANGE
REDEMPTION AND EXCHANGE REQUESTS MADE ON BEHALF OF PARTICIPANTS IN AN
EMPLOYER-SPONSORED RETIREMENT PLAN ARE MADE IN ACCORDANCE WITH DIRECTIONS
PROVIDED BY THE EMPLOYER. EMPLOYEES SHOULD THEREFORE CONTACT THEIR EMPLOYER FOR
DETAILS.
Your shares will be redeemed or exchanged at a price 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. For exchange requests, 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 also request a redemption or an
exchange by calling the Fund at 800-828-5052.
The Fund will honor written redemption requests of shareholders who recently
purchased shares by check, but will not mail the proceeds until it is reasonably
satisfied that the purchase check has cleared, which may take up to 15 days from
the purchase date. The Fund will not honor telephone redemptions for 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 or Class C Shares of any of the funds in the Delaware Group. The Fund may
suspend, terminate or amend the terms of, the exchange privilege upon 60 days'
written notice to shareholders.
Various redemption and exchange methods are outlined below. No fee is
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, including selection of any of the
features described below, shall continue in effect until such time as a 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,
-15-
<PAGE>
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 redemption
request. The Fund issues certificates for Class shares only if 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: 215-255-8864.
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 may only redeem
or exchange by written request and you must return your certificates.
The Telephone Redemption - Check to Your Address of Record service and the
Telephone Exchange service, both of which are described below, are automatically
provided unless you notify the Fund in writing that you do not wish to have such
service available with respect to your account. The Fund reserves the right to
modify, terminate or suspend these procedures upon 60 days' written notice to
shareholders. It may be difficult to reach the Fund by telephone during periods
when market or economic conditions lead to an unusually large volume of
telephone requests.
Neither the Fund nor the Transfer Agent is responsible for any shareholder
loss incurred in acting upon written or telephone instructions for redemption or
exchange of Class shares which are reasonably believed to be genuine. With
respect to such telephone transactions, the Fund will follow reasonable
procedures to confirm that instructions communicated by telephone are genuine
(including verification of a form of personal identification) as, if it does
not, the Fund or the Transfer Agent may be liable for any losses due to
unauthorized or fraudulent transactions. A written confirmation will be
provided for all purchase, exchange and redemption transactions initiated by
telephone. By exchanging shares by telephone, you are acknowledging prior
receipt of a prospectus for the fund into which your 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 address of record. Checks will be payable
to the shareholder(s) of record. Payment is normally mailed the next business
day, but no later 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
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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 redemption 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.
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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.
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, the Value Fund
B Class and the Value Fund C Class.
Both dividends and distributions, if any, are automatically reinvested in
your account at net asset value.
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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, 1995, 42.37% of the Fund's dividends from net
investment income qualified for the corporate dividends-received deduction.
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.
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The tax discussion set forth above is included for general information only.
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.
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CALCULATION OF NET ASSET VALUE PER SHARE
The purchase and redemption price of the Class is the net asset value ("NAV")
per share of the Class next computed 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 the 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 four 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, B and C 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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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 Fund's
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, 1995, the Manager and its affiliate, Delaware
International Advisers Ltd., were supervising in the aggregate more than $27
billion in assets in the various institutional (approximately $17,389,902,000)
and investment company (approximately $10,383,560,000) accounts.
The Manager is an indirect, wholly-owned subsidiary of Delaware Management
Holdings, Inc. ("DMH"). On April 3, 1995, a merger between DMH and a wholly-
owned subsidiary of Lincoln National Corporation ("Lincoln National") was
completed. DMH and the Manager became wholly-owned subsidiaries, and subject to
the ultimate control, 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. In connection with the merger, a new Investment Management Agreement
between the Fund and the Manager was executed following shareholder approval.
The Manager manages the Fund's portfolio and makes investment decisions which
are implemented by the Fund's Trading Department. The Manager also administers
the Fund's affairs and 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, 1995
were 0.75% of average daily net assets.
Effective August 21, 1995, David C. Dalrymple assumed primary responsibility
for making day-to-day investment decisions for the Fund. Prior to then, Mr.
Dalrymple served as an assistant portfolio manager of Delaware Group DelCap
Fund, Inc. Mr. Dalrymple holds a BS in Business Administration from Clarkson
College in Potsdam, NY, and an MBA from Cornell Johnson School of Management in
Ithaca, NY. Prior to joining the Delaware Group in 1991, he spent five years as
an assistant portfolio manager for Lord Abbett and Co. in New York. Mr.
Dalrymple is a Chartered Financial Analyst and a member of the Financial
Analysts of Philadelphia.
In making investment decisions for the Fund, Mr. Dalrymple 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 named an executive vice
president of the Manager in 1994.
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He is on the Board of Directors of Keystone Insurance Fund and AAA Mid-Atlantic
and is a former president and current member of the Advisory Council of the Bond
Club of Philadelphia.
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 that net
capital gains are realized. Given the Fund's investment objective, its annual
portfolio turnover rate may exceed 100%. A turnover rate of 100% would occur 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 for redemptions and repurchases of Fund shares. During the past
two fiscal years, the Fund's portfolio turnover rates were 14% for 1994 and 65%
for 1995.
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 summarizing all
transactions during the period. A confirmation statement will be sent following
all transactions other than those involving a reinvestment of distributions.
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 a Distribution Agreement dated April 3, 1995, as amended on
November 29, 1995. The Distributor 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 directors annually review service fees paid
to the Transfer Agent. Certain
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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 services 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. Fees will be quoted
upon request and are subject to change.
The Distributor and the Transfer Agent are indirect, wholly-owned
subsidiaries of DMH.
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 Distribution Agreement. The ratio of operating expenses
to average daily net assets for the Class was 1.18% for the fiscal year ended
November 30, 1995.
SHARES
The Fund is an open-end management investment company, commonly known as a
mutual fund. The Fund's portfolio of assets is diversified as defined by the
1940 Act. 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 1940 Act. 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 Fund also offers the Value Fund A Class, Value Fund B Class and Value
Fund C 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, Value Fund B Class and Value Fund C 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.
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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.
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VALUE FUND
- -----------------------------------
A CLASS
- -----------------------------------
B CLASS
- -----------------------------------
C CLASS
- -----------------------------------
INSTITUTIONAL CLASS
===================================
CLASSES OF DELAWARE GROUP
VALUE FUND, INC.
- -----------------------------------
PART B
STATEMENT OF
ADDITIONAL INFORMATION
- -----------------------------------
JANUARY 29, 1996
DELAWARE
GROUP
--------
The Delaware Group includes funds with a wide range of investment
objectives. Stock funds, income funds, tax-free funds, money market funds,
global and international funds and closed-end equity funds give investors the
ability to create a portfolio that fits their personal financial goals. For more
information, shareholders of the Fund Classes should contact their financial
adviser or call Delaware Group at 800-523-4640 and shareholders of the
Institutional Class should contact 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
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
<PAGE>
PART B--STATEMENT OF ADDITIONAL INFORMATION
JANUARY 29, 1996
DELAWARE GROUP VALUE FUND, INC.
1818 MARKET STREET
PHILADELPHIA, PA 19103
FOR MORE INFORMATION ABOUT THE
VALUE FUND INSTITUTIONAL CLASS: 800-828-5052
FOR PROSPECTUS AND PERFORMANCE
OF THE VALUE FUND A CLASS,
THE VALUE FUND B CLASS AND
THE VALUE FUND C CLASS: NATIONWIDE 800-523-4640
INFORMATION ON EXISTING ACCOUNTS
OF THE VALUE FUND A CLASS,
THE VALUE FUND B CLASS AND THE
VALUE FUND C CLASS:
(SHAREHOLDERS ONLY) NATIONWIDE 800-523-1918
DEALER SERVICES:
(BROKER/DEALERS ONLY) NATIONWIDE 800-362-7500
TABLE OF CONTENTS
COVER PAGE
INVESTMENT POLICIES AND PORTFOLIO TECHNIQUES
ACCOUNTING AND TAX ISSUES
PERFORMANCE INFORMATION
TRADING PRACTICES AND BROKERAGE
PURCHASING SHARES
INVESTMENT PLANS
DETERMINING OFFERING PRICE AND
NET ASSET VALUE
REDEMPTION AND REPURCHASE
DISTRIBUTIONS AND TAXES
INVESTMENT MANAGEMENT AGREEMENT
OFFICERS AND DIRECTORS
EXCHANGE PRIVILEGE
GENERAL INFORMATION
APPENDIX A -- DESCRIPTION OF RATINGS
APPENDIX B -- IRA INFORMATION
APPENDIX C
FINANCIAL STATEMENTS
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Delaware Group Value Fund, Inc. (the "Fund") is a professionally-managed
mutual fund of the series type which currently offers a single portfolio. The
Fund offers four classes (individually, a "Class" and collectively, the
"Classes") of shares - Value Fund A Class (the "Class A Shares"), Value Fund B
Class (the "Class B Shares") and Value Fund C Class (the "Class C Shares")
(together, the "Fund Classes") and Value Fund Institutional Class (the
"Institutional Class"). Class B Shares, Class C Shares and Institutional Class
shares of the Fund may be purchased at a price equal to the next determined net
asset value per share. 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. Class A Shares are subject to a maximum front-end sales
charge of 4.75% and annual 12b-1 Plan expenses of up to .30%. 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 annual 12b-1 Plan expenses
of up to 1%, which are assessed against Class B Shares for approximately eight
years after purchase. See Automatic Conversion of Class B Shares under Buying
Shares in the Fund Classes' Prospectus. Class C Shares are subject to a CDSC
which may be imposed on redemptions made within 12 months of purchase and annual
12b-1 Plan expenses of up to 1%, which are assessed against the Class C Shares
for the life of the investment. All references to "shares" in this Statement of
Additional Information ("Part B" of the registration statement) refer to all
Classes of shares of the Fund, except where noted.
This Part B supplements the information contained in the current Prospectus
for the Fund Classes dated January 29, 1996 and the current Prospectus for the
Institutional Class dated January 29, 1996, as they may be amended from time to
time. It should be read in conjunction with the respective Class' Prospectus.
Part B is not itself a prospectus but is, in its entirety, incorporated by
reference into each Class' Prospectus. A prospectus relating to the Fund
Classes and a prospectus relating to the Institutional Class may be obtained by
writing or calling your investment dealer or by contacting the Fund's national
distributor, Delaware Distributors, L.P. (the "Distributor"), 1818 Market
Street, Philadelphia, PA 19103.
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INVESTMENT POLICIES AND PORTFOLIO TECHNIQUES
INVESTMENT RESTRICTIONS--The Fund has adopted the following restrictions
which, along with its investment objective, cannot be changed without approval
by the holders of a "majority" of the Fund's outstanding shares, which is a vote
by the holders of the lesser of a) 67% or more of the voting securities present
in person or by proxy at a meeting, if the holders of more than 50% of the
outstanding voting securities are present or represented by proxy or b) more
than 50% of the outstanding voting securities. The percentage limitations
contained in the restrictions and policies set forth herein apply at the time of
purchase of securities.
The Fund shall not:
1. Invest more than 5% of the market or other fair value of its assets in
the securities of any one issuer (other than obligations of, or guaranteed by,
the U.S. Government, its agencies or instrumentalities).
2. Invest in securities of other investment companies except as part of a
merger, consolidation or other acquisition.
3. Make loans, except to the extent that purchases of debt obligations
(including repurchase agreements), in accordance with the Fund's investment
objective and policies, are considered loans and except that 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.
4. Purchase or sell real estate but this shall not prevent the Fund from
investing in securities secured by real estate or interests therein.
5. Purchase more than 10% of the outstanding voting and nonvoting
securities of any issuer, or invest in companies for the purpose of exercising
control or management.
6. Engage in the underwriting of securities of other issuers, except that
in connection with the disposition of a security, the Fund may be deemed to be
an "underwriter" as that term is defined in the Securities Act of 1933.
7. Make any investment which would cause more than 25% of the market or
other fair value of its total assets to be invested in the securities of issuers
all of which conduct their principal business activities in the same industry.
This restriction does not apply to obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
8. Write or purchase puts, calls or combinations thereof, except that the
Fund may write covered call options with respect to any or all parts of its
portfolio securities and purchase put options if the Fund owns the security
covered by the put option at the time of purchase, and that premiums paid on all
put options outstanding do not exceed 2% of its total assets. The Fund may sell
put options previously purchased and enter into closing transactions with
respect to covered call and put options. In addition, the Fund may write call
options and purchase put options on stock indices and enter into closing
transactions with respect to such options.
9. Purchase securities on margin, make short sales of securities or
maintain a net short position.
10. Invest more than 5% of the value of its total assets in securities of
companies less than three years old. Such three-year period shall include the
operation of any predecessor company or companies.
11. Invest in warrants valued at lower of cost or market exceeding 5% of
the Fund's net assets. Included in that amount, but not to exceed 2% of the
Fund's net assets, may be warrants not listed on the New York Stock Exchange or
American Stock Exchange.
12. Purchase or retain the securities of any issuer which has an officer,
director or security holder who is a director or officer of the Fund or of its
investment manager if or so long as the directors and officers of the Fund and
of its investment manager together own beneficially more than 5% of any class of
securities of such issuer.
13. Invest in interests in oil, gas or other mineral exploration or
development programs.
14. Invest more than 10% of the Fund's net assets in repurchase agreements
maturing in more than seven days and other illiquid assets.
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15. Borrow money in excess of one-third of the value of its net assets and
then only as a temporary measure for extraordinary purposes or to facilitate
redemptions. The Fund has no intention of increasing its net income through
borrowing. Any borrowing will be done from a bank and to the extent that such
borrowing exceeds 5% of the value of the Fund's net assets, asset coverage of at
least 300% is required. In the event that such asset coverage shall at any time
fall below 300%, the Fund shall, within three days thereafter (not including
Sunday or holidays) or such longer period as the Securities and Exchange
Commission may prescribe by rules and regulations, reduce the amount of its
borrowings to such an extent that the asset coverage of such borrowings shall be
at least 300%. The Fund will not pledge more than 10% of its net assets. The
Fund will not issue senior securities as defined in the Investment Company Act
of 1940, except for notes to banks. Investment securities will not normally be
purchased while the Fund has an outstanding borrowing.
The Fund has a policy, which may not be changed without shareholder
approval, that it will not invest in commodities; however, the Fund reserves the
right to invest in financial futures and options thereon, including stock index
futures, to the extent these instruments are considered commodities.
In addition, although not a fundamental investment restriction, the Fund
currently does not invest its assets in real estate limited partnerships.
INVESTMENT POLICIES--The application of the Fund's investment policy will
be dependent upon the judgment of Delaware Management Company, Inc. (the
"Manager"). In accordance with the judgment of the Manager, the proportions of
the Fund's assets invested in particular industries will vary from time to time.
The securities in which the Fund invests may or may not be listed on a national
stock exchange, but if they are not so listed will generally have an established
over-the-counter market. While management believes that the investment
objective can be achieved by investing in common stock, the portfolio may be
invested in other securities including, but not limited to, convertible
securities, preferred stocks, bonds, warrants and foreign securities. In
periods during which the Manager feels that market conditions warrant a more
defensive portfolio positioning, the Fund may also invest temporarily in various
types of fixed income obligations.
In addition, from time to time, the Fund may also engage in the following
investment techniques:
REPURCHASE AGREEMENTS--While the Fund is permitted to do so, it normally
does not invest in repurchase agreements, except to invest cash balances.
The funds in the Delaware Group have obtained an exemption from the joint-
transaction prohibitions of Section 17(d) of the Investment Company Act of 1940
to allow the Delaware Group funds jointly to invest cash balances. The Fund may
invest cash balances in a joint repurchase agreement in accordance with the
terms of the Order and subject generally to the conditions described below.
A repurchase agreement is a short-term investment by which the purchaser
acquires ownership of a debt security and the seller agrees to repurchase the
obligation at a future time and set price, thereby determining the yield during
the purchaser's holding period. Should an issuer of a repurchase agreement fail
to repurchase the underlying security, the loss to the Fund, if any, would be
the difference between the repurchase price and the market value of the
security. The Fund will limit its investments in repurchase agreements to those
which the Manager, under the guidelines of the Board of Directors, determines to
present minimal credit risks and which are of high quality. In addition, the
Fund must have collateral of at least 100% of the repurchase price, including
the portion representing the Fund's yield under such agreements which is
monitored on a daily basis.
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.
-4-
<PAGE>
It is the understanding of the Manager that the staff of the Securities and
Exchange Commission permits portfolio lending by registered investment companies
if certain conditions are met. These conditions are as follows: 1) each
transaction must have 100% collateral in the form of cash, short-term U.S.
Government securities, or irrevocable letters of credit payable by banks
acceptable to the Fund from the borrower; 2) this collateral must be valued
daily and should the market value of the loaned securities increase, the
borrower must furnish additional collateral to the Fund; 3) the Fund must be
able to terminate the loan after notice, at any time; 4) the Fund must receive
reasonable interest on any loan, and any dividends, interest or other
distributions on the lent securities, and any increase in the market value of
such securities; 5) the Fund may pay reasonable custodian fees in connection
with the loan; and 6) the voting rights on the lent securities may pass to the
borrower; however, if the directors of the Fund know that a material event will
occur affecting an investment loan, they must either terminate the loan in order
to vote the proxy or enter into an alternative arrangement with the borrower to
enable the directors to vote the proxy.
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, under the supervision of
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.
* * *
RESTRICTED SECURITIES
The Fund may invest in restricted securities, including unregistered
securities eligible for resale without registration pursuant to Rule 144A ("Rule
144A Securities") under the Securities Act of 1933 ("1933 Act"). Rule 144A
Securities may be freely traded among qualified institutional investors without
registration under the 1933 Act.
Investing in Rule 144A Securities could have the effect of increasing the
level of the Fund's illiquidity to the extent that qualified institutional
buyers become, for a time, uninterested in purchasing these securities. After
the purchase of a Rule 144A Security, however, the Board of Directors and the
Manager will continue to monitor the liquidity of that security to ensure that
the Fund has no more than 10% of its net assets in illiquid securities.
OPTIONS--The Fund may write call options and purchase put options on a
covered basis only, and will not engage in option writing strategies for
speculative purposes.
A. COVERED CALL WRITING--The Fund may write covered call options, from time
to time, on such portion of its portfolio, without limit, as the Manager
determines is appropriate in seeking to obtain the Fund's investment objective.
A call option gives the purchaser of such option the right to buy, and the
writer, in this case the Fund, has the obligation to sell the underlying
security at the exercise price during the option period. The advantage to the
Fund of writing covered calls is that the Fund receives additional income, in
the form of a premium, which may offset any capital loss or decline in market
value of the security. However, if the security rises in value, the Fund may
not fully participate in the market appreciation.
During the option period, a covered call option writer may be assigned an
exercise notice by the broker/dealer through whom such call option was sold
requiring the writer to deliver the underlying security against payment of the
exercise price. This obligation is terminated upon the expiration of the option
period or at such earlier time in which the writer effects a closing purchase
transaction. A closing purchase transaction cannot be effected with respect to
an option once the option writer has received an exercise notice for such
option.
With respect to both options on actual portfolio securities owned by the
Fund and options on stock indices, the Fund may enter into closing purchase
transactions. A closing purchase transaction is one in which the Fund, when
obligated as a writer of an option, terminates
-5-
<PAGE>
its obligation by purchasing an option of the same series as the option
previously written.
Closing purchase transactions will ordinarily be effected to realize a
profit on an outstanding call option, to prevent an underlying security from
being called, to permit the sale of the underlying security or to enable the
Fund to write another call option on the underlying security with either a
different exercise price or expiration date or both. The Fund may realize a net
gain or loss from a closing purchase transaction depending upon whether the net
amount of the original premium received on the call option is more or less than
the cost of effecting the closing purchase transaction. Any loss incurred in a
closing purchase transaction may be partially or entirely offset by the premium
received from a sale of a different call option on the same underlying security.
Such a loss may also be wholly or partially offset by unrealized appreciation in
the market value of the underlying security. Conversely, a gain resulting from
a closing purchase transaction could be offset in whole or in part by a decline
in the market value of the underlying security.
If a call option expires unexercised, the Fund will realize a short-term
capital gain in the amount of the premium on the option, less the commission
paid. Such a gain, however, may be offset by depreciation in the market value
of the underlying security during the option period. If a call option is
exercised, the Fund will realize a gain or loss from the sale of the underlying
security equal to the difference between the cost of the underlying security,
and the proceeds of the sale of the security plus the amount of the premium on
the option, less the commission paid.
The market value of a call option generally reflects the market price of an
underlying security. Other principal factors affecting market value include
supply and demand, interest rates, the price volatility of the underlying
security and the time remaining until the expiration date.
The Fund will write call options only on a covered basis, which means that
the Fund will own the underlying security subject to a call option at all times
during the option period. Unless a closing purchase transaction is effected,
the Fund would be required to continue to hold a security which it might
otherwise wish to sell, or deliver a security it would want to hold. Options
written by the Fund will normally have expiration dates between one and nine
months from the date written. The exercise price of a call option may be below,
equal to or above the current market value of the underlying security at the
time the option is written.
B. PURCHASING PUT OPTIONS--The Fund may invest up to 2% of its total assets
in the purchase of put options. The Fund will, at all times during which it
holds a put option, own the security covered by such option.
The Fund intends to purchase put options in order to protect against a
decline in the market value of the underlying security below the exercise price
less the premium paid for the option ("protective puts"). The ability to
purchase put options will allow the Fund to protect an unrealized gain in an
appreciated security in its portfolio without actually selling the security. If
the security does not drop in value, the Fund will lose the value of the premium
paid. The Fund may sell a put option which it has previously purchased prior to
the sale of the securities underlying such option. Such sales will result in a
net gain or loss depending on whether the amount received on the sale is more or
less than the premium and other transaction costs paid on the put option which
is sold.
The Fund may sell a put option purchased on individual portfolio securities
or stock indices. Additionally, the Fund may enter into closing sale
transactions. A closing sale transaction is one in which the Fund, when it is
the holder of an outstanding option, liquidates its position by selling an
option of the same series as the option previously purchased.
OPTIONS ON STOCK INDICES
A stock index assigns relative values to the common stocks included in the
index with the index fluctuating with changes in the market values of the
underlying common stock.
Options on stock indices are similar to options on stocks but have
different delivery requirements. Stock options provide the right to take or
make delivery of the underlying stock at
-6-
<PAGE>
a specified price. A stock index option gives the holder the right to receive a
cash "exercise settlement amount" equal to (i) the amount by which the fixed
exercise price of the option exceeds (in the case of a put) or is less than (in
the case of a call) the closing value of the underlying index on the date of
exercise, multiplied by (ii) a fixed "index multiplier." Receipt of this cash
amount will depend upon the closing level of the stock index upon which the
option is based being greater than (in the case of a call) or less than (in the
case of a put) the exercise price of the option. The amount of cash received
will be equal to such difference between the closing price of the index and
exercise price of the option expressed in dollars times a specified multiple.
The writer of the option is obligated, in return for the premium received, to
make delivery of this amount. Gain or loss to the Fund on transactions in stock
index options will depend on price movements in the stock market generally (or
in a particular industry or segment of the market) rather than price movements
of individual securities.
As with stock options, the Fund may offset its position in stock index
options prior to expiration by entering into a closing transaction on an
Exchange or it may let the option expire unexercised.
A stock index fluctuates with changes in the market values of the stock so
included. Some stock index options are based on a broad market index such as
the Standard & Poor's 500 or the New York Stock Exchange Composite Index, or a
narrower market index such as the Standard & Poor's 100. Indices are also based
on an industry or market segment such as the AMEX Oil and Gas Index or the
Computer and Business Equipment Index. Options on stock indices are currently
traded on the following Exchanges among others: The Chicago Board Options
Exchange, New York Stock Exchange and American Stock Exchange.
The effectiveness of purchasing or writing stock index options as a hedging
technique will depend upon the extent to which price movements in the Fund's
portfolio correlate with price movements of the stock index selected. Because
the value of an index option depends upon movements in the level of the index
rather than the price of a particular stock, whether the Fund will realize a
gain or loss from the purchase or writing of options on an index depends upon
movements in the level of stock prices in the stock market generally or, in the
case of certain indices, in an industry or market segment, rather than movements
in the price of a particular stock. Since the Fund's portfolio will not
duplicate the components of an index, the correlation will not be exact.
Consequently, the Fund bears the risk that the prices of the securities being
hedged will not move in the same amount as the hedging instrument.
It is also possible that there may be a negative correlation between the
index or other securities underlying the hedging instrument and the hedged
securities which would result in a loss on both such securities and the hedging
instrument. Accordingly, successful use by the Fund of options on stock indices
will be subject to the Manager's ability to predict correctly movements in the
direction of the stock market generally or of a particular industry. This
requires different skills and techniques than predicting changes in the price of
individual stocks.
Positions in stock index options may be closed out only on an Exchange
which provides a secondary market. There can be no assurance that a liquid
secondary market will exist for any particular stock index option. Thus, it may
not be possible to close such an option. The inability to close options
positions could have an adverse impact on the Fund's ability to effectively
hedge its securities. The Fund will enter into an option position only if there
appears to be a liquid secondary market for such options.
The Fund will not engage in transactions in options on stock indices for
speculative purposes but only to protect appreciation attained, to offset
capital losses and to take advantage of the liquidity available in the option
markets.
FOREIGN SECURITIES
The Fund may invest in securities of foreign companies. However, the Fund
will not invest more than 25% of the value of its total assets, at the time of
purchase, in foreign securities (other than securities of Canadian issuers
registered under the Securities Exchange Act of 1934 or American Depository
Receipts, on which there are no such limits).
-7-
<PAGE>
There has been in the past, and there may be again in the future, an
interest equalization tax levied by the United States in connection with the
purchase of foreign securities such as those purchased by the Fund. Payment of
such interest equalization tax, if imposed, would reduce the Fund's rate of
return on its investment. Dividends paid by foreign issuers may be subject to
withholding and other foreign taxes which may decrease the net return on such
investments as compared to dividends paid to the Fund by United States
corporations.
Investors should recognize that investing in foreign corporations involves
certain considerations, including those set forth below, which are not typically
associated with investing in United States corporations. Foreign corporations
are not generally subject to uniform accounting, auditing and financial
standards and requirements comparable to those applicable to United States
corporations. There may also be less supervision and regulation of foreign
stock exchanges, brokers and listed corporations than exist in the United
States. The Fund may be affected either unfavorably or favorably by
fluctuations in the relative rates of exchange as between the currencies of
different nations and control regulations. Furthermore, there may be the
possibility of expropriation or confiscatory taxation, political, economic or
social instability or diplomatic developments which could affect assets of the
Fund held in foreign countries.
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 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 loss 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.
HIGH-YIELD, HIGH-RISK SECURITIES
Investing in so-called "high-yield" or "high-risk" securities entails
certain risks, including the risk of loss of principal, which may be greater
than the risks involved in investment grade securities, and which should be
considered by investors contemplating an investment in the Fund. Such
securities are sometimes issued by companies whose earnings at the time of
issuance are less than the projected debt service on the high-yield securities.
The risks include the following:
A. YOUTH AND VOLATILITY OF THE HIGH-YIELD MARKET--Although the market for
high-yield securities has been in existence for many years, including periods of
economic downturns, the high-yield market grew rapidly during the long economic
expansion which took place in the United States during the 1980s. During that
economic expansion, the use of high-yield debt securities to fund highly
leveraged corporate acquisitions and restructurings increased dramatically. As
a result, the high-yield market grew substantially during that economic
expansion. Although experts disagree on the impact recessionary periods have
had and will have
-8-
<PAGE>
on the high-yield market, some analysts believe a protracted economic downturn
would severely disrupt the market for high-yield securities, would adversely
affect the value of outstanding bonds and would adversely affect the ability of
high-yield issuers to repay principal and interest. Those analysts cite
volatility experienced in the high-yield market in the past as evidence for
their position. It is likely that protracted periods of economic uncertainty
would result in increased volatility in the market prices of high-yield
securities, an increase in the number of high-yield bond defaults and
corresponding volatility in the Fund's net asset value.
Although the Fund will not ordinarily purchase securities rated below B by
Moody's and S&P, it may do so if the Manager believes that capital appreciation
is likely. The Fund will not invest more than 25% of its assets in such
securities.
B. LIQUIDITY AND VALUATION--The secondary market for high-yield
securities is currently dominated by institutional investors, including mutual
funds and certain financial institutions. There is generally no established
retail secondary market for high-yield securities. As a result, the secondary
market for high-yield securities is more limited and less liquid than other
secondary securities markets. The high-yield secondary market is particularly
susceptible to liquidity problems when the institutions which dominate it
temporarily cease buying bonds for regulatory, financial or other reasons, such
as the savings and loan crisis. A less liquid secondary market may have an
adverse effect on the Fund's ability to dispose of particular issues, when
necessary, to meet the Fund's liquidity needs or in response to a specific
economic event, such as the deterioration in the creditworthiness of the issuer.
In addition, a less liquid secondary market makes it more difficult for the Fund
to obtain precise valuations of the high-yield securities in its portfolio.
During periods involving such liquidity problems, judgment plays a greater role
in valuing high-yield securities than is normally the case. The secondary market
for high-yield securities is also generally considered to be more likely to be
disrupted by adverse publicity and investor perceptions than the more
established secondary securities markets. The Fund's privately placed high-yield
securities are particularly susceptible to the liquidity and valuation risks
outlined above.
C. LEGISLATIVE AND REGULATORY ACTION AND PROPOSALS--There are a variety of
legislative actions which have been taken or which are considered from time to
time by the United States Congress which could adversely affect the market for
high-yield bonds. For example, Congressional legislation limited the
deductibility of interest paid on certain high-yield bonds used to finance
corporate acquisitions. Also, Congressional legislation has, with some
exceptions, generally prohibited federally-insured savings and loan institutions
from investing in high-yield securities. Regulatory actions have also affected
the high-yield market. For example, many insurance companies have restricted or
eliminated their purchases of high-yield bonds as a result of, among other
factors, actions taken by the National Association of Insurance Commissioners.
If similar legislative and regulatory actions are taken in the future, they
could result in further tightening of the secondary market for high-yield
issues, could reduce the number of new high-yield securities being issued.
-9-
<PAGE>
ACCOUNTING AND TAX ISSUES
When the Fund writes a call, or purchases a put option, an amount equal to
the premium received or paid by it is included in the section of the Fund's
assets and liabilities as an asset and as an equivalent liability.
In writing a call, the amount of the liability is subsequently "marked to
market" to reflect the current market value of the option written. The current
market value of a written option is the last sale price on the principal
Exchange on which such option is traded or, in the absence of a sale, the mean
between the last bid and asked prices. If an option which the Fund has written
expires on its stipulated expiration date, the Fund reports a realized gain. If
the Fund enters into a closing purchase transaction with respect to an option
which the Fund has written, the Fund realizes a gain (or loss if the cost of the
closing transaction exceeds the premium received when the option was sold)
without regard to any unrealized gain or loss on the underlying security, and
the liability related to such option is extinguished. Any such gain or loss is a
short-term capital gain or loss for federal income tax purposes. If a call
option which the Fund has written is exercised, the Fund realizes a capital gain
or loss (long-term or short-term, depending on the holding period of the
underlying security) from the sale of the underlying security and the proceeds
from such sale are increased by the premium originally received.
The premium paid by the Fund for the purchase of a put option is recorded
in the section of the Fund's assets and liabilities as an investment and
subsequently adjusted daily to the current market value of the option. For
example, if the current market value of the option exceeds the premium paid, the
excess would be unrealized appreciation and, conversely, if the premium exceeds
the current market value, such excess would be unrealized depreciation. The
current market value of a purchased option is the last sale price on the
principal Exchange on which such option is traded or, in the absence of a sale,
the mean between the last bid and asked prices. If an option which the Fund has
purchased expires on the stipulated expiration date, the Fund realizes a short-
term or long-term capital loss for federal income tax purposes in the amount of
the cost of the option. If the Fund sells the put option, it realizes a short-
term or long-term capital gain or loss, depending on whether the proceeds from
the sale are greater or less than the cost of the option. If the Fund exercises
a put option, it realizes a capital gain or loss (long-term or short-term,
depending on the holding period of the underlying security) from the sale of the
underlying security and the proceeds from such sale will be decreased by the
premium originally paid. However, since the purchase of a put option is treated
as a short sale for federal income tax purposes, the holding period of the
underlying security will be affected by such a purchase.
OPTIONS ON CERTAIN STOCK INDICES--Accounting for options on certain stock
indices will be in accordance with generally accepted accounting principles. The
amount of any realized gain or loss on closing out such a position will result
in a realized capital gain or loss for tax purposes. Such options held by the
Fund at the end of each fiscal year will be required to be marked to market for
federal income tax purposes. Sixty percent of any net gain or loss recognized on
such deemed sales or on any actual sales will be treated as long-term capital
gain or loss, and the remainder will be treated as short-term capital gain or
loss.
OTHER TAX REQUIREMENTS--The Fund has qualified, and intends to continue to
qualify, as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). The Fund must meet several
requirements to maintain its status as a regulated investment company. Among
these requirements are that at least 90% of its investment company taxable
income be derived from dividends, interest, payment with respect to securities
loans and gains from the sale or disposition of securities; that at the close of
each quarter of its taxable year at least 50% of the value of its assets
consists of cash and cash items, government securities, securities of other
regulated investment companies and, subject to certain diversification
requirements, other securities; and that less than 30% of its gross income be
derived from sales of securities held for less than three months.
-10-
<PAGE>
The requirement that not more than 30% of the Fund's gross income be
derived from gains from the sale or other disposition of securities held for
less than three months may restrict the Fund in its ability to write covered
call options on securities which it has held less than three months, to write
options which expire in less than three months, to sell securities which have
been held less than three months and to effect closing purchase transactions
with respect to options which have been written less than three months prior to
such transactions. Consequently, in order to avoid realizing a gain within the
three-month period, the Fund may be required to defer the closing out of a
contract beyond the time when it might otherwise be advantageous to do so. The
Fund may also be restricted in the sale of purchased put options and the
purchase of put options for the purpose of hedging underlying securities because
of the application of the short sale holding period rules with respect to such
underlying securities.
The straddle rules of Section 1092 may apply. Generally, the straddle
provisions require the deferral of losses to the extent of unrecognized gains
related to the offsetting positions in the straddle. Excess losses, if any, can
be recognized in the year of loss. Deferred losses will be carried forward and
recognized in the following year, subject to the same limitation.
-11-
<PAGE>
PERFORMANCE INFORMATION*
From time to time, the Fund may state each Class' total return in
advertisements and other types of literature. Any statements of total return
performance data for a Class will be accompanied by information on its average
annual compounded total rate of return for that Class over, as relevant, the
most recent one-, five- and ten-year (or life of fund, if applicable) periods.
The Fund may also advertise aggregate and average total return information of
each Class over additional periods of time. The net asset value of a Class
fluctuates so shares, when redeemed, may be worth more or less than the original
investment, and a Class' results should not be considered as representative of
future performance.
Average annual total rate of return for a Class is based on a hypothetical
$1,000 investment that includes capital appreciation and depreciation during the
stated periods. The following formula will be used for the actual computations:
n
P(1+T) = ERV
Where: P = a hypothetical initial purchase
order of $1,000 from which, in the
case of only Class A Shares, the
maximum front-end sales charge is
deducted;
T = average annual total return;
n = number of years;
ERV = redeemable value of the
hypothetical $1,000 purchase at
the end of the period after the
deduction of the applicable CDSC,
if any, with respect to Class B
Shares and Class C Shares.
*In the case of Class A Shares, the Limited CDSC applicable to only certain
redemptions of these shares will not be deducted from any computation of total
return. See the Prospectus for the Fund Classes for a description of the
Limited CDSC and the limited instances in which it applies. All references to
contingent deferred sales charges or a CDSC in this Performance Information
section will apply to Class B Shares or Class C Shares.
Aggregate or cumulative total return is calculated in a similar manner,
except that the results are not annualized. Each calculation assumes the
maximum front-end sales charge, if any, is deducted from the initial $1,000
investment at the time it is made with respect to Class A Shares, and that all
distributions are reinvested at net asset value, and, with respect to Class B
Shares and Class C Shares, reflects the deduction of the CDSC that would be
applicable upon complete redemption of such shares. In addition, the Fund may
present total return information that does not reflect the deduction of the
maximum front-end sales charge or any applicable CDSC.
The performance of Class A Shares, Class B Shares and the Institutional
Class, as shown below, is the average annual total return through November 30,
1995, computed as described above. Class C Shares commenced operations on
November 29, 1995. The average annual total return for Class A Shares at offer
reflects the maximum front-end sales charges paid on the purchase of shares.
The average annual total return for Class A Shares at net asset value (NAV) does
not reflect the payment of any front-end sales charge.
Pursuant to applicable regulation, total return shown for the Institutional
Class for the periods prior to the commencement of operations of such Class is
calculated by taking the performance of Class A Shares and adjusting it to
reflect the elimination of all sales charges. However, for those periods, no
adjustment has been made to eliminate the impact of 12b-1 payments, and
performance would have been affected had such an adjustment been made.
The average annual total return for Class B Shares including deferred sales
charge reflects the deduction of the applicable CDSC that would be paid if the
shares were redeemed at November 30, 1995. The average annual total return for
Class B Shares excluding deferred sales charge assumes the shares were not
redeemed at November 30, 1995 and therefore does not reflect the deduction of a
CDSC.
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<PAGE>
Securities prices fluctuated during the periods covered and past results
should not be considered as representative of future performance.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
CLASS A CLASS A INSTITU-
SHARES SHARES TIONAL
(AT OFFER)(1) (AT NAV) CLASS(2)
<S> <C> <C> <C>
1 year
ended
11/30/95 14.69% 20.39% 20.76%
3 years
ended
11/30/95 9.74% 11.55% 11.90%
5 years
ended
11/30/95 18.49% 19.64% 19.87%
Period
6/24/87(3)
through
11/30/95 13.52% 14.18% 14.31%
</TABLE>
(1) Effective November 29, 1995, the maximum front-end sales charge was reduced
from 5.75% to 4.75%. The above performance figures are calculated using
4.75% as the applicable sales charge for all time periods, and are more
favorable than they would have been had they been calculated using the
former front-end sales charge.
(2) Date of initial public offering was November 9, 1992.
(3) Date of initial public offering of Class A Shares.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
CLASS B SHARES CLASS B SHARES
(INCLUDING (EXCLUDING
DEFERRED SALES DEFERRED SALES
CHARGE) CHARGE)
<S> <C> <C>
1 year ended
11/30/95 15.55% 19.55%
Period
9/6/94(1)
through
11/30/95 7.84% 11.01%
</TABLE>
(1) Date of initial public offering of Class B Shares.
From time to time, the Fund may also quote each Class' actual total return
performance, dividend results and other performance information in advertising
and other types of literature and may compare that information to, or may
separately illustrate similar information reported by, the Standard & Poor's 500
Stock Index, the Dow Jones Industrial Average, the Russell 2000 Index TR, the
NASDAQ Composite Index and other unmanaged indices.
The Standard & Poor's 500 Stock Index and the Dow Jones Industrial Average
are industry-accepted unmanaged indices of generally-conservative securities
used for measuring general market performance. The Russell 2000 Index TR is a
total return weighted index which is comprised of 2,000 of the smallest stocks
(on the basis of capitalization) in the Russell 3000 Index and is calculated on
a monthly basis. The NASDAQ Composite Index is a market capitalization price
only index that tracks the performance of domestic common stocks traded on the
regular NASDAQ market as well as National Market System traded foreign common
stocks and American Depository Receipts. The total return performance reported
for these indices will reflect the reinvestment of all distributions on a
quarterly basis and market price fluctuations. The indices do not take into
account any sales charge or other fees. In seeking a particular investment
objective, the Fund's portfolio primarily includes common stocks considered by
the Manager to be more aggressive than those tracked by these indices.
Total return performance of each Class will be computed by adding all
reinvested income and realized securities profits distributions plus the change
in net asset value during a specific period and dividing by the offering price
at the beginning of the period. It will not reflect any income taxes payable by
shareholders on the reinvested distributions included in the calculation.
Because securities prices fluctuate, past performance should not be considered
as a representation of the results which may be realized from an investment in
the Fund in the future.
The Fund may also state each Class' total return performance in the form of
an average annual return. This average annual return figure will be computed by
taking the sum of annual returns, then dividing that figure by the number of
years in the overall period indicated. The
-13-
<PAGE>
computation will reflect the impact of the maximum front-end or contingent
deferred sales charge, if any, paid on the illustrated investment amount against
the first year's return.
From time to time, the Fund may also quote actual total return performance
for each Class in advertising and other types of literature compared to indices
or averages of alternative financial products available to prospective
investors. For example, the performance comparisons may include the average
return of various bank instruments, some of which may carry certain return
guarantees offered by leading banks and thrifts as monitored by Bank Rate
Monitor, and those of generally-accepted corporate bond and government security
price indices of various durations prepared by Lehman Brothers and Salomon
Brothers, Inc. These indices are not managed for any investment goal.
Comparative information on the Consumer Price Index may also be included.
The Consumer Price Index, as prepared by the U.S. Bureau of Labor Statistics, is
the most commonly used measure of inflation. It indicates the cost fluctuations
of a representative group of consumer goods. It does not represent a return
from an investment.
Statistical and performance information and various indices compiled and
maintained by organizations such as the following may also be used in preparing
exhibits comparing certain industry trends and competitive mutual fund
performance to comparable Fund activity and performance and in illustrating
general financial planning principles. From time to time, certain mutual fund
performance ranking information, calculated and provided by these organizations
may also be used in the promotion of sales of the Fund. Any indices used are
not managed for any investment goal.
CDA Technologies, Inc., Lipper Analytical Services, Inc. and Morningstar,
Inc. are performance evaluation services that maintain statistical
performance databases, as reported by a diverse universe of independently-
managed mutual funds.
Ibbotson Associates, Inc. is a consulting firm that provides a variety of
historical data including total return, capital appreciation and income on
the stock market as well as other investment asset classes, and inflation.
With their permission, this information will be used primarily for
comparative purposes and to illustrate general financial planning
principles.
Interactive Data Corporation is a statistical access service that maintains
a database of various international industry indicators, such as historical
and current price/earning information, individual equity and fixed income
price and return information.
Compustat Industrial Databases, a service of Standard & Poor's, may also be
used in preparing performance and historical stock and bond market
exhibits. This firm maintains fundamental databases that provide financial,
statistical and market information covering more than 7,000 industrial and
non-industrial companies.
Russell Indexes is an investment analysis service that provides both
current and historical stock performance information, focusing on the
business fundamentals of those firms issuing the security.
Salomon Brothers and Lehman Brothers are statistical research firms that
maintain databases of international market, bond market, corporate and
government-issued securities of various maturities. This information, as
well as unmanaged indices compiled and maintained by these firms, will be
used in preparing comparative illustrations.
The following tables are examples, for purposes of illustration only, of
cumulative total return performance for Class A Shares, Class B Shares and the
Institutional Class through November 30, 1995. Class C Shares commenced
operations on November 29, 1995. For these purposes, the calculations assume
the reinvestment of any realized securities profits distributions and
-14-
<PAGE>
income dividends paid during the period. Comparative information on the
Standard & Poor's 500 Stock Index, the Dow Jones Industrial Average and the
NASDAQ Composite Index is also included.
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
DOW
CLASS A INSTITU- STANDARD JONES NASDAQ
SHARES(1) TIONAL & POOR'S INDUS- COM-
(AT OFFER) CLASS(2) 500(4) TRIAL(4) POSITE(4)
<S> <C> <C> <C> <C> <C>
3 months
ended
11/30/95 0.13% 5.20% 8.38% 10.74% 3.83%
6 months
ended
11/30/95 7.41% 12.94% 14.92% 15.09% 22.51%
9 months
ended
11/30/95 13.23% 19.06% 26.62% 28.99% 33.45%
1 year
ended
11/30/95 14.69% 20.76% 36.93% 39.33% 41.17%
3 years
ended
11/30/95 32.17% 40.10% 52.33% 66.73% 62.27%
5 years
ended
11/30/95 133.52% 147.45% 117.10% 129.44% 194.99%
Period
6/24/87(3)
through
11/30/95 191.54% 209.10% 156.93% 175.95% 149.42%
</TABLE>
(1) Effective November 29, 1995, the maximum front-end sales charge was reduced
from 5.75% to 4.75%. The above performance figures are calculated using
4.75% as the applicable sales charge for all periods, and are more favorable
than they would have been had they been calculated using the former sales
charge.
(2) Date of initial public offering was November 9, 1992. Pursuant to
applicable regulation, total return shown for the Institutional Class for
the periods prior to the commencement of operations of such Class is
calculated by taking the performance of Class A Shares and adjusting it to
reflect the elimination of all sales charges. However, for those periods,
no adjustment has been made to eliminate the impact of 12b-1 payments, and
performance would have been affected had such an adjustment been made.
(3) Date of initial public offering of Class A Shares.
(4) Source: Interactive Data Corp.
<TABLE>
<CAPTION>
CLASS B CLASS B
SHARES SHARES
(INCLUDING (EXCLUDING DOW
DEFERRED DEFERRED STANDARD JONES NASDAQ
SALES SALES & POOR'S INDUS- COM-
CHARGE) CHARGE) 500(2) TRIAL(2) POSITE(2)
<S> <C> <C> <C> <C> <C>
3 months
ended
11/30/95 0.92% 4.92% 8.38% 10.74% 3.83%
6 months
ended
11/30/95 8.33% 12.33% 14.92% 15.09% 22.51%
9 months
ended
11/30/95 14.21% 18.21% 26.62% 28.99% 33.45%
1 year
ended
11/30/95 15.55% 19.55% 36.93% 39.33% 41.17%
Period
9/6/94(1)
through
11/30/95 9.78% 13.78% 32.55% 34.53% 38.35%
</TABLE>
(1) Date of initial public offering of Class B Shares.
(2) Source: Interactive Data Corp.
Because every investor's goals and risk threshold are different, the
Distributor, as distributor for the Fund and other mutual funds in the Delaware
Group, will provide general information about investment alternatives and
scenarios that will allow investors to assess their personal goals. This
information will include general material about investing as well as materials
reinforcing various industry-accepted principles of prudent and responsible
personal financial planning. One typical way of addressing these issues is to
compare an individual's goals and the length of time the individual has to
attain these goals to his or her risk threshold. In addition, the Distributor
will provide information that discusses the Manager's overriding investment
philosophy and how that philosophy impacts the Fund's, and other Delaware Group
funds', investment disciplines employed in seeking their objectives.
-15-
<PAGE>
The Distributor may also from time to time cite general or specific information
about the institutional clients of the Manager, including the number of such
clients serviced by the Manager.
THE POWER OF COMPOUNDING
When you opt to reinvest your current income for additional Fund shares,
your investment is given yet another opportunity to grow. It's called the Power
of Compounding and the following chart illustrates just how powerful it can be.
COMPOUNDED RETURNS
Results at various assumed fixed rates of return on a $10,000 investment
compounded quarterly for 10 years:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
9% 11% 13%
RATE OF RATE OF RATE OF
RETURN RETURN RETURN
12-'85 $10,931 $11,146 $11,365
12-'86 $11,948 $12,424 $12,916
12-'87 $13,060 $13,848 $14,679
12-'88 $14,276 $15,435 $16,682
12-'89 $15,605 $17,204 $18,959
12-'90 $17,057 $19,176 $21,546
12-'91 $18,645 $21,374 $24,487
12-'92 $20,381 $23,824 $27,829
12-'93 $22,278 $26,554 $31,627
12-'94 $24,352 $29,598 $35,943
</TABLE>
These figures are calculated assuming a fixed constant investment return
and assume no fluctuation in the value of principal. These figures, which do
not reflect payment of applicable taxes, are not intended to be a projection of
investment results and do not reflect the actual performance results of any of
the Classes.
-16-
<PAGE>
TRADING PRACTICES AND BROKERAGE
The Fund selects brokers or dealers to execute transactions for the
purchase or sale of portfolio securities on the basis of its judgment of their
professional capability to provide the service. The primary consideration is to
have brokers or dealers execute transactions at best price and execution. Best
price and execution refers to many factors, including the price paid or received
for a security, the commission charged, the promptness and reliability of
execution, the confidentiality and placement accorded the order and other
factors affecting the overall benefit obtained by the account on the
transaction. A number of trades are made on a net basis where the Fund either
buys the securities directly from the dealer or sells them to the dealer. In
these instances, there is no direct commission charged but there is a spread
(the difference between the buy and sell price) which is the equivalent of a
commission. When a commission is paid, the Fund pays reasonably competitive
brokerage commission rates based upon the professional knowledge of its trading
department as to rates paid and charged for similar transactions throughout the
securities industry. In some instances, the Fund pays a minimal share
transaction cost when the transaction presents no difficulty.
During the fiscal years ended November 30, 1993, 1994 and 1995, the
aggregate dollar amounts of brokerage commissions paid by the Fund were
$252,502, $89,843 and $384,243, respectively. The aggregate dollar amount of
brokerage commissions paid for 1993 was higher due to the large number of
purchases made to the Fund during that year.
The Manager may allocate out of all commission business generated by all of
the funds and accounts under its management, brokerage business to brokers or
dealers who provide brokerage and research services. These services include
advice, either directly or through publications or writings, as to the value of
securities, the advisability of investing in, purchasing or selling securities,
and the availability of securities or purchasers or sellers of securities;
furnishing of analyses and reports concerning issuers, securities or industries;
providing information on economic factors and trends; assisting in determining
portfolio strategy; providing computer software and hardware used in security
analyses; and providing portfolio performance evaluation and technical market
analyses. Such services are used by the Manager in connection with its
investment decision-making process with respect to one or more funds and
accounts managed by it, and may not be used, or used exclusively, with respect
to the fund or account generating the brokerage.
During the fiscal year ended November 30, 1995, portfolio transactions of
the Fund in the amount of $37,590,393, resulting in brokerage commissions of
$135,992, were directed to brokers for brokerage and research services provided.
As provided in the Securities Exchange Act of 1934 and the Fund's
Investment Management Agreement, higher commissions are permitted to be paid to
broker/dealers who provide brokerage and research services than to
broker/dealers who do not provide such services if such higher commissions are
deemed reasonable in relation to the value of the brokerage and research
services provided. Although transactions are directed to broker/dealers who
provide such brokerage and research services, the Fund believes that the
commissions paid to such broker/dealers are not, in general, higher than
commissions that would be paid to broker/dealers not providing such services and
that such commissions are reasonable in relation to the value of the brokerage
and research services provided. In some instances, services may be provided to
the Manager which constitute in some part brokerage and research services used
by the Manager in connection with its investment decision-making process and
constitute in some part services used by the Manager in connection with
administrative or other functions not related to its investment decision-making
process. In such cases, the Manager will make a good faith allocation of
brokerage and research services and will pay out of its own resources for
services used by the Manager in connection with administrative or other
functions not related to its investment decision-making process. In addition, so
long as no fund is disadvantaged, portfolio transactions which generate
commissions or their equivalent are allocated to
-17-
<PAGE>
broker/dealers who provide daily portfolio pricing services to the Fund and to
other funds in the Delaware Group. Subject to best price and execution,
commissions allocated to brokers providing such pricing services may or may not
be generated by the funds receiving the pricing service.
The Manager may place a combined order for two or more accounts or funds
engaged in the purchase or sale of the same security if, in its judgment, joint
execution is in the best interest of each participant and will result in best
price and execution. Transactions involving commingled orders are allocated in a
manner deemed equitable to each account or fund. When a combined order is
executed in a series of transactions at different prices, each account
participating in the order may be allocated an average price obtained from the
executing broker. It is believed that the ability of the accounts to participate
in volume transactions will generally be beneficial to the accounts and funds.
Although it is recognized that, in some cases, the joint execution of orders
could adversely affect the price or volume of the security that a particular
account or fund may obtain, it is the opinion of the Manager and the Fund's
Board of Directors that the advantages of combined orders outweigh the possible
disadvantages of separate transactions.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. (the "NASD"), and subject to seeking best price and
execution, the Fund may place orders with broker/dealers that have agreed to
defray certain Fund expenses such as custodian fees, and may, at the request of
the Distributor, give consideration to sales of its shares as a factor in the
selection of brokers and dealers to execute Fund portfolio transactions.
PORTFOLIO TURNOVER
Portfolio trading will be undertaken principally to accomplish the Fund's
objective in relation to anticipated movements in the general level of interest
rates. The Fund is free to dispose of portfolio securities at any time, subject
to complying with the Code and the Investment Company Act of 1940, when changes
in circumstances or conditions make such a move desirable in light of the
investment objective. The Fund will not attempt to achieve or be limited to a
predetermined rate of portfolio turnover, such a turnover always being
incidental to transactions undertaken with a view to achieving the Fund's
investment objective.
Under certain market conditions, the Fund may experience a high rate of
portfolio turnover which could exceed 100%. The portfolio turnover rate of the
Fund is calculated by dividing the lesser of purchases or sales of portfolio
securities for the particular fiscal year by the monthly average of the value of
the portfolio securities owned by the Fund during the particular fiscal year,
exclusive of securities whose maturities at the time of acquisition are one year
or less.
The degree of portfolio activity may affect brokerage costs of the Fund and
taxes payable by the Fund's shareholders to the extent of any net realized
capital gains. 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. In investing for capital appreciation, the Fund may hold
securities for any period of time. Portfolio turnover will also be increased if
the Fund writes a large number of call options which are subsequently exercised.
The turnover rate also may be affected by cash requirements from redemptions and
repurchases of Fund shares. Total brokerage costs generally increase with higher
portfolio turnover rates.
During the fiscal years ended November 30, 1994 and 1995, the Fund's
portfolio turnover rates were 14% and 65%, respectively.
-18-
<PAGE>
PURCHASING SHARES
The Distributor serves as the national distributor for the Fund's four
classes of shares - Class A Shares, Class B Shares, Class C Shares and the
Institutional Class, and has agreed to use its best efforts to sell shares of
the Fund. See the Prospectuses for additional information on how to invest.
Shares of the Fund are offered on a continuous basis, and may be purchased
through authorized investment dealers or directly by contacting the Fund or its
agent.
The minimum initial investment generally is $1,000 for Class A Shares,
Class B Shares and Class C Shares. Subsequent purchases generally must be at
least $100 for Class A Shares, Class B Shares and Class C Shares. The minimum
initial and subsequent investment for Class A Shares will be waived for
purchases by officers, directors and employees of any Delaware Group fund, the
Manager or any of the Manager's affiliates if the purchases are made pursuant to
a payroll deduction program. Shares purchased pursuant to the Uniform Gifts to
Minors Act or the Uniform Transfers to Minors Act and shares purchased in
connection with an Automatic Investing Plan are subject to a minimum initial
purchase of $250 and a minimum subsequent purchase of $25. Accounts opened under
the Delaware Group Asset Planner service are subject to a minimum initial
investment of $2,000 per Asset Planner strategy selected. There are no minimum
purchase requirements for the Institutional Class, but certain eligibility
requirements must be satisfied.
There is a maximum purchase limitation of $250,000 with respect to each
purchase of Class B Shares; for Class C Shares, each purchase must be in an
amount that is less than $1,000,000. (See Investment Plans for purchase
limitations applicable to each of the Fund's master retirement plans.) The Fund
will reject any order for purchase of more than $250,000 of Class B Shares and
$1,000,000 or more for Class C Shares. An investor may exceed these limitations
by making cumulative purchases over a period of time. An investor should keep
in mind, however, that reduced front-end sales charges apply to investments of
$100,000 or more in Class A Shares, which are subject to a lower annual 12b-1
Plan expense charge than Class B Shares and Class C Shares and generally are not
subject to a CDSC.
Selling dealers have the responsibility of transmitting orders promptly.
The Fund reserves the right to reject any order for the purchase of its shares
if in the opinion of management such rejection is in the Fund's best interest.
The NASD has adopted Rules of Fair Practice relating to investment company
sales charges. The Fund and the Distributor intend to operate in compliance
with these rules.
Class A Shares are purchased at the offering price which reflects a maximum
front-end sales charge of 4.75%; however, lower front-end sales charges apply
for larger purchases. See the table below. Class A Shares are also subject to
annual 12b-1 Plan expenses.
Class B Shares are purchased at net asset value and 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 which are higher than those to
which Class A Shares are subject and are assessed against Class B Shares for
approximately eight years after purchase. See Automatic Conversion of Class B
Shares in the Fund Classes' Prospectus.
Class C Shares are purchased at net asset value and are subject to a CDSC
of 1% if shares are redeemed within 12 months following purchase. Class C
Shares are also subject to annual 12b-1 Plan expenses for the life of the
investment which are equal to those to which Class B Shares are subject.
Institutional Class shares are purchased at the net asset value per share
without the imposition of a front-end or contingent deferred sales charge or
12b-1 Plan expenses. See Determining Offering Price and Net Asset Value and
Plans Under Rule 12b-1 for the Fund Classes in this Part B.
-19-
<PAGE>
Institutional Class shares, Class A Shares, Class B Shares and Class C
Shares represent a proportionate interest in the Fund's assets and will receive
a proportionate interest in the Fund's income, before application, as to the
Class A, Class B and Class C Shares, of any expenses under the Fund's 12b-1
Plans.
Certificates representing shares purchased are not ordinarily issued unless
a shareholder submits a specific request. Certificates are not issued in the
case of Class B Shares. However, purchases not involving the issuance of
certificates are confirmed to the investor and credited to the shareholder's
account on the books maintained by Delaware Service Company, Inc. (the "Transfer
Agent"). The investor will have the same rights of ownership with respect to
such shares as if certificates had been issued. An investor that is permitted
to obtain a certificate may receive a certificate representing shares purchased
by sending a letter to the Transfer Agent requesting the certificate. No charge
is made for any certificate issued. Investors who hold certificates
representing any of their shares may only redeem those shares by written
request. The investor's certificate(s) must accompany such request.
ALTERNATIVE PURCHASE ARRANGEMENTS
The alternative purchase arrangements of Class A, Class B and Class C
Shares permit investors to choose the method of purchasing shares that is most
suitable for their needs 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 purchase Class A Shares and incur a front-end sales charge and
annual 12b-1 Plan expenses of up to a maximum of .30% of the average daily net
assets of Class A Shares, or to purchase either Class B or Class C Shares and
have the entire initial purchase amount invested in the Fund with the investment
thereafter subject to a CDSC and annual 12b-1 Plan expenses. Class B Shares are
subject to a CDSC if the shares are redeemed within six years of purchase, and
Class C Shares are subject to a CDSC if the shares are redeemed within 12 months
of purchase. Class B and Class C Shares are each 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 Fund to the Distributor, dealers or others for providing personal service
and/or maintaining shareholder accounts) of average daily net assets of the
respective Class. Class B Shares will automatically convert to Class A Shares
at the end of approximately eight years after purchase and, thereafter, be
subject to annual 12b-1 Plan expenses of up to a maximum of .30% of average
daily net assets of such shares. Unlike Class B Shares, Class C Shares do not
convert to another class.
CLASS A SHARES
Purchases of $100,000 or more of Class A Shares at the offering price carry
reduced front-end sales charges as shown in the accompanying table, and may
include a series of purchases over a 13-month period under a Letter of Intention
signed by the purchaser. See Special Purchase Features - Class A Shares, below
for more information on ways in which investors can avail themselves of reduced
front-end sales charges and other purchase features.
-20-
<PAGE>
<TABLE>
<CAPTION>
CLASS A SHARES
- -------------------------------------------------------------------------------
Dealer's
Front-End Sales Charge as % of Commission***
Amount of Purchase Offering Amount as % of
Price Invested** Offering Price
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $100,000 4.75% 5.01% 4.00%
$100,000 but under $250,000 3.75 3.92 3.00
$250,000 but under $500,000 2.50 2.55 2.00
$500,000 but under $1,000,000* 2.00 2.03 1.60
</TABLE>
* There is no front-end sales charge on purchases of $1 million or more of
Class A Shares but, under certain limited circumstances, a 1% contingent
deferred sales charge may apply upon redemption of such shares. The
contingent deferred sales charge ("Limited CDSC") that may be applicable
arises only in the case of certain net asset value purchases which have
triggered the payment of a dealer's commission.
** Based upon the net asset value per share of Class A Shares as of the end of
the Fund's most recent fiscal year.
*** Financial institutions or their affiliated brokers may receive an agency
transaction fee in the percentages set forth above.
- -------------------------------------------------------------------------------
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 or
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 to dealers up to the full amount of the front-
end sales charge shown above. Dealers who receive 90% or more of the sales
charge may be deemed to be underwriters under the Securities Act of 1933.
-21-
<PAGE>
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 commission of up to .15% of the
offering price in connection with sales of Class A Shares. Such dealers must
meet certain requirements in terms of organization and distribution capabilities
and their ability to increase sales. The Distributor should be contacted for
further information on these requirements as well as the basis and circumstances
upon which the additional commission will be paid. Participating dealers may be
deemed to have additional responsibilities under the securities laws.
DEALER'S COMMISSION
For initial purchases of Class A Shares of $1,000,000 or more, 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
-------------
(as a percent-
AMOUNT age of amount
OF PURCHASE 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 (see Redemption and Repurchase) may be aggregated
with those of Class A Shares of the Fund. 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.
Financial advisers should contact the Distributor concerning the applicability
and calculation of the dealer's commission in the case of combined purchases.
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.
CONTINGENT DEFERRED SALES CHARGE - CLASS B SHARES AND CLASS C SHARES
Class B and Class C Shares are purchased without the imposition of a front-
end sales charge. Class B Shares redeemed within six years of purchase may be
subject to a CDSC at the rates set forth below and Class C Shares redeemed
within 12 months of purchase may be subject to a CDSC of 1%. CDSC fees are
charged as a percentage of the dollar amount subject to the CDSC. 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 those
shares at the time of redemption. No CDSC will be imposed on increases in net
asset value above the initial purchase price. In addition, no CDSC will be
assessed on redemptions of shares received through the reinvestment of dividends
or capital gains distributions. See the Prospectus for the Fund Classes under
Redemption and Exchange - Waiver of Contingent Deferred Sales Charge - Class B
and Class Shares for a list of the instances in which the CDSC is waived.
The following table sets forth the rates of the CDSC for Class B Shares of
the Fund:
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
-22-
<PAGE>
During the seventh year after purchase and, thereafter, until converted
automatically into Class A Shares of the Fund, Class B Shares will still be
subject to the annual 12b-1 Plan expenses of up to 1% of average daily net
assets of those shares. At the end of approximately eight years after purchase,
the investor's Class B Shares will be automatically converted into Class A
Shares of the Fund. See Automatic Conversion of Class B Shares under Buying
Shares in the Fund Classes' Prospectus. Such conversion will constitute a tax-
free exchange for federal income tax purposes. See Taxes in the Prospectus for
the Fund Classes.
PLANS UNDER RULE 12B-1 FOR THE FUND CLASSES
Pursuant to Rule 12b-1 under the Investment Company Act of 1940, the Fund has
adopted a separate plan for each of the Class A Shares, Class B Shares and Class
C Shares of the Fund (the "Plans"). Each Plan permits the Fund to pay for
certain distribution, promotional and related expenses involved in the marketing
of only the Class to which the Plan applies. The Plans do not apply to the
Institutional Class of shares. Such shares are not included in calculating the
Plans' fees, and the Plans are not used to assist in the distribution and
marketing of the Institutional Class shares. Shareholders of the Institutional
Class may not vote on matters affecting the Plans.
The Plans permit the Fund, pursuant to the Distribution Agreement, to pay out
of the assets of the Class A Shares, the Class B Shares and the Class C Shares
monthly fees to the Distributor for its services and expenses in distributing
and promoting sales of shares of such classes. 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, and paying distribution and maintenance fees to securities
brokers and dealers who enter into agreements with the Distributor. The Plan
expenses relating to Class B and Class C Shares are also used to pay the
Distributor for advancing the commission costs to dealers with respect to the
initial sale of such shares.
In addition, the Fund may make payments out of the assets of the Class A,
Class B and Class C Shares directly to other unaffiliated parties, such as
banks, who either aid in the distribution of shares of, or provide services to,
such classes.
The maximum aggregate fee payable by the Fund under the Plans, and the Fund's
Distribution Agreement, is on an annual basis, .30% of the Class A Shares'
average daily net assets for the year, and 1% (.25% of which are service fees to
be paid to the Distributor, dealers and others for providing personal service
and/or maintaining shareholder accounts) of each of the Class B Shares' and the
Class C Shares' average daily net assets for the year. The Fund's Board of
Directors may reduce these amounts at any time.
All of the distribution expenses incurred by the Distributor and others, such
as broker/dealers, in excess of the amount paid on behalf of Class A, Class B
and Class C Shares would be borne by such persons without any reimbursement from
such classes. Subject to seeking best price and execution, the Fund may, from
time to time, buy or sell portfolio securities from or to firms which receive
payments under the Plans.
From time to time, the Distributor may pay additional amounts from its own
resources to dealers for aid in distribution or for aid in providing
administrative services to shareholders.
The Plans and the Distribution Agreement, as amended, have been approved by
the Board of Directors of the Fund, including a majority of the directors who
are not "interested persons" (as defined in the Investment Company Act of 1940)
of the Fund and who have no direct or indirect financial interest in the Plans,
by vote cast in person at a meeting duly called for the purpose of voting on the
Plans and such Agreements. Continuation of the Plans and the Distribution
Agreement, as amended, must be approved annually by the Board of Directors in
the same manner as specified above.
Each year, the directors must determine whether continuation of the Plans is
in the best interest of shareholders of, respectively, Class A
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Shares, Class B Shares and Class C Shares and that there is a reasonable
likelihood of the Plan relating to a Fund Class providing a benefit to that
Class. The Plans and the Distribution Agreement, as amended, may be terminated
with respect to a Class at any time without penalty by a majority of those
directors who are not "interested persons" or by a majority vote of the
outstanding voting securities of the relevant Fund Class. Any amendment
materially increasing the percentage payable under the Plans must likewise be
approved by a majority vote of the outstanding voting securities of the relevant
Fund Class, as well as by a majority vote of those directors who are not
"interested persons." With respect to the Class A Shares' Plan, any material
increase in the maximum percentage payable thereunder must also be approved by a
majority of the outstanding Class B Shares. Also, any other material amendment
to the Plans must be approved by a majority vote of the directors including a
majority of the noninterested directors of the Fund having no interest in the
Plans. In addition, in order for the Plans to remain effective, the selection
and nomination of directors who are not "interested persons" of the Fund must be
effected by the directors who themselves are not "interested persons" and who
have no direct or indirect financial interest in the Plans. Persons authorized
to make payments under the Plans must provide written reports at least quarterly
to the Board of Directors for their review.
For the fiscal year ended November 30, 1995, payments from the Class A Shares
pursuant to its Plan amounted to $524,840 and such amount was used for the
following purposes: $6,948 - Annual/Semi-Annual Reports; $422,983 - Broker
Trails; $35,278 - Commission to Wholesalers; $1,821 - Dealer Service Expenses;
$12,986 - Promotional-Other; $7,731 - Promotional-Broker Meetings; $8,030 -
Prospectus Printing; $26,880 - Wholesaler Expenses; and $2,183 - Telephone. For
the fiscal year ended November 30, 1995, payments from the Class B Shares
pursuant to its Plan amounted to $34,976 and such amount was used for the
following purposes: $11,507 - Broker Sales Charges; $8,646 - Broker Trails;
$1,588 -Commission to Wholesalers; $12,975 - Interest on Broker Sales Charges;
$47 - Telephone; and $213 - Promotional-Broker Meetings. For the period
November 29, 1995 (date of initial public offering) through November 30, 1995,
there were no payments from the Class C Shares pursuant to its Plan.
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.
OTHER PAYMENTS TO DEALERS - CLASS A, CLASS B AND CLASS C SHARES
From time to time, at the discretion of the Distributor, all registered
broker/dealers whose aggregate sales of Fund 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.
Payments to dealers made in connection with seminars, conferences or contests
relating to the promotion of fund shares may be in an amount up to 100% of the
expenses incurred or awards made.
The Distributor may also pay a portion of the expense of preapproved dealer
advertisements promoting the sale of Delaware Group fund shares.
SPECIAL PURCHASE FEATURES - CLASS A SHARES
BUYING AT NET ASSET VALUE
Class A Shares may be reinvested without a front-end sales charge under the
Dividend Reinvestment Plan and, under certain circumstances, the 12-Month
Reinvestment Privilege and the Exchange Privilege.
Current and former officers, directors and employees of the Fund, any other
fund in the Delaware Group, the Manager or any of the Manager's current
affiliates and those that may in the future be created, legal counsel to the
funds, and registered representatives, and employees of broker/dealers who have
entered
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into Dealer's Agreements with the Distributor may purchase Class A Shares and
any such class of shares of any of the funds in the Delaware Group, including
any fund that may be created, at the net asset value per share. Spouses,
parents, brothers, sisters and children (regardless of age) of such persons at
their direction, and any employee benefit plan established by any of the
foregoing funds, corporations, counsel or broker/dealers may also purchase
shares at net asset value. Purchases of Class A Shares may also 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 charges. Purchases of Class A Shares also may be made at net asset
value by bank employees who provide services in connection with agreements
between the bank and unaffiliated brokers or dealers concerning sales of shares
of Delaware Group funds. 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. Such purchasers are
required to sign a letter stating that the purchase is for investment only and
that the securities may not be resold except to the issuer. Such purchasers may
also be required to sign or deliver such other documents as the Fund may
reasonably require to establish eligibility for purchase at net asset value. The
Fund must be notified in advance that the trade qualifies for purchase at net
asset value.
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.
LETTER OF INTENTION
The reduced front-end sales charges described above with respect to Class A
Shares are also applicable to the aggregate amount of purchases made by any such
purchaser previously enumerated within a 13-month period pursuant to a written
Letter of Intention provided by the Distributor and signed by the purchaser, and
not legally binding on the signer or the Fund, which provides for the holding in
escrow by the Transfer Agent of 5% of the total amount of the Class A Shares
intended to be purchased until such purchase is completed within the 13-month
period. A Letter of Intention may be dated to include shares purchased up to 90
days prior to the date the Letter is signed. The 13-month period begins on the
date of the earliest purchase. If the intended investment is not completed,
except as noted below, the purchaser will be asked to pay an amount equal to the
difference between the front-end sales charge on Class A Shares purchased at the
reduced rate and the front-end sales charge otherwise applicable to the total
shares purchased. If such payment is not made within 20 days following the
expiration of the 13-month period, the Transfer Agent will surrender an
appropriate number of the escrowed shares for redemption in order to realize the
difference. Such purchasers may include the value (at offering price at the
level designated in their Letter of Intention) of all their shares of the Fund
and of any class of any of the other mutual funds in the Delaware Group (except
shares of any Delaware Group fund which do not carry a front-end sales charge,
CDSC or Limited CDSC, other than shares of Delaware Group Premium Fund, Inc.
beneficially owned in connection with the ownership of variable insurance
products, unless they were acquired through an exchange from a Delaware Group
fund which carried a front-end sales charge, CDSC or Limited CDSC) previously
purchased and still held as of the date of their Letter of Intention toward the
completion of such Letter. For purposes of satisfying an investor's obligation
under a Letter of Intention, Class B
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<PAGE>
Shares and Class C Shares of the Fund and the corresponding classes of shares of
other Delaware Group funds which offer such shares may be aggregated with Class
A Shares of the Fund and the corresponding class of shares of the other Delaware
Group funds.
Employers offering a Delaware Group retirement plan may also complete a
Letter of Intention to obtain a reduced front-end sales charge on investments in
Class A Shares made by the plan. The aggregate investment level of the Letter
of Intention will be determined and accepted by the Transfer Agent at the point
of plan establishment. The level and any reduction in front-end sales charge
will be based on actual plan participation and the projected investments in
Delaware Group funds that are offered with a front-end sales charge, CDSC or
Limited CDSC for a 13-month period. The Transfer Agent reserves the right to
adjust the signed Letter of Intention based on this acceptance criteria. The
13-month period will begin on the date this Letter of Intention is accepted by
the Transfer Agent. If actual investments exceed the anticipated level and
equal an amount that would qualify the plan for further discounts, any front-end
sales charges will be automatically adjusted. In the event this Letter of
Intention is not fulfilled within the 13-month period, the plan level will be
adjusted (without completing another Letter of Intention) and the employer will
be billed for the difference in front-end sales charges due, based on the plan's
assets under management at that time. Employers may also include the value (at
offering price at the level designated in their Letter of Intention) of all
their shares intended for purchase that are offered with a front-end sales
charge, CDSC or Limited CDSC of any class. Class B Shares and Class C Shares of
the Fund and other Delaware Group funds which offer corresponding classes of
shares may also be aggregated for this purpose.
COMBINED PURCHASES PRIVILEGE
In determining the availability of the reduced front-end sales charge
previously set forth with respect to Class A Shares, purchasers may combine the
total amount of any combination of the Class A Shares, Class B Shares and/or
Class C Shares of the Fund, as well as shares of any other class of any of the
other Delaware Group funds (except shares of any Delaware Group fund which do
not carry a front-end sales charge, CDSC or Limited CDSC, other than shares of
Delaware Group Premium Fund, Inc. beneficially owned in connection with the
ownership of variable insurance products, unless they were acquired through an
exchange from a Delaware Group fund which carried a front-end sales charge, CDSC
or Limited CDSC).
The privilege also extends to all purchases made at one time by an
individual; or an individual, his or her spouse and their children under 21; or
a trustee or other fiduciary of trust estates or fiduciary accounts for the
benefit of such family members (including certain employee benefit
programs).
RIGHT OF ACCUMULATION
In determining the availability of the reduced front-end sales charge with
respect to Class A Shares, purchasers may also combine any subsequent purchases
of Class A Shares, Class B Shares and Class C Shares of the Fund, as well as
shares of any other class of any of the other Delaware Group funds which offer
such classes (except shares of any Delaware Group fund which do not carry a
front-end sales charge, CDSC or Limited CDSC, other than shares of Delaware
Group Premium Fund, Inc. beneficially owned in connection with the ownership of
variable insurance products, unless they were acquired through an exchange from
a Delaware Group fund which carried a front-end sales charge, CDSC or Limited
CDSC). If, for example, any such purchaser has previously purchased and still
holds Class A Shares and/or shares of any other of the classes described in the
previous sentence with a value of $40,000 and subsequently purchases $60,000 at
offering price of additional shares of Class A Shares, the charge applicable to
the $60,000 purchase would currently be 3.75%. For the purpose of this
calculation, the shares presently held shall be valued at the public offering
price that would have been in effect were the shares purchased simultaneously
with the current purchase. Investors should refer to the table of sales charges
for Class A Shares to determine the applicability of the Right of Accumulation
to their particular circumstances.
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<PAGE>
12-MONTH REINVESTMENT PRIVILEGE
Holders of Class A Shares (and of the Institutional Class holding shares
which were acquired through an exchange of one of the other mutual funds in the
Delaware Group offered with a front-end sales charge) who redeem such shares of
the Fund have one year from the date of redemption to reinvest all or part of
their redemption proceeds in Class A Shares of the Fund or in Class A Shares of
any of the other funds in the Delaware Group, subject to applicable eligibility
and minimum purchase requirements, in states where shares of such other funds
may be sold, at net asset value without the payment of a front-end sales charge.
This privilege does not extend to Class A Shares where the redemption of the
shares triggered the payment of a Limited CDSC. Persons investing redemption
proceeds from direct investments in mutual funds in the Delaware Group offered
without a front-end sales charge will be required to pay the applicable sales
charge when purchasing Class A Shares. The reinvestment privilege does not
extend to a redemption of either Class B or Class C Shares.
Any such reinvestment cannot exceed the redemption proceeds (plus any amount
necessary to purchase a full share). The reinvestment will be made at the net
asset value next determined after receipt of remittance. A redemption and
reinvestment could have income tax consequences. It is recommended that a tax
adviser be consulted with respect to such transactions. Any reinvestment
directed to a fund in which the investor does not then have an account will be
treated like all other initial purchases of a fund's shares. Consequently, an
investor should obtain and read carefully the prospectus for the fund in which
the investment is proposed to be made before investing or sending money. The
prospectus contains more complete information about the fund, including charges
and expenses.
Investors should consult their financial advisers or the Transfer Agent,
which also serves as the Fund's shareholder servicing agent, about the
applicability of the Limited CDSC (see Contingent Deferred Sales Charge for
Certain Redemptions of Class A Shares Made at Net Asset Value under Redemption
and Exchange in the Fund Classes' Prospectus) in connection with the features
described above.
GROUP INVESTMENT PLANS
Group Investment Plans that are not eligible to purchase shares of the
Institutional Class may also benefit from the reduced front-end sales charges
for investments in Class A Shares set forth in the table on page 21, based on
total plan assets. If a company has more than one plan investing in the Delaware
Group of funds, then the total amount invested in all plans would be used in
determining the applicable front-end sales charge reduction upon each purchase,
both initial and subsequent, upon notification to the Fund at the time of each
such purchase. Employees participating in such Group Investment Plans may also
combine the investments made in their plan account when determining the
applicable front-end sales charge on purchases to non-retirement Delaware Group
investment accounts if they so notify the Fund in connection with each purchase.
For other retirement plans and special services, see Retirement Plans for the
Fund Classes under Investment Plans.
VALUE FUND INSTITUTIONAL CLASS
The Institutional Class is available for purchase only by: (a) retirement
plans introduced by persons not associated with brokers or dealers that are
primarily engaged in the retail securities business and rollover individual
retirement accounts from such plans; (b) tax-exempt employee benefit plans of
the Manager or its affiliates and securities dealer firms with a selling
agreement with the Distributor; (c) institutional advisory accounts of the
Manager or its affiliates and those having client relationships with Delaware
Investment Advisers, a division of the Manager, or its affiliates and their
corporate sponsors, as well as subsidiaries and related employee benefit plans
and rollover individual retirement accounts from such institutional advisory
accounts; (d) banks, trust companies and similar financial institutions
investing for their own account or for the account of their trust customers for
whom such financial institution is exercising investment discretion in
purchasing shares of the Class; and (e) registered
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<PAGE>
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.
Shares of the Institutional Class are available for purchase at net asset
value, without the imposition of a front-end or contingent deferred sales charge
and are not subject to Rule 12b-1 expenses.
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<PAGE>
INVESTMENT PLANS
REINVESTMENT PLAN/OPEN ACCOUNT
Unless otherwise designated by shareholders in writing, dividends from net
investment income and distributions from realized securities profits, if any,
will be automatically reinvested in additional shares of the respective Fund
Class in which an investor has an account (based on the net asset value in
effect on the reinvestment date) and will be credited to the shareholder's
account on that date. All dividends and distributions of the Institutional Class
are reinvested in the account of the holders of such shares (based on the net
asset value of the Fund in effect on the reinvestment date). A confirmation of
each dividend payment from net investment income and of distributions from
realized securities profits, if any, will be mailed to shareholders in the first
quarter of the fiscal year.
Under the Reinvestment Plan/Open Account, shareholders may purchase and add
full and fractional shares to their plan accounts at any time either through
their investment dealers or by sending a check or money order to the Fund. Such
purchases, which must meet the minimum subsequent purchase requirements set
forth in the Prospectuses and this Part B, are made for Class A Shares at the
public offering price and, for Class B Shares, Class C Shares and the
Institutional Class at the net asset value, at the end of the day of receipt. A
reinvestment plan may be terminated at any time. This plan does not assure a
profit nor protect against depreciation in a declining market.
REINVESTMENT OF DIVIDENDS IN OTHER DELAWARE GROUP FUNDS
Subject to applicable eligibility and minimum initial purchase requirements
and the limitations set forth below, holders of Class A, Class B and Class C
Shares may automatically reinvest dividends and/or distributions from the Fund
in any of the other mutual funds in the Delaware Group, including the Fund, in
states where their shares may be sold. Such investments will be at net asset
value at the close of business on the reinvestment date without any front-end
sales charge or service fee. Nor will such investments be subject to a CDSC or
Limited CDSC. The shareholder must notify the Transfer Agent in writing and must
have established an account in the fund into which the dividends and/or
distributions are to be invested. Any reinvestment directed to a fund in which
the investor does not then have an account will be treated like all other
initial purchases of a fund's shares. Consequently, an investor should obtain
and read carefully the prospectus for the fund in which the investment is
proposed to be made before investing or sending money. The prospectus contains
more complete information about the fund, including charges and expenses.
Subject to the following limitations, dividends and/or distributions from
other funds in the Delaware Group may be invested in shares of the Fund,
provided an account has been established. Dividends from Class A Shares may not
be directed to Class B Shares or Class C Shares of another fund in the Delaware
Group. Dividends from Class B Shares may only be directed to Class B Shares of
another fund in the Delaware Group that offers such class of shares. Dividends
from Class C Shares may only be directed to Class C Shares of another fund in
the Delaware Group that offers such class of shares. See Class B Funds and Class
C Funds under Buying Shares in the Fund Classes' Prospectus for the funds in the
Delaware Group that are eligible for investment by holders of Fund shares.
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.
INVESTING BY ELECTRONIC FUND TRANSFER
Direct Deposit Purchase Plan--Investors may arrange for the Fund to accept
for investment in Class A, Class B or Class C Shares, through an agent bank,
preauthorized government or private recurring payments. This method of
investment assures the timely credit to the shareholder's account of payments
such as social security, veterans' pension or compensation benefits, federal
salaries, Railroad Retirement benefits, private payroll checks, dividends, and
disability or pension fund benefits. It also eliminates lost, stolen and delayed
checks.
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<PAGE>
Automatic Investing Plan--Shareholders of Class A, Class B and Class C Shares
may make automatic investments by authorizing, in advance, monthly payments
directly from their checking account for deposit into their Fund account. This
type of investment will be handled in either of the two ways noted below. (1)
If the shareholder's bank is a member of the National Automated Clearing House
Association ("NACHA"), the amount of the investment will be electronically
deducted from his or her account by Electronic Fund Transfer ("EFT"). The
shareholder's checking account will reflect a debit each month at a specified
date although no check is required to initiate the transaction. (2) If the
shareholder's bank is not a member of NACHA, deductions will be made by
preauthorized checks, known as Depository Transfer Checks. Should the
shareholder's bank become a member of NACHA in the future, his or her
investments would be handled electronically through EFT.
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.
* * *
Initial investments under the Direct Deposit Purchase Plan and the Automatic
Investing Plan must be for $250 or more and subsequent investments under such
plans must be for $25 or more. An investor wishing to take advantage of either
service must complete an authorization form. Either service can be discontinued
by the shareholder at any time without penalty by giving written notice.
Payments to the Fund from the federal government or its agencies on behalf of
a shareholder may be credited to the shareholder's account after such payments
should have been terminated by reason of death or otherwise. Any such payments
are subject to reclamation by the federal government or its agencies.
Similarly, under certain circumstances, investments from private sources may be
subject to reclamation by the transmitting bank. In the event of a reclamation,
the Fund may liquidate sufficient shares from a shareholder's account to
reimburse the government or the private source. In the event there are
insufficient shares in the shareholder's account, the shareholder is expected to
reimburse the Fund.
DIRECT DEPOSIT PURCHASES BY MAIL
Shareholders may authorize a third party, such as a bank or employer, to make
investments directly to their Fund accounts. The Fund will accept these
investments, such as bank-by-phone, annuity payments and payroll allotments, by
mail directly from the third party. Investors should contact their employers or
financial institutions who in turn should contact the Fund for proper
instructions.
RETIREMENT PLANS FOR THE FUND CLASSES
An investment in the Fund may 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. The CDSC may be waived on certain redemptions of Class B Shares and
Class C Shares. See the Prospectus for the Fund Classes under Redemption and
Exchange - Waiver of Contingent Deferred Sales Charge - Class B and Class C
Shares for a list of the instances in which the CDSC is waived.
Each purchase of Class B Shares is subject to a maximum purchase limitation
of $250,000 for retirement plans. Each purchase of Class C Shares must be in an
amount that is less than $1,000,000 for such plans. The maximum purchase
limitations apply only to the initial purchase of shares by the retirement plan.
Minimum investment limitations generally applicable to other investors do not
apply to retirement plans, other than Individual Retirement Accounts ("IRAs")
for which there is a minimum initial purchase of $250, and a minimum subsequent
purchase of $25, regardless of which class is selected. Retirement plans may be
subject to plan establishment fees, annual maintenance fees and/or other
administrative or trustee fees. Fees are based upon the number of participants
in the plan
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as well as the services selected. Additional information about fees is included
in retirement plan materials. Fees are quoted upon request. Annual maintenance
fees may be shared by Delaware Management Trust Company, the Transfer Agent,
other affiliates of the Manager and others that provide services to such plans.
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 shares of the Institutional Class. See
Value Fund Institutional Class above. For additional information on any of the
plans and Delaware's retirement services, call the Shareholder Service Center
telephone number.
IT IS ADVISABLE FOR AN INVESTOR CONSIDERING ANY ONE OF THE RETIREMENT PLANS
DESCRIBED BELOW TO CONSULT WITH AN ATTORNEY, ACCOUNTANT OR A QUALIFIED
RETIREMENT PLAN CONSULTANT. FOR FURTHER DETAILS, INCLUDING APPLICATIONS FOR ANY
OF THESE PLANS, CONTACT YOUR INVESTMENT DEALER OR THE DISTRIBUTOR.
Taxable distributions from the retirement plans described below may be
subject to withholding.
Please contact your investment dealer or the Distributor for the special
application forms required for the plans described below.
PROTOTYPE PROFIT SHARING OR MONEY PURCHASE PENSION PLANS
Prototype plans are available for self-employed individuals, partnerships
and corporations which replace the former Keogh and corporate retirement plans.
These plans contain profit sharing or money purchase pension plan provisions.
Contributions for plans of this type may be invested only in Class A and Class C
Shares.
INDIVIDUAL RETIREMENT ACCOUNT ("IRA")
A document is available for an individual who wants to establish an IRA by
making contributions which may be tax-deductible, even if the individual is
already participating in an employer-sponsored retirement plan. Even if
contributions are not deductible for tax purposes, as indicated below, earnings
will be tax-deferred. In addition, an individual may make contributions on
behalf of a spouse who has no compensation for the year or elects to be treated
as having no compensation for the year. Investments in each of the Fund Classes
are permissible.
The Tax Reform Act of 1986 (the "Act") restructured, and in some cases
eliminated, the tax deductibility of IRA contributions. Under the Act, the full
deduction for IRAs ($2,000 for each working spouse and $2,250 for one-income
couples) was retained for all taxpayers who are not covered by an employer-
sponsored retirement plan. Even if a taxpayer (or his or her spouse) is covered
by an employer-sponsored retirement plan, the full deduction is still available
if the taxpayer's adjusted gross income is below $25,000 ($40,000 for taxpayers
filing joint returns). A partial deduction is allowed for married couples with
incomes between $40,000 and $50,000, and for single individuals with incomes
between $25,000 and $35,000. The Act does not permit deductions for
contributions to IRAs by taxpayers whose adjusted gross income before IRA
deductions exceeds $50,000 ($35,000 for singles) and who are active participants
in an employer-sponsored retirement plan. Taxpayers who are not allowed
deductions on IRA contributions still can make nondeductible IRA contributions
of as much as $2,000 for each working spouse ($2,250 for one-income couples),
and defer taxes on interest or other earnings from the IRAs. Special rules
apply for determining the deductibility of contributions made by married
individuals filing separate returns.
A company or association may establish a Group IRA for employees or members
who want to purchase shares of the Fund. Purchases of $1 million or more of
Class A Shares qualify for purchase at net asset value but may, under certain
circumstances, be subject to a Limited CDSC. See Purchasing Shares concerning
reduced front-end sales charges applicable to Class A Shares.
Investments generally must be held in the IRA until age 59 1/2 in order to
avoid premature distribution penalties, but distributions generally must
commence no later than April 1 of the calendar year following the year in which
the participant reaches age 70 1/2. Individuals are entitled to revoke the
account, for any reason and
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without penalty, by mailing written notice of revocation to Delaware Management
Trust Company within seven days after the receipt of the IRA Disclosure
Statement or within seven days after the establishment of the IRA, except, if
the IRA is established more than seven days after receipt of the IRA Disclosure
Statement, the account may not be revoked. Distributions from the account
(except for the pro-rata portion of any nondeductible contributions) are fully
taxable as ordinary income in the year received. Excess contributions removed
after the tax filing deadline, plus extensions, for the year in which the excess
contributions were made are subject to a 6% excise tax on the amount of excess.
Premature distributions (distributions made before age 59 1/2, except for death,
disability and certain other limited circumstances) will be subject to a 10%
excise tax on the amount prematurely distributed, in addition to the income tax
resulting from the distribution. See Class B Shares and Class C Shares under
Alternative Purchase Arrangements, Contingent Deferred Sales Charge - Class B
Shares and Class C Shares, and Waiver of Contingent Deferred Sales Charge -
Class B and Class C Shares in the Fund Classes' Prospectus concerning the
applicability of a CDSC upon redemption.
See Appendix B for additional IRA information.
SIMPLIFIED EMPLOYEE PENSION PLAN ("SEP/IRA")
A SEP/IRA may be established by an employer who wishes to sponsor a tax-
sheltered retirement program by making contributions on behalf of all eligible
employees. Each of the Fund Classes is available for investment by a SEP/IRA.
SALARY REDUCTION SIMPLIFIED EMPLOYEE PENSION PLAN ("SAR/SEP")
Employers with 25 or fewer eligible employees can establish this plan which
permits employer contributions and salary deferral contributions in Class A
Shares and Class C Shares only.
PROTOTYPE 401(K) DEFINED CONTRIBUTION PLAN
Section 401(k) of the Code permits employers to establish qualified plans
based on salary deferral contributions. Plan documents are available to enable
employers to establish a plan. An employer may also elect to make profit
sharing contributions and/or matching contributions with investments in only
Class A Shares and Class C Shares or certain other funds in the Delaware Group.
Purchases under the plan may be combined for purposes of computing the reduced
front-end sales charge applicable to Class A Shares as set forth in the table on
page 21.
DEFERRED COMPENSATION PLAN FOR PUBLIC SCHOOLS AND NON-PROFIT ORGANIZATIONS
("403(B)(7)")
Section 403(b)(7) of the Code permits public school systems and certain
non-profit organizations to use mutual fund shares held in a custodial account
to fund deferred compensation arrangements for their employees. A custodial
account agreement is available for those employers who wish to purchase any of
the Fund Classes in conjunction with such an arrangement. Applicable front-end
sales charges with respect to Class A Shares for such purchases are set forth in
the table on page 21.
DEFERRED COMPENSATION PLAN FOR STATE AND LOCAL GOVERNMENT EMPLOYEES ("457")
Section 457 of the Code permits state and local governments, their agencies
and certain other entities to establish a deferred compensation plan for their
employees who wish to participate. This enables employees to defer a portion of
their salaries and any federal (and possibly state) taxes thereon. Such plans
may invest in shares of any of the Fund Classes. Although investors may use
their own plan, there is available a Delaware Group 457 Deferred Compensation
Plan. Interested investors should contact the Distributor or their investment
dealers to obtain further information. Applicable front-end sales charges for
such purchases of Class A Shares are set forth in the table on page 21.
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DETERMINING OFFERING PRICE AND NET ASSET VALUE
Orders for purchases of Class A Shares are effected at the offering price
next calculated by the Fund after receipt of the order by the Fund or its agent.
Orders for purchases of Class B Shares, Class C Shares and the Institutional
Class are effected at the net asset value per share next calculated after
receipt of the order by the Fund or its agent. Selling dealers have the
responsibility of transmitting orders promptly.
The offering price for Class A Shares consists of the net asset value per
share plus any applicable sales charges. Offering price and net asset value are
computed as of the close of regular trading on the New York Stock Exchange
(ordinarily, 4 p.m., Eastern time) on days when the Exchange is open. The New
York Stock Exchange is scheduled to be open Monday through Friday throughout the
year except for New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas. When the New York
Stock Exchange is closed, the Fund will generally be closed, pricing
calculations will not be made and purchase and redemption orders will not be
processed.
An example showing how to calculate the net asset value per share and, in
the case of Class A Shares, the offering price per share, is included in the
Fund's financial statements which are incorporated by reference into this Part
B.
The Fund's net asset value per share is computed by adding the value of all
the securities and other assets in the portfolio, deducting any liabilities and
dividing by the number of shares outstanding. Expenses and fees are accrued
daily. In determining the Fund's total net assets, portfolio securities
primarily listed or traded on a national or foreign securities exchange, except
for bonds, are valued at the last sales price on that exchange. Options are
valued at the last reported sales price or, if no sales are reported, at the
mean between bid and asked prices. For valuation purposes, foreign securities
initially expressed in foreign currency values will be converted into U.S.
dollar values at the mean between the bid and offered quotations of such
currencies against U.S. dollars as last quoted by any recognized dealer.
Securities not traded on a particular day, over-the-counter securities, and
government and agency securities are valued at the mean value between bid and
asked prices. Money market instruments having a maturity of less than 60 days
are valued at amortized cost. Debt securities (other than short-term
obligations) are valued on the basis of valuations provided by a pricing service
when such prices are believed to reflect the fair value of such securities. Use
of a pricing service has been approved by the Board of Directors. Prices
provided by a pricing service take into account appropriate factors such as
institutional trading in similar groups of securities, yield, quality, coupon
rate, maturity, type of issue, trading characteristics and other market data.
Subject to the foregoing, securities for which market quotations are not readily
available and other assets are valued at fair value as determined in good faith
and in a method approved by the Board of Directors.
Each Class of the Fund 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 Institutional Class will not incur any of the expenses under the
Fund's 12b-1 Plans and the Class A, Class B and Class C 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 each Class of the Fund will vary.
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REDEMPTION AND REPURCHASE
Any shareholder may require the Fund to redeem shares by sending a WRITTEN
REQUEST, signed by the record owner or owners exactly as the shares are
registered, to the Fund, 1818 Market Street, Philadelphia, PA 19103. In
addition, certain expedited redemption methods described below are available
when stock certificates have not been issued. The Fund issues certificates for
Class A Shares and Institutional Class shares only if a shareholder specifically
requests them. The Fund does not issue certificates for Class B Shares or Class
C Shares. If stock certificates have been issued for shares being redeemed,
they must accompany the written request. For redemptions of $50,000 or less
paid to the shareholder at the address of record, the Fund requires a request
signed by all owners of the shares or the investment dealer of record, but does
not require signature guarantees. When the redemption is for more than $50,000,
or if payment is made to someone else or to another address, signatures of all
record owners are required and a signature guarantee may be required. 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 request further
documentation from corporations, retirement plans, executors, administrators,
trustees or guardians.
In addition to redemption of shares by the Fund, the Distributor, acting as
agent for the Fund, offers to repurchase Fund shares from broker/dealers acting
on behalf of shareholders. The redemption or repurchase price, which may be
more or less than the shareholder's cost, is the net asset value per share next
determined after receipt of the request in good order by the Fund or its agent,
subject to any applicable CDSC or Limited CDSC. This is computed and effective
at the time the offering price and net asset value are determined. See
Determining Offering Price and Net Asset Value. The Fund and the Distributor
end their business day at 5 p.m., Eastern time. This offer is discretionary and
may be completely withdrawn without further notice by the Distributor.
Orders for the repurchase of Fund shares which are submitted to the
Distributor prior to the close of its business day will be executed at the net
asset value per share computed that day (subject to any applicable CDSC or
Limited CDSC), if the repurchase order was received by the broker/dealer from
the shareholder prior to the time the offering price and net asset value are
determined on such day. The selling dealer has the responsibility of
transmitting orders to the Distributor promptly. Such repurchase is then settled
as an ordinary transaction with the broker/dealer (who may make a charge to the
shareholder for this service) delivering the shares repurchased.
Certain redemptions of Class A Shares purchased at net asset value may
result in the imposition of a Limited CDSC. See Contingent Deferred Sales Charge
for Certain Redemptions of Class A Shares Made at Net Asset Value under
Redemption and Exchange in the Prospectus for the Fund Classes. 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 C Shares are subject to a CDSC of 1% if shares are
redeemed within 12 months following purchase. See Contingent Deferred Sales
Charge -Class B Shares and Class C Shares under Buying Shares in the Prospectus
for the Fund Classes. Except for the applicable CDSC or Limited CDSC and, with
respect to the expedited payment by wire described below, for which there is
currently a $7.50 bank wiring cost, neither the Fund nor the Distributor charges
a fee for redemptions or repurchases, but such fees could be charged at any time
in the future.
Payment for shares redeemed will ordinarily be mailed the next business
day, but in no case later than seven days, after receipt of a redemption request
in good order.
If a shareholder who recently purchased shares by check seeks to redeem all
or a portion of those shares in a written request, the Fund will honor the
redemption request but will not mail the
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proceeds until it is reasonably satisfied of the collection of the investment
check. This potential delay can be avoided by making investments by wiring
Federal Funds.
If a shareholder has been credited with a purchase by a check which is
subsequently returned unpaid for insufficient funds or for any other reason, the
Fund will automatically redeem from the shareholder's account the shares
purchased by the check plus any dividends earned thereon. Shareholders may be
responsible for any losses to the Fund or to the Distributor.
In case of a suspension of the determination of the net asset value because
the New York Stock Exchange is closed for other than weekends or holidays, or
trading thereon is restricted or an emergency exists as a result of which
disposal by the Fund of securities owned by it is not reasonably practical, or
it is not reasonably practical for the Fund fairly to value its assets, or in
the event that the Securities and Exchange Commission has provided for such
suspension for the protection of shareholders, the Fund may postpone payment or
suspend the right of redemption or repurchase. In such case, the shareholder
may withdraw the request for redemption or leave it standing as a request for
redemption at the net asset value next determined after the suspension has been
terminated.
Payment for shares redeemed or repurchased may be made either in cash or
kind, or partly in cash and partly in kind. Any portfolio securities paid or
distributed in kind would be valued as described in Determining Offering Price
and Net Asset Value. Subsequent sale by an investor receiving a distribution in
kind could result in the payment of brokerage commissions. However, the Fund
has elected to be governed by Rule 18f-1 under the Investment Company Act of
1940 pursuant to which the Fund is obligated to redeem shares solely in cash up
to the lesser of $250,000 or 1% of the net asset value of the Fund during any
90-day period for any one shareholder.
The value of the Fund's investments is subject to changing market prices.
Thus, a shareholder reselling shares to the Fund may sustain either a gain or
loss, depending upon the price paid and the price received for such shares.
SMALL ACCOUNTS
Before the Fund involuntarily redeems shares from an account that, under
the circumstances listed in the relevant Prospectus, has remained below the
minimum amounts required by the Fund's Prospectuses and sends the proceeds to
the shareholder, the shareholder will be notified in writing that the value of
the shares in the account is less than the minimum required and will be allowed
60 days from the date of notice to make an additional investment to meet the
required minimum. See The Conditions of Your Purchase under Buying Shares in the
Fund's Prospectuses. Any redemption in an inactive account established with a
minimum investment may trigger mandatory redemption. No CDSC or Limited CDSC
will apply to the redemptions described in this paragraph.
Effective November 29, 1995, the minimum initial investment in Class A
Shares was increased from $250 to $1,000. Class A accounts that were established
before November 29, 1995 and maintain a balance in excess of $250 will not
presently be subject to the $9 quarterly service fee that may be assessed
against accounts with balances below the stated minimum, nor subject to
involuntary redemption.
* * *
The Fund has available certain redemption privileges, as described below.
The Fund reserves the right to suspend or terminate these expedited payment
procedures upon 60 days' written notice to shareholders.
EXPEDITED TELEPHONE REDEMPTIONS
Shareholders of the Fund Classes or their investment dealers of record
wishing to redeem any amount of shares of $50,000 or less for which certificates
have not been issued may call the Fund at 800-523-1918 or, in the case of
shareholders of the Institutional Class, their Client Services Representative at
800-828-5052 prior to the time the offering price and net asset value are
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determined, as noted above, and have the proceeds mailed to them at the record
address. Checks payable to the shareholder(s) of record will normally be mailed
the next business day, but no later than seven days, after the receipt of the
redemption request. This option is only available to individual, joint and
individual fiduciary-type accounts.
In addition, redemption proceeds of $1,000 or more can be transferred to
your predesignated bank account by wire or by check by calling the Fund, as
described above. An authorization form must have been completed by the
shareholder and filed with the Fund before the request is received. Payment will
be made by wire or check to the bank account designated on the authorization
form as follows:
1. PAYMENT BY WIRE: Request that Federal Funds be wired to the bank account
designated on the authorization form. Redemption proceeds will normally be wired
on the next business day following receipt of the redemption request. There is a
$7.50 wiring fee (subject to change) charged by CoreStates Bank, N.A. which will
be deducted from the withdrawal proceeds each time the shareholder requests a
redemption. If the proceeds are wired to the shareholder's account at a bank
which is not a member of the Federal Reserve System, there could be a delay in
the crediting of the funds to the shareholder's bank account.
2. PAYMENT BY CHECK: Request a check be mailed to the bank account
designated on the authorization form. Redemption proceeds will normally be
mailed the next business day, but no later than seven days, from the date of the
telephone request. This procedure will take longer than the Payment by Wire
option (1 above) because of the extra time necessary for the mailing and
clearing of the check after the bank receives it.
REDEMPTION REQUIREMENTS: In order to change the name of the bank and the
account number it will be necessary to send a written request to the Fund and a
signature guarantee may be required. 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.
To reduce the shareholder's risk of attempted fraudulent use of the
telephone redemption procedure, payment will be made only to the bank account
designated on the authorization form.
The Fund will not honor telephone redemptions for shares recently purchased
by check unless it is reasonably satisfied that the purchase check has cleared.
If expedited payment under these procedures could adversely affect the
Fund, the Fund may take up to seven days to pay the shareholder.
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 Fund 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. Telephone instructions received by
shareholders of the Fund Classes are generally tape recorded. A written
confirmation will be provided for all purchase, exchange and redemption
transactions initiated by telephone.
SYSTEMATIC WITHDRAWAL PLAN
Shareholders of Class A Shares, Class B Shares and Class C Shares who own
or purchase $5,000 or more of shares at the offering price, or net asset value,
as applicable, for which certificates have not been issued may establish a
Systematic Withdrawal Plan for monthly withdrawals of $25 or more, or quarterly
withdrawals of $75 or more, although the Fund does not recommend any specific
amount of withdrawal. This $5,000 minimum does not apply for the Fund's
prototype retirement plans. Shares purchased with the initial investment and
through reinvestment of cash dividends and realized securities profits
distributions will be credited to the shareholder's account and sufficient full
and fractional shares will be redeemed at the net asset value calculated on the
third business day preceding the mailing date.
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Checks are dated either the 1st or the 15th of the month, as selected by
the shareholder, (unless such date falls on a holiday or a weekend) and are
normally mailed within two business days. Both ordinary income dividends and
realized securities profits distributions will be automatically reinvested in
additional shares of the Class at net asset value. This plan is not recommended
for all investors and should be started only after careful consideration of its
operation and effect upon the investor's savings and investment program. To the
extent that withdrawal payments from the plan exceed any dividends and/or
realized securities profits distributions paid on shares held under the plan,
the withdrawal payments will represent a return of capital, and the share
balance may in time be depleted, particularly in a declining market.
The sale of shares for withdrawal payments constitutes a taxable event and
a shareholder may incur a capital gain or loss for federal income tax purposes.
This gain or loss may be long-term or short-term depending on the holding period
for the specific shares liquidated. Premature withdrawals from retirement plans
may have adverse tax consequences.
Withdrawals under this plan by the holders of Class A Shares or any similar
plan of any other investment company charging a front-end sales charge made
concurrently with the purchases of Class A Shares of this or the shares of any
other investment company will ordinarily be disadvantageous to the shareholder
because of the payment of duplicative sales charges. Shareholders should not
purchase Class A Shares while participating in a Systematic Withdrawal Plan and
a periodic investment program in a fund managed by the Manager must be
terminated before a Systematic Withdrawal Plan can take effect, except if the
shareholder is a participant in one of our retirement plans or is investing in
Delaware Group funds which do not carry a sales charge. Also, redemptions of
Class A Shares pursuant to a Systematic Withdrawal Plan may be subject to a
Limited CDSC if the purchase was made at net asset value and a dealer's
commission has been paid on that purchase. Redemptions of Class B Shares or
Class C Shares pursuant to a Systematic Withdrawal Plan may be subject to a
CDSC, unless the annual amount selected to be withdrawn is less than 12% of the
account balance on the date that the Systematic Withdrawal Plan was established.
See Waiver of Contingent Deferred Sales Charge - Class B and Class C Shares and
Waiver of Limited Contingent Deferred Sales Charge - Class A Shares under
Redemption and Exchange in the Prospectus for the Fund Classes.
An investor wishing to start a Systematic Withdrawal Plan must complete an
authorization form. If the recipient of Systematic Withdrawal Plan payments is
other than the registered shareholder, the shareholder's signature on this
authorization must be guaranteed. 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. This plan may be terminated by the shareholder or the
Transfer Agent at any time by giving written notice.
The Systematic Withdrawal Plan is not available for the Institutional
Class.
WEALTH BUILDER OPTION
Shareholders of the Fund Classes may elect to invest in one or more of the
other mutual funds in the Delaware Group through our Wealth Builder Option.
Under this automatic exchange program, shareholders can authorize regular
monthly investments (minimum of $100 per fund) to be liquidated from their
account and invested automatically into other mutual funds in the Delaware
Group, subject to the conditions and limitations set forth in the Fund Classes'
Prospectus. See Wealth Builder Option and Redemption and Exchange in the
Prospectus for the Fund Classes.
The investment will be made on the 20th day of each month (or, if the fund
selected is not open that day, the next business day) at the public offering
price or net asset value, as applicable, of the fund selected on the date of
investment. No investment will be made for any month if the value of the
shareholder's account is less than the amount specified for investment.
Periodic investment through the Wealth Builder Option does not insure
profits or protect against losses in a declining market. The price of
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the fund into which investments are made could fluctuate. Since this program
involves continuous investment regardless of such fluctuating value, investors
selecting this option should consider their financial ability to continue to
participate in the program through periods of low fund share prices. This
program involves automatic exchanges between two or more fund accounts and is
treated as a purchase of shares of the fund into which investments are made
through the program. See Exchange Privilege for a brief summary of the tax
consequences of exchanges.
Shareholders can also use the Wealth Builder Option to invest in the Fund
Classes through regular liquidations of shares in their accounts in other mutual
funds in the Delaware Group, subject to the conditions and limitations described
in the Fund Classes' Prospectus. Shareholders can terminate their participation
at any time by written notice to the Fund.
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. This option also is not available to shareholders
of the Institutional Class.
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DISTRIBUTIONS AND TAXES
The Fund has qualified, and intends to continue to qualify, as a regulated
investment company under Subchapter M of the Code. As such, the Fund will not be
subject to federal income tax on net investment income and net realized capital
gains which are distributed to shareholders.
Each Class of shares of the Fund will share proportionately in the
investment income and expenses of the Fund, except that Class A Shares, Class B
Shares and Class C Shares alone will incur distribution fees under their
respective 12b-1 Plans.
The Fund intends to pay out substantially all of its net investment income
and net realized capital gains. Such payments, if any, will be made once a year
during the first quarter of the following fiscal year. All dividends and any
capital gains distributions will be automatically credited to the shareholder's
account in additional shares of the same class of the Fund at net asset value
unless, in the case of shareholders in the Fund Classes, the shareholder
requests in writing that such dividends and/or distributions be paid in cash.
Dividend payments of $1.00 or less will be automatically reinvested,
notwithstanding a shareholder's election to receive dividends in cash. If such a
shareholder's dividends increase to greater than $1.00, the shareholder would
have to file a new election in order to begin receiving dividends in cash again.
Any check in payment of dividends or other distributions which cannot be
delivered by the United States 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. The Fund may deduct from a shareholder's account the costs of
the Fund's effort to locate a shareholder if a shareholder's mail is returned by
the Post Office or the Fund is otherwise unable to locate the shareholder or
verify the shareholder's mailing address. These costs may include a percentage
of the account when a search company charges a percentage fee in exchange for
their location services.
Dividends from investment income and short-term capital gains distributions
are treated by shareholders as ordinary income for federal income tax purposes.
Distributions of long-term capital gains, if any, are taxable to shareholders as
long-term capital gains, regardless of the length of time an investor has held
such shares, and these gains are currently taxed at long-term capital gain
rates. The tax status of dividends and distributions paid to shareholders will
not be affected by whether they are paid in cash or in additional shares.
Persons not subject to tax will not be required to pay taxes on
distributions.
A portion of the Fund's dividends may qualify for the dividends-received
deduction for corporations provided in the federal income tax law. The portion
of dividends paid by the Fund that so qualifies will be designated each year in
a notice to the Fund's shareholders, and cannot exceed the gross amount of
dividends received by the Fund from domestic (U.S.) corporations that would have
qualified for the dividends-received deduction in the hands of the Fund if the
Fund was a regular corporation. The availability of the dividends-received
deduction is subject to certain holding period and debt financing restrictions
imposed under the Code on the corporation claiming the deduction. For the fiscal
year ended November 30, 1995, 42.37% of the Fund's dividends from net investment
income was eligible for this deduction.
Shareholders will be notified annually by the Fund as to the federal income
tax status of dividends and distributions.
Distributions may also be subject to state and local taxes; shareholders
are advised to consult with their tax advisers in this regard. Shares of the
Fund will be exempt from Pennsylvania county personal property taxes.
See also Other Tax Requirements under Accounting and Tax Issues in this
Part B.
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INVESTMENT MANAGEMENT AGREEMENT
The Manager, located at One Commerce Square, Philadelphia, PA 19103,
furnishes investment management services to the Fund, subject to the supervision
and direction of the Fund's Board of Directors.
The Manager and its predecessors have been managing the funds in the
Delaware Group since 1938. The aggregate assets of these funds on November 30,
1995 were approximately $10,383,560,000. Investment advisory services are also
provided to institutional accounts with assets on November 30, 1995 of
approximately $17,389,902,000.
The Investment Management Agreement for the Fund is dated April 3, 1995,
and was approved by shareholders on March 29, 1995.
The Agreement has an initial term of two years and may be renewed each year
only so long as such renewal and continuance are specifically approved at least
annually by the Board of Directors or by vote of a majority of the outstanding
voting securities of the Fund, and only if the terms and the renewal thereof
have been approved by vote of a majority of the directors of the Fund who are
not parties thereto or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval. The Agreement is
terminable without penalty on 60 days' notice by the directors of the Fund or by
the Manager. The Agreement will terminate automatically in the event of its
assignment.
The compensation paid by the Fund for investment management services is
equal to 1/16 of 1% per month (the equivalent of 3/4 of 1% per year) of the
Fund's average daily net assets, less all directors' fees paid to the
unaffiliated directors by the Fund. This fee is higher than that paid by many
other funds; it may be higher or lower than that paid by funds with comparative
investment objectives. On November 30, 1995, the total net assets of the Fund
were $27,773,461,000. Under the general supervision of the Board of Directors,
the Manager makes all investment decisions which are implemented by the Fund.
The Manager pays the salaries of all directors, officers and employees who are
affiliated with both the Manager and the Fund. Investment management fees paid
by the Fund for the fiscal years ended November 30, 1993, 1994 and 1995 amounted
to $724,137, $1,341,214, and $1,371,155, respectively.
Except for those expenses borne by the Manager under the Investment
Management Agreement and the Distributor under the Distribution Agreement, the
Fund is responsible for all of its own expenses. Among others, these include
the Fund's proportionate share of rent and certain other administrative
expenses; the investment management fees; transfer and dividend disbursing agent
fees and costs; custodian expenses; federal and state securities registration
fees; proxy costs; and the costs of preparing prospectuses and reports sent to
shareholders. The ratios of expenses to average daily net assets of Class A
Shares and Class B Shares for the fiscal year ended November 30, 1995 were 1.48%
and 2.18%, respectively, which reflects the impact of their 12b-1 Plans. The
ratio of expenses to average daily net assets for the Institutional Class for
the fiscal year ended November 30, 1995 was 1.18%. The Fund anticipates that
the ratio of expenses to average daily net assets of Class C Shares will be
identical to that of the Class B Shares.
By California regulation, the Manager is required to waive certain fees and
reimburse the Fund for certain expenses to the extent that the Fund's annual
operating expenses, exclusive of taxes, interest, brokerage commissions and
extraordinary expenses, exceed 2 1/2% of its first $30 million of average daily
net assets, 2% of the next $70 million of average daily net assets and 1 1/2% of
any additional average daily net assets. For the fiscal year ended November 30,
1995, no such reimbursement was necessary or paid.
DISTRIBUTION AND SERVICE
The Distributor, Delaware Distributors, L.P. (which formerly conducted
business as Delaware Distributors, Inc.), located at 1818 Market Street,
Philadelphia, PA 19103, serves as the national distributor of Fund shares under
a Distribution Agreement dated April 3, 1995, as amended on
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November 29, 1995. The Distributor is an affiliate of the Manager and bears all
of the costs of promotion and distribution, except for payments by the Fund on
behalf of Class A Shares, Class B Shares and Class C Shares under their
respective 12b-1 Plans. Prior to January 3, 1995, Delaware Distributors, Inc.
("DDI") served as the national distributor of the Fund's shares. On that date,
Delaware Distributors, L.P., a newly formed limited partnership, succeeded to
the business of DDI. All officers and employees of DDI became officers and
employees of Delaware Distributors, L.P. DDI is the corporate general partner
of Delaware Distributors, L.P. and both DDI and Delaware Distributors, L.P. are
indirect, wholly-owned subsidiaries of Delaware Management Holdings, Inc.
The Transfer Agent, Delaware Service Company, Inc., another affiliate of
the Manager located at 1818 Market Street, Philadelphia, PA 19103, serves as the
Fund's shareholder servicing, dividend disbursing and transfer agent pursuant to
a Shareholders Services Agreement dated June 29, 1988. The Transfer Agent is
also an indirect, wholly-owned subsidiary of Delaware Management Holdings, Inc.
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OFFICERS AND DIRECTORS
The business and affairs of the Fund are managed under the direction of its
Board of Directors.
Certain officers and directors of the Fund hold identical positions in each
of the other funds in the Delaware Group. On December 31, 1995, the Fund's
officers and directors owned less than 1% of the outstanding shares of Class A
Shares, Class B Shares, Class C Shares and the Institutional Class,
respectively.
As of December 31, 1995, the Fund believes the following accounts held 5%
or more of the outstanding shares of the Class A Shares, Class B Shares, Class C
Shares and the Institutional Class: Merrill, Lynch, Pierce, Fenner & Smith Inc.,
Mutual Fund Operations, P.O. Box 41621, Jacksonville, FL 32203 held of record
for the benefit of others 748,385 shares (9.19%) of the outstanding shares of
the Class A Shares. Merrill, Lynch, Pierce, Fenner & Smith Inc., Mutual Fund
Operations, Attention Book Entry, 4800 Deer Lake Drive East, 3rd Fl.,
Jacksonville, FL 32246 held of record for the benefit of others 32,197 shares
(11.45%) of the outstanding shares of the Class B Shares. Delaware Management
Company, Inc., Attn. Joseph H. Hastings, 1818 Market Street, Philadelphia, PA
19103 held 237 shares (93.49%); and Darla M. Clavette, 8 Post Office Road,
Enfield, CT 06082 held 16 shares (6.32%) of the outstanding shares of the Class
C Shares. Delaware Management Company, Inc. Employee Profit Sharing Trust, 1818
Market Street, Philadelphia, PA 19103 held 102,410 shares (29.46%); Windermere
Retirement Plan, 5424 Sand Point Way N.E., Seattle, WA 98105 held 76,159 shares
(21.91%); Bank of New York Cust. Equity League Pension Trust Fund Amivest Corp.
Discretionary Investment Manager, 52 Williams Street, 5th Fl., New York, NY,
10005 held 59,676 shares (17.17%); Bank of New York Cust. Annuity Fund of Local
One IATSE Discretionary Investment Manager 717103, One Wall Street, 7th Fl., New
York, NY, 10286 held 20,357 shares (5.85%); and Bank of New York Cust. Local 144
Hospital Welfare Fund, One Wall Street, 7th Fl., New York, NY, 10286 held 18,639
shares (5.36%) of the outstanding shares of the Institutional Class. Shares held
by Delaware Management Company, Inc. Employee Profit Sharing Trust are
beneficially owned by the participants in the plan.
DMH Corp., Delaware Management Company, Inc., Delaware Distributors, L.P.,
Delaware Distributors, Inc., Delaware Service Company, Inc., Delaware Management
Trust Company, Delaware International Holdings Ltd., Founders Holdings, Inc.,
Delaware International Advisers Ltd., Delaware Investment Counselors, Inc. and
Delaware Investment & Retirement Services, Inc. are direct or indirect, wholly-
owned subsidiaries of Delaware Management Holdings, Inc. ("DMH"). On April 3,
1995, a merger between DMH and a wholly-owned subsidiary of Lincoln National
Corporation ("Lincoln National") was completed. In connection with the merger,
a new Investment Management Agreement between the Fund and the Manager was
executed following shareholder approval. DMH and the Manager are now wholly-
owned subsidiaries, and subject to the ultimate control, 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.
Directors and principal officers of the Fund are noted below along with
their ages and their business experience for the past five years. Unless
otherwise noted, the address of each officer and director is One Commerce
Square, Philadelphia, PA 19103.
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<PAGE>
*WAYNE A. STORK (58)
Chairman, President, Chief Executive Officer, Director and/or Trustee of
the Fund, 15 other funds in the Delaware Group (which excludes Delaware
Pooled Trust, Inc.), Delaware Management Holdings, Inc., DMH Corp.,
Delaware International Holdings Ltd. and Founders Holdings, Inc.
Chairman and Director of Delaware Pooled Trust, Inc., Delaware Investment
Counselors, Inc. and Delaware Investment & Retirement Services, Inc.
Chairman, Chief Executive Officer, Chief Investment Officer and Director of
Delaware Management Company, Inc.
Chairman, Chief Executive Officer and Director of Delaware International
Advisers Ltd.
Director of Delaware Distributors, Inc. and Delaware Service Company, Inc.
During the past five years, Mr. Stork has served in various executive
capacities at different times within the Delaware organization.
WINTHROP S. JESSUP (50)
Executive Vice President of the Fund and 15 other funds in the Delaware
Group (which excludes Delaware Pooled Trust, Inc.) and Delaware
Management Holdings, Inc.
President and Chief Executive Officer of Delaware Pooled Trust, Inc.
President and Director of Delaware Investment Counselors, Inc.
Executive Vice President and Director of DMH Corp., Delaware Management
Company, Inc., Delaware International Holdings Ltd. and Founders
Holdings, Inc.
Vice Chairman and Director of Delaware Distributors, Inc.
Vice Chairman of Delaware Distributors, L.P.
Director of Delaware Service Company, Inc., Delaware International Advisers
Ltd., Delaware Management Trust Company and Delaware Investment &
Retirement Services, Inc.
During the past five years, Mr. Jessup has served in various executive
capacities at different times within the Delaware organization.
RICHARD G. UNRUH, JR. (56)
Executive Vice President of the Fund and each of the other 16 funds in the
Delaware Group.
Executive Vice President and Director of Delaware Management Company, Inc.
Senior Vice President of Delaware Management Holdings, Inc.
Director of Delaware International Advisers Ltd.
During the past five years, Mr. Unruh has served in various executive
capacities at different times within the Delaware organization.
WALTER P. BABICH (68)
Director and/or Trustee of the Fund and each of the other 16 funds in the
Delaware Group.
460 North Gulph Road, King of Prussia, PA 19406.
Board Chairman, Citadel Constructors, Inc.
From 1986 to 1988, Mr. Babich was a partner of Irwin & Leighton and from
1988 to 1991, he was a partner of I&L Investors.
- -----------------------------
*Director affiliated with the investment manager of the Fund and considered an
"interested person" as defined in the Investment Company Act of 1940.
-43-
<PAGE>
ANTHONY D. KNERR (57)
Director and/or Trustee of the Fund and each of the other 16 funds in the
Delaware Group.
500 Fifth Avenue, New York, NY 10110.
Consultant, Anthony Knerr & Associates.
From 1982 to 1988, Mr. Knerr was Executive Vice President/Finance and
Treasurer of Columbia University, New York. From 1987 to 1989, he was
also a lecturer in English at the University. In addition, Mr. Knerr
was Chairman of The Publishing Group, Inc., New York, from 1988 to
1990. Mr. Knerr founded The Publishing Group, Inc. in 1988.
ANN R. LEVEN (55)
Director and/or Trustee of the Fund and each of the other 16 funds in the
Delaware Group.
785 Park Avenue, New York, NY 10021.
Treasurer, National Gallery of Art.
From 1984 to 1990, Ms. Leven was Treasurer and Chief Fiscal Officer of the
Smithsonian Institution, Washington, DC, and from 1975 to 1994, she was
Adjunct Professor of Columbia Business School.
W. THACHER LONGSTRETH (75)
Director and/or Trustee of the Fund and each of the other 16 funds in the
Delaware Group.
1617 John F. Kennedy Boulevard, Philadelphia, PA 19103.
Vice Chairman, Packquisition Corp., a financial printing, commercial
printing and information processing firm.
Philadelphia City Councilman.
President, MLW, Associates.
Director, Tasty Baking Company.
Director, Healthcare Services Group.
CHARLES E. PECK (70)
Director and/or Trustee of the Fund and each of the other 16 funds in the
Delaware Group.
P.O. Box 1102, Columbia, MD 21044.
Secretary, Enterprise Homes, Inc.
From 1981 to 1990, Mr. Peck was Chairman and Chief Executive Officer of The
Ryland Group, Inc., Columbia, MD.
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<PAGE>
DAVID K. DOWNES (56)
Senior Vice President/Chief Administrative Officer/Chief Financial Officer of
the Fund, each of the other 16 funds in the Delaware Group and Delaware
Management Company, Inc.
Chairman and Director of Delaware Management Trust Company.
Chief Executive Officer and Director of Delaware Investment & Retirement
Services, Inc.
Senior Vice President/Chief Administrative Officer/Chief Financial
Officer/Treasurer of Delaware Management Holdings, Inc.
Senior Vice President/Chief Financial Officer/Treasurer and Director of DMH
Corp.
Senior Vice President/Chief Administrative Officer and Director of Delaware
Distributors, Inc.
Senior Vice President/Chief Administrative Officer of Delaware Distributors,
L.P.
Senior Vice President/Chief Administrative Officer/Chief Financial Officer
and Director of Delaware Service Company, Inc.
Chief Financial Officer and Director of Delaware International Holdings Ltd.
Senior Vice President/Chief Financial Officer/Treasurer of Delaware
Investment Counselors, Inc.
Senior Vice President/Chief Financial Officer and Director of Founders
Holdings, Inc.
Director of Delaware International Advisers Ltd.
Before joining the Delaware Group in 1992, Mr. Downes was Chief
Administrative Officer, Chief Financial Officer and Treasurer of Equitable
Capital Management Corporation, New York, from December 1985 through August
1992, Executive Vice President from December 1985 through March 1992, and
Vice Chairman from March 1992 through August 1992.
GEORGE M. CHAMBERLAIN, JR. (48)
Senior Vice President and Secretary of the Fund, each of the other 16 funds
in the Delaware Group, Delaware Management Holdings, Inc., Delaware
Distributors, L.P. and Delaware Investment Counselors, Inc.
Executive Vice President, Secretary and Director of Delaware Management Trust
Company.
Senior Vice President, Secretary and Director of DMH Corp., Delaware
Management Company, Inc., Delaware Distributors, Inc., Delaware Service
Company, Inc., Delaware Investment & Retirement Services, Inc. and Founders
Holdings, Inc.
Secretary and Director of Delaware International Holdings Ltd.
Director of Delaware International Advisers Ltd.
Attorney.
During the past five years, Mr. Chamberlain has served in various capacities
at different times within the Delaware organization.
DAVID C. DALRYMPLE (38)
Vice President/Senior Portfolio Manager of the Fund, seven other equity funds
in the Delaware Group and Delaware Management Company, Inc.
Before joining the Delaware Group in 1991, Mr. Dalrymple was an Assistant
Portfolio Manager for Lord Abbett and Company, New York, N.Y. from 1986 to
1991.
-45-
<PAGE>
JOSEPH H. HASTINGS (46)
Vice President/Corporate Controller of the Fund, each of the other 16 funds
in the Delaware Group, Delaware Management Holdings, Inc., DMH Corp.,
Delaware Management Company, Inc., Delaware Distributors, L.P., Delaware
Distributors, Inc., Delaware Service Company, Inc., Delaware Investment
Counselors, Inc., Founders Holdings, Inc. and Delaware International
Holdings Ltd.
Chief Financial Officer/Treasurer of Delaware Investment & Retirement
Services, Inc.
Executive Vice President/Chief Financial Officer/Treasurer of Delaware
Management Trust Company.
Assistant Treasurer of Founders CBO Corporation.
1818 Market Street, Philadelphia, PA 19103.
Before joining the Delaware Group in 1992, Mr. Hastings was Chief Financial
Officer for Prudential Residential Services, L.P., New York, NY from 1989
to 1992. Prior to that, Mr. Hastings served as Controller and Treasurer for
Fine Homes International, L.P., Stamford, CT from 1987 to 1989.
MICHAEL P. BISHOF (33)
Vice President/Treasurer of the Fund, each of the other 16 funds in the
Delaware Group, Delaware Management Company, Inc., Delaware Distributors,
Inc., Delaware Distributors, L.P., Delaware Service Company, Inc., and
Founders Holdings, Inc.
Assistant Treasurer of Founders CBO Corporation.
Vice President/Manager of Investment Accounting of Delaware International
Holdings Ltd.
Before joining the Delaware Group in 1995, Mr. Bishof was a Vice President
for Bankers Trust, New York, NY from 1994 to 1995, a Vice President for CS
First Boston Investment Management, New York, NY from 1993 to 1994 and an
Assistant Vice President for Equitable Capital Management Corporation, New
York, NY from 1987 to 1993.
-46-
<PAGE>
The following is a compensation table listing for each director entitled to
receive compensation, the aggregate compensation received from the Fund and the
total compensation received from all Delaware Group funds for the fiscal year
ended November 30, 1995 and an estimate of annual benefits to be received upon
retirement under the Delaware Group Retirement Plan for Directors/Trustees as of
November 30, 1995.
<TABLE>
<CAPTION>
PENSION OR
RETIREMENT ESTIMATED TOTAL
BENEFITS ANNUAL COMPENSATION
AGGREGATE ACCRUED BENEFITS FROM ALL 17
COMPENSATION AS PART OF UPON DELAWARE
NAME FROM FUND FUND EXPENSES RETIREMENT* GROUP FUNDS
<S> <C> <C> <C> <C>
W. Thacher Longstreth $2,178 None $18,100 $58,188
Ann R. Leven $2,474 None $18,100 $66,324
Walter P. Babich $2,502 None $18,100 $67,324
Anthony D. Knerr $2,238 None $18,100 $62,613
Charles E. Peck $2,178 None $18,100 $58,188
</TABLE>
* Under the terms of the Delaware Group Retirement Plan for Directors/Trustees,
each disinterested director who, at the time of his or her retirement from
the Board, has attained the age of 70 and served on the Board for at least
five continuous years, is entitled to receive payments from each fund in the
Delaware Group for a period equal to the lesser of the number of years that
such person served as a director or the remainder of such person's life. The
amount of such payments will be equal, on an annual basis, to the amount of
the annual retainer that is paid to directors of each fund at the time of
such person's retirement. If an eligible director retired as of November 30,
1995, he or she would be entitled to annual payments totaling $18,100, in the
aggregate, from all of the funds in the Delaware Group, based on the number
of funds in the Delaware Group as of that date.
-47-
<PAGE>
EXCHANGE PRIVILEGE
The exchange privileges available for shareholders of the Classes and for
shareholders of classes of other funds in the Delaware Group are set forth in
the relevant prospectuses for such classes. The following supplements that
information. The Fund may modify, terminate or suspend the exchange privilege
upon 60 days' notice to shareholders.
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. A shareholder requesting an exchange will be sent a current
prospectus and an authorization form for any of the other mutual funds in the
Delaware Group. Exchange instructions must be signed by the record owner(s)
exactly as the shares are registered.
An exchange constitutes, for tax purposes, the sale of one fund or series and
the purchase of another. The sale may involve either a capital gain or loss to
the shareholder for federal income tax purposes.
In addition, investment advisers and dealers may make exchanges between funds
in the Delaware Group on behalf of their clients by telephone or other expedited
means. This service may be discontinued or revised at any time by the Transfer
Agent. Such exchange requests may be rejected if it is determined that a
particular request or the total requests at any time could have an adverse
effect on any of the funds. Requests for expedited exchanges may be submitted
with a properly completed exchange authorization form, as described above.
TELEPHONE EXCHANGE PRIVILEGE
Shareholders owning shares for which certificates have not been issued or
their investment dealers of record may exchange shares by telephone for shares
in other mutual funds in the Delaware Group. This service is automatically
provided unless the Fund receives written notice from the shareholder to the
contrary.
Shareholders or their investment dealers of record may contact the Transfer
Agent at 800-523-1918 or, in the case of shareholders of the Institutional
Class, their Client Services Representative at 800-828-5052, to effect an
exchange. The shareholder's current Fund account number must be identified, as
well as the registration of the account, the share or dollar amount to be
exchanged and the fund into which the exchange is to be made. Requests received
on any day after the time the offering price and net asset value are determined
will be processed the following day. See Determining Offering Price and Net
Asset Value. Any new account established through the exchange will automatically
carry the same registration, shareholder information and dividend option as the
account from which the shares were exchanged. The exchange requirements of the
fund into which the exchange is being made, such as sales charges, eligibility
and investment minimums, must be met. (See the prospectus of the fund desired or
inquire by calling the Transfer Agent or, as relevant, your Client Services
Representative.) Certain funds are not available for Retirement Plans.
The telephone exchange privilege is intended as a convenience to shareholders
and is not intended to be a vehicle to speculate on short-term swings in the
securities market through frequent transactions in and out of the funds in the
Delaware Group. Telephone exchanges may be subject to limitations as to amounts
or frequency. The Transfer Agent and the Fund reserve the right to record
exchange instructions received by telephone and to reject exchange requests at
any time in the future.
As described in the Fund's Prospectuses, 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 Fund shares which are
reasonably believed to be genuine.
-48-
<PAGE>
RIGHT TO REFUSE TIMING ACCOUNTS
With regard to accounts that are administered by market timing services
("Timing Firms") to purchase or redeem shares based on changing economic and
market conditions ("Timing Accounts"), the Fund will refuse any new Timing
Arrangements, as well as any new purchases (as opposed to exchanges) in Delaware
Group funds from Timing Firms. The Fund reserves the right to temporarily or
permanently terminate the exchange privilege or reject any specific purchase
order for any person whose transactions seem to follow a timing pattern who: (i)
makes an exchange request out of the Fund within two weeks of an earlier
exchange request out of the Fund, or (ii) makes more than two exchanges out of
the Fund per calendar quarter, or (iii) exchanges shares equal in value to at
least $5 million, or more than 1/4 of 1% of the Fund's net assets. Accounts
under common ownership or control, including accounts administered so as to
redeem or purchase shares based upon certain predetermined market indicators,
will be aggregated for purposes of the exchange limits.
RESTRICTIONS ON TIMED EXCHANGES
Timing Accounts operating under existing Timing Agreements may only execute
exchanges between the following eight Delaware Group funds: (1) Decatur Income
Fund, (2) Decatur Total Return Fund, (3) Delaware Fund, (4) Limited-Term
Government Fund, (5) Tax-Free USA Fund, (6) Delaware Cash Reserve, (7)
Delchester Fund, and (8) Tax-Free Pennsylvania Fund. No other Delaware Group
funds are available for Timed Exchanges. Assets redeemed or exchanged out of
Timing Accounts in Delaware Group funds not listed above may not be reinvested
back into that Timing Account. The Fund reserves the right to apply these same
restrictions to the account(s) of any person whose transactions seem to follow a
timing pattern (as described above).
The Fund also reserves the right to refuse the purchase side of an exchange
request by any Timing Account, person, or group if, in the Manager's judgment,
the Fund would be unable to invest effectively in accordance with its investment
objectives and policies, or would otherwise potentially be adversely affected.
A shareholder's purchase exchanges may be restricted or refused if the Fund
receives or anticipates simultaneous orders affecting significant portions of
the Fund's assets. In particular, a pattern of exchanges that coincide with a
"market timing" strategy may be disruptive to the Fund and therefore may be
refused.
Except as noted above, only shareholders and their authorized brokers of
record will be permitted to make exchanges or redemptions.
* * *
Following is a summary of the investment objectives of the other Delaware
Group funds:
DELAWARE FUND seeks long-term growth by a balance of capital appreciation,
income and preservation of capital. It uses a dividend-oriented valuation
strategy to select securities issued by established companies that are believed
to demonstrate potential for income and capital growth. DEVON FUND seeks
current income and capital appreciation by investing primarily in income-
producing common stocks, with a focus on common stocks the Manager believes have
the potential for above average dividend increases over time.
TREND FUND seeks long-term growth by investing in common stock issued by
emerging growth companies exhibiting strong capital appreciation potential.
DELCAP FUND seeks 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.
DECATUR INCOME FUND seeks the highest possible current income by investing
primarily in common stocks that provide the potential for income and capital
appreciation without undue risk to principal. DECATUR TOTAL RETURN FUND seeks
long-term growth by investing primarily in securities that provide the potential
for income and capital appreciation without undue risk to principal.
-49-
<PAGE>
DELCHESTER FUND seeks as high a current income as possible by investing
principally in corporate bonds, and also in U.S. Government securities and
commercial paper.
U.S. GOVERNMENT FUND seeks high current income by investing primarily in
long-term debt obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities.
LIMITED-TERM GOVERNMENT FUND seeks high, stable income by investing
primarily in a portfolio of short- and intermediate-term securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities and
instruments secured by such securities. U.S. GOVERNMENT MONEY FUND seeks maximum
current income with preservation of principal and maintenance of liquidity by
investing only in short-term securities issued or guaranteed as to principal and
interest by the U.S. Government, its agencies or instrumentalities, and
repurchase agreements collateralized by such securities, while maintaining a
stable net asset value.
DELAWARE CASH RESERVE seeks the highest level of income consistent with the
preservation of capital and liquidity through investments in short-term money
market instruments, while maintaining a stable net asset value.
TAX-FREE USA FUND seeks high current income exempt from federal income tax
by investing in municipal bonds of geographically-diverse issuers. TAX-FREE
INSURED FUND invests in these same types of securities but with an emphasis on
municipal bonds protected by insurance guaranteeing principal and interest are
paid when due. TAX-FREE USA INTERMEDIATE FUND seeks a high level of current
interest income exempt from federal income tax, consistent with the preservation
of capital by investing primarily in municipal bonds.
TAX-FREE MONEY FUND seeks high current income, exempt from federal income
tax, by investing in short-term municipal obligations, while maintaining a
stable net asset value.
TAX-FREE PENNSYLVANIA FUND seeks a high level of current interest income
exempt from federal and, to the extent possible, certain Pennsylvania state and
local taxes, consistent with the preservation of capital.
INTERNATIONAL EQUITY FUND seeks to achieve long-term growth without undue
risk to principal by investing primarily in international securities that
provide the potential for capital appreciation and income. GLOBAL BOND FUND
seeks to achieve current income consistent with the preservation of principal by
investing primarily in global fixed income securities that may also provide the
potential for capital appreciation. GLOBAL ASSETS FUND seeks to achieve long-
term total return by investing in global securities which will provide higher
current income than a portfolio comprised exclusively of equity securities,
along with the potential for capital growth.
DELAWARE GROUP PREMIUM FUND offers nine series available exclusively as
funding vehicles for certain insurance company separate accounts. EQUITY/INCOME
SERIES seeks the highest possible total rate of return by selecting issues that
exhibit the potential for capital appreciation while providing higher than
average dividend income. HIGH YIELD SERIES seeks as high a current income as
possible by investing in rated and unrated corporate bonds, U.S. Government
securities and commercial paper. CAPITAL RESERVES SERIES seeks a high stable
level of current income while minimizing fluctuations in principal by investing
in a diversified portfolio of short- and intermediate-term securities. MONEY
MARKET SERIES seeks the highest level of income consistent with preservation of
capital and liquidity through investments in short-term money market
instruments. GROWTH SERIES seeks long-term capital appreciation by investing
its assets in a diversified portfolio of securities exhibiting the potential for
significant growth. MULTIPLE STRATEGY SERIES seeks a balance of capital
appreciation, income and preservation of capital. It uses a dividend-oriented
valuation strategy to select securities issued by established companies that are
believed to demonstrate potential for income and capital growth. INTERNATIONAL
EQUITY SERIES seeks long-term growth without undue risk to principal by
investing primarily in equity securities of foreign issuers that provide the
potential for capital appreciation and income. VALUE SERIES seeks capital
appreciation by investing in small- to mid-cap common stocks whose market values
appear low relative to their underlying value or future earnings and growth
potential. Emphasis will also be placed on
-50-
<PAGE>
securities of companies that may be temporarily out of favor or whose value is
not yet recognized by the market. EMERGING GROWTH SERIES seeks long-term
capital appreciation by investing primarily in small-cap common stocks and
convertible securities of emerging and other growth-oriented companies. These
securities will have been judged to be responsive to changes in the market place
and to have fundamental characteristics to support growth. Income is not an
objective.
For more complete information about any of these funds, including charges
and expenses, you can obtain a prospectus from the Distributor. Read it
carefully before you invest or forward funds.
Each of the summaries above is qualified in its entirety by the information
contained in each fund's prospectus(es).
-51-
<PAGE>
GENERAL INFORMATION
The Manager is the investment manager of the Fund. The Manager or its
affiliate, Delaware International Advisers Ltd., also manages the other funds in
the Delaware Group. The Manager, through a separate division, also manages
private investment accounts. While investment decisions for the Fund are made
independently from those of the other funds and accounts, they may make
investment decisions at the same time.
Access persons and advisory persons of the Delaware Group of funds, as
those terms are defined in Rule 17j-1 under the Investment Company Act of 1940,
who provide services to the Manager, Delaware International Advisers Ltd. or
their affiliates, are permitted to engage in personal securities transactions
subject to the exceptions set forth in Rule 17j-1 and the following general
restrictions and procedures: (1) certain blackout periods apply to personal
securities transactions of those persons; (2) transactions must receive advance
clearance and must be completed on the same day as the clearance is received;
(3) certain persons are prohibited from investing in initial public offerings of
securities and other restrictions apply to investments in private placements of
securities; (4) opening positions may only be closed-out at a profit after a 60-
day holding period has elapsed; and (5) the Compliance Officer must be informed
periodically of all securities transactions and duplicate copies of brokerage
confirmations and account statements must be supplied to the Compliance Officer.
The Distributor acts as national distributor for the Fund and for the other
mutual funds in the Delaware Group. As previously described, prior to January 3,
1995, DDI served as the national distributor for the Fund. In its capacity as
such, DDI received net commissions from the Fund on behalf of Class A Shares
after reallowances to dealers, as follows:
<TABLE>
<CAPTION>
FISCAL TOTAL AMOUNT AMOUNTS NET
YEAR OF UNDERWRITING REALLOWED COMMISSION
ENDED COMMISSION TO DEALERS TO DDI
- ----- --------------- ---------- ----------
<S> <C> <C> <C>
11/30/95 $608,374 $527,679 $80,695
11/30/94 $1,707,818 $1,480,648 $227,170
11/30/93 3,274,016 2,912,033 361,983
</TABLE>
During the fiscal year ended November 30, 1993, no Limited CDSC payments
were made with respect to Class A Shares. During the fiscal year ended November
30, 1994, in its capacity as the Fund's national distributor, DDI received
Limited CDSC payments in the amount of $12,607 with respect to Class A Shares.
During the fiscal year ended November 30, 1995, in their capacity as the Fund's
national distributor, DDI and the Distributor received Limited CDSC payments in
the amount of $218.
For the period September 6, 1994 (date of initial public offering) through
November 30, 1994, DDI received CDSC payments in the amount of $995 with respect
to Class B Shares. During the fiscal year ended November 30, 1995, in their
capacity as the Fund's national distributor, DDI and the Distributor received
CDSC payments in the amount of $14,682 with respect to Class B Shares.
For the period November 29, 1995 (date of initial public offering) through
November 30, 1995, no CDSC payments were made with respect to the Class C
Shares.
Effective as of January 3, 1995, all such payments described above have
been paid to the Distributor.
The Transfer Agent, an affiliate of the Manager, acts as shareholder
servicing, dividend disbursing and transfer agent for the Fund and for the other
mutual funds in the Delaware Group. The Transfer Agent is paid a fee by the Fund
for providing these services consisting of an annual per account charge of $5.50
plus transaction charges for particular services according to a schedule.
Compensation is fixed each year and approved by the Board of Directors,
including a majority of the unaffiliated directors.
The Manager and its affiliates own the name "Delaware Group." Under certain
circumstances, including the termination of the Fund's advisory relationship
with the Manager or its distribution relationship with the Distributor, the
Manager and its affiliates could cause the Fund to delete the words "Delaware
Group" from the Fund's name.
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<PAGE>
Chemical Bank, 450 West 33rd Street, New York, NY 10001, is custodian of
the Fund's securities and cash. As custodian for the Fund, Chemical Bank
maintains a separate account or accounts for the Fund; receives, holds and
releases portfolio securities on account of the Fund; receives and disburses
money on behalf of the Fund; and collects and receives income and other payments
and distributions on account of the Fund's portfolio securities.
Morgan Guaranty Trust Company of New York, located at 60 Wall Street, New
York, New York 10260, provides similar services with respect to the Fund's
investments in foreign securities.
The legality of the issuance of the shares offered hereby, registered
pursuant to Rule 24f-2 under the 1940 Act, has been passed upon for the Fund by
Stradley, Ronon, Stevens & Young, Philadelphia, Pennsylvania.
CAPITALIZATION
The Fund has a present authorized capitalization of five hundred million
shares of capital stock with a $.01 par value per share. Prior to November 9,
1992, the Fund offered only one class of shares, the class currently designated
the Class A Shares. Beginning November 9, 1992, the Fund began offering the
Institutional Class, beginning September 6, 1994, the Fund began offering the
Class B Shares, and beginning November 29, 1995, the Fund began offering the
Class C Shares. Each Class represents a proportionate interest in the assets of
the Fund, and each has the same voting and other rights and preferences as the
other classes of the Fund, except that shares of the Institutional Class may not
vote on any matter affecting the Fund Classes' Plans under Rule 12b-1.
Similarly, as a general matter, shareholders of Class A Shares, Class B Shares
and Class C Shares may vote only on matters affecting the 12b-1 Plan that
relates to the class of shares that they hold. However, Class B Shares may vote
on any proposal to increase materially the fees to be paid by the Fund under the
Plan relating to Class A Shares. General expenses of the Fund will be allocated
on a pro-rata basis to the classes according to asset size, except that expenses
of the Plans of Class A, Class B and Class C Shares will be allocated solely to
those classes. The Board of Directors has allocated one hundred million shares
to Class A Shares, one hundred million shares to Class B Shares, fifty million
shares to Class C Shares and fifty million shares to the Institutional Class.
Shares have equal voting rights, no preemptive rights, are fully transferable
and, when issued, are fully paid and nonassessable.
Prior to September 6, 1994, the Value Fund A Class was known as the Value
Fund class and the Value Fund Institutional Class was known as the Value Fund
(Institutional) class.
NONCUMULATIVE VOTING
THESE SHARES HAVE NONCUMULATIVE VOTING RIGHTS WHICH MEANS THAT THE HOLDERS
OF MORE THAN 50% OF THE SHARES OF THE FUND VOTING FOR THE ELECTION OF DIRECTORS
CAN ELECT ALL THE DIRECTORS IF THEY CHOOSE TO DO SO, AND, IN SUCH EVENT, THE
HOLDERS OF THE REMAINING SHARES WILL NOT BE ABLE TO ELECT ANY DIRECTORS.
This Part B does not include all of the information contained in the
Registration Statement which is on file with the Securities and Exchange
Commission.
-53-
<PAGE>
APPENDIX A--DESCRIPTION OF RATINGS
COMMERCIAL PAPER
Excerpts from Standard & Poor's Rating Group's ("S&P") description of its
two highest commercial paper ratings: A-1--judged to be the highest investment
grade category possessing the highest relative strength; A-2--investment grade
category possessing less relative strength than the highest rating.
Excerpts from Moody's Investors Service, Inc.'s ("Moody's") description of
its two highest commercial paper ratings: P-1--the highest grade possessing
greatest relative strength; P-2--second highest grade possessing less relative
strength than the highest grade.
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.
-54-
<PAGE>
APPENDIX B--IRA INFORMATION
The Tax Reform Act of 1986 ("Act") restructured, and in some cases
eliminated, the tax deductibility of IRA contributions. Under the Act, the full
deduction for IRAs ($2,000 for each working spouse and $2,250 for one-income
couples) was retained for all taxpayers who are not covered by an employer-
sponsored retirement plan. Even if a taxpayer (or his or her spouse) is covered
by an employer-sponsored retirement plan, the full deduction is still available
if the taxpayer's adjusted gross income is below $25,000 ($40,000 for taxpayers
filing joint returns). A partial deduction is allowed for married couples with
incomes between $40,000 and $50,000, and for single individuals with incomes
between $25,000 and $35,000. The Act does not permit deductions for
contributions to IRAs by taxpayers whose adjusted gross income before IRA
deductions exceeds $50,000 ($35,000 for singles) and who are active participants
in an employer-sponsored retirement plan. Taxpayers who were not allowed
deductions on IRA contributions still can make nondeductible IRA contributions
of as much as $2,000 for each working spouse ($2,250 for one-income couples),
and defer taxes on interest or other earnings from the IRAs. Special rules
apply for determining the deductibility of contributions made by married
individuals filing separate returns.
As illustrated in the following tables, maintaining an Individual
Retirement Account remains a valuable opportunity.
For many, an IRA will continue to offer both an up-front tax break with its
tax deduction each year and the real benefit that comes with tax-deferred
compounding. For others, losing the tax deduction will impact their taxable
income status each year. Over the long term, however, being able to defer taxes
on earnings still provides an impressive investment opportunity--a way to have
money grow faster due to tax-deferred compounding.
Even if your IRA contribution is no longer deductible, the benefits of
saving on a tax-deferred basis can be substantial. The following tables
illustrate the benefits of tax-deferred versus taxable compounding. Each
reflects a constant 10% rate of return, compounded annually, with the
reinvestment of all proceeds. The tables do not take into account any sales
charges or fees. Of course, earnings accumulated in your IRA will be subject to
tax upon withdrawal. If you choose a mutual fund with a fluctuating net asset
value, like the Fund, your bottom line at retirement could be lower--it could
also be much higher.
$2,000 INVESTED ANNUALLY ASSUMING A 10% ANNUALIZED RETURN
15% Tax Bracket Single -- $0-$22,750
- --------------- Joint -- $0-$38,000
<TABLE>
<CAPTION>
HOW MUCH YOU
END OF CUMULATIVE HOW MUCH YOU HAVE WITH FULL
YEAR INVESTMENT AMOUNT HAVE WITHOUT IRA IRA DEDUCTION
<S> <C> <C> <C>
1 $ 2,000 $ 1,844 $ 2,200
5 10,000 10,929 13,431
10 20,000 27,363 35,062
15 30,000 52,074 69,899
20 40,000 89,231 126,005
25 50,000 145,103 216,364
30 60,000 229,114 361,887
35 70,000 355,438 596,254
40 80,000 545,386 973,704
</TABLE>
[Without IRA--investment of $1,700 ($2,000 less 15%) earning 8.5% (10% less
15%)]
-55-
<PAGE>
28% Tax Bracket Single --$22,751-$55,100
- ---------------
Joint --$38,001-$91,850
<TABLE>
<CAPTION>
END OF CUMULATIVE HOW MUCH YOU HOW MUCH YOU HAVE WITH FULL IRA
YEAR INVESTMENT AMOUNT HAVE WITHOUT IRA NO DEDUCTION DEDUCTION
<S> <C> <C> <C> <C>
1 $ 2,000 $ 1,544 $ 1,584 $ 2,200
5 10,000 8,913 9,670 13,431
10 20,000 21,531 25,245 35,062
15 30,000 39,394 50,328 69,899
20 40,000 64,683 90,724 126,005
25 50,000 100,485 155,782 216,364
30 60,000 151,171 260,559 361,887
35 70,000 222,927 429,303 596,254
40 80,000 324,512 701,067 973,704
</TABLE>
[Without IRA--investment of $1,440 ($2,000 less 28%) earning 7.2% (10% less
28%)]
[With IRA--No Deduction--investment of $1,440 ($2,000 less 28%) earning 10%]
31% Tax Bracket Single --$55,101-$115,000
- ---------------
Joint --$91,851-$140,000
<TABLE>
<CAPTION>
END OF CUMULATIVE HOW MUCH YOU HOW MUCH YOU HAVE WITH FULL IRA
YEAR INVESTMENT AMOUNT HAVE WITHOUT IRA NO DEDUCTION DEDUCTION
<S> <C> <C> <C> <C>
1 $ 2,000 $ 1,475 $ 1,518 $ 2,200
5 10,000 8,467 9,268 13,431
10 20,000 20,286 24,193 35,062
15 30,000 36,787 48,231 69,899
20 40,000 59,821 86,943 126,005
25 50,000 91,978 149,291 216,364
30 60,000 136,868 249,702 361,887
35 70,000 199,536 411,415 596,254
40 80,000 287,021 671,855 973,704
</TABLE>
[Without IRA--investment of $1,380 ($2,000 less 31%) earning 6.9% (10% less
31%)]
[With IRA--No Deduction--investment of $1,380 ($2,000 less 31%) earning 10%]
-56-
<PAGE>
36% Tax Bracket* Single--$115,001-$250,000
--------------- Joint --$140,001-$250,000
<TABLE>
<CAPTION>
END OF CUMULATIVE HOW MUCH YOU HOW MUCH YOU HAVE WITH FULL IRA
YEAR INVESTMENT AMOUNT HAVE WITHOUT IRA NO DEDUCTION DEDUCTION
<S> <C> <C> <C> <C>
1 $ 2,000 $ 1,362 $ 1,408 $ 2,200
5 10,000 7,739 8,596 13,431
10 20,000 18,292 22,440 35,062
15 30,000 32,683 44,736 69,899
20 40,000 52,308 80,643 126,005
25 50,000 79,069 138,473 216,364
30 60,000 115,562 231,608 361,887
35 70,000 165,327 381,602 596,254
40 80,000 233,190 623,170 973,704
</TABLE>
[Without IRA--investment of $1,280 ($2,000 less 36%) earning 6.4% (10% less
36%)]
[With IRA--No Deduction--investment of $1,280 ($2,000 less 36%) earning 10%]
39.6% Tax Bracket* Single--over $250,000
----------------- Joint --over $250,000
<TABLE>
<CAPTION>
END OF CUMULATIVE HOW MUCH YOU HOW MUCH YOU HAVE WITH FULL IRA
YEAR INVESTMENT AMOUNT HAVE WITHOUT IRA NO DEDUCTION DEDUCTION
<S> <C> <C> <C> <C>
1 $ 2,000 $ 1,281 $ 1,329 $ 2,200
5 10,000 7,227 8,112 13,431
10 20,000 16,916 21,178 35,062
15 30,000 29,907 42,219 69,899
20 40,000 47,324 76,107 126,005
25 50,000 70,677 130,684 216,364
30 60,000 101,986 218,580 361,887
35 70,000 143,965 360,137 596,254
40 80,000 200,249 588,117 973,704
</TABLE>
[Without IRA--investment of $1,208 ($2,000 less 39.6%) earning 6.04% (10%
less 39.6%)]
[With IRA--No Deduction--investment of $1,208 ($2,000 less 39.6%) earning
10%]
* For tax years beginning after 1992, a 36% tax rate applies to all taxable
income in excess of the maximum dollar amounts subject to the 31% tax rate.
In addition, a 10% surtax (not applicable to capital gains) applies to
certain high-income taxpayers. It is computed by applying a 39.6% rate to
taxable income in excess of $250,000. The above tables do not reflect the
personal exemption phaseout nor the limitations of itemized deductions that
may apply.
-57-
<PAGE>
$2,000 SINGLE INVESTMENT AT A RETURN OF 10% COMPOUNDED ANNUALLY
<TABLE>
<CAPTION>
TAXABLE-- TAXABLE-- TAXABLE-- TAXABLE-- TAXABLE-- TAX
YEARS 39.6%* 36%* 31% 28% 15% DEFERRED
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10 $ 3,595 $ 3,719 $ 3,898 $ 4,008 $ 4,522 $ 5,187
15 4,820 5,072 5,441 5,675 6,799 8,354
20 6,463 6,916 7,596 8,034 10,224 13,455
30 11,618 12,861 14,803 16,102 23,117 34,899
40 20,884 23,916 28,849 32,272 52,266 90,519
</TABLE>
$2,000 INVESTED ANNUALLY AT A RETURN OF 10% COMPOUNDED ANNUALLY
<TABLE>
<CAPTION>
TAXABLE-- TAXABLE-- TAXABLE-- TAXABLE-- TAXABLE-- TAX
YEARS 39.6%* 36%* 31% 28% 15% DEFERRED
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10 $ 28,006 $ 28,581 $ 29,400 $ 29,904 $ 32,192 $ 35,062
15 49,514 51,067 53,314 54,714 61,264 69,899
20 78,351 81,731 86,697 89,838 104,978 126,005
30 168,852 180,566 198,360 209,960 269,546 361,887
40 331,537 364,360 415,973 450,711 641,631 973,704
</TABLE>
* For tax years beginning after 1992, a 36% tax rate applies to all taxable
income in excess of the maximum dollar amounts subject to the 31% tax rate. In
addition, a 10% surtax (not applicable to capital gains) applies to certain
high-income taxpayers. It is computed by applying a 39.6% rate to taxable
income in excess of $250,000. The above tables do not reflect the personal
exemption phaseout nor the limitations of itemized deductions that may apply.
-58-
<PAGE>
THE VALUE OF STARTING YOUR IRA EARLY
The following illustrates how much more you would have contributing $2,000
each January--the earliest opportunity--compared to contributing on April 15th
of the following year--the latest, for each tax year.
After 5 years $ 3,528 more
10 years $ 6,113
20 years $17,228
30 years $47,295
Compounded returns for the longest period of time is the key. The above
illustration assumes a 10% rate of return and the reinvestment of all proceeds.
And it pays to shop around. If you get just 2% more per year, it can make
a big difference when you retire. A constant 8% versus 10% return, both
compounded annually, illustrates the point. This chart is based on a yearly
investment of $2,000 on January 1. After 30 years the difference can mean as
much as 50% more!
8% RETURN 10% RETURN
--------- ----------
10 years $ 31,291 $ 35,062
20 years $ 98,846 $126,005
30 years $244,692 $361,887
The statistical exhibits above are for illustration purposes only and do
not reflect the actual performance for the Fund, either in the past or in the
future.
-59-
<PAGE>
APPENDIX C
THE COMPANY LIFE CYCLE
Traditional business theory contends that a typical company progresses
through basically four stages of development, keyed closely to a firm's sales.
1. EMERGING GROWTH--a period of experimentation in which the company builds
awareness of a new product or firm.
2. ACCELERATED DEVELOPMENT--a period of rapid growth with potentially high
profitability and acceptance of the product.
3. MATURING PHASE--a period of diminished real growth due to dependence on
replacement or sustained product demand.
4. CYCLICAL STAGE--a period in which a company faces a potential saturation
of demand for its product. At this point, a firm either diversifies or becomes
obsolete.
HYPOTHETICAL CORPORATE LIFE CYCLE
Hypothetical Corporate Life Cycle Chart shows in a line illustration, the
stages that a typical company would go through, beginning with the emerging
state where sales growth continues at a steep pace to the mature phase where
growth levels off to the cyclical stage where sales show more definitive highs
and lows.
The above chart illustrates the path
traditionally followed by companies that
successfully survive the growth sequence.
-60-
<PAGE>
FINANCIAL STATEMENTS
Ernst & Young LLP serves as the independent auditors for the Fund and, in
its capacity as such, audits the financial statements contained in the Fund's
Annual Report. The Fund's Statement of Net Assets, Statement of Operations,
Statements of Changes in Net Assets and Notes to Financial Statements, as well
as the report of Ernst & Young LLP, independent auditors, for the fiscal year
ended November 30, 1995, are included in the Fund's Annual Report to
shareholders. The financial statements, the notes relating thereto and the
report of Ernst & Young LLP, listed above are incorporated by reference from the
Annual Report into this Part B.
-61-
<PAGE>
Form N-1A
File No. 33-11419
Delaware Group Value Fund, Inc.
PART C
------
Other Information
-----------------
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements:
Part A - Financial Highlights
*Part B - Statement of Net Assets
Statement of Operations
Statement of Changes in Net Assets
Notes to Financial Statements
Accountant's Report
* The financial statements and Accountant's Report listed above are
incorporated by reference into Part B from the Registrant's Annual Report
for the fiscal year ended November 30, 1995 and are herein included as an
Exhibit.
(b) Exhibits:
(1) Articles of Incorporation.
(a) Articles of Incorporation, as amended and supplemented to
date, incorporated into this filing by reference to Post-
Effective Amendment No. 13 filed September 14, 1995.
(b) Executed Articles Supplementary (November 28, 1995) attached
as Exhibit.
(2) By-Laws. By-Laws, as amended through September 14, 1995,
incorporated into this filing by reference to Post-Effective
Amendment No. 13 filed September 14, 1995.
(3) Voting Trust Agreement. Inapplicable.
i
<PAGE>
Form N-1A
File No. 33-11419
Delaware Group Value Fund, Inc.
(4) Copies of all Instruments Defining the Rights of Holders.
(a) Articles of Incorporation, Articles of Amendment and
Articles Supplementary.
(i) Article Second of Articles Supplementary (May 27, 1992
and September 6, 1994) and Article Fifth and Article
Eighth of Articles of Incorporation (January 16, 1987)
incorporated into this filing by reference to Post-
Effective Amendment No. 13 filed September 14, 1995.
(ii) Executed Articles Supplementary (November 28, 1995)
attached as Exhibit 24(b)(1)(b).
(b) By-Laws. Article II, Article III, as amended, and Article
XIII, which was subsequently redesignated as Article XIV,
incorporated into this filing by reference to Post-Effective
Amendment No. 13 filed September 14, 1995.
(5) Investment Management Agreement. Investment Management Agreement
between Delaware Management Company, Inc. and the Registrant
dated April 3, 1995 incorporated into this filing by reference
to Post-Effective Amendment No. 13 filed September 14, 1995.
(6) (a) Distribution Agreement.
(i) Executed Distribution Agreement between Delaware
Distributors, L.P. and the Registrant (April 3, 1995)
attached as Exhibit.
(ii) Executed Amendment No. 1 to Distribution Agreement
(November 29, 1995) attached as Exhibit.
(b) Administration and Service Agreement. Form of Administration
and Service Agreement (as amended November 1995) included
as Module.
(c) Dealer's Agreement. Dealer's Agreement (as amended November
1995) included as Module.
(d) Mutual Fund Agreement for the Delaware Group of Funds
(November 1995) included as Module.
ii
<PAGE>
Form N-1A
File No. 33-11419
Delaware Group Value Fund, Inc.
(7) Bonus, Profit Sharing, Pension Contracts.
(a) Amended and Restated Profit Sharing Plan incorporated into
this filing by reference to Post-Effective Amendment No. 13
filed September 14, 1995.
(b) Amendment to Profit Sharing Plan (December 21, 1995)
included as Module.
(8) Custodian Agreement. Incorporated into this filing by reference
to Post-Effective Amendment No. 3 filed January 30, 1989, Post-
Effective Amendment No. 6 filed January 28, 1992 and Post-
Effective Amendment No. 9 filed January 29, 1993.
(9) Other Material Contracts. Shareholders Services Agreement
incorporated into this filing by reference to Post-Effective
Amendment No. 2 filed November 28, 1988.
(10) Opinion of Counsel. Filed with letter relating to Rule
24f-2 on January 26, 1996.
(11) Consent of Auditors. Attached as Exhibit.
(12) Inapplicable.
(13) Undertaking of Initial Shareholder. Incorporated into this
filing by reference to Pre-Effective Amendment No. 2 filed June
17, 1987.
(14) Model Plans. Incorporated into this filing by reference to
Post-Effective Amendment No. 9 filed January 29, 1993, Post-
Effective Amendment No. 10 filed January 28, 1994 and Post-
Effective Amendment No. 13 filed September 14, 1995.
(15) Plans under Rule 12b-1.
(a) Executed Plan under Rule 12b-1 for Class A (November 29,
1995) attached as Exhibit.
(b) Executed Plan under Rule 12b-1 for Class B (November 29,
1995) attached as Exhibit.
(c) Executed Plan under Rule 12b-1 for Class C (November 29,
1995) attached as Exhibit.
iii
<PAGE>
Form N-1A
File No. 33-11419
Delaware Group Value Fund, Inc.
(16) Schedules of Computation for each Performance Quotation.
Incorporated into this filing by reference to Post-Effective
Amendment No. 13 filed September 14, 1995.
Schedules of Computation for each Performance Quotation for
periods not previously electronically filed attached as Exhibit.
(17) Financial Data Schedules. Attached as Exhibit.
(18) Plan under Rule 18f-3. Plan under Rule 18f-3 included as
Module.
(19) Other: Directors' Power of Attorney. Incorporated into this
filing by reference to Post-Effective Amendment No. 13 filed
September 14, 1995.
(20) Other: Financial Statements. The Registrant's financial
statements for the fiscal year ended November 30, 1995 attached
as Exhibit.
Item 25. Persons Controlled by or under Common Control with Registrant. None.
-------------------------------------------------------------
Item 26. Number of Holders of Securities.
-------------------------------
(1) (2)
Number of
Title of Class Record Holders
-------------- --------------
Delaware Group Value Fund, Inc.'s:
Value Fund A Class
Common Stock Par Value 14,307 Accounts as of
$.01 Per Share December 31, 1995
Value Fund B Class
Common Stock Par Value 67 Accounts as of
$.01 Per Share December 31, 1995
Value Fund C Class
Common Stock Par Value 2 Accounts as of
$.01 Per Share December 31, 1995
Value Fund Institutional Class
Common Stock Par Value 24 Accounts as of
$.01 Per Share December 31, 1995
iv
<PAGE>
Form N-1A
File No. 33-11419
Delaware Group Value Fund, Inc.
Item 27. Indemnification. Incorporated into this filing by reference to initial
Registration Statement filed January 23, 1987 and Article VII of the
By-Laws, as amended, incorporated into this filing by reference to
Post-Effective Amendment No. 13 filed September 14, 1995.
Item 28. Business and Other Connections of Investment Adviser.
-----------------------------------------------------
Delaware Management Company, Inc. (the "Manager") or its affiliate,
Delaware International Advisers Ltd., also serves as investment manager to the
other funds in the Delaware Group (Delaware Group Delaware Fund, Inc., Delaware
Group Trend Fund, Inc., Delaware Group DelCap Fund, Inc., Delaware Group Decatur
Fund, Inc., Delaware Group Delchester High-Yield Bond Fund, Inc., Delaware Group
Government Fund, Inc., Delaware Group Limited-Term Government Funds, Inc.,
Delaware Group Cash Reserve, Inc., Delaware Group Tax-Free Fund, Inc., DMC Tax-
Free Income Trust-Pennsylvania, Delaware Group Tax-Free Money Fund, Inc.,
Delaware Group Premium Fund, Inc., Delaware Group Global & International Funds,
Inc., Delaware Pooled Trust, Inc., Delaware Group Dividend and Income Fund, Inc.
and Delaware Group Global Dividend and Income Fund, Inc.) and provides
investment advisory services to institutional accounts, primarily retirement
plans and endowment funds. In addition, certain directors of the Manager also
serve as directors/trustees of the other Delaware Group funds, and certain
officers are also officers of these other funds. A company owned by the
Manager's parent company acts as principal underwriter to the mutual funds in
the Delaware Group (see Item 29 below) and another such company acts as the
shareholder servicing, dividend disbursing and transfer agent for all of the
mutual funds in the Delaware Group.
The following persons serving as directors or officers of the Manager have
held the following positions during the past two years:
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ----------------------- -----------------------------------------------
Wayne A. Stork Chairman of the Board, Chief Executive Officer,
Chief Investment Officer and Director of Delaware
Management Company, Inc.; President, Chief
Executive Officer, Chairman of the Board and
Director of the Registrant and, with the
exception of Delaware Pooled Trust, Inc., each of
the other funds in the Delaware Group, Delaware
Management Holdings, Inc., DMH Corp., Delaware
International Holdings Ltd. and Founders
Holdings, Inc.; Chairman of the Board and
Director of Delaware Pooled Trust, Inc., Delaware
Investment Counselors, Inc. and Delaware
Investment & Retirement Services, Inc.; Chairman,
Chief Executive Officer and Director of Delaware
International Advisers Ltd.; and Director of
Delaware Distributors, Inc. and Delaware Service
Company, Inc.
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
v
<PAGE>
Form N-1A
File No. 33-11419
Delaware Group Value Fund, Inc.
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ----------------------- -----------------------------------------------
Winthrop S. Jessup Executive Vice President and Director of
Delaware Management Company, Inc., DMH Corp.,
Delaware International Holdings Ltd. and
Founders Holdings, Inc.; Executive Vice
President of the Registrant and, with the
exception of Delaware Pooled Trust, Inc., each
of the other funds in the Delaware Group and
Delaware Management Holdings, Inc.; President
and Chief Executive Officer of Delaware Pooled
Trust, Inc.; Vice Chairman of Delaware
Distributors, L.P.; Vice Chairman and Director
of Delaware Distributors, Inc.; Director of
Delaware Service Company, Inc., Delaware
Management Trust Company, Delaware
International Advisers Ltd. and Delaware
Investment & Retirement Services, Inc.; and
President and Director of Delaware Investment
Counselors, Inc.
Richard G. Unruh, Jr. Executive Vice President and Director of
Delaware Management Company, Inc.; Executive
Vice President of the Registrant and each of
the other funds in the Delaware Group; Senior
Vice President of Delaware Management Holdings,
Inc.; and Director of Delaware International
Advisers Ltd.
Board of Directors, Chairman of Finance
Committee, Keystone Insurance Company since
1989, 2040 Market Street, Philadelphia, PA;
Board of Directors, Chairman of Finance
Committee, Mid Atlantic, Inc. since 1989, 2040
Market Street, Philadelphia, PA
Paul E. Suckow Senior Vice President/Chief Investment Officer,
Fixed Income of Delaware Management Company,
Inc., the Registrant, each of the other funds
in the Delaware Group and Delaware Management
Holdings, Inc.; Senior Vice President and
Director of Founders Holdings, Inc.; and
Director of Founders CBO Corporation
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
vi
<PAGE>
Form N-1A
File No. 33-11419
Delaware Group Value Fund, Inc.
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ----------------------- ---------------------------------------------------
David K. Downes Senior Vice President, Chief Administrative Officer
and Chief Financial Officer of Delaware Management
Company, Inc., the Registrant and each of the other
funds in the Delaware Group; Chairman and Director
of Delaware Management Trust Company; Senior Vice
President, Chief Administrative Officer, Chief
Financial Officer and Treasurer of Delaware
Management Holdings, Inc.; Senior Vice President,
Chief Financial Officer, Treasurer and Director of
DMH Corp.; Senior Vice President and Chief
Administrative Officer of Delaware Distributors,
L.P.; Senior Vice President, Chief Administrative
Officer and Director of Delaware Distributors,
Inc.; Senior Vice President, Chief Administrative
Officer, Chief Financial Officer and Director of
Delaware Service Company, Inc.; Chief Financial
Officer and Director of Delaware International
Holdings Ltd.; Senior Vice President, Chief
Financial Officer and Treasurer of Delaware
Investment Counselors, Inc.; Senior Vice President,
Chief Financial Officer and Director of Founders
Holdings, Inc.; Chief Executive Officer and
Director of Delaware Investment & Retirement
Services, Inc.; and Director of Delaware
International Advisers Ltd.
Chief Executive Officer, Chief Financial Officer
and Treasurer of Forewarn, Inc. since 1992, 8
Clayton Place, Newtown Square, PA
George M. Chamberlain, Jr. Senior Vice President, Secretary and Director of
Delaware Management Company, Inc., DMH Corp.,
Delaware Distributors, Inc., Delaware Service
Company, Inc., Founders Holdings, Inc. and Delaware
Investment & Retirement Services, Inc.; Senior Vice
President and Secretary of the Registrant, each of
the other funds in the Delaware Group, Delaware
Distributors, L.P., Delaware Investment Counselors,
Inc. and Delaware Management Holdings, Inc.;
Executive Vice President, Secretary and Director of
Delaware Management Trust Company; Secretary and
Director of Delaware International Holdings Ltd.;
and Director of Delaware International Advisers
Ltd.
Director of ICI Mutual Insurance Co. since 1992,
P.O. Box 730, Burlington, VT
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
vii
<PAGE>
Form N-1A
File No. 33-11419
Delaware Group Value Fund, Inc.
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ----------------------- ---------------------------------------------------
Richard J. Flannery Managing Director/Corporate Tax & Affairs of
Delaware Management Company, Inc., Delaware
Management Holdings, Inc., DMH Corp., Delaware
Distributors, L.P., Delaware Distributors, Inc.,
Delaware Service Company, Inc., Delaware Management
Trust Company, Founders CBO Corporation, Delaware
Investment Counselors, Inc. and Delaware Investment
& Retirement Services, Inc.; Vice President of the
Registrant and each of the other funds in the
Delaware Group; Managing Director/Corporate Tax &
Affairs and Director of Founders Holdings, Inc.;
Managing Director and Director of Delaware
International Holdings Ltd.; and Director of
Delaware International Advisers Ltd.
Limited Partner of Stonewall Links, L.P. since
1991, Bulltown Rd., Elverton, PA; Director and
Member of Executive Committee of Stonewall Links,
Inc. since 1991, Bulltown Rd., Elverton, PA
Michael P. Bishof/1/ Vice President and Treasurer of Delaware Management
Company, Inc., the Registrant, each of the other
funds in the Delaware Group, Delaware Distributors,
L.P., Delaware Distributors, Inc., Delaware Service
Company, Inc. and Founders Holdings, Inc.;
Assistant Treasurer of Founders CBO Corporation;
and Vice President and Manager of Investment
Accounting of Delaware International Holdings Ltd.
Eric E. Miller Vice President and Assistant Secretary of Delaware
Management Company, Inc., the Registrant, each of
the other funds in the Delaware Group, Delaware
Management Holdings, Inc., DMH Corp., Delaware
Distributors, L.P., Delaware Distributors, Inc.,
Delaware Service Company, Inc., Delaware Management
Trust Company, Founders Holdings, Inc., Delaware
Investment Counselors, Inc. and Delaware Investment
& Retirement Services, Inc.
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
viii
<PAGE>
Form N-1A
File No. 33-11419
Delaware Group Value Fund, Inc.
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ----------------------- ---------------------------------------------------
Richelle S. Maestro Vice President and Assistant Secretary of Delaware
Management Company, Inc., the Registrant, each of
the other funds in the Delaware Group, Delaware
Management Holdings, Inc., Delaware Distributors,
L.P., Delaware Distributors, Inc., Delaware Service
Company, Inc., DMH Corp., Delaware Management Trust
Company, Delaware Investment Counselors, Inc.,
Delaware Investment & Retirement Services, Inc. and
Founders Holdings, Inc.; and Assistant Secretary of
Founders CBO Corporation and Delaware International
Holdings Ltd.
General Partner of Tri-R Associates since 1989,
10001 Sandmeyer Ln., Philadelphia, PA
John M. Zerr/2/ Vice President and Assistant Secretary of Delaware
Management Company, Inc., the Registrant, each of
the other funds in the Delaware Group, DMH Corp.,
Delaware Distributors, L.P., Delaware Distributors,
Inc., Delaware Service Company, Inc., Delaware
Management Trust Company, Delaware Investment
Counselors, Inc. and Delaware Investment &
Retirement Services, Inc.
Secretary and Counsel of Renovisions, Inc. since
1990, 4284 South Dixi Road, Resaca, GA
Joseph H. Hastings Vice President/Corporate Controller of Delaware
Management Company, Inc., the Registrant, each of
the other funds in the Delaware Group, Delaware
Management Holdings, Inc., DMH Corp., Delaware
Distributors, L.P., Delaware Distributors, Inc.,
Delaware Service Company, Inc., Delaware Investment
Counselors, Inc., Founders Holdings, Inc. and
Delaware International Holdings Ltd.; Executive
Vice President, Chief Financial Officer and
Treasurer of Delaware Management Trust Company;
Chief Financial Officer and Treasurer of Delaware
Investment & Retirement Services, Inc.; and
Assistant Treasurer of Founders CBO Corporation
Bruce A. Ulmer Vice President/Director of Internal Audit of
Delaware Management Company, Inc., the Registrant,
each of the other funds in the Delaware Group,
Delaware Management Holdings, Inc., DMH Corp. and
Delaware Management Trust Company; and Vice
President/Internal Audit of Delaware Investment &
Retirement Services, Inc.
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
ix
<PAGE>
Form N-1A
File No. 33-11419
Delaware Group Value Fund, Inc.
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ----------------------- ---------------------------------------------------
Steven T. Lampe/3/ Vice President/Taxation of Delaware Management
Company, Inc., the Registrant, each of the other
funds in the Delaware Group, Delaware Management
Holdings, Inc., DMH Corp., Delaware Distributors,
L.P., Delaware Distributors, Inc., Delaware Service
Company, Inc., Delaware Management Trust Company,
Founders Holdings, Inc., Founders CBO Corporation
and Delaware Investment Counselors, Inc.
Lisa O. Brinkley/4/ Vice President/Compliance of Delaware Management
Company, Inc., the Registrant, each of the other
funds in the Delaware Group, DMH Corp., Delaware
Distributors, L.P., Delaware Distributors, Inc.,
Delaware Service Company, Inc., Delaware Management
Trust Company, Delaware Investment Counselors, Inc.
and Delaware Investment & Retirement Services, Inc.
Rosemary E. Milner Vice President/Legal of Delaware Management
Company, Inc., the Registrant, each of the other
funds in the Delaware Group, Delaware Distributors,
L.P. and Delaware Distributors, Inc.
Douglas L. Anderson/5/ Vice President/Operations of Delaware Management
Company, Inc., Delaware Service Company, Inc. and
Delaware Investment & Retirement Services, Inc.;
and Vice President/Operations and Director of
Delaware Management Trust Company
Michael T. Taggart Vice President/Facilities Management and
Administrative Services of Delaware Management
Company, Inc.
Gerald T. Nichols Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., each of the tax-exempt
funds, the fixed income funds and the closed-end
funds in the Delaware Group; Vice President of
Founders Holdings, Inc.; and Treasurer and Director
of Founders CBO Corporation
J. Michael Pokorny Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., each of the tax-exempt
funds and the fixed income funds in the Delaware
Group
Gary A. Reed Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., each of the tax-exempt
funds and the fixed income funds in the Delaware
Group and Delaware Investment Counselors, Inc.
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
x
<PAGE>
Form N-1A
File No. 33-11419
Delaware Group Value Fund, Inc.
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------ ---------------------------------------------------------
Paul A. Matlack Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., each of the tax-exempt funds,
the fixed income funds and the closed-end funds in the
Delaware Group; Vice President of Founders Holdings, Inc.;
and Secretary and Director of Founders CBO Corporation
Patrick P. Coyne Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., each of the tax-exempt funds and
the fixed income funds in the Delaware Group
Roger A. Early/6/ Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., each of the tax-exempt funds and
the fixed income funds in the Delaware Group
Edward N. Antoian Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., the Registrant and each of the
other equity funds in the Delaware Group
General Partner of Zeke Investment Partners since 1991,
569 Canterbury Lane, Berwyn, PA
George H. Burwell Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., the Registrant and each of the
other equity funds in the Delaware Group
John B. Fields Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., the Registrant, each of the
other equity funds in the Delaware Group and Delaware
Investment Counselors, Inc.
Edward A. Trumpbour Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., the Registrant and each of the
other equity funds in the Delaware Group
David C. Dalrymple Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., the Registrant and each of the
other equity funds in the Delaware Group
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
xi
<PAGE>
Form N-1A
File No. 33-11419
Delaware Group Value Fund, Inc.
<TABLE>
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------ ---------------------------------------------------------
<S> <C>
Faye P. Staples/7/ Vice President/Human Resources of Delaware Management
Company, Inc., Delaware Distributors, L.P. and Delaware
Distributors, Inc.; and Vice President/Director of Human
Resources of Delaware Service Company, Inc.
</TABLE>
/1/ VICE PRESIDENT/GLOBAL INVESTMENT MANAGEMENT OPERATIONS, Bankers Trust
and VICE PRESIDENT, CS First Boston Investment Management prior to June
1995.
/2/ ATTORNEY, Ballard, Spahr, Andrews and Ingersoll prior to July 1995.
/3/ TAX MANAGER, Price Waterhouse prior to October 1995.
/4/ VICE PRESIDENT AND COMPLIANCE OFFICER, Banc One Securities Corporation
prior to June 1994 and ASSISTANT VICE PRESIDENT AND COMPLIANCE OFFICER,
Aetna Life and Casualty prior to March 1993.
/5/ VICE PRESIDENT OF OPERATIONS, Supervised Service Company prior to March
1994.
/6/ SENIOR VICE PRESIDENT AND PORTFOLIO MANAGER, Federated Investors prior to
July 1994.
/7/ VICE PRESIDENT/HUMAN RESOURCES, Nova Care prior to September 1995.
Item 29. Principal Underwriters.
----------------------
(a) Delaware Distributors, L.P. serves as principal underwriter for all
the mutual funds in the Delaware Group.
(b) Information with respect to each director, officer or partner of
principal underwriter:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- --------------------------- ---------------------------- ----------------------------
<S> <C> <C>
Delaware Distributors, Inc. General Partner None
Delaware Management Limited Partner Investment Manager
Company, Inc.
Delaware Investment Limited Partner None
Counselors, Inc.
Winthrop S. Jessup Vice Chairman Executive Vice President
Keith E. Mitchell President and Chief None
Executive Officer
David K. Downes Senior Vice President and Senior Vice President/Chief
Chief Administrative Officer Administrative Officer/Chief
Financial Officer
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
xii
<PAGE>
Form N-1A
File No. 33-11419
Delaware Group Value Fund, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- -------------------------- --------------------------- ------------------------
<S> <C> <C>
George M. Chamberlain, Jr. Senior Vice President/ Senior Vice President/
Secretary Secretary
J. Lee Cook Senior Vice President/ None
National Sales Manager
Stephen H. Slack Senior Vice President/ None
Wholesaler
William F. Hostler Senior Vice President/ None
Marketing Services
Minette van Noppen Senior Vice President/ None
Retirement Services
Richard J. Flannery Managing Director/Corporate Vice President
& Tax Affairs
Eric E. Miller Vice President/ Vice President/
Assistant Secretary Assistant Secretary
Richelle S. Maestro Vice President/ Vice President/
Assistant Secretary Assistant Secretary
John M. Zerr Vice President/ Vice President/
Assistant Secretary Assistant Secretary
Joseph H. Hastings Vice President/ Vice President/
Corporate Controller Corporate Controller
Michael P. Bishof Vice President/Treasurer Vice President/Treasurer
Steven T. Lampe Vice President/Taxation Vice President/Taxation
Lisa O. Brinkley Vice President/ Vice President/
Compliance Compliance
Rosemary E. Milner Vice President/Legal Vice President/Legal
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
xiii
<PAGE>
Form N-1A
File No. 33-11419
Delaware Group Value Fund, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ---------------------- -------------------------- ---------------------
<S> <C> <C>
Diane M. Anderson Vice President/Retirement None
Services
Denise F. Guerriere Vice President/Client None
Services
Julia R. Vander Els Vice President/Retirement None
Services
Jerome J. Alrutz Vice President/Retirement None
Services
Joanne A. Mettenheimer Vice President/National None
Accounts
Christopher H. Price Vice President/Annuity None
Marketing & Administration
Thomas S. Butler Vice President/DDI None
Administration
Frank Albanese Vice President/Wholesaler None
William S. Carroll Vice President/Wholesaler None
William S. Castetter Vice President/Wholesaler None
Thomas J. Chadie Vice President/Wholesaler None
Robert M. Frank Vice President/Wholesaler None
Douglas R. Glennon Vice President/Wholesaler None
Alan D. Kessler Vice President/Wholesaler None
William M. Kimbrough Vice President/Wholesaler None
Mac McAuliffe Vice President/Wholesaler None
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
xiv
<PAGE>
Form N-1A
File No. 33-11419
Delaware Group Value Fund, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- --------------------- ------------------------------ ---------------------
<S> <C> <C>
Patrick L. Murphy Vice President/Wholesaler None
Henry W. Orvin Vice President/Wholesaler None
Philip G. Rickards Vice President/Wholesaler None
Michael W. Rose Vice President/Wholesaler None
Thomas E. Sawyer Vice President/Wholesaler None
Robert E. Stansbury Vice President/Wholesaler None
Larry D. Stone Vice President/Wholesaler None
Faye P. Staples Vice President/Human Resources None
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
(c) Not Applicable.
Item 30. Location of Accounts and Records.
--------------------------------
All accounts and records are maintained in Philadelphia at 1818 Market
Street, Philadelphia, PA 19103 or One Commerce Square, Philadelphia,
PA 19103.
Item 31. Management Services. None.
-------------------
Item 32. Undertakings.
------------
(a) Not Applicable.
(b) Not Applicable.
(c) The Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.
(d) The Registrant hereby undertakes to promptly call a meeting of
shareholders for the purpose of voting upon the question of
removal of any director when requested in writing to do so by the
record holders of not less than 10% of the outstanding shares.
xv
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, this Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in this City of Philadelphia and Commonwealth of Pennsylvania on
this 26th day of January, 1996.
DELAWARE GROUP VALUE FUND, INC.
By/s/Wayne A. Stork
------------------------------------
Wayne A. Stork
President, Chairman of the Board,
Chief Executive Officer and Director
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
- --------------------------- ------------------------------------------ ----------------
<S> <C> <C>
President, Chairman of the Board,
/s/Wayne A. Stork Chief Executive Officer and Director January 26, 1996
- ---------------------------
Wayne A. Stork
Senior Vice President/Chief Administrative
Officer/Chief Financial Officer (Principal
Financial Officer and Principal Accounting
/s/David K. Downes Officer January 26, 1996
- ---------------------------
David K. Downes
/s/Walter P. Babich * Director January 26, 1996
- ---------------------------
Walter P. Babich
/s/Anthony D. Knerr * Director January 26, 1996
- ---------------------------
Anthony D. Knerr
/s/Ann R. Leven * Director January 26, 1996
- ---------------------------
Ann R. Leven
/s/W. Thacher Longstreth * Director January 26, 1996
- ---------------------------
W. Thacher Longstreth
/s/Charles E. Peck * Director January 26, 1996
- ---------------------------
Charles E. Peck
*By/s/Wayne A. Stork
-----------------------------
Wayne A. Stork
as Attorney-in-Fact for
each of the persons indicated
</TABLE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Exhibits
to
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Exhibit
- ----------- -------
EX-99.B1B Executed Articles Supplementary (November 28, 1995)
EX-99.B6AI Executed Distribution Agreement (April 3, 1995)
EX-99.B6AII Executed Amendment No. 1 to Distribution Agreement
(November 29, 1 995)
EX-99.B6B Form of Administration and Service Agreement
(Module Name (November 1995)
ADMIN_SER_AGREE)
EX-99.B6C Dealer's Agreement (November 1995)
(Module Name
DEALERS_AGREE)
EX-99.B6D Mutual Fund Agreement for the Delaware Group of
(Module Name Funds (November 1995)
MFAGMT95)
EX-99.B7B Amendment to Profit Sharing Plan (December 21, 1995)
(Module Name
AMEND_PROF_SHAR)
EX-99.B11 Consent of Auditors
EX-99.B15A Executed Plan under Rule 12b-1 for Class A
(November 29, 1995)
EX-99.B15B Executed Plan under Rule 12b-1 for Class B
(November 29, 1995)
EX-99.B15C Executed Plan under Rule 12b-1 for Class C
(November 29, 1995)
EX-99.B16 Schedules of Computation for each Performance Quotation
for periods not previously shown
EX-27 Financial Data Schedules
EX-99.B18 Plan under Rule 18f-3 (November 1995)
(Module Name
MOD18F3)
EX-99.B20 Financial Statements: The Registrant's financial statements
for the fiscal year ended November 30, 1995
<PAGE>
DELAWARE GROUP VALUE FUND, INC.
ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
Delaware Group Value Fund, Inc., a Maryland corporation having its
principal office in Baltimore, Maryland (the "Corporation"), hereby certifies,
in accordance with Section 2-208 of the Maryland General Corporation Law, to the
State Department of Assessments and Taxation of Maryland that:
FIRST: The Corporation has authority to issue a total of Five Hundred
Million (500,000,000) shares of common stock with a par value of One Cent
($0.01) per share of the Corporation (the "Common Stock"), having an aggregate
par value of Five Million Dollars ($5,000,000). Of such Five Hundred Million
(500,000,000) shares of Common Stock, Three Hundred Fifty Million (350,000,000)
shares have been allocated to Series I of the Common Stock as follows: (1)
Fifty Million (50,000,000) shares have been allocated to the Value Fund
(Institutional) class; (2) One Hundred Fifty Million (150,000,000) shares have
been allocated to the Value Fund B Class; and (3) One Hundred Fifty Million
(150,000,000) shares have been allocated to the Value Fund class.
SECOND: The Board of Directors of the Corporation, at a meeting held
on July 20, 1995, adopted a resolution classifying a fourth class of shares of
Series I of the Common Stock as the Value Fund C Class (the "C Class") and
reclassifying and allocating Fifty Million (50,000,000) shares of authorized and
unissued Common Stock, previously classified and allocated to the Value Fund B
Class of Series I of the Common Stock, to the C Class.
THIRD: The shares of the C Class shall represent proportionate
interests in the same portfolio of investments as the shares of the Value Fund
(Institutional) class, Value Fund B Class and Value Fund class of Series I of
the Common Stock. The shares of the C Class shall have the same preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications, or terms or conditions of redemption as the shares of
the Value Fund (Institutional) class, Value Fund B Class and Value Fund class of
Series I of the Common Stock, all as set forth in the Articles of Incorporation
of the Corporation, except for the differences hereinafter set forth:
1. The dividends and distributions of investment income and
capital gains with respect to shares of the C Class shall be in
such amounts as may be declared from time to time by the Board of
Directors, and such dividends and distributions may vary with
respect to such class from the dividends and distributions of
investment income and capital gains with respect to shares of the
other classes of Series I of the Common Stock to reflect differing
<PAGE>
allocations of the expenses of the Corporation among the shares of
such classes and any resultant difference among the net asset
values per share of the shares of such classes, to such extent and
for such purposes as the Board of Directors may deem appropriate.
The allocation of investment income and capital gains and expenses
and liabilities of the Corporation among the four classes of
Series I of the Common Stock shall be determined by the Board of
Directors in a manner that is consistent with the order, as
applicable, dated September 6, 1994 (Investment Company Act of
1940 Release No. 20529) issued by the Securities and Exchange
Commission, and any amendments to such order, any future order or
any Multiple Class Plan adopted by the Corporation in accordance
with Rule 18f-3 under the Investment Company Act of 1940, as
amended, that modifies or supersedes such order.
2. Except as may otherwise be required by law pursuant to any
applicable order, rule or interpretation issued by the Securities
and Exchange Commission, or otherwise, the holders of shares of
the C Class shall have (i) exclusive voting rights with respect to
any matter submitted to a vote of stockholders that affects only
holders of shares of the C Class, including without limitation the
provisions of any Distribution Plan adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended (a
"Distribution Plan") applicable to shares of the C Class, and (ii)
no voting rights with respect to the provisions of any
Distribution Plan applicable to any other class of Common Stock or
with regard to any other matter submitted to a vote of
stockholders which does not affect holders of shares of the C
Class.
3. The shares of the C Class shall not automatically convert into
shares of the Value Fund class of Series I of the Common Stock as
do the shares of the Value Fund B Class of Series I of the Common
Stock.
FOURTH: The shares of the Value Fund B Class of Series I of the
Common Stock reclassified as shares of the C Class pursuant to these Articles
Supplementary have been reclassified by the Board of Directors
<PAGE>
pursuant to authority contained in the Articles of Incorporation of the
Corporation.
FIFTH: These Articles Supplementary shall become effective on
November 28, 1995.
IN WITNESS WHEREOF, Delaware Group Value Fund, Inc. has caused
these Articles Supplementary to be signed in its name and on its behalf this
28th day of November, 1995.
DELAWARE GROUP VALUE FUND, INC.
By:/s/George M. Chamberlain, Jr.
-----------------------------
George M. Chamberlain, Jr.
Senior Vice President
ATTEST:
/s/Richelle S. Maestro
- ----------------------
Richelle S. Maestro
Assistant Secretary
THE UNDERSIGNED, Senior Vice President of DELAWARE GROUP VALUE FUND,
INC., who executed on behalf of the said Corporation the foregoing Articles
Supplementary, of which this instrument is made a part, hereby acknowledges, in
the name of and on behalf of said Corporation, said Articles Supplementary to be
the corporate act of said Corporation and further certifies that, to the best of
his knowledge, information and belief, the matters and facts set forth therein
with respect to the authorization and approval thereof are true in all material
respects, under the penalties of perjury.
/s/George M. Chamberlain, Jr.
-----------------------------
George M. Chamberlain, Jr.
Senior Vice President
<PAGE>
DELAWARE GROUP VALUE FUND, INC.
DISTRIBUTION AGREEMENT
Distribution Agreement (the "Agreement") made as of this 3rd day of
April, 1995 by and between DELAWARE GROUP VALUE FUND, INC., a Maryland
corporation (the "Fund"), and DELAWARE DISTRIBUTORS, L.P. (the "Distributor"), a
Delaware limited partnership.
WITNESSETH
----------
WHEREAS, the Fund is an investment company regulated by Federal and
State regulatory bodies, and
WHEREAS, the Distributor is engaged in the business of promoting the
distribution of the securities of investment companies and, in connection
therewith and acting solely as agent for such investment companies and not as
principal, advertising, promoting, offering and selling their securities to the
public, and
WHEREAS, the Fund and the Distributor (or its predecessor) were the
parties to a contract under which the Distributor acted as the national
distributor of the shares of the Fund, which contract was amended and restated
as of the 6th day of September, 1994 and subsequently readopted as of January
3,1995 (the "Prior Distribution Agreement"), and
WHEREAS, Delaware Management Holdings, Inc. ("Holdings"), the indirect
parent company of the Distributor, completed on the date of this Agreement a
merger transaction with a newly-formed subsidiary of Lincoln National
Corporation, pursuant to which Holdings became a wholly-owned subsidiary of
Lincoln National Corporation, and
<PAGE>
WHEREAS, the merger transaction resulted in a change of control of
the Distributor and an automatic termination of the Prior Distribution
Agreement, and
WHEREAS, the Board of Directors of the Fund has determined to enter
into a new agreement with the Distributor as of the date hereof, pursuant to
which the Distributor shall continue to be the national distributor of the
Fund's Value Fund class (now doing business as Value Fund A Class and
hereinafter referred to as the "Class A Shares"), the Fund's Value Fund B Class
(the "Class B Shares") and the Fund's Value Fund (Institutional) class (now
doing business as Value Fund Institutional Class and hereinafter referred to as
the "Institutional Class Shares"), which classes may do business under these or
such other names as the Board of Directors may designate from time to time, on
the terms and conditions set forth below,
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. The Fund hereby engages the Distributor to promote the
distribution of the shares and, in connection therewith and as agent for the
Fund and not as principal, to advertise, promote, offer and sell the shares to
the public.
2. (a) The Distributor agrees to serve as distributor of the Fund's
shares and, as agent for the Fund and not as principal, to advertise, promote
and use its best efforts to sell the Fund's shares wherever their sale is legal,
either through dealers or otherwise, in such places and in such manner, not
inconsistent with the law and the provisions of this Agreement and the Fund's
Registration Statement under the Securities Act of 1933, including the
Prospectus contained therein and the Statement of Additional Information
contained therein, as may be mutually determined by the Fund and the Distributor
from time to time.
<PAGE>
(b) For the Institutional Class Shares, the Distributor will bear all
costs of financing any activity which is primarily intended to result in the
sale of that class of shares, including, but not necessarily limited to,
advertising, compensation of underwriters, dealers and sales personnel, the
printing and mailing of sales literature and distribution of that class of
shares.
(c) For its services as agent for the Class A Shares and Class B
Shares, the Distributor shall be entitled to compensation on each sale or
redemption, as appropriate, of shares of such classes equal to any front-end or
deferred sales charge described in the Prospectus from time to time and may
allow concessions to dealers in such amounts and on such terms as are therein
set forth.
(d) For the Class A Shares and Class B Shares, the Fund shall, in
addition, compensate the Distributor for its services as provided in the
Distribution Plan as adopted on behalf of the Class A Shares and Class B Shares,
respectively, pursuant to Rule 12b-1 under the Investment Company Act of 1940
(the "Plans"), copies of which as presently in force are attached hereto as,
respectively, Exhibit "A" and "B".
3. (a) The Fund agrees to make available for sale by the Fund through
the Distributor all or such part of the authorized but unissued shares as the
Distributor shall require from time to time, and except as provided in Paragraph
3(b) hereof, the Fund will not sell shares other than through the efforts of the
Distributor.
(b) The Fund reserves the right from time to time (1) to sell and
issue shares other than for cash; (2) to issue shares in exchange for
substantially all of the assets of any corporation or trust, or in exchange of
shares of any corporation or trust; (3) to pay stock dividends to its
shareholders, or to pay dividends in cash or stock at the option of its
<PAGE>
stockholders, or to sell stock to existing stockholders to the extent of
dividends payable from time to time in cash, or to split up or combine its
outstanding shares of common stock; (4) to offer shares for cash to its
stockholders as a whole, by the use of transferable rights or otherwise, and to
sell and issue shares pursuant to such offers; and (5) to act as its own
distributor in any jurisdiction in which the Distributor is not registered as a
broker-dealer.
4. The Fund warrants the following:
(a) The Fund is, or will be, a properly registered investment
company, and any and all shares which it will sell through the Distributor are,
or will be, properly registered with the Securities and Exchange Commission
("SEC").
(b) The provisions of this Agreement do not violate the terms of any
instrument by which the Fund is bound, nor do they violate any law or regulation
of any body having jurisdiction over the Fund or its property.
5.(a) The Fund will supply to the Distributor a conformed copy of the
Registration Statement, all amendments thereto, all exhibits, and each
Prospectus and Statement of Additional Information.
(b) The Fund will register or qualify the shares for sale in such
states as is deemed desirable.
(c) The Fund, without expense to the Distributor,
(1) will give and continue to give such financial statements and
other information as may be required by the SEC or the proper public bodies of
the states in which the shares may be qualified;
(2) from time to time, will furnish the Distributor as soon as
reasonably practicable true copies of its periodic reports to stockholders;
(3) will promptly advise the Distributor in person or by telephone or
telegraph, and promptly confirm such advice in writing, (a) when any amendment
or supplement to the Registration Statement becomes effective, (b) of any
request by the SEC for amendments or supplements to the Registration Statement
or the Prospectus or for additional information, and (c) of the
<PAGE>
issuance by the SEC of any Stop Order suspending the effectiveness of the
Registration Statement, or the initiation of any proceedings for that purpose;
(4) if at any time the SEC shall issue any Stop Order suspending the
effectiveness of the Registration Statement, will make every reasonable effort
to obtain the lifting of such order at the earliest possible moment;
(5) will from time to time, use its best effort to keep a sufficient
supply of shares authorized, any increases being subject to approval of the
Fund's shareholders as may be required;
(6) before filing any further amendment to the Registration Statement
or to the Prospectus, will furnish the Distributor copies of the proposed
amendment and will not, at any time, whether before or after the effective date
of the Registration Statement, file any amendment to the Registration Statement
or supplement to the Prospectus of which the Distributor shall not previously
have been advised or to which the Distributor shall reasonably object (based
upon the accuracy or completeness thereof) in writing;
(7) will continue to make available to its stockholders (and forward
copies to the Distributor) of such periodic, interim and any other reports as
are now, or as hereafter may be, required by the provisions of the Investment
Company Act of 1940; and
(8) will, for the purpose of computing the offering price of its
shares, advise the Distributor within one hour after the close of the New York
Stock Exchange (or as soon as practicable thereafter) on each business day upon
which the New York Stock Exchange may be open of the net asset value per share
of the shares of common stock outstanding, determined in accordance with any
applicable provisions of law and the provisions of the Articles of
Incorporation, as amended, of the Fund as of the close of business on such
business day. In the event that prices are to be calculated more than once
daily, the Fund will promptly advise the Distributor of the time of each
calculation and the price computed at each such time.
6. The Distributor agrees to submit to the Fund, prior to its use,
the form of all sales literature proposed to be generally disseminated by or for
the Distributor, all advertisements proposed to be used by the Distributor, all
sales literature or advertisements prepared by or for the Distributor for such
dissemination or for use by others in connection with the sale of the shares,
and the form of dealers' sales contract the Distributor intends to use in
connection with sales of the Fund's shares. The Distributor also agrees that the
Distributor will submit such sales literature and advertisements to the NASD,
SEC or other regulatory agency as from time to time may be appropriate,
considering practices then current in the industry. The
<PAGE>
Distributor agrees not to use such form of dealers' sales contract or to use or
to permit others to use such sales literature or advertisements without the
written consent of the Fund if any regulatory agency expresses objection thereto
or if the Fund delivers to the Distributor a written objection thereto.
7. The purchase price of each share sold hereunder shall be the
offering price per share mutually agreed upon by the parties hereto, and as
described in the Fund's Prospectus, as amended from time to time, determined in
accordance with any applicable provision of law, the provisions of its Articles
of Incorporation and the Rules of Fair Practice of the National Association of
Securities Dealers, Inc.
8. The responsibility of the Distributor hereunder shall be limited
to the promotion of sales of shares. The Distributor shall undertake to promote
such sales solely as agent of the Fund, and shall not purchase or sell such
shares as principal. Orders for shares and payment for such orders shall be
directed to the Fund's agent, Delaware Service Company, Inc. for acceptance on
behalf of the Fund. The Distributor is not empowered to approve orders for
sales of shares or accept payment for such orders. Sales of Fund shares shall
be deemed to be made when and where accepted by Delaware Service Company, Inc.
on behalf of the Fund.
9. With respect to the apportionment of costs between the Fund and
the Distributor of activities with which both are concerned, the following will
apply:
(a) The Fund and the Distributor will cooperate in preparing the
Registration Statements, the Prospectus, the Statement of Additional
Information, and all amendments, supplements and replacements thereto. The Fund
will pay all costs incurred in the preparation of the Fund's Registration
Statement, including typesetting, the costs incurred in printing
<PAGE>
and mailing Prospectuses and Annual, Semi-Annual and other financial reports to
its own shareholders and fees and expenses of counsel and accountants.
(b) The Distributor will pay the costs incurred in printing and
mailing copies of Prospectuses to prospective investors.
(c) The Distributor will pay advertising and promotional expenses,
including the costs of literature sent to prospective investors.
(d) The Fund will pay the costs and fees incurred in registering or
qualifying the shares with the various states and with the SEC.
(e) The Distributor will pay the costs of any additional copies of
Fund financial and other reports and other Fund literature supplied to the
Distributor by the Fund for sales promotion purposes.
10. The Distributor may engage in other business, provided such other
business does not interfere with the performance by the Distributor of its
obligations under this Agreement.
11. The Fund agrees to indemnify, defend and hold harmless the
Distributor and each person, if any, who controls the Distributor within the
meaning of Section 15 of the Securities Act of 1933, from and against any and
all losses, damages, or liabilities to which, jointly or severally, the
Distributor or such controlling person may become subject, insofar as the
losses, damages or liabilities arise out of the performance of its duties
hereunder except that the Fund shall not be liable for indemnification of the
Distributor or any controlling person thereof for any liability to the Fund or
its security holders to which they would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of their
duties under this Agreement.
12. Copies of financial reports, Registration Statements and
Prospectuses, as well as demands, notices, requests, consents, waivers, and
other communications in writing which it may be necessary or desirable for
<PAGE>
either party to deliver or furnish to the other will be duly delivered or
furnished, if delivered to such party at its address shown below during regular
business hours, or if sent to that party by registered mail or by prepaid
telegram filed with an office or with an agent of Western Union or another
nationally recognized telegraph service, in all cases within the time or times
herein prescribed, addressed to the recipient at 1818 Market Street,
Philadelphia, Pennsylvania 19103, or at such other address as the Fund or the
Distributor may designate in writing and furnish to the other.
13. This Agreement shall not be assigned, as that term is defined in
the Investment Company Act of 1940, by the Distributor and shall terminate
automatically in the event of its attempted assignment by the Distributor. This
Agreement shall not be assigned by the Fund without the written consent of the
Distributor signed by its duly authorized officers and delivered to the Fund.
Except as specifically provided in the indemnification provision contained in
Paragraph 11 herein, this Agreement and all conditions and provisions hereof are
for the sole and exclusive benefit of the parties hereto and their legal
successors and no express or implied provision of this Agreement is intended or
shall be construed to give any person other than the parties hereto and their
legal successors any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provisions herein contained.
14. (a) This Agreement shall remain in force for a period of two
years from the date hereof and from year to year thereafter, but only so long as
such continuance is specifically approved at least annually by the Board of
Directors or by vote of a majority of the outstanding voting securities of the
Fund and only if the terms and the renewal thereof have been approved by the
vote of a majority of the Directors of the Fund, who are not
<PAGE>
parties hereto or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval.
(b) The Distributor may terminate this Agreement on written notice to
the Fund at any time in case the effectiveness of the Registration Statement
shall be suspended, or in case Stop Order proceedings are initiated by the SEC
in respect of the Registration Statement and such proceedings are not withdrawn
or terminated within thirty days. The Distributor may also terminate this
Agreement at any time by giving the Fund written notice of its intention to
terminate the Agreement at the expiration of three months from the date of
delivery of such written notice of intention to the Fund.
(c) The Fund may terminate this Agreement at any time on at least
thirty days prior written notice to the Distributor (1) if proceedings are
commenced by the Distributor or any of its stockholders for the Distributor's
liquidation or dissolution or the winding up of the Distributor's affairs; (2)
if a receiver or trustee of the Distributor or any of its property is appointed
and such appointment is not vacated within thirty days thereafter; (3) if, due
to any action by or before any court or any federal or state commission,
regulatory body, or administrative agency or other governmental body, the
Distributor shall be prevented from selling securities in the United States or
because of any action or conduct on the Distributor's part, sales of the shares
are not qualified for sale. The Fund may also terminate this Agreement at any
time upon prior written notice to the Distributor of its intention to so
terminate at the expiration of three months from the date of the delivery of
such written notice to the Distributor.
15. The validity, interpretation and construction of this Agreement,
and of each part hereof, will be governed by the laws of the Commonwealth of
Pennsylvania.
<PAGE>
16. In the event any provision of this Agreement is determined to be
void or unenforceable, such determination shall not affect the remainder of the
Agreement, which shall continue to be in force.
DELAWARE DISTRIBUTORS, L.P.
By: DELAWARE DISTRIBUTORS, INC., General Partner
Attest:
/s/Eric E. Miller By:/s/Keith E. Mitchell
- ----------------- --------------------
Name: Eric E. Miller Name: Keith E. Mitchell
Title: Vice President Title: President/Chief
Assistant Secretary Executive Officer
DELAWARE GROUP VALUE FUND, INC.
Attest:
/s/John M. Zerr By:/s/David K. Downes
- --------------- ------------------
Name: John M. Zerr Name: David K. Downes
Title: Vice President Title: Senior Vice President/
Assistant Secretary Chief Administrative Officer
<PAGE>
EXHIBIT A
12B-1 PLAN
----------
The following Distribution Plan (the "Plan") has been adopted pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Group Value Fund, Inc. (the "Fund"), on behalf of the Value Fund class (now
doing business as Value Fund A Class and hereinafter referred to as the
"Class"), which Fund and Class may do business under these or such other names
as the Board of Directors of the Fund may designate from time to time. The Plan
has been approved by a majority of the Board of Directors, including a majority
of the Directors who are not interested persons of the Fund and who have no
direct or indirect financial interest in the operation of the Plan or in any
agreements related thereto, cast in person at a meeting called for the purpose
of voting on such Plan. Such approval by the Directors included a determination
that in the exercise of reasonable business judgment and in light of their
fiduciary duties, there is a reasonable likelihood that the Plan will benefit
the Class and its shareholders. If the Plan has not yet been approved by a
majority of the outstanding voting securities as required in the Act, the Plan
will be presented to the public shareholders at the next regular annual or
special meeting.
The Fund is a corporation organized under the laws of the State of
Maryland, is authorized to issue different series and classes of securities and
is an open-end management investment company registered under the Act. Delaware
Management Company, Inc. ("DMC") serves as the Fund's investment adviser and
manager pursuant to an Investment Management Agreement. Delaware Service
Company, Inc. serves as the Fund's shareholder servicing, dividend disbursing
and transfer agent. Delaware Distributors, L.P. ("the Distributor") is the
principal underwriter and national distributor for the
A-1
<PAGE>
Fund's shares, including shares of the Class, pursuant to the Distribution
Agreement between the Distributor and the Fund ("Distribution Agreement").
The Distributor may enter into agreements with other registered broker-
dealers substantially in the form of the Dealer Agreement approved by the Fund
in the implementation of this Plan and of the Distribution Agreement between it
and the Fund. The Fund may, in addition, enter into arrangements with persons
other than broker-dealers which are not "affiliated persons" or "interested
persons" of the Fund, DMC or the Distributor to provide to the Fund services in
the Fund's marketing of the shares of the Class, such arrangements to be
reflected by Service Agreements.
The Plan provides that:
l. The Fund shall pay a monthly fee not to exceed 0.3% (3/10 of 1%)
per annum of the Fund's average daily net assets represented by shares of the
Class (the "Maximum Amount") as may be determined by the Fund's Board of
Directors from time to time. Such monthly fee shall be reduced by the aggregate
sums paid by the Fund to persons other than broker-dealers (the "Service
Providers") pursuant to Service Agreements referred to above.
2. (a) The Distributor shall use the monies paid to it pursuant to
paragraph l above to furnish, or cause or encourage others to furnish, services
and incentives in connection with the promotion, offering and sale of Class
shares and, where suitable and appropriate, the retention of Class shares by
shareholders.
(b) The Service Providers shall use the monies paid respectively
to them to reimburse themselves for the actual costs they have incurred in
confirming that their customers have received the Prospectus and Statement of
Additional Information, if applicable, and as a fee for (l) assisting such
customers in maintaining proper records with the Fund (2)
A-2
<PAGE>
answering questions relating to their respective accounts and (3) aiding in
maintaining the investment of their respective customers in the Class.
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under the Plan. The Service
Providers shall inform the Fund monthly and in writing of the amounts each
claims under the Service Agreement and the Plan; both the Distributor and the
Service Providers shall furnish the Board of Directors of the Fund with such
other information as the Board may reasonably request in connection with the
payments made under the Plan and the use thereof by the Distributor and the
Service Providers, respectively, in order to enable the Board to make an
informed determination of the amount of the Fund's payments and whether the Plan
should be continued.
4. The officers of the Fund shall furnish to the Board of Directors
of the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the Fund in writing of the commencement of the Plan, which time shall not
be before the first annual or special meeting of the public shareholders at
which the Plan is or was approved by the vote of a majority of the outstanding
voting securities as required in the Act (the "Commencement Date"); thereafter,
the Plan shall continue in effect for a period of more than one year from the
Commencement Date only so long as such continuance is specifically approved at
least annually by a vote of the Board of Directors of the Fund, and of the
Directors who are not interested persons of the Fund and have no direct or
indirect financial interest in the operation of the Plan or in any agreements
related to the Plan ("non-interested
A-3
<PAGE>
Directors"), cast in person at a meeting called for the purpose of voting on
such Plan.
6. (a) The Plan may be terminated at any time by vote of a majority
of the non-interested Directors or by vote of a majority of the outstanding
voting securities of the Class.
(b) The Plan may not be amended to increase materially the amount
to be spent for distribution pursuant to paragraph l thereof without approval by
the shareholders of the Class.
7. The Distribution Agreement between the Fund and the Distributor,
and the Service Agreements between the Fund and the Service Providers, shall
specifically have a copy of this Plan attached to, and its terms and provisions
incorporated respectively by reference in, such agreements.
8. All material amendments to this Plan shall be approved by the non-
interested Directors in the manner described in paragraph 5 above.
9. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Directors shall be committed to the discretion of such
non-interested Directors.
10. The definitions contained in Sections 2(a)(3), 2(a)(4), 2(a)(l9)
and 2(a)(42) of the Act shall govern the meaning of "affiliated person,"
"assignment," "interested person(s)" and "vote of a majority of the outstanding
voting securities," respectively, for the purposes of this Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
A-4
<PAGE>
EXHIBIT B
12B-1 PLAN
----------
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Group Value Fund, Inc. (the "Fund"), on behalf of the Value Fund B Class (the
"Class"), which Fund and Class may do business under these or such other names
as the Board of Directors of the Fund may designate from time to time. The Plan
has been approved by a majority of the Board of Directors, including a majority
of the Directors who are not interested persons of the Fund and who have no
direct or indirect financial interest in the operation of the Plan or in any
agreements related thereto, cast in person at a meeting called for the purpose
of voting on such Plan. Such approval by the Directors included a determination
that in the exercise of reasonable business judgment and in light of their
fiduciary duties, there is a reasonable likelihood that the Plan will benefit
the Class and its shareholders. The Plan has been approved by a vote of the
holders of a majority of the outstanding voting securities of the Class, as
defined in the Act.
The Fund is a corporation organized under the laws of the State of
Maryland, is authorized to issue different series and classes of securities and
is an open-end management investment company registered under the Act. Delaware
Management Company, Inc. serves as the Fund's investment adviser and manager
pursuant to an Investment Management Agreement. Delaware Service Company, Inc.
serves as the Fund's shareholder servicing, dividend disbursing and transfer
agent. Delaware Distributors, L.P. (the "Distributor") is the principal
underwriter and national distributor for the Fund's shares, including shares of
the Class, pursuant to the Distribution Agreement between the Distributor and
the Fund ("Distribution Agreement").
The Plan provides that:
B-1
<PAGE>
1. (a) The Fund shall pay to the Distributor a monthly fee not to
exceed 0.75% (3/4 of 1%) per annum of the Fund's average daily net assets
represented by shares of the Class as may be determined by the Fund's Board of
Directors from time to time.
(b) In addition to the amounts described in (a) above, the Fund
shall pay (i) to the Distributor for payment to dealers or others, or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
Fund's average daily net assets represented by shares of the Class, as a service
fee pursuant to dealer or servicing agreements, the forms of which have been
approved from time to time by the Fund's Board of Directors.
2. (a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for,
among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation related to sales and marketing personnel, and holding special
promotions. In addition, such fees may be used to pay for advancing the
commission costs to dealers with respect to the sale of Class shares.
(b) The monies to be paid pursuant to paragraph 1(b) above shall
be used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include confirming
that customers have received the Prospectus and Statement of Additional
Information, if applicable; assisting such customers in maintaining proper
records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under paragraph 1(a) above. In
B-2
<PAGE>
addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
any others receiving fees under the Plan shall furnish the Board of Directors of
the Fund with such other information as the Board may reasonably request in
connection with the payments made under the Plan and the use thereof by the
Distributor and others in order to enable the Board to make an informed
determination of the amount of the Fund's payments and whether the Plan should
be continued.
4. The officers of the Fund shall furnish to the Board of Directors of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the Fund of the commencement of the Plan (the "Commencement Date");
thereafter, the Plan shall continue in effect for a period of more than one year
from the Commencement Date only so long as such continuance is specifically
approved at least annually by a vote of the Board of Directors of the Fund, and
of the Directors who are not interested persons of the Fund and have no direct
or indirect financial interest in the operation of the Plan or in any agreements
related to the Plan ("non-interested Directors"), cast in person at a meeting
called for the purpose of voting on such Plan.
6. (a) The Plan may be terminated at any time by vote of a majority of
the non-interested Directors or by vote of a majority of the outstanding voting
securities of the Class.
(b) The Plan may not be amended to increase materially the amount
to be spent for distribution pursuant to paragraph 1 thereof without approval by
the shareholders of the Class.
B-3
<PAGE>
7. The Distribution Agreement between the Fund and the Distributor,
and any dealers or servicing agreements between the Distributor and brokers or
others or between the Fund and others receiving a servicing fee, shall
specifically have a copy of this Plan attached to, and its terms and provisions
incorporated respectively by reference in, such agreements.
8. All material amendments to this Plan shall be approved by the non-
interested Directors in the manner described in paragraph 5 above.
9. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Directors shall be committed to the discretion of such
non-interested Directors.
10. The definitions contained in Sections 2(a)(3), 2(a)(4), 2(a)(19)
and 2(a)(42) of the Act shall govern the meaning of "affiliated person,"
"assignment," "interested person(s)" and "vote of a majority of the outstanding
voting securities," respectively, for the purposes of this Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
B-4
<PAGE>
DELAWARE GROUP VALUE FUND, INC.
AMENDMENT NO. 1 TO DISTRIBUTION AGREEMENT
This Amendment No. 1 to Distribution Agreement (this "Agreement") is
made as of the 29th day of November, 1995, by and between DELAWARE GROUP VALUE
FUND, INC. (the "Fund"), and DELAWARE DISTRIBUTORS, L.P. (the "Distributor").
WITNESSETH
----------
WHEREAS, the Fund and the Distributor are parties to that certain
Distribution Agreement made as of the 3rd day of April, 1995 (the "Distribution
Agreement"); and
WHEREAS, the Board of Directors of the Fund has established the Value
Fund C Class (the "Class C Shares") as an additional class of shares of the Fund
and the Fund and the Distributor desire to amend the Distribution Agreement to
provide that the Distributor shall act as the national distributor of the Class
C Shares pursuant thereto;
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. The Class C Shares are hereby included among the shares to which
the Distribution Agreement relates and the Distributor shall act as distributor
for the Class C Shares pursuant to and in accordance with the Distribution
Agreement, as amended hereby.
2. Hereafter, each reference to "Class B Shares" in Section 2 (c) and
"Class B Shares and the Consultant Class Shares" in Section 2(d) of the
Distribution Agreement shall be deemed to include the Class C Shares, provided
that the Distribution Plan adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940 for the Class C Shares and presently in force is attached
hereto as Exhibit "A."
DELAWARE DISTRIBUTORS, L.P.
By: Delaware Distributors, Inc.,
General Partner
ATTEST:
/s/Eric E. Miller By:/s/Keith E. Mitchell
- ----------------- --------------------
Name: Eric E. Miller Name: Keith E. Mitchell
Title: Vice President Title: President
Assistant Secretary Chief Executive Officer
DELAWARE GROUP VALUE FUND, INC.
B-5
<PAGE>
ATTEST:
/s/John M. Zerr By:/s/David K. Downes
- --------------- ------------------
Name: John M. Zerr Name: David K. Downes
Title: Vice President Title: Senior Vice President
Assistant Secretary Chief Administrative Officer
B-6
<PAGE>
EXHIBIT A
DISTRIBUTION PLAN
CLASS C
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Group Value Fund, Inc. (the "Fund") on behalf of the Value Fund C Class (the
"Class"), which Fund and Class may do business under these or such other names
as the Board of Directors of the Fund may designate from time to time. The Plan
has been approved by a majority of the Board of Directors, including a majority
of the Directors who are not interested persons of the Fund and who have no
direct or indirect financial interest in the operation of the Plan or in any
agreements related thereto ("non-interested Directors"), cast in person at a
meeting called for the purpose of voting on such Plan. Such approval by the
Directors included a determination that in the exercise of reasonable business
judgment and in light of their fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Class and its shareholders. The Plan
has been approved by a vote of the holders of a majority of the outstanding
voting securities of the Class, as defined in the Act.
The Fund is a corporation organized under the laws of the State of
Maryland, is authorized to issue different series and classes of securities and
is an open-end management investment company registered under the Act. Delaware
Management Company, Inc. serves as the Fund's investment adviser and manager
pursuant to an Investment Management Agreement. Delaware Service Company, Inc.
serves as the Fund's shareholder servicing, dividend disbursing and transfer
agent. Delaware Distributors, L.P. (the "Distributor") is the principal
underwriter and national distributor for the Fund's shares, including shares of
the Class, pursuant to the Distribution Agreement between the Distributor and
the Fund ("Distribution Agreement").
The Plan provides that:
B-7
<PAGE>
1. (a) The Fund shall pay to the Distributor a monthly fee not to
exceed 0.75% (3/4 of 1%) per annum of the Fund's average daily net assets
represented by shares of the Class as may be determined by the Fund's Board of
Directors from time to time.
(b) In addition to the amounts described in paragraph 1(a) above, the
Fund shall pay: (i) to the Distributor for payment to dealers or others or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
Fund's average daily net assets represented by shares of the Class, as a service
fee pursuant to dealer or servicing agreements.
2. (a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for,
among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation related to sales and marketing personnel, and holding special
promotions. In addition, such fees may be used to pay for advancing the
commission costs to dealers with respect to the sale of Class shares.
(b) The monies to be paid pursuant to paragraph 1(b) above shall be
used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include confirming
that customers have received the Prospectus and Statement of Additional
Information, if applicable; assisting such customers in maintaining proper
records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under paragraph 1(a) above. In
addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
any others receiving fees under the Plan shall furnish the Board of Directors of
the Fund with such other information as the Board may reasonably
B-8
<PAGE>
request in connection with the payments made under the Plan and the use thereof
by the Distributor and others in order to enable the Board to make an informed
determination of the amount of the Fund's payments and whether the Plan should
be continued.
4. The officers of the Fund shall furnish to the Board of Directors
of the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the Fund of the commencement of the Plan (the "Commencement Date");
thereafter, the Plan shall continue in effect for a period of more than one year
from the Commencement Date only so long as such continuance is specifically
approved at least annually by a vote of the Board of Directors of the Fund, and
of the non-interested Directors, cast in person at a meeting called for the
purpose of voting on such Plan.
6. (a) The Plan may be terminated at any time by vote of a majority of
the non-interested Directors or by vote of a majority of the outstanding voting
securities of the Class.
(b) The Plan may not be amended to increase materially the amount
to be spent for distribution pursuant to paragraph 1 thereof without approval by
the shareholders of the Class.
7. All material amendments to this Plan shall be approved by the non-
interested Directors in the manner described in paragraph 5 above.
8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Directors shall be committed to the discretion of such
non-interested Directors.
9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
of the outstanding voting securities," respectively, for the purposes of this
Plan.
B-9
<PAGE>
This Plan shall take effect on the Commencement Date, as previously
defined.
November 29, 1995
B-10
<PAGE>
DELAWARE GROUP
Administration and Service Agreement
Gentlemen:
We are the national distributor of the shares of all of the classes
(now existing or hereafter added) of all of the Funds in the Delaware Group of
Funds. The term "Fund" as used in this Agreement refers to each fund in the
Delaware Group which retains the Distributor to promote and sell its shares, and
any fund which may hereafter be added to the Delaware Group and retain us as
national distributor. You have indicated that you wish to provide certain
services to your customers relating to their ownership of Fund shares, in
accordance with the terms of this Agreement.
TERMS
1. With respect to any Fund that offers shares of classes for which
Distribution Plans have been adopted under Rule 12b-1 (individually a "12b-1
Plan") of the Investment Company Act of 1940 (the "1940 Act"), which 12b-1 Plans
provide for the payment of service fees, we expect you to provide administrative
and other services, including, but not limited to, furnishing personal and other
services and assistance to your customers who own Fund shares, answering routine
inquiries regarding a Fund, assisting in changing dividend options, account
designations and addresses, maintaining such accounts, or such other services as
a Fund may require, to the extent permitted by applicable statutes, rules, or
regulations. For such services, we shall pay you a fee, as established by us
from time to time, based on the value of the shares of each class of each Fund
which are attributable to customers of your firm. We are permitted to make this
payment under the terms of the 12b-1 Plans adopted by certain of the Funds, as
such Plans may be in effect from time to time.
2. You shall furnish us and each Fund with such information as shall
reasonably be requested by the Board of Directors or Trustees with respect to
the fees paid to you pursuant to this Agreement.
3. We shall furnish to the Board of Directors or Trustees, for their
review, on a quarterly basis, a written report of the amounts expended under
<PAGE>
the Plan by us with respect to the relevant Fund and the purposes for which
such expenditures were made.
4. This Agreement may be terminated by either party at any time by
written notice to that effect and will terminate without notice upon any act of
insolvency by you. Notwithstanding the termination of this Agreement, you shall
remain liable for any amounts otherwise owing to the Distributor or the Funds
and for your portion of any transfer tax or other liability which may be
asserted or assessed against the Distributor or the Fund, or upon any one or
more of the Distributor's dealers, based upon a claim that you and such dealers
or any of them constitute a partnership, an unincorporated business or other
separate entity.
5. Any obligation assumed by a Fund pursuant to this Agreement shall be
limited in all cases to the assets of such Fund and no person shall seek
satisfaction thereof from shareholders of a Fund.
6. The 12b-1 Plans in effect on the date of this Agreement are
described in the Funds' Prospectuses. Each Fund reserves the right to terminate
or suspend its 12b-1 Plan(s) at any time as specified in such Plan(s) and we
reserve the right, at any time, without notice, to modify, suspend or terminate
payments hereunder in connection with such 12b-1 Plan(s).
7. This Agreement shall take effect on the date set forth below.
8. The terms and provisions of the current Prospectus and Statement of
Additional Information for each relevant Fund are hereby accepted and agreed to
by the parties hereto as evidenced by our execution hereof.
GENERAL
9. Governing Law. This Agreement will be governed by and construed in
accordance with the law of the State of Pennsylvania, without reference to that
state's choice of law doctrine.
10. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one Agreement.
11. Severability. In the event that any provision of this Agreement,
or the application of any such provision to any person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
<PAGE>
to persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
12. Entire Agreement. This Agreement sets forth the entire
understanding of the parties hereto and supersedes all prior agreements and
understandings between the parties hereto relating to the subject matter hereof.
13. Headings. The underlined headings contained herein are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the interpretation
hereof.
DELAWARE DISTRIBUTORS, L.P.
By: DELAWARE DISTRIBUTORS, INC.,
General Partner
By:
--------------------------------
Agreed and Accepted:
- ------------------------------
(Name)
By:
---------------------------
(Authorized Officer)
Date:
-------------------------
<PAGE>
DEALER'S AGREEMENT
We invite you, as a selected dealer, to participate as principal in the
distribution of the shares of all of the classes (now existing or hereafter
added) of all of the Funds in the Delaware Group of Investment Companies which
retain us, Delaware Distributors, L.P., to act as exclusive national
distributor. The term "Fund" as used in this Agreement, refers to each Fund in
the Delaware Group which retains us to promote and sell its shares, and any Fund
which may hereafter be added to the Delaware Group and retain us as national
distributor. Such additional Funds will be included in this Agreement upon our
providing you with written notice of such inclusion.
OFFERING PRICE TO PUBLIC: Orders for shares received from you and accepted by a
Fund or its agent, Delaware Service Company, Inc., will be at the public
offering price applicable to each order as set forth in that Fund's Prospectus.
The manner of computing the net asset value of shares, the public offering price
and the effective time of orders received from you are described in the
Prospectus for each Fund. We reserve the right, at any time and without notice,
to suspend the sale of Fund shares.
CONCESSIONS TO YOU: You will be entitled to deduct the applicable concession as
set forth in the then current Prospectus of a Fund from the purchase price of
certain purchase orders placed by you for shares of a Fund having a sales
charge. We reserve the right from time to time, without prior notice, to modify,
suspend or eliminate such concessions by amendment, sticker or supplement to the
Prospectus for the Fund. If any shares confirmed to you under the terms of this
Agreement are redeemed or repurchased by the Fund or by us as agent for the
Fund, or are tendered for redemption or repurchase, within seven business days
after the date of our confirmation of the original purchase order, you shall
promptly refund to us the concession allowed to you on such shares.
PURCHASE PLANS: The purchase price on all orders placed by you and any
concessions or other fees otherwise due to you under this Agreement will be
subject to the then current terms and provisions of any applicable special plans
and accounts (e.g., volume purchases, letters of intent, rights of accumulation,
combined purchases privilege, exchange and reinvestment privileges and
<PAGE>
retirement plan accounts) as set forth from time to time in the Prospectus. We
must be notified when an order is placed if it qualifies for a reduced sales
charge under any of these plans. We reserve the right, at any time, without
prior notice, to modify, suspend or eliminate any such plans or accounts by
amendment, sticker or supplement to the Prospectus for the Fund.
SALES, ORDERS AND CONFIRMATIONS: In offering Fund shares to the public or
otherwise, you shall act as dealer for your own account, and in no transaction
shall you have any authority to act as agent for the Fund, for any other
selected dealer or for us. No person is authorized to make any representations
concerning the shares to the Fund except those contained in the Prospectus and
in written information issued by the Fund or by us as a supplement to such
Prospectus. In purchasing Fund shares, you shall rely only on such
representations.
All sales must be made subject to confirmation and orders are subject
to acceptance or rejection by the Fund in its sole discretion. Your orders must
be wired, telephoned or written to the Fund or its agent. You agree to place
orders for the same number of shares sold by you at the price at which such
shares are sold. You agree that you will not purchase Fund shares except for
investment or for the purpose of covering purchase orders already received and
that you will not, as principal, sell Fund shares unless purchased by you from
the Fund under the terms hereof. You also agree that you will not withhold
placing with us orders received from your customers so as to profit yourself
from such withholding. Each of your orders shall be confirmed by you in writing
on the same day.
PAYMENT AND ISSUANCE OF CERTIFICATES: The shares purchased by you hereunder
shall be paid for in full at the public offering price, less any concession to
you as set forth above, by check payable to the Fund, at its office, within
three business days after our acceptance of your order. If not so paid, we
reserve the right to cancel the sale and to hold you responsible for any loss
sustained by us or the Fund (including lost profit) in consequence. Certificates
representing the Fund's shares will not be issued unless (i) the Fund's
Prospectus indicates that certificates may be issued for the class of shares
being purchased, and (ii) a specific request is received from the purchaser.
Certificates, if requested, will be issued in the names indicated by
registration instructions accompanying your payment.
-2-
<PAGE>
REDEMPTION: The Prospectus describes the provisions whereby the Fund, under all
ordinary circumstances, will redeem shares held by shareholders on demand. You
agree that you will not make any representations to shareholders relating to the
redemption of their shares other than the statements contained in the Prospectus
and the underlying organizational documents of the Fund, to which it refers, and
that you will quote as the redemption price only the price determined by the
Fund. You shall not repurchase any shares from your customers at a price below
that next quoted by the Fund for redemption. You may charge a reasonable fee for
services in connection with the repurchase by you from your customers of shares.
You may hold such repurchased shares only for investment purposes or submit such
shares to the Fund for redemption.
12b-1 PLAN: With respect to any Fund that offers shares of classes for which
Distribution Plans have been adopted under Rule 12b-1 (individually a "12b-1
Plan") of the Investment Company Act of 1940 (the "1940 Act"), we expect you to
provide distribution and marketing services in the promotion of the Fund's
shares. In connection with the receipt of distribution fees and/or the receipt
of service fees as set forth under the 12b-1 Plan(s) applicable to the class or
classes of Fund shares purchased by your customers, we expect you to provide
administrative and other services to your customers who own Fund shares,
including, but not limited to, furnishing personal and other services and
assistance, answering routine inquiries regarding a Fund, assisting in changing
dividend options, account designations and addresses, maintaining such accounts,
or such other services as the Fund may require, to the extent permitted by
applicable statutes, rules, or regulations. For such services we will pay you a
fee, as established by us from time to time, based on a portion of the net asset
value of the accounts of your clients in the Fund. We are permitted to make this
payment under the terms of the 12b-1 Plans adopted by certain of the Funds, as
such Plans may be in effect from time to time. The 12b-1 Plans in effect on the
date of this Agreement are described in the Funds' Prospectuses. Each Fund
reserves the right to terminate or suspend its 12b-1 Plan at any time as
specified in the Plan and we reserve the right, at any time, without notice, to
modify, suspend or terminate payments hereunder in connection with such 12b-1
Plan. You will furnish the Fund and us with such information as may be
-3-
<PAGE>
reasonably requested by the Fund or its directors or trustees or by us with
respect to such fees paid to you pursuant to this Agreement.
LEGAL COMPLIANCE: This Agreement and any transaction with, or payment to, you
pursuant to the terms hereof is conditioned on your representation to us that,
as of the date of this Agreement you are, and at all times during its
effectiveness you will be: (a) a registered broker/dealer under the Securities
Exchange Act of 1934 and qualified under applicable state securities laws in
each jurisdiction in which you are required to be qualified to act as a
broker/dealer in securities, and a member in good standing of the National
Association of Securities Dealers, Inc. (the "NASD"); or (b) a foreign
broker/dealer not eligible for membership in the NASD and otherwise in
compliance with applicable U.S. federal and state securities laws. You agree to
notify us promptly in writing and immediately suspend sales of Fund shares if
this representation ceases to be true. You also agree that, whether you are a
member of the NASD or a foreign broker/dealer not eligible for such membership,
you will comply with the rules of the NASD including, in particular, Sections 2
and 26 of Article III thereof, and that you will maintain adequate records with
respect to your transactions with the Funds.
BLUE SKY MATTERS: We shall have no obligation or responsibility with respect to
your right to sell Fund shares in any state or jurisdiction. From time to time
we may furnish you with information identifying the states and jurisdictions
under the securities laws of which it is believed a Fund's shares may be sold.
You will not transact orders for Fund shares in states or jurisdictions in which
we indicate Fund shares may not be sold. You agree to offer and sell Fund shares
outside the United States only in compliance with all applicable laws, rules and
regulations of any foreign government having jurisdiction over such transactions
in addition to any applicable laws, rules and regulations of the United States.
LITERATURE: We will furnish you with copies of each Fund's Prospectus, sales
literature and other information made publicity available by the Fund, in
reasonable quantities upon your request. You agree to deliver a copy of the
current Prospectus in accordance with the provisions of the Securities Act of
1933 to each purchaser of Fund shares for whom you act as broker. We shall file
Fund sales literature and promotional material with the NASD and SEC as
required.
-4-
<PAGE>
You may not publish or use any sales literature or promotional materials with
respect to the Funds without our prior review and written approval.
NOTICES AND COMMUNICATIONS: All communications from you should be addressed to
us at One Commerce Square, 2005 Market Street, Philadelphia, PA 19103. Any
notice from us to you shall be deemed to have been duly given if mailed or
telegraphed to you at the address set forth below. Each of us may change the
address to which notices shall be sent by notice to the other in accordance with
the terms hereof.
TERMINATION: This Agreement may be terminated by either party at any time by
written notice to that effect and will terminate without notice upon the
appointment of a trustee for you under the Securities Investor Protection Act,
or any other act of insolvency by you. Notwithstanding the termination of this
Agreement, you shall remain liable for any amounts otherwise owing to us or the
Funds and for your portion of any transfer tax or other liability which may be
asserted or assessed against the Fund, or us, or upon any one or more of the
selected dealers based upon the claim that the selected dealers or any of them
constitute a partnership, an unincorporated business or other separate entity.
AMENDMENT: This Agreement may be amended or revised at any time by us upon
notice to you and, unless you notify us in writing to the contrary, you will be
deemed to have accepted such modifications.
GENERAL: Your acceptance hereof will constitute an obligation on your part to
observe all the terms and conditions hereof. In the event you breach any of the
terms and conditions of this Agreement, you will indemnify us, the Funds, and
our affiliates for any damages, losses, costs and expenses (including reasonable
attorneys' fees) arising out of or relating to such breach and we may offset any
such damages, losses, costs and expenses against any amounts due to you
hereunder. Nothing contained herein shall constitute you, us and any dealers an
association or partnership. All references in this Agreement to the "Prospectus"
refer to the then current version of the Prospectus and include the Statement of
Additional Information incorporated by reference therein and any stickers or
supplements thereto. This Agreement supercedes and replaces any prior agreement
-5-
<PAGE>
between us and you with respect to your purchase and sale of Fund shares and is
to be construed in accordance with the laws of the State of Delaware.
Please confirm this Agreement by executing one copy of this Agreement
below and returning it to us. Keep the enclosed duplicate copy for your records.
DELAWARE DISTRIBUTORS, L.P.
By: Delaware Distributors, Inc.,
General Partner
By:/s/Keith E. Mitchell
----------------------
Name: Keith E. Mitchell
Title: President/Chief Executive Officer
-6-
<PAGE>
DEALER'S AGREEMENT ACCEPTANCE
DELAWARE DISTRIBUTORS, L.P.
The undersigned hereby confirms the Dealer's Agreement and acknowledges
that any purchase of Fund shares made during the effectiveness of this Agreement
is subject to all the applicable terms and conditions set forth in this
Agreement, and agrees to pay for the shares at the price and upon the terms and
conditions stated in the Agreement. The undersigned hereby acknowledges receipt
of Prospectuses relating to the Fund shares and confirms that, in executing the
Dealer's Agreement, it has relied on such Prospectuses and not on any other
statement whatsoever, written or oral.
INVESTMENT DEALER PLEASE SIGN HERE AND COMPLETE BELOW
By: DATE
------------------------------- ----------------------------
Name:
-----------------------------
Title:
----------------------------
- ----------------------------------
FIRM
- ----------------------------------
FIRM'S TAX IDENTIFICATION NUMBER
- ----------------------------------
STREET ADDRESS
- ----------------------------------
CITY/STATE/ZIP
<PAGE>
MUTUAL FUND AGREEMENT
FOR THE DELAWARE GROUP OF FUNDS
Gentlemen:
We are the national distributor for the Delaware Group of Funds with exclusive
right to sell and distribute Fund shares. (The term "Funds" in this Agreement
refers to each or any of the Funds that from time to time comprise the Delaware
Group and for whom we act as distributor.) You have indicated that you wish to
act as agent for your customers in connection with the purchase, sale and
redemption of Fund shares and desire to provide certain services to your
customers relating to their ownership of Fund shares, all in accordance with the
terms of this Agreement.
AGENT FOR CUSTOMERS: In placing orders for the purchase and sale of Fund shares,
you will be acting as agent for your customers and will not have any authority
to act as agent for us, any of the Funds or any of our affiliates or
representatives. Neither you nor any of your employees or agents are authorized
to make any representations concerning the Funds or Fund shares except those
contained in the then current "Prospectus" and in written information issued by
the Fund or by us as a supplement to the Prospectus. In purchasing Fund shares
your customers may rely on such authorized information.
OFFERING PRICE TO PUBLIC: Orders for shares received from you and accepted by
the Fund or its agent, Delaware Service Co., Inc., will be at the public
offering price applicable to each order as set forth in the Prospectus. The
manner of computing the net asset value, the public offering price and the
effective time of orders received from you are described in the Prospectus for
each Fund. We reserve the right at any time, without notice, to suspend the sale
of Fund shares or withdraw the public offering.
SALES, ORDERS AND CONFIRMATIONS: All orders must be made subject to
confirmation. Your orders must be wired, telephoned or written to the Fund or
its agent. You agree to place orders on behalf of your customers for the number
of shares, and at the price, as in bona fide orders from your customers. We will
not accept any conditional orders. We will send a written confirmation of each
trade indicating that the trade was on a fully disclosed basis to your customer.
It is agreed and understood that, whether shares are registered in the
purchaser's name, in your name or in the name of your nominee, your customer
will have full beneficial ownership of the Fund shares.
AGENCY FEES: On each order accepted by us for a Fund with a sales charge, we
understand that you will charge your customer an agency commission or agency
transaction fee ("agency fee") as set forth in the schedule of sales concessions
and agency fees set forth in that Fund's Prospectus, as it may be amended from
time to time. This fee shall be subject to the provisions of all terms set forth
in the Prospectus for volume purchases and special plans and accounts (e.g.
retirement plans, letters of intent, etc.) You will not receive from us a
<PAGE>
dealer's concession or similar allowance out of the sales charge. In accordance
with interpretations by the Staff of the Securities and Exchange Commission (the
"Commission"), the agency fee will be your sole charge to your customers for
placing such orders. You may elect to make payments in either of two ways: (a)
you may send us the public offering price for the Fund shares purchased less the
amount of the agency fee due you or (b) you or your customer may send us the
entire public offering price for the Fund shares and we will, on a periodic
basis, remit to you the agency fee due. You will notify us in writing of which
method of payment you elect. If any shares sold to your customer under the terms
of this Agreement are repurchased by the Fund or by us, or are tendered to a
Fund for redemption or repurchase, within seven (7) business days after the date
of the confirmation of the original purchase order, you will promptly refund to
us full agency fee paid or allowed to you on such shares.
PAYMENT AND ISSUANCE OF CERTIFICATES: Regardless of the payment method elected,
Fund shares purchased by you for your customers hereunder shall be paid for in
full by check payable to the Fund at its office within three business days after
our acceptance of your order. If not so paid, the Fund reserves the right,
without notice, to cancel the sale and to hold you responsible for any loss,
including lost profit, sustained by us or the Fund in consequence. Certificates
representing Fund shares will not be issued unless a specific request is
received from you or your customer. Certificates, if requested, will be issued
in the names indicated by registration instructions accompanying payment.
REDEMPTION: The Prospectus describes the provisions whereby the Fund, under all
ordinary circumstances, will repurchase its shares from shareholders on demand.
You agree that you will not make any representations to shareholders relating to
the purchase of their Fund shares other than the statements contained in the
Prospectus and the underlying organizational documents of the Fund, to which it
refers, and that you will quote to your customers as the redemption price only
the price determined by the Fund.
12b-1 PLAN: With respect to any Fund that has a Distribution Plan under Rule
12b-1 (a "12b-1Plan") of the Investment Company Act of 1940 (the "1940 Act"), we
expect you will provide shareholder and administrative services to your
customers who own Fund shares, such as: answering inquiries regarding the Fund;
assisting in changing dividend options, account designations and addresses;
establishing and maintaining shareholder accounts and records; arranging for
bank wires; or such other services as the Fund may require to the extent
permitted by applicable statutes, rules or regulations. You will promptly answer
all written complaints received by you relating to Fund accounts or promptly
forward such complaints to us and assist us in answering such complaints. For
such services we will pay you a fee as set by us from time to time, based on a
portion of the net asset value of the accounts of your clients in the Fund. We
are permitted to make this payment under the terms of the 12b-1 Plan adopted by
2
<PAGE>
certain of the Funds, as such 12b-1 Plans may be in effect from time to time.
Each Fund reserves the right, at any time, to suspend payments under its 12b-1
Plan. You will furnish the Fund and us with such information as may be
reasonably requested by the Fund or its directors or trustees or by us with
respect to fees paid to you pursuant to this Agreement. In accordance with
interpretations and rulings to the Staff of the Commission, you will not charge
your customers any fees for services for which you are being compensated under a
12b-1 Plan of a Fund.
SALES OF NO-LOAD - NON 12b-1 PLAN FUNDS: In connection with any orders placed by
you on behalf of your customers for shares of Funds that do not charge a sales
load and do not have a 12b-1 Plan, we understand that you may charge your
customers a limited service or transaction fee, in accordance with
interpretations and rulings of the Staff of the Commission.
LEGAL COMPLIANCE: This Agreement and any transaction with or payment to you
pursuant to the terms hereof is conditioned on your representation to us that,
as of the date of this Agreement you are and at all times during its
effectiveness you will be (a) a registered broker-dealer under the Securities
Exchange Act of 1934 and qualified under applicable state securities laws, if
any, to act as a broker or dealer in securities, and a member in good standing
of the National Association of Securities Dealers, Inc. (the "NASD"); or (b) a
"bank" as defined in Section 3(a)(6) of the Securities and Exchange Act of 1934
(or other financial institution) and not otherwise required to register as a
broker or dealer under such Act. You agree to notify us promptly in writing if
this representation ceases to be true. You also agree that you will comply with
the rules of the NASD including, in particular, Sections 2 and 26 of Article III
thereof, to the extent applicable, that you will maintain adequate records with
respect to your customers and their transactions, and that such transactions
will be without recourse against you by your customers. We recognize that, in
addition to applicable provisions of state and federal securities laws, you may
be subject to the provisions of the Glass-Steagall Act and other laws governing,
among other things, the conduct of activities by federal and state chartered and
supervised financial institutions and their affiliated organizations. Because
you will be the only one having a direct relationship with the customer, you
will be responsible in that relationship for insuring compliance with all laws
and regulations, including those of all applicable federal and state regulatory
authorities and bodies having jurisdiction over you or your customers to the
extent applicable to securities purchases hereunder.
BLUE SKY MATTERS: We shall have no obligation or responsibility with respect to
your right to sell Fund shares in any state or jurisdiction. From time to time
we shall furnish you with information identifying the states under the
securities laws of which it is believed a Fund's shares may be sold. You will
not transact orders for Fund shares in states which we indicate Fund shares may
not be sold.
LITERATURE: We will furnish you with copies of each Fund's Prospectus, sales
literature and other information made publicly available by the Fund, in
3
<PAGE>
reasonable quantities upon your request. We shall file Fund sales literature and
promotional material with the NASD and SEC as required. You may not publish or
use any sales literature or promotional material with respect to the Funds
without our prior review and written approval.
CUSTOMERS: The name of your customers will remain your sole property and will
not be used by us except for servicing or informational mailings and other
correspondence in the normal course of business.
NOTICES AND COMMUNICATIONS: All communications from you should be addressed to
us at 1818 Market Street, Philadelphia, PA 19103. Any notice from us to you
shall be deemed to have been duly given if mailed or telegraphed to you at the
address set forth above. Each of us may change the address to which notices
shall be sent by notice to the other in accordance with the terms hereof.
TERMINATION: This Agreement may be terminated by either party at any time by
written notice to that effect. Notwithstanding the termination of this
Agreement, you shall remain liable for any amounts otherwise owing to us or the
Fund and for your portion of any transfer tax or other liability which may be
asserted or assessed against the Fund, us or any one or more of our dealers,
based upon the claim that you and such dealers or any of them constitute a
partnership, an unincorporated business or other separate entity.
AMENDMENT: This Agreement may be amended or revised at any time by us upon
notice to you and, unless you promptly notify us in writing to the contrary, you
will be deemed to have accepted such modifications.
GENERAL: Your acceptance hereof will constitute an obligation on your part to
observe all the terms and conditions hereof. In the event you breach any of the
terms and conditions of this Agreement, you will indemnify us, the Funds, and
our affiliates for any damages, losses, costs and expenses (including reasonable
attorneys' fees) arising out of or relating to such breach. Nothing contained
herein shall constitute you, us and any dealers an association or partnership.
All references in this Agreement to the "Prospectus" include the Statement of
Additional Information incorporated by reference therein and any stickers or
supplements thereto, provided that any requirement in this Agreement to deliver
a copy of the Prospectus shall not include the Statement of Additional
Information unless requested by the customer. This Agreement is to be construed
in accordance with the laws of the State of Delaware.
4
<PAGE>
Please confirm this Agreement by executing one copy of this Agreement below and
returning it to us. Keep the enclosed duplicate copy for your records.
Date: DELAWARE DISTRIBUTORS, L.P.
----------------------------
BY: DELAWARE DISTRIBUTORS, INC.
General Partner
BY:
--------------------------------
Accepted and Agreed to:
- ---------------------------------
(Name of Firm)
BY:
------------------------------
Name:
Title:
5
AMENDMENT NO. 1
TO THE
SECOND AMENDMENT AND RESTATEMENT OF THE
PROFIT SHARING PLAN OF
DELAWARE GROUP DELAWARE FUND, INC.
EFFECTIVE APRIL 1, 1989
This Amendment is made this 21st day of December, 1995, by Delaware
Group Delaware fund, Inc. (the "Employer").
WITNESSETH:
-----------
WHEREAS, the Employer adopted the second amendment and restatement of
the Profit Sharing Plan of Delaware Management Company, Inc. (the "Plan"),
effective April 1, 1989; and
WHEREAS, the Employer desires to clarify the provisions of the Plan
pertaining to the crediting of service for vesting purposes.
NOW THEREFORE, Section 2.28 of the Plan is hereby amended as follows:
"2.28 "Year of Service" shall mean the completion by an Employee of
1,000 or more Hours of Service during his initial Eligibility
Computation Period and during any Plan Year, beginning with the Plan
Year which commences after the Employee first performs an Hour of
Service. However, for the period from October 1, 1988 through March 31,
1990, an Employee shall be given credit for a Year of Service if he
completes 1,000 Hours of Service during the period October 1, 1988 to
September 30, 1989 and shall be given credit for an additional Year of
Service if he completes 1,000 Hours of Service during the period April
1, 1989 to March 31, 1990. For purposes of determining a Participant's
nonforfeitable right to his Employer Contribution Account, Years of
Service shall include an Employee's prior service with Delaware
Management Company, Inc. or any other Entity required to be aggregated
with Delaware Management Company, Inc. under Sections 414(b) or (c) of
the Code."
IN WITNESS WHEREOF, the Employer has caused this Amendment to be
executed by its duly authorized officers and its corporate seal to be impressed
hereon the date first written above.
ATTEST: DELAWARE GROUP DELAWARE FUND, INC.
/s/ George M. Chamberlain, Jr. By: /s/ Wayne A. Stork
- ------------------------------- -------------------------
Senior Vice President/Secretary Chairman
<PAGE>
Consent of Independent Auditors
We consent to the references to our firm under the captions "Financial
Highlights" in the Prospectuses and "Financial Statements" in the Statement of
Additional Information and to the incorporation by reference in this Post-
Effective Amendment No. 15 to the Registration Statement (Form N-lA) (No. 33-
11419) of Delaware Group Value Fund, Inc. of our report dated January 5, 1996,
included in the 1995 Annual Report to Shareholders of Delaware Group Value Fund,
Inc.
/s/ Ernst & Young LLP
Ernst & Young LLP
Philadelphia, Pennsylvania
January 25, 1996
<PAGE>
Report of Independent Auditors
To the Shareholders and Board of Directors
Delaware Group Value Fund, Inc.
We have audited the accompanying statement of net assets of Delaware Group Value
Fund, Inc. as of November 30, 1995, and the related statement of operations for
the year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Delaware Group Value Fund, Inc. at November 30, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
/s/ Ernst & Young LLP
Ernst & Young LLP
Philadelphia, Pennsylvania
January 5, 1996
<PAGE>
DISTRIBUTION PLAN
CLASS A
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule l2b-l under the Investment Company Act of l940 (the "Act") by Delaware
Group Value Fund, Inc. (the "Fund") on behalf of the Value Fund Class, now doing
business as the Value Fund A Class (hereinafter referred to as the "Class"),
which Fund and Class may do business under these or such other names as the
Board of Directors of the Fund may designate from time to time. The Plan has
been approved by a majority of the Board of Directors, including a majority of
the Directors who are not interested persons of the Fund and who have no direct
or indirect financial interest in the operation of the Plan or in any agreements
related thereto ("non-interested Directors"), cast in person at a meeting called
for the purpose of voting on such Plan. Such approval by the Directors included
a determination that in the exercise of reasonable business judgment and in
light of their fiduciary duties, there is a reasonable likelihood that the Plan
will benefit the Class and its shareholders. If the Plan has not yet been
approved by a majority of the outstanding voting securities as required in the
Act, the Plan will be presented to the public shareholders at the next regular
annual or special meeting.
The Fund is a corporation organized under the laws of the State of
Maryland, is authorized to issue different series and classes of securities and
is an open-end management investment company registered under the Act. Delaware
Management Company, Inc. serves as the Fund's investment adviser and manager
pursuant to an Investment Management Agreement. Delaware Service Company, Inc.
serves as the Fund's shareholder servicing, dividend disbursing and transfer
agent. Delaware Distributors, L.P. (the "Distributor") is the principal
underwriter and national distributor for the Fund's shares, including
B-16
<PAGE>
shares of the Class pursuant to the Distribution Agreement between the
Distributor and the Fund ("Distribution Agreement").
The Plan provides that:
l. The Fund shall pay to the Distributor a monthly fee not to exceed 0.3%
(3/10 of l%) per annum of the Fund's average daily net assets represented by
shares of the Class (the "Maximum Amount") as may be determined by the Fund's
Board of Directors from time to time. Such monthly fee shall be reduced by the
aggregate sums paid by the Fund to persons other than broker-dealers (the
"Service Providers") who may, pursuant to servicing agreements, provide to the
Fund services in the Fund's marketing of shares of the Class.
2. (a) The Distributor shall use the monies paid to it pursuant to
paragraph l above to furnish, or cause or encourage others to furnish, services
and incentives in connection with the promotion, offering and sale of Class
shares and, where suitable and appropriate, the retention of Class shares by
shareholders.
(b) The Service Providers shall use the monies paid respectively to
them to reimburse themselves for the actual costs they have incurred in
confirming that their customers have received the Prospectus and Statement of
Additional Information, if applicable, and as a fee for (l) assisting such
customers in maintaining proper records with the Fund (2) answering questions
relating to their respective accounts and (3) aiding in maintaining the
investment of their respective customers in the Class.
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under the Plan. The Service
Providers shall inform the Fund monthly and in writing of the amounts each
claims under the Plan; both the Distributor and the Service Providers shall
furnish the Board of Directors of the Fund with such other information as the
Board may reasonably request in connection with the payments made under the Plan
and the use thereof by the Distributor and the Service Providers, respectively,
in order to enable the Board to make an informed determination of the amount of
the Fund's payments and whether the Plan should be continued.
B-17
<PAGE>
4. The officers of the Fund shall furnish to the Board of Directors of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the Fund in writing of the commencement of the Plan, which time shall not
be before the first annual or special meeting of the public shareholders at
which the Plan is or was approved by the vote of a majority of the outstanding
voting securities as required in the Act (the "Commencement Date"); thereafter,
the Plan shall continue in effect for a period of more than one year from the
Commencement Date only so long as such continuance is specifically approved at
least annually by a vote of the Board of Directors of the Fund, and of the non-
interested Directors, cast in person at a meeting called for the purpose of
voting on such Plan.
6. (a) The Plan may be terminated at any time by vote of a majority of
the non-interested Directors or by vote of a majority of the outstanding voting
securities of the Class.
(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph l thereof without approval by
the shareholders of the Class.
7. All material amendments to this Plan shall be approved by the non-
interested Directors in the manner described in paragraph 5 above.
8. So long as the Plan is in effect, the selection and nomination of the
Fund's non-interested Directors shall be committed to the discretion of such
non-interested Directors.
9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the Act
shall govern the meaning of "interested person(s)" and "vote of a majority of
the outstanding voting securities," respectively, for the purposes of this Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
B-18
<PAGE>
DISTRIBUTION PLAN
CLASS B
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Group Value Fund, Inc. (the "Fund") on behalf of the Value Fund B Class (the
"Class"), which Fund and Class may do business under these or such other names
as the Board of Directors of the Fund may designate from time to time. The Plan
has been approved by a majority of the Board of Directors, including a majority
of the Directors who are not interested persons of the Fund and who have no
direct or indirect financial interest in the operation of the Plan or in any
agreements related thereto ("non-interested Directors"), cast in person at a
meeting called for the purpose of voting on such Plan. Such approval by the
Directors included a determination that in the exercise of reasonable business
judgment and in light of their fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Class and its shareholders. The Plan
has been approved by a vote of the holders of a majority of the outstanding
voting securities of the Class, as defined in the Act.
The Fund is a corporation organized under the laws of the State of
Maryland, is authorized to issue different series and classes of securities and
is an open-end management investment company registered under the Act. Delaware
Management Company, Inc. serves as the Fund's investment adviser and manager
pursuant to an Investment Management Agreement. Delaware Service Company, Inc.
serves as the Fund's shareholder servicing, dividend disbursing and transfer
agent. Delaware Distributors, L.P. (the "Distributor")
B-20
<PAGE>
is the principal underwriter and national distributor for the Fund's shares,
including shares of the Class, pursuant to the Distribution Agreement between
the Distributor and the Fund ("Distribution Agreement").
The Plan provides that:
1. (a) The Fund shall pay to the Distributor a monthly fee not to
exceed 0.75% (3/4 of 1%) per annum of the Fund's average daily net assets
represented by shares of the Class as may be determined by the Fund's Board of
Directors from time to time.
(b) In addition to the amounts described in (a) above, the Fund
shall pay (i) to the Distributor for payment to dealers or others, or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
Fund's average daily net assets represented by shares of the Class, as a service
fee pursuant to dealer or servicing agreements.
2. (a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for,
among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation related to sales and marketing personnel, and holding special
promotions. In addition, such fees may be used to pay for advancing the
commission costs to dealers with respect to the sale of Class shares.
(b) The monies to be paid pursuant to paragraph 1(b) above shall
be used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include confirming
that customers have received the Prospectus and Statement of Additional
Information, if applicable; assisting such customers in maintaining proper
records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under paragraph 1(a)
B-21
<PAGE>
above. In addition, the Distributor and others shall inform the Fund monthly and
in writing of the amounts paid under paragraph 1(b) above; both the Distributor
and any others receiving fees under the Plan shall furnish the Board of
Directors of the Fund with such other information as the Board may reasonably
request in connection with the payments made under the Plan and the use thereof
by the Distributor and others in order to enable the Board to make an informed
determination of the amount of the Fund's payments and whether the Plan should
be continued.
4. The officers of the Fund shall furnish to the Board of Directors
of the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the Fund of the commencement of the Plan (the "Commencement Date");
thereafter, the Plan shall continue in effect for a period of more than one year
from the Commencement Date only so long as such continuance is specifically
approved at least annually by a vote of the Board of Directors of the Fund, and
of the non-interested Directors, cast in person at a meeting called for the
purpose of voting on such Plan.
6. (a) The Plan may be terminated at any time by vote of a majority
of the non-interested Directors or by vote of a majority of the outstanding
voting securities of the Class.
(b) The Plan may not be amended to increase materially the amount
to be spent for distribution pursuant to paragraph 1 thereof without approval by
the shareholders of the Class.
7. All material amendments to this Plan shall be approved by the non-
interested Directors in the manner described in paragraph 5 above.
8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Directors shall be committed to the discretion of such
non-interested Directors.
B-22
<PAGE>
9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
of the outstanding voting securities," respectively, for the purposes of this
Plan.
This Plan shall take effect on the Commencement Date, as
previously defined.
B-23
<PAGE>
EXHIBIT A
DISTRIBUTION PLAN
CLASS C
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Group Value Fund, Inc. (the "Fund") on behalf of the Value Fund C Class (the
"Class"), which Fund and Class may do business under these or such other names
as the Board of Directors of the Fund may designate from time to time. The Plan
has been approved by a majority of the Board of Directors, including a majority
of the Directors who are not interested persons of the Fund and who have no
direct or indirect financial interest in the operation of the Plan or in any
agreements related thereto ("non-interested Directors"), cast in person at a
meeting called for the purpose of voting on such Plan. Such approval by the
Directors included a determination that in the exercise of reasonable business
judgment and in light of their fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Class and its shareholders. The Plan
has been approved by a vote of the holders of a majority of the outstanding
voting securities of the Class, as defined in the Act.
The Fund is a corporation organized under the laws of the State of
Maryland, is authorized to issue different series and classes of securities and
is an open-end management investment company registered under the Act. Delaware
Management Company, Inc. serves as the Fund's investment
B-24
<PAGE>
adviser and manager pursuant to an Investment Management Agreement. Delaware
Service Company, Inc. serves as the Fund's shareholder servicing, dividend
disbursing and transfer agent. Delaware Distributors, L.P. (the "Distributor")
is the principal underwriter and national distributor for the Fund's shares,
including shares of the Class, pursuant to the Distribution Agreement between
the Distributor and the Fund ("Distribution Agreement").
The Plan provides that:
1.(a) The Fund shall pay to the Distributor a monthly fee not to
exceed 0.75% (3/4 of 1%) per annum of the Fund's average daily net assets
represented by shares of the Class as may be determined by the Fund's Board of
Directors from time to time.
(b) In addition to the amounts described in paragraph 1(a) above, the
Fund shall pay: (i) to the Distributor for payment to dealers or others or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
Fund's average daily net assets represented by shares of the Class, as a service
fee pursuant to dealer or servicing agreements.
2.(a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for,
among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation related to sales and marketing personnel, and holding special
promotions. In addition, such fees may be used to pay for advancing the
commission costs to dealers with respect to the sale of Class shares.
(b) The monies to be paid pursuant to paragraph 1(b) above shall be
used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include confirming
that customers have received the Prospectus and Statement of Additional
Information, if applicable; assisting such customers in maintaining proper
records with the Fund; answering questions relating to their respective
B-25
<PAGE>
accounts; and aiding in maintaining the investment of their respective customers
in the Class.
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under paragraph 1(a) above. In
addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
any others receiving fees under the Plan shall furnish the Board of Directors of
the Fund with such other information as the Board may reasonably request in
connection with the payments made under the Plan and the use thereof by the
Distributor and others in order to enable the Board to make an informed
determination of the amount of the Fund's payments and whether the Plan should
be continued.
4. The officers of the Fund shall furnish to the Board of Directors
of the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the Fund of the commencement of the Plan (the "Commencement Date");
thereafter, the Plan shall continue in effect for a period of more than one year
from the Commencement Date only so long as such continuance is specifically
approved at least annually by a vote of the Board of Directors of the Fund, and
of the non-interested Directors, cast in person at a meeting called for the
purpose of voting on such Plan.
6.(a) The Plan may be terminated at any time by vote of a majority of
the non-interested Directors or by vote of a majority of the outstanding voting
securities of the Class.
(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph 1 thereof without approval by
the shareholders of the Class.
7. All material amendments to this Plan shall be approved by the non-
interested Directors in the manner described in paragraph 5 above.
B-26
<PAGE>
8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Directors shall be committed to the discretion of such
non-interested Directors.
9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
of the outstanding voting securities," respectively, for the purposes of this
Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
November 29, 1995
B-27
<PAGE>
DELAWARE GROUP VALUE FUND B
ANNUALIZED RATE OF RETURN
FOR FISCAL YEAR ENDING 1995
- ----------------------------------------
Average Annual Compounded Rate of Return:
n
P(1 + T) = ERV
ONE
YEAR
- --------
1
$1000(1 - T) = $1,155.51
T = 15.55%
LIFE OF
FUND
- --------
1.23561644
$1000(1 - T) = $1,097.75
T = 7.84%
<PAGE>
DELAWARE GROUP VALUE FUND B
ANNUALIZED RATE OF RETURN
FOR FISCAL YEAR ENDING 1995
- ----------------------------------------
Average Annual Compounded Rate of Return:
n
P(1 + T) = ERV
ONE
YEAR
- --------
1
$1000(1 - T) = $1,195.51
T = 19.55%
LIFE OF
FUND
- --------
1.23561644
$1000(1 - T) = $1,137.75
T = 11.01%
<PAGE>
DELAWARE GROUP VALUE FUND B
TOTAL RETURN PERFORMANCE
NINE MONTHS (INCLUDING CDSC)
- ----------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $19.11
Initial Shares 52.329
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
1994 52.329 $0.000 0.000 52.329
- ----------------------------------------------------------------------
Ending Shares 52.329
Ending NAV $22.59
---------
$1,182.11
Less CDSC $40.00
---------
Investment Return $1,142.11
Total Return Performance
- ------------------------
Investment Return $1,142.11
Less Initial Investment $1,000.00
---------
$ 142.11 / $1,000.00 x 100
Total Return: 14.21%
</TABLE>
<PAGE>
DELAWARE GROUP VALUE FUND B
TOTAL RETURN PERFORMANCE
NINE MONTHS (EXCLUDING CDSC)
- -----------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $19.11
Initial Shares 52.329
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------------
1994 52.329 $0.000 0.000 52.329
- -----------------------------------------------------------------
Ending Shares 52.329
Ending NAV $22.59
---------
Investment Return $1,182.11
Total Return Performance
- ------------------------
Investment Return $1,182.11
Less Initial Investment $1,000.00
---------
$182.11/$1,000.00 x 100
Total Return: 18.21%
<PAGE>
DELAWARE GROUP VALUE FUND B
TOTAL RETURN PERFORMANCE
ONE YEAR (INCLUDING CDSC)
- ------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $19.30
Initial Shares 51.813
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ------ --------- ---------- ---------- ----------
1994 51.813 $0.720 1.109 52.922
- ------ --------- ---------- ---------- ----------
Ending Shares 52.922
Ending NAV $22.59
---------
$1,195.51
Less CDSC $40.00
---------
Investment Return $1,155.51
Total Return Performance
- ------------------------
Investment Return $1,155.51
Less Initial Investment $1,000.00
---------
$155.51 / $1,000.00 x 100
Total Return: 15.55%
<PAGE>
DELAWARE GROUP VALUE FUND B
TOTAL RETURN PERFORMANCE
ONE YEAR (EXCLUDING CDSC)
- --------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $19.30
Initial Shares 51.813
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
1994 51.813 $0.400 1.109 52.922
- --------------------------------------------------------------------------------
Ending Shares 52.922
Ending NAV $22.59
----------
Investment Return $1,195.51
Total Return Performance
- ------------------------
Investment Return $1,195.51
Less Initial Investment $1,000.00
----------
$195.51 / $1,000.00 x 100
Total Return: 19.55%
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000809821
<NAME> DELAWARE GROUP VALUE FUND, INC.
<SERIES>
<NUMBER> 001
<NAME> VALUE FUND A CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 161,174,021
<INVESTMENTS-AT-VALUE> 192,432,798
<RECEIVABLES> 4,650,742
<ASSETS-OTHER> 846
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 197,084,386
<PAYABLE-FOR-SECURITIES> 4,576,606
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,410,205
<TOTAL-LIABILITIES> 6,986,811
<SENIOR-EQUITY> 83,522
<PAID-IN-CAPITAL-COMMON> 149,453,363
<SHARES-COMMON-STOCK> 7,776,729
<SHARES-COMMON-PRIOR> 9,289,521
<ACCUMULATED-NII-CURRENT> 2,017,066
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7,285,169
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 31,258,455
<NET-ASSETS> 177,011,337
<DIVIDEND-INCOME> 2,288,782
<INTEREST-INCOME> 2,703,947
<OTHER-INCOME> 0
<EXPENSES-NET> 2,741,859
<NET-INVESTMENT-INCOME> 2,250,870
<REALIZED-GAINS-CURRENT> 7,254,850
<APPREC-INCREASE-CURRENT> 24,932,006
<NET-CHANGE-FROM-OPS> 34,437,726
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,473,989
<DISTRIBUTIONS-OF-GAINS> 2,306,541
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,698,238
<NUMBER-OF-SHARES-REDEEMED> 4,401,949
<SHARES-REINVESTED> 190,919
<NET-CHANGE-IN-ASSETS> 2,759,242
<ACCUMULATED-NII-PRIOR> 1,327,257
<ACCUMULATED-GAINS-PRIOR> 2,444,660
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,371,155
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,741,859
<AVERAGE-NET-ASSETS> 174,665,649
<PER-SHARE-NAV-BEGIN> 19.320
<PER-SHARE-NII> 0.253
<PER-SHARE-GAIN-APPREC> 3.597
<PER-SHARE-DIVIDEND> 0.160
<PER-SHARE-DISTRIBUTIONS> 0.250
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 22.760
<EXPENSE-RATIO> 1.480
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000809821
<NAME> DELAWARE GROUP VALUE FUND, INC.
<SERIES>
<NUMBER> 002
<NAME> VALUE FUND B CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 161,174,021
<INVESTMENTS-AT-VALUE> 192,432,798
<RECEIVABLES> 4,650,742
<ASSETS-OTHER> 846
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 197,084,386
<PAYABLE-FOR-SECURITIES> 4,576,606
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,410,205
<TOTAL-LIABILITIES> 6,986,811
<SENIOR-EQUITY> 83,522
<PAID-IN-CAPITAL-COMMON> 149,453,363
<SHARES-COMMON-STOCK> 256,143
<SHARES-COMMON-PRIOR> 75,379
<ACCUMULATED-NII-CURRENT> 2,017,066
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7,285,169
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 31,258,455
<NET-ASSETS> 5,787,447
<DIVIDEND-INCOME> 2,288,782
<INTEREST-INCOME> 2,703,947
<OTHER-INCOME> 0
<EXPENSES-NET> 2,741,859
<NET-INVESTMENT-INCOME> 2,250,870
<REALIZED-GAINS-CURRENT> 7,254,850
<APPREC-INCREASE-CURRENT> 24,932,006
<NET-CHANGE-FROM-OPS> 34,437,726
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 13,005
<DISTRIBUTIONS-OF-GAINS> 21,675
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 227,700
<NUMBER-OF-SHARES-REDEEMED> 48,686
<SHARES-REINVESTED> 1,750
<NET-CHANGE-IN-ASSETS> 2,759,242
<ACCUMULATED-NII-PRIOR> 1,327,257
<ACCUMULATED-GAINS-PRIOR> 2,444,660
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,371,155
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,741,859
<AVERAGE-NET-ASSETS> 3,551,280
<PER-SHARE-NAV-BEGIN> 19.300
<PER-SHARE-NII> 0.141
<PER-SHARE-GAIN-APPREC> 3.549
<PER-SHARE-DIVIDEND> 0.150
<PER-SHARE-DISTRIBUTIONS> 0.250
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 22.590
<EXPENSE-RATIO> 2.180
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000809821
<NAME> DELAWARE GROUP VALUE FUND, INC.
<SERIES>
<NUMBER> 003
<NAME> VALUE FUND C CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 161,174,021
<INVESTMENTS-AT-VALUE> 192,432,798
<RECEIVABLES> 4,650,742
<ASSETS-OTHER> 846
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 197,084,386
<PAYABLE-FOR-SECURITIES> 4,576,606
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,410,205
<TOTAL-LIABILITIES> 6,986,811
<SENIOR-EQUITY> 83,522
<PAID-IN-CAPITAL-COMMON> 149,453,363
<SHARES-COMMON-STOCK> 221
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 2,017,066
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7,285,169
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 31,258,455
<NET-ASSETS> 5,031
<DIVIDEND-INCOME> 2,288,782
<INTEREST-INCOME> 2,703,947
<OTHER-INCOME> 0
<EXPENSES-NET> 2,741,859
<NET-INVESTMENT-INCOME> 2,250,870
<REALIZED-GAINS-CURRENT> 7,254,850
<APPREC-INCREASE-CURRENT> 24,932,006
<NET-CHANGE-FROM-OPS> 34,437,726
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 221
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,759,242
<ACCUMULATED-NII-PRIOR> 1,327,257
<ACCUMULATED-GAINS-PRIOR> 2,444,660
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,371,155
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,741,859
<AVERAGE-NET-ASSETS> 2
<PER-SHARE-NAV-BEGIN> 22.510
<PER-SHARE-NII> 0.000
<PER-SHARE-GAIN-APPREC> 0.250
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 22.760
<EXPENSE-RATIO> 2.180
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000809821
<NAME> DELAWARE GROUP VALUE FUND, INC.
<SERIES>
<NUMBER> 004
<NAME> VALUE FUND INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 161,174,021
<INVESTMENTS-AT-VALUE> 192,432,798
<RECEIVABLES> 4,650,742
<ASSETS-OTHER> 846
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 197,084,386
<PAYABLE-FOR-SECURITIES> 4,576,606
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,410,205
<TOTAL-LIABILITIES> 6,986,811
<SENIOR-EQUITY> 83,522
<PAID-IN-CAPITAL-COMMON> 149,453,363
<SHARES-COMMON-STOCK> 319,080
<SHARES-COMMON-PRIOR> 329,064
<ACCUMULATED-NII-CURRENT> 2,017,066
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7,285,169
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 31,258,455
<NET-ASSETS> 7,293,760
<DIVIDEND-INCOME> 2,288,782
<INTEREST-INCOME> 2,703,947
<OTHER-INCOME> 0
<EXPENSES-NET> 2,741,859
<NET-INVESTMENT-INCOME> 2,250,870
<REALIZED-GAINS-CURRENT> 7,254,850
<APPREC-INCREASE-CURRENT> 24,932,006
<NET-CHANGE-FROM-OPS> 34,437,726
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 74,067
<DISTRIBUTIONS-OF-GAINS> 86,125
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 232,840
<NUMBER-OF-SHARES-REDEEMED> 251,372
<SHARES-REINVESTED> 8,548
<NET-CHANGE-IN-ASSETS> 2,759,242
<ACCUMULATED-NII-PRIOR> 1,327,257
<ACCUMULATED-GAINS-PRIOR> 2,444,660
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,371,155
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,741,859
<AVERAGE-NET-ASSETS> 6,643,814
<PER-SHARE-NAV-BEGIN> 19.400
<PER-SHARE-NII> 0.297
<PER-SHARE-GAIN-APPREC> 3.628
<PER-SHARE-DIVIDEND> 0.215
<PER-SHARE-DISTRIBUTIONS> 0.250
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 22.860
<EXPENSE-RATIO> 1.180
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
The Delaware Group of Funds
Multiple Class Plan Pursuant to Rule 18f-3
This Multiple Class Plan (the "Plan") has been adopted by a
majority of the Board of Directors of each of the investment companies listed on
Appendix A as may be amended from time to time (each individually a "Fund," and
collectively, the "Funds"), including a majority of the Directors who are not
interested persons of each Fund, pursuant to Rule 18f-3 under the Investment
Company Act of 1940, as amended (the "Act"). The Board of each Fund has
determined that the Plan, including the allocation of expenses, is in the best
interests of the Fund as a whole, each series of shares offered by such Fund
(individually and collectively the "Series") where the Fund offers its shares in
multiple series, and each class of shares offered by the Fund or Series, as
relevant. The Plan sets forth the provisions relating to the establishment of
multiple classes of shares for each Fund and, if relevant, its Series. To the
extent that a subject matter set forth in this Plan is covered by a Fund's
Articles of Incorporation or By-Laws, such Articles of Incorporation or By-Laws
will control in the event of any inconsistencies with descriptions contained in
this Plan.
The term "Portfolio," when used in this Plan in the context of
a Fund that offers only a single series of shares, shall be a reference to the
Fund, and when used in the context of a Fund that offers multiple series of
shares, shall be a reference to each series of such Fund.
CLASSES
1. Appendix A to this Plan describes the classes to be issued
by each Portfolio and identifies the names of such classes.
FRONT-END SALES CHARGE
2. Class A shares carry a front-end sales charge as described
in the Funds' relevant prospectuses; and Class B, Class C and Institutional
Class shares are sold without a front-end sales charge.
CONTINGENT DEFERRED SALES CHARGE
3. Class A shares are not subject to a contingent deferred
sales charge ("CDSC"), except in the following limited circumstances. On
<PAGE>
investments of $1 million or more for which a dealer's commission is paid by the
Fund's principal underwriter, a CDSC of 1.00% of the lesser of (i) the net asset
value at the time of redemption, or (ii) the original net asset value at the
time of purchase applies to redemptions of those investments within the
contingency period of 12 months from the month of purchase.
4. Class B shares redeemed within six years of their purchase
shall be assessed a CDSC at the following rate: (i) 4.00% if shares are redeemed
within two years of purchase; (ii) 3.00% if shares are redeemed during the third
or fourth year following purchase; (iii) 2.00% if shares are redeemed during the
fifth year following purchase; (iv) 1.00% if shares are redeemed during the
sixth year following purchase; and (vi) 0% thereafter.
5. Class C shares redeemed within twelve months of their
purchase shall be assessed a CDSC at the rate of 1.00% of the lesser of (i) the
net asset value at the time of redemption, or (ii) the original net asset value
at the time of purchase.
6. The CDSC for each class is waived in certain circumstances,
as described in the Funds' relevant prospectuses. Shares that are subject to a
CDSC age one month at the end of the month in which the shares were purchased,
regardless of the specific date during the month that the shares were purchased.
7. Institutional Class shares are not subject to a CDSC.
RULE 12b-1 PLANS
8. In accordance with the Rule 12b-1 Plan for the Class A
shares of each Portfolio, the Fund shall pay to Delaware Distributors, L.P. (the
"Distributor") a monthly fee not to exceed 0.30% per annum of such Portfolio's
average daily net assets represented by Class A shares as may be determined by
the Fund's Board of Directors from time to time. The monthly fee shall be
reduced by the aggregate sums paid by or on behalf of such Portfolio to persons
other than broker-dealers (the "Service Providers") pursuant to servicing
agreements.
9. In accordance with the Rule 12b-1 Plan for the Class B
shares of each Portfolio, the Fund shall pay to the Distributor a monthly fee
not to exceed 0.75% per annum of such Portfolio's average daily net assets
represented by Class B shares as may be determined by the Fund's Board of
Directors from time to time. In addition to these amounts, the Fund shall pay
(i) to the Distributor for payment to dealers or others, or (ii) directly to
others, an amount not to exceed 0.25% per annum of such Portfolio's average
daily net assets represented by Class B shares, as a service fee pursuant to
dealer or servicing agreements.
-2-
<PAGE>
10. In accordance with the Rule 12b-1 Plan for the Class C
shares of each Portfolio, the Fund shall pay to the Distributor a monthly fee
not to exceed 0.75% per annum of such Portfolio's average daily net assets
represented by Class C shares as may be determined by the Fund's Board of
Directors from time to time. In addition to these amounts, the Fund shall pay
(i) to the Distributor for payment to dealers or others, or (ii) directly to
others, an amount not to exceed 0.25% per annum of such Portfolio's average
daily net assets represented by Class C shares, as a service fee pursuant to
dealer or servicing agreements.
11. A Rule 12b-1 Plan has not been adopted for the
Institutional Class shares of any Portfolio.
ALLOCATION OF EXPENSES
12. The Fund shall allocate to each class of shares of a
Portfolio any fees and expenses incurred by the Fund in connection with the
distribution or servicing of such class of shares under a Rule 12b-1 Plan, if
any, adopted for such class. In addition, the Fund reserves the right, subject
to approval by the Fund's Board of Directors, to allocate fees and expenses of
the following nature to a particular class of shares of a Portfolio (to the
extent that such fees and expenses actually vary among each class of shares or
vary by types of services provided to each class of shares of the Portfolio):
(i) transfer agency and other recordkeeping costs;
(ii) Securities and Exchange Commission and blue sky
registration or qualification fees;
(iii) printing and postage expenses related to printing and
distributing class specific materials, such as
shareholder reports, prospectuses and proxies to
current shareholders of a particular class or to
regulatory authorities with respect to such class of
shares;
(iv) audit or accounting fees or expenses relating
solely to such class;
(v) the expenses of administrative personnel and
services as required to support the shareholders
of such class;
(vi) litigation or other legal expenses relating solely
to such class of shares;
-3-
<PAGE>
(vii) Directors' fees and expenses incurred as a result
of issues relating solely to such class of shares;
and
(viii) other expenses subsequently identified and
determined to be properly allocated to such class
of shares.
13. Except for any expenses that are allocated to a particular
class as described in paragraph 11 above, all expenses incurred by a Portfolio
will be allocated to each class of shares of such Portfolio on the basis of the
net asset value of each such class in relation to the net asset value of the
Portfolio.
ALLOCATION OF INCOME AND GAINS
14. Income and realized and unrealized capital gains and
losses of a Portfolio will be allocated to each class of shares of such
Portfolio on the basis of the net asset value of each such class in relation to
the net asset value of the Portfolio.
CONVERSIONS
15. (a) Except for shares acquired through a reinvestment of
dividends or distributions, Class B shares held for eight years after purchase
are eligible for automatic conversion into Class A shares of the same Portfolio
in accordance with the terms described in the relevant prospectus. Class B
shares acquired through a reinvestment of dividends or distributions will
convert into Class A shares of the same Portfolio pro rata with the Class B
shares that were not acquired through the reinvestment of dividends and
distributions.
(b) The automatic conversion feature of Class B
shares shall be suspended at any time that the Board of Directors of the Fund
determines that there is not available a reasonably satisfactory opinion of
counsel to the effect that (i) the assessment of the higher fee under the Fund's
Rule 12b-1 Plan for Class B does not result in the Fund's dividends or
distributions constituting a preferential dividend under the Internal Revenue
Code of 1986, as amended, and (ii) the conversion of Class B shares into Class A
shares does not constitute a taxable event under federal income tax law. In
addition, the Board of Directors of a Fund may suspend the automatic conversion
feature by determining that any other condition to conversion set forth in the
relevant prospectus, as amended from time to time, is not satisfied.
(c) The Board of Directors of a Fund may also suspend the
automatic conversion of Class B shares if it determines that suspension is
-4-
<PAGE>
appropriate to comply with the requirements of the Act, or any rule or
regulation issued thereunder, relating to voting by Class B shareholders on the
Fund's Rule 12b-1 Plan for Class A or, in the alternative, the Board of
Directors may provide Class B shareholders with alternative conversion or
exchange rights.
16. Class A, Class C and Institutional Class shares do not
have a conversion feature.
EXCHANGES
17. Exchanges are permitted between Class A Shares and
Institutional Class Shares of a Portfolio or of any other Portfolio in the
Delaware Group funds; Class B shares of a Portfolio may only be exchanged for
Class B shares of any other Portfolio in the Delaware Group; Class C shares of a
Portfolio may only be exchanged for Class C shares of any other Portfolio in the
Delaware Group. All exchanges are subject to the eligibility and minimum
purchase requirements set forth in the Funds' prospectuses. Exchanges cannot be
made between open-end and closed-end funds within the Delaware Group.
18. Each class will vote separately with respect to the Rule
12b-1 Plan related to that class; provided, however, that Class B shares of a
Portfolio may vote on any proposal to materially increase the fees to be paid by
the Fund under the Rule 12b-1 Plan for the Class A shares of the same Portfolio.
19. On an ongoing basis, the Directors, pursuant to their
fiduciary responsibilities under the Act and otherwise, will monitor the
Portfolio for the existence of any material conflicts between the interests of
all the classes of shares offered by such Portfolio. The Directors, including a
majority of the Directors who are not interested persons of the Fund, shall take
such action as is reasonably necessary to eliminate any such conflict that may
develop. The Manager and the Distributor shall be responsible for alerting the
Board to any material conflicts that arise.
20. As described more fully in the Funds' relevant
prospectuses, broker-dealers that sell shares of a Portfolio will be compensated
differently depending on which class of shares the investor selects.
21. Each Fund reserves the right to increase, decrease or
waive the CDSC imposed on any existing or future class of shares of a Portfolio
within the ranges permissible under applicable rules and regulations of the
Securities and Exchange Commission (the "SEC") and the rules of the National
Association of Securities Dealers, Inc. (the "NASD"), as such rules may be
amended or adopted from time to time. Each Fund may in the future alter the
terms of the existing classes of such Portfolio or create new classes in
compliance with applicable rules and regulations of the SEC and the NASD.
-5-
<PAGE>
22. All material amendments to this Plan must be approved by a
majority of the Directors of each Fund affected by such amendments, including a
majority of the Directors who are not interested persons of the Fund.
Effective as of November 29, 1995
-6-
<PAGE>
APPENDIX A
List of Funds and Their Classes
1. Delaware Group Delaware Fund, Inc.
Delaware Fund
Delaware Fund A Class
Delaware Fund B Class
Delaware Fund C Class
Delaware Fund Institutional Class
Devon Fund
Devon Fund A Class
Devon Fund B Class
Devon Fund C Class
Devon Fund Institutional Class
2. Delaware Group Trend Fund, Inc.
Trend Fund A Class
Trend Fund B Class
Trend Fund C Class
Trend Fund Institutional Class
3. Delaware Group Value Fund, Inc.
Value Fund A Class
Value Fund B Class
Value Fund C Class
Value Fund Institutional Class
4. Delaware Group DelCap Fund, Inc.
DelCap Fund A Class
DelCap Fund B Class
DelCap Fund C Class
DelCap Fund Institutional Class
5. Delaware Group Decatur Fund, Inc.
Decatur Income Fund
Decatur Income Fund A Class
Decatur Income Fund B Class
Decatur Income Fund C Class
Decatur Income Fund Institutional Class
<PAGE>
Decatur Total Return Fund
Decatur Total Return Fund A Class
Decatur Total Return Fund B Class
Decatur Total Return Fund C Class
Decatur Total Return Fund Institutional Class
6. Delaware Group Global & International Funds, Inc.
International Equity Series
International Equity Fund A Class
International Equity Fund B Class
International Equity Fund C Class
International Equity Fund Institutional Class
Global Bond Series
Global Bond Fund A Class
Global Bond Fund B Class
Global Bond Fund C Class
Global Bond Fund Institutional Class
Global Assets Series
Global Assets Fund A Class
Global Assets Fund B Class
Global Assets Fund C Class
Global Assets Fund Institutional Class
-8-
<PAGE>
Financial
-------------------
Statements
-------------------
Delaware Group Value Fund, Inc.
Statement of Net Assets
November 30, 1995
<TABLE>
<CAPTION>
Number Market
of Shares Value
<S> <C> <C>
COMMON STOCK - 91.36%
Aerospace & Defense - 1.58%
*Moog...................................................... 80,500 $ 1,187,375
Thiokol................................................... 53,700 1,819,088
------------
3,006,463
------------
Automobiles & Automotive Parts - 2.44%
*Custom Chrome............................................. 88,400 2,165,800
Smith (A.O.).............................................. 52,600 1,249,250
Titan Wheel International................................. 71,100 1,217,588
------------
4,632,638
------------
Banking, Finance & Insurance - 18.38%
Allmerica Property & Casualty............................. 97,600 2,488,800
*Americredit............................................... 237,700 3,060,388
California Federal Bank................................... 154,500 2,356,125
First Security............................................ 75,400 2,606,013
Firstmerit................................................ 52,500 1,509,375
Fourth Financial.......................................... 27,800 1,049,450
Hibernia Class A.......................................... 97,900 1,027,950
Horace Mann Educators..................................... 68,600 1,989,400
*Investors Financial Services.............................. 42,600 836,025
Mid Ocean LTD............................................. 56,300 2,097,175
Money Store............................................... 54,550 2,591,125
ONBANCorp................................................. 39,000 1,294,313
PMI Group................................................. 38,500 1,828,750
PartnerRe Limited......................................... 48,300 1,270,894
Prudential Reinsurance Holdings........................... 66,470 1,387,561
Titan Holdings............................................ 37,800 515,025
*Transport Holdings Class A................................ 25,200 970,200
USF&G..................................................... 106,300 1,833,675
Union Planters............................................ 50,500 1,590,750
West One Bancorp.......................................... 53,200 2,640,050
------------
34,943,044
------------
Building, Housing & Materials - 8.33%
Centex.................................................... 81,300 2,672,738
*Centex Construction Products.............................. 55,000 770,000
*Central Sprinkler......................................... 46,500 1,575,188
*Champion Enterprises...................................... 97,400 2,922,000
Continental Homes Holdings................................ 100,100 1,839,338
Elcor..................................................... 61,800 1,290,075
*Griffon................................................... 161,100 1,369,350
Kaufman & Broad Home...................................... 100,600 1,307,800
Patrick Industries........................................ 80,000 1,060,000
*Southern Energy Homes..................................... 57,000 1,018,875
------------
15,825,364
------------
Chemicals - 2.27%
*CFC International......................................... 37,800 366,188
*Carbide/Graphite Group.................................... 54,100 797,975
Ferro..................................................... 56,200 1,250,450
*Scotts.................................................... 93,900 1,895,606
------------
4,310,219
------------
Energy & Energy Services - 8.43%
*Belden & Blake............................................ 80,750 1,302,094
*Chesapeake Energy......................................... 19,000 807,500
Cross Timbers Oil......................................... 38,300 660,675
Devon Energy.............................................. 68,000 1,640,500
*Global Marine............................................. 322,200 2,174,850
*Nabors Industries......................................... 55,000 543,125
*Noble Drilling............................................ 90,375 666,516
*Offshore Logistics........................................ 121,400 1,479,563
*Seacor Holdings........................................... 59,100 1,351,913
*Tom Brown................................................. 101,400 1,292,850
USX-Delhi Group........................................... 107,400 1,100,850
Valero Energy............................................. 74,000 1,914,750
Western Gas Resources..................................... 67,100 1,090,375
------------
16,025,561
------------
Food, Beverage & Tobacco - 2.21%
*Bush Boake Allen.......................................... 53,200 1,635,900
*Daka International........................................ 34,200 970,425
International Multifoods.................................. 68,000 1,589,500
------------
4,195,825
------------
Healthcare & Pharmaceuticals - 11.03%
*Arbor Health Care......................................... 104,800 1,873,300
*Community Health Systems.................................. 56,700 1,941,975
*Lincare Holdings.......................................... 54,300 1,459,313
*Mariner Health Group...................................... 154,100 2,051,456
*Marquette Electronics Class A............................. 83,300 1,603,525
*Maxicare Health Plans..................................... 126,800 2,757,900
*Mid Atlantic Medical Services............................. 109,200 2,661,750
*Multicare................................................. 93,700 1,955,988
Owens & Minor............................................. 64,300 835,900
*Sunrise Medical........................................... 19,000 327,750
*Sybron International...................................... 28,400 1,370,300
*Universal Health Services Class B......................... 51,700 2,132,625
------------
20,971,782
------------
Industrial Machinery - 8.93%
Cascade................................................... 61,800 888,375
*Global Industrial Technologies............................ 128,900 2,287,975
Greenfield Industries..................................... 14,200 438,425
IDEX...................................................... 59,000 2,426,375
JLG Industries............................................ 104,000 2,925,000
Keystone International.................................... 70,900 1,453,450
*MagneTek.................................................. 70,900 584,925
Manitowoc................................................. 34,900 1,025,188
Regal-Beloit.............................................. 96,400 2,120,800
*Rexel..................................................... 118,100 1,594,350
TriMas.................................................... 32,200 619,850
</TABLE>
8
<PAGE>
Statement of Net Assets (Continued)
<TABLE>
<CAPTION>
Number Market
of Shares Value
<S> <C> <C>
COMMON STOCK (Continued)
Industrial Machinery (Continued)
Varlen.................................................... 23,650 $ 617,856
------------
16,982,569
------------
Media, Leisure & Entertainment - 7.12%
Callaway Golf............................................. 38,300 761,213
*Carmike Cinemas-Class A................................... 95,000 2,327,500
*Devon Group............................................... 55,800 2,134,350
*Hollywood Park............................................ 126,700 1,282,838
Polaris Industries........................................ 69,100 2,124,825
Reynolds & Reynolds Class A............................... 96,600 3,682,875
*Valassis Communications................................... 79,500 1,222,313
------------
13,535,914
------------
Metals & Mining - 1.24%
AK Steel Holding.......................................... 45,300 1,568,513
*Lone Star Technologies.................................... 31,800 278,250
*Universal Stainless & Alloy Products...................... 47,300 505,519
------------
2,352,282
------------
Paper & Forest Products - 5.16%
Boise Cascade............................................. 47,000 1,750,750
Chesapeake................................................ 66,200 1,952,900
Longview Fibre............................................ 125,300 2,161,425
Rayonier.................................................. 49,900 1,908,675
Willamette Industries..................................... 33,500 2,035,125
------------
9,808,875
------------
Real Estate - 5.98%
Developers Diversified Realty............................. 59,800 1,689,350
Highwoods Properties...................................... 71,400 1,883,175
Public Storage............................................ 107,600 1,936,800
ROC Communities........................................... 85,900 1,922,013
Reckson Associates Realty................................. 69,700 1,942,888
Starwood Lodging Trust.................................... 72,100 1,991,763
------------
11,365,989
------------
Retail & Apparel - 0.83%
*Lands' End................................................ 63,400 935,150
*Musicland Stores.......................................... 100,900 643,238
------------
1,578,388
------------
Technology - 2.05%
*Cable Design Technologies................................. 18,900 815,063
*Cherry Class A............................................ 52,100 527,513
*Cherry Class B............................................ 48,500 491,063
Methode Electronics Class A............................... 140,100 2,066,475
------------
3,900,114
------------
Textiles & Furniture - 1.35%
Juno Lighting............................................. 95,000 1,508,125
*Mohawk Industries......................................... 61,400 1,066,825
------------
2,574,950
------------
Transportation & Related - 4.03%
*ABC Rail Products......................................... 64,300 1,418,619
Airborne Freight.......................................... 70,900 1,994,063
*Airways................................................... 82,700 795,988
*Landstar Systems.......................................... 47,500 1,217,188
*Mesaba Holdings........................................... 82,700 568,563
TNT Freightways........................................... 84,800 1,664,200
------------
7,658,621
------------
Total Common Stocks
(cost $142,409,821)..................................... 173,668,598
------------
<CAPTION>
Principal
Amount
<S> <C> <C>
SHORT-TERM INVESTMENTS - 3.15%
Federal National Mortgage Association
Discount Notes 12/5/95.................................. $6,000,000 5,996,200
------------
Total Short-Term Investments
(cost $5,996,200)....................................... 5,996,200
------------
REPURCHASE AGREEMENTS - 6.72%
With Chase Manhattan Bank 5.875%
12/1/95 (dated 11/30/95,
collateralized by $4,502,000 U.S.
Treasury Notes 6.125% due 5/31/97,
market value $4,545,207)................................ 4,430,000 4,430,000
With J.P. Morgan Bank 5.875% 12/1/95
(dated 11/30/95, collateralized by
$4,174,000 U.S. Treasury Notes
6.50% due 4/30/97, market value
$4,257,866)............................................. 4,169,000 4,169,000
With PaineWebber 5.85% 12/1/95
(dated 11/30/95, collateralized by
$4,245,000 U.S. Treasury Notes
5.625% due 11/30/00, market
value $4,261,769)....................................... 4,169,000 4,169,000
------------
Total Repurchase Agreements
(cost $12,768,000)...................................... 12,768,000
------------
TOTAL MARKET VALUE OF SECURITIES - 101.23%
(COST $161,174,021)..................................... 192,432,798
LIABILITIES NET OF RECEIVABLES AND
OTHER ASSETS - ( 1.23% )................................ (2,335,223)
------------
NET ASSETS APPLICABLE TO 8,352,173
($.01 PAR VALUE) OUTSTANDING - 100.00%.................. $190,097,575
============
NET ASSET VALUE - VALUE FUND A CLASS
($177,011,337 / 7,776,729 shares)....................... $22.76
======
NET ASSET VALUE - VALUE FUND B CLASS
($5,787,447 / 256,143 shares)........................... $22.59
======
NET ASSET VALUE - VALUE FUND C CLASS
($5,031/ 221 shares).................................... $22.76
======
NET ASSET VALUE - VALUE FUND
INSTITUTIONAL CLASS ($7,293,760 / 319,080 shares)....... $22.86
======
</TABLE>
9
<PAGE>
Statement of Net Assets (Continued)
<TABLE>
<CAPTION>
Market
Value
<S> <C>
COMPONENTS OF NET ASSETS AT NOVEMBER 30, 1995:
Common stock, $.01 par value, 500,000,000 shares
authorized to the Fund with 150,000,000
shares allocated to Value Fund A Class, 100,000,000
shares allocated to Value Fund B Class,
50,000,000 shares allocated to Value Fund C Class,
and 50,000,000 shares allocated to Value Fund
Institutional Class..................................... $149,536,885
Accumulated undistributed income:
Net investment income................................... 2,017,066
Net realized gain on investments and
foreign currencies.................................... 7,285,169
Net unrealized appreciation of investments and
foreign currencies.................................... 31,258,455
------------
Total net assets.......................................... $190,097,575
------------
</TABLE>
- --------------------
* Non-income producing security for the year ended November 30, 1995.
See accompanying notes
Delaware Group Value Fund, Inc.
Statement of Operations
Year Ended November 30, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest............................................. $2,703,947
Dividends (net of foreign taxes)..................... 2,288,782 $ 4,992,729
----------
EXPENSES:
Management fees ($1,371,155)
and directors' fees ($15,288)...................... 1,386,443
Distribution expenses................................ 559,818
Dividend disbursing and transfer
agent fees and expenses............................ 513,172
Registration fees.................................... 67,427
Reports and statements to shareholders............... 51,448
Salaries............................................. 46,221
Custodian fees....................................... 29,605
Professional fees.................................... 25,076
Taxes, other than taxes on income.................... 19,400
Other................................................ 43,249 2,741,859
---------- -----------
NET INVESTMENT INCOME................................ 2,250,870
-----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS AND
FOREIGN CURRENCIES:
Net realized gain (loss) on:
Investment transactions............................ 7,405,943
Foreign currency................................... (151,093)
-----------
Net realized gain.................................. 7,254,850
Net unrealized appreciation of investments
and foreign currency during the period............. 24,932,006
-----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS..................................... 32,186,856
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS.................................... $34,437,726
===========
NET ASSET VALUE AND OFFERING PRICE PER SHARE
VALUE FUND A CLASS:
Net asset value per share (A)........................ $22.76
Sales charge (4.75% of offering price, or 5.01% of
amount invested per share) (B)..................... 1.14
------
Offering Price....................................... $23.90
======
</TABLE>
- --------------------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon the redemption or repurchase of shares.
(B) See Purchasing Shares in the current Prospectus for purchases of $100,000 or
more. Effective November 29, 1995 the maximum sales charge was reduced from
5.75% to 4.75%.
See accompanying notes
10
<PAGE>
Delaware Group Value Fund, Inc.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended Year Ended
11/30/95 11/30/94
<S> <C> <C>
OPERATIONS:
Net investment income................................. $ 2,250,870 $ 1,400,728
Net realized gain from security
transactions and foreign currencies................. 7,254,850 2,439,590
Net unrealized appreciation (depreciation)
of investments during the period.................... 24,932,006 (9,879,689)
------------ ------------
Net increase (decrease) in net assets
resulting from operations........................... 34,437,726 (6,039,371)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Value Fund A Class.................................. (1,473,989) (268,712)
Value Fund B Class.................................. (13,005) --
Value Fund C Class.................................. -- --
Value Fund Institutional Class...................... (74,067) (21,832)
Net realized gain from security transactions:
Value Fund A Class.................................. (2,306,541) (1,305,068)
Value Fund B Class.................................. (21,675) --
Value Fund C Class.................................. -- --
Value Fund Institutional Class...................... (86,125) (46,393)
------------ ------------
(3,975,402) (1,642,005)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
Value Fund A Class.................................. 53,057,497 126,050,942
Value Fund B Class.................................. 4,607,799 1,551,271
Value Fund C Class.................................. 5,030 --
Value Fund Institutional Class...................... 4,893,677 3,152,293
Net asset value of shares issued upon
reinvestment of dividends from net
investment income and net realized
gain from security transactions:
Value Fund A Class.................................. 3,572,237 1,449,342
Value Fund B Class.................................. 32,715 --
Value Fund C Class.................................. -- --
Value Fund Institutional Class...................... 160,192 68,225
------------ ------------
66,329,147 132,272,073
------------ ------------
Cost of shares repurchased:
Value Fund A Class.................................. (87,750,505) (92,020,403)
Value Fund B Class.................................. (998,195) (40,173)
Value Fund C Class.................................. -- --
Value Fund Institutional Class...................... (5,283,529) (2,051,443)
------------ ------------
(94,032,229) (94,112,019)
------------ ------------
Increase (decrease) in net assets derived
from capital share transactions..................... (27,703,082) 38,160,054
------------ ------------
NET INCREASE IN NET ASSETS:........................... 2,759,242 30,478,678
------------ ------------
Beginning of period................................... 187,338,333 156,859,655
------------ ------------
End of period (including undistributed
net investment income of $2,017,066
and $1,327,257, respectively)....................... $190,097,575 $187,338,333
============ ============
</TABLE>
See accompanying notes
Delaware Group Value Fund
Notes to Financial Statements
November 30, 1995
Delaware Group Value Fund, Inc. ("the Fund") is registered as a diversified
open-end investment company under the Investment Company Act of 1940. The Fund
is organized as a Maryland corporation and offers four classes of shares.
1. Significant Accounting Policies
The following accounting policies are in accordance with generally accepted
accounting principles and are consistently followed by the Fund:
Security Valuation - Securities listed on an exchange are valued at the last
quoted sales price as of 4:00 pm New York time on the valuation date. Securities
not traded or securities not listed on an exchange are valued at the mean of the
last quoted bid and asked prices. Long-term debt securities are valued by an
independent pricing service when such prices are believed to reflect the fair
value of such securities. Money market instruments having less than 60 days to
maturity are valued at amortized cost.
Federal Income Taxes - The Fund intends to continue to qualify as a regulated
investment company and make the requisite distributions to shareholders.
Accordingly, no provision for federal income taxes is required in the financial
statements.
Repurchase Agreements - The Fund may invest in a pooled cash account along with
other members of the Delaware Group of Funds. The aggregate daily balance of the
pooled cash account is invested in repurchase agreements secured by obligations
of the U.S. government. The respective collateral is held by the Fund's
custodian bank until the maturity of the respective repurchase agreements. Each
repurchase agreement is 100% collateralized. However, in the event of default or
bankruptcy by the counterparty to the agreement, realization of the collateral
may be subject to legal proceedings.
Class Accounting - Investment income, common expenses, and gains (losses) on
investments are allocated to the various classes of the Fund on the basis of
daily net assets of each class. Distribution expenses relating to a specific
class are charged directly to that class.
Foreign Currencies - The value of all assets and liabilities denominated in
foreign currencies are translated into U.S. dollars at the exchange rate of such
currencies against the U.S. dollar as of 3:00 pm New York time. Forward foreign
currency contracts are valued at the mean between the bid and asked prices of
the contracts. Interpolated values are derived when the settlement date of the
contract is an interim date for which quotations are not available.
Other - Expenses common to all funds within the Delaware Group of Funds are
allocated amongst the funds on the basis of average net assets. Security
transactions are recorded on the date the securities are purchased or sold
(trade date). Costs used in calculating realized gains and losses on the sale of
investment securities are those of the specific securities sold. Dividend income
is recorded on the ex-dividend date and interest income is recorded on an
accrual basis.
Certain fund expenses are paid directly by brokers. The amount of these expenses
is less than 0.01% of the Fund's average net assets.
11
<PAGE>
Notes to Financial Statements (Continued)
2. Investment Management and Distribution Agreements
In accordance with the terms of the Investment Management Agreement, the Fund
pays Delaware Management Company, Inc. (DMC), the Investment Manager of the
Fund, a fee which is calculated daily at the annual rate of 0.75% of the average
daily net assets of the Fund less fees paid to the independent directors. At
November 30, 1995, the Fund had a liability for Investment Management fees and
other expenses payable to DMC for $28,710.
Pursuant to the Distribution Agreement, the Fund pays Delaware Distributors,
L.P. (DDLP), the Distributor and affiliate of DMC, an annual fee of 0.30% of the
average daily net assets of the A Class and 1.00% of the average daily net
assets of the B Class and the C Class. No distribution expenses are paid by the
Institutional Class. At November 30, 1995, the Fund had a liability for
distribution fees and other expenses payable to DDLP for $6,403. For the year
ended November 30, 1995, the Fund paid DDLP $80,695 for commissions earned on
sales of Value Fund A Class shares.
The Fund has engaged Delaware Service Company,Inc. (DSC), an affiliate of DMC,
to serve as dividend disbursing and transfer agent for the Fund. For the year
ended November 30, 1995, the Fund expensed $513,172 for these services. At
November 30, 1995, the Fund had a liability for such fees and other expenses
payable to DSC for $2,556.
Certain officers of the Investment Manager are officers, directors, and/or
employees of the Fund. These officers, directors, and employees are paid no
compensation by the Fund.
On April 3, 1995, Delaware Management Holdings, Inc., the indirect parent of
DMC, DDLP and DSC, through a merger transaction (the "Merger") became a wholly-
owned subsidiary of Lincoln National Corporation. Other than the resulting
change in ownership, the Merger will not materially change the manner in which
DMC, DDLP and DSC have heretofore conducted their relationships with the Fund.
3. Investments
During the year ended November 30, 1995, the Fund made purchases of $110,242,959
and sales of $91,339,822 of investment securities other than U.S. government
securities and temporary cash investments.
At November 30, 1995, unrealized appreciation for federal income tax purposes
aggregated $31,258,777 of which $36,370,875 related to unrealized appreciation
of securities and $5,112,098 related to unrealized depreciation of securities.
The realized gain for federal income tax purposes was $7,400,341 for the year
ended November 30, 1995.
4. Capital Stock
Transactions in capital stock shares were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
11/30/95 11/30/94
<S> <C> <C>
Shares sold:
Value Fund A Class............................ 2,698,238 6,203,942
Value Fund B Class............................ 227,700 77,412
Value Fund C Class............................ 221 --
Value Fund Institutional Class................ 232,840 155,126
Shares issued upon reinvestment of
dividends from net investment
income and distributions of net realized
gain from security transactions:
Value Fund A Class............................ 190,919 70,565
Value Fund B Class............................ 1,750 --
Value Fund C Class............................ -- --
Value Fund Institutional Class................ 8,548 3,317
---------- ----------
3,360,216 6,510,362
---------- ----------
Shares repurchased:
Value Fund A Class............................ (4,401,949) (4,527,081)
Value Fund B Class............................ (48,686) (2,033)
Value Fund C Class............................ -- --
Value Fund Institutional Class................ (251,372) (101,287)
---------- ----------
(4,702,007) (4,630,401)
---------- ----------
Net Increase (decrease)....................... (1,341,791) 1,879,961
========== ==========
</TABLE>
The Fund declared distributions of $0.89 per share from net realized gain from
security transactions and $0.24, $0.095, $0.28 and $0.30 per share for Value
Fund A Class, Value Fund B Class, Value Fund C Class and Value Fund
Institutional Class, respectively, from net investment income, payable on
January 4, 1996 to shareholders of record December 26, 1995. The ex-dividend
date was December 27, 1995.
5. Securities Lending
The market value of securities on loan to broker/dealers at November 30, 1995
was $22,028,813 for which the Fund received cash collateral of $22,666,300.
6. Lines of Credit
The Fund has a committed line of credit for $2,500,000. No amount was
outstanding at November 30, 1995 or at any time during the last fiscal year.
12
<PAGE>
Notes to Financial Statements (Continued)
7. Financial Highlights
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
Value Fund A Class
----------------------------------------------------------
Year Ended November 30, 1995
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............................. $19.320 $20.070 $17.750 $ 15.320 $11.050
Income from investment operations:
Net investment income (loss)................................... 0.253 0.142 0.033 0.060 (0.006)
Net realized and unrealized gain (loss) from
security transactions........................................ 3.597 (0.687) 3.147 3.360 4.681
------- ------- ------- ------- -------
Total from investment operations............................... 3.850 (0.545) 3.180 3.420 4.675
Less distributions:
Dividends from net investment income........................... (0.160) (0.035) (0.040) none (0.155)
Distributions from net realized gain from
security transactions........................................ (0.250) (0.170) (0.820) (0.990) (0.250)
------- ------- ------- ------- -------
Total distributions............................................ (0.410) (0.205) (0.860) (0.990) (0.405)
Net asset value, end of period................................... $22.760 $19.320 $20.070 $17.750 $15.320
======= ======= ======= ======= =======
Total return/1/.................................................. 20.39% (2.78%) 18.59% 22.99% 43.61%
Ratios/supplemental data:
Net assets, end of period (000 omitted)........................ $177,011 $179,498 $151,384 $38,792 $12,041
Ratio of expenses to average net assets........................ 1.48% 1.46% 1.64% 1.93% 2.26%
Ratio of net investment income (loss) to average net assets.... 1.18% 0.75% 0.25% 0.39% (0.07%)
Portfolio turnover............................................. 65% 14% 32% 68% 99%
</TABLE>
- --------------------
/1/ Does not include maximum sales charge of 4.75% nor the 1% limited contingent
deferred sales charge that would apply in the event of certain redemptions
within 12 months of purchase.
13
<PAGE>
Notes to Financial Statements (Continued)
7. Financial Highlights (Continued)
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
Value Fund
Value Fund B Class C Class Value Fund Institutional Class
---------------------- ------------ ----------------------------------------------
Year 9/6/94/1/ 11/29/95/4/ Year Year Year 11/9/92/1/
Ended to to Ended Ended Ended to
11/30/95 11/30/94 11/30/95 11/30/95 11/30/94 11/30/93 11/30/92
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.......... $19.300 $20.280 $22.510 $19.400 $20.140 $17.750 $17.090
Income from investment operations:
Net investment income....................... 0.141 0.011 none 0.297 0.195 0.092 0.004
Net realized and unrealized gain (loss)
from security transactions................ 3.549 (0.991) 0.250 3.628 (0.685) 3.158 0.656
------- ------- ------- ------- ------- ------- -------
Total from investment operations............ 3.690 (0.980) 0.250 3.925 (0.490) 3.250 0.660
Less distributions:
Dividends from net investment income........ (0.150) none none (0.215) (0.080) (0.040) none
Distributions from net realized gain
from security transactions................ (0.250) none none (0.250) (0.170) (0.820) none
------- ------- ------- ------- ------- ------- -------
Total distributions......................... (0.400) none none (0.465) (0.250) (0.860) none
Net asset value, end of period................ $22.590 $19.300 $22.760 $22.860 $19.400 $20.140 $17.750
======= ======= ======= ======= ======= ======= =======
Total return/2/............................... 19.55% (4.83%) /3/ 20.76% (2.51%) 19.00% 3.86%
Ratios/supplemental data:
Net assets, end of period (000 omitted)..... $5,788 $1,455 $5 $7,294 $6,385 $5,476 $1,558
Ratio of expenses to average net assets..... 2.18% 2.16% /3/ 1.18% 1.16% 1.34% 1.63%
Ratio of net investment income to average
net assets................................ 0.48% 0.05% /3/ 1.48% 1.05% 0.55% 0.69%
Portfolio turnover.......................... 65% 14% /3/ 65% 14% 32% 68%
</TABLE>
- --------------------
/1/ Date of initial public offering; ratios have been annualized and total
return has not been annualized.
/2/ Does not include contingent deferred sales charge which varies from 1% - 4%
depending upon the holding period for Value Fund B Class.
/3/ The ratios of expenses and net investment income to average net assets,
portfolio turnover and total return have been omitted as management believes
that such ratios and return for this relatively short period are not
meaningful.
/4/ Date of initial public offering.
See accompanying notes
14
<PAGE>
Delaware Group Value Fund, Inc.
Report of Independent Auditors
To the Shareholders and Board of Directors
Delaware Group Value Fund, Inc.
We have audited the accompanying statement of net assets of the Delaware Group
Value Fund, Inc. as of November 30, 1995, and the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the five years in the period then ended. These financial statements and
the financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above presents fairly, in all material respects, the financial position of
Delaware Group Value Fund, Inc. at November 30, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended, in conformity with general accepted
accounting principles.
Ernst & Young LLP
Philadelphia, Pennsylvania
January 5, 1996
15
