-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, CagUJ4Wf+G3YYKPMZxRnUwigyZlfCYGkIXbeU0Jacs43AScwNTFglQQDppu8UQFn cJBXW+6+6CFOOud8eGEvhQ== 0000893220-95-000257.txt : 19950425 0000893220-95-000257.hdr.sgml : 19950425 ACCESSION NUMBER: 0000893220-95-000257 CONFORMED SUBMISSION TYPE: 497 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19950424 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DELAWARE GROUP TREASURY RESERVES INC CENTRAL INDEX KEY: 0000357059 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 236732199 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 002-75526 FILM NUMBER: 95530632 BUSINESS ADDRESS: STREET 1: ONE COMMERCE SQ STREET 2: 2005 MARKET ST CITY: PHILADELPHIA STATE: PA ZIP: 19103 BUSINESS PHONE: 2157512926 MAIL ADDRESS: STREET 1: ONE COMMERCE SQ STREET 2: 2005 MARKET ST CITY: PHILADELPHIA STATE: PA ZIP: 19103 FORMER COMPANY: FORMER CONFORMED NAME: DELAWARE TREASURY RESERVES DATE OF NAME CHANGE: 19880718 497 1 DELAWARE GROUP TREASURY INTERMEDIATE STICKER 1 SUPPLEMENT DATED APRIL 15, 1995 TO THE CURRENT PROSPECTUSES OF THE FOLLOWING DELAWARE GROUP FUNDS DELAWARE GROUP DELAWARE FUND, INC., DELAWARE GROUP TREND FUND, INC., DELAWARE GROUP VALUE FUND, INC., DELAWARE GROUP DECATUR FUND, INC., DELAWARE GROUP DELCAP FUND, INC., DELAWARE GROUP DELCHESTER HIGH-YIELD BOND FUND, INC., DELAWARE GROUP GOVERNMENT FUND, INC., DELAWARE GROUP TAX-FREE FUND, INC., DELAWARE GROUP TREASURY RESERVES, INC., DELAWARE GROUP TAX-FREE MONEY, INC., DELAWARE GROUP CASH RESERVE, INC. On March 29, 1995, shareholders of each of the above referenced Funds or, as relevant, the series thereof, approved a new Investment Management Agreement with Delaware Management Company, Inc. ("DMC"), an indirect wholly-owned subsidiary of Delaware Management Holdings, Inc. ("DMH"). The approval of new Investment Management Agreements was subject to the completion of the merger (the "Merger") between DMH and a wholly-owned subsidiary of Lincoln National Corporation ("Lincoln National") which occurred on April 3, 1995. Accordingly, the previous Investment Management Agreements terminated and the new Investment Management Agreements became effective on that date. As a result of the Merger, DMC and its two affiliates, Delaware Service Company, Inc., the Funds' shareholder servicing, dividend disbursing and transfer agent and Delaware Distributors, L.P., the Funds' national distributor became indirect wholly-owned subsidiaries of Lincoln National. Lincoln National, with headquarters in Fort Wayne, Indiana, is a diversified organization with operations in many aspects of the financial services industry, including insurance and investment management. Under the new Investment Management Agreements, DMC will be paid at the same annual fee rates and on the same terms as it was under the previous Investment Management Agreements. In addition, the investment approach and operation of each Fund and, as relevant, each series of a Fund, will remain substantially unchanged. PS-OTH-4/95 2 DELAWARE GROUP TREASURY RESERVES, INC. TREASURY RESERVES INTERMEDIATE SERIES PROSPECTUS SUPPLEMENT FOR RESIDENTS OF TEXAS Treasury Reserves Intermediate Fund may invest in a variety of securities including, but not limited to, U.S. Treasury Securities. Securities which are not issued by the U.S. Treasury may present investment risks which are different (and in some instances may be greater) than those of U.S. Treasury Securities. Fund assets may also include, among other securities, Government National Mortgage Association (GNMA) securities, collateralized mortgage obligations that are fully backed by securities issued or guaranteed by the U.S. government, its agencies and instrumentalities, mortgage-backed securities issued or guaranteed by U.S. government agencies and instrumentalities, and repurchase agreements. In addition, up to 20% of the Fund's assets, in the aggregate, may be invested in any combination of: (i) asset-backed securities if rated AAA (or having an equivalent rating); (ii) corporate notes and bonds rated A or above; and (iii) other specified securities. PS-15TX 3 TREASURY RESERVES INTERMEDIATE FUND P R O S P E C T U S A CLASS SHARES FEBRUARY 28, 1995 B CLASS SHARES -------------------------------------------------------------------- 1818 Market Street, Philadelphia, PA 19103 For Prospectus and Performance: Nationwide 800-523-4640 Philadelphia 215-988-1333 Information on Existing Accounts: (Shareholders Only) Nationwide 800-523-1918 Philadelphia 215-988-1241 Dealer Services: (broker/dealers only) Nationwide 800-362-7500 Philadelphia 215-988-1050 Delaware Group Treasury Reserves, Inc. (the "Fund") is a professionally-managed mutual fund of the series type. This Prospectus describes the Treasury Reserves Intermediate Fund A Class ("Class A Shares") and the Treasury Reserves Intermediate Fund B Class ("Class B Shares") (such classes, collectively, the "Classes") of the Fund's Treasury Reserves Intermediate Series (the "Series"). The Series' objective is to seek a high, stable level of current income while attempting to minimize fluctuations in principal and provide maximum liquidity. The Series intends to achieve its objective by investing its assets in a diversified portfolio of short- and intermediate-term securities issued or guaranteed by the U.S. government, its agencies or instrumentalities and instruments secured by such securities. Class A Shares may be purchased at the public offering price, which is equal to the next determined net asset value per share, plus a front-end sales charge, and Class B Shares may be purchased at a price equal to the next determined net asset value per share. The Class A Shares are subject to a maximum front-end sales charge of 3.00% and annual 12b-1 Plan expenses. The Class B Shares are subject to a contingent deferred sales charge ("CDSC") which may be imposed on redemptions made within three years of purchase and 12b-1 Plan expenses which are higher than those to which Class A Shares are subject and, except in the case of certain purchases of Class B Shares acquired by exchange, are assessed against the Class B Shares for no longer than approximately five years after purchase. See Summary of Expenses, and Automatic Conversion of Class B Shares under Buying Shares. These alternatives permit an investor to choose the method of purchasing shares that is most beneficial given the amount of the purchase, the length of time the investor expects to hold the shares and other circumstances. See Buying Shares. The minimum initial investment for each of the Classes is $1,000. Subsequent investments must be at least $25 with respect to the Class A Shares and $100 with respect to the Class B Shares. Class B Shares are also subject to a maximum purchase limitation of $250,000. The Fund will therefore reject any order for purchase of more than $250,000 for Class B Shares. See Buying Shares and Retirement Planning. This Prospectus relates only to the Classes and sets forth information that you should read and consider before you invest. Please retain it for future reference. Part B of the registration statement, dated February 28, 1995, as it may be amended from time to time, contains additional information about the Series and has been filed with the Securities and Exchange Commission. Part B is incorporated by reference into this Prospectus and is available, without charge, by writing to Delaware Distributors, L.P. at the above address or by calling the above numbers. The Fund's financial statements appear in its Annual Report, which will accompany any response to requests for Part B. The Series also offers the Treasury Reserves Intermediate Fund Institutional Class. That class is available only to certain enumerated institutions, has no front-end or contingent deferred sales charge and is not subject to annual 12b-1 Plan expenses.
TABLE OF CONTENTS COVER PAGE . . . . . . . . . . . . . . . . . . . . . . 1 SYNOPSIS . . . . . . . . . . . . . . . . . . . . . . . 2 SUMMARY OF EXPENSES . . . . . . . . . . . . . . . . . . 3 FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . . 4 INVESTMENT OBJECTIVE AND POLICIES SUITABILITY . . . . . . . . . . . . . . . . . . . . . 6 INVESTMENT STRATEGY . . . . . . . . . . . . . . . . . 6 THE DELAWARE DIFFERENCE PLANS AND SERVICES . . . . . . . . . . . . . . . . . 10 RETIREMENT PLANNING . . . . . . . . . . . . . . . . . . 12 BUYING SHARES 13 REDEMPTION AND EXCHANGE . . . . . . . . . . . . . . . . 21 DIVIDENDS AND DISTRIBUTIONS . . . . . . . . . . . . . . 25 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . 26 CALCULATION OF OFFERING PRICE AND NET ASSET VALUE PER SHARE . . . . . . . . . . . . . . 27 MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . . 27
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. - ------------------------------------------------------------------------------- BE SURE TO CONSULT YOUR FINANCIAL ADVISER WHEN MAKING INVESTMENTS. MUTUAL FUNDS CAN BE A VALUABLE PART OF YOUR FINANCIAL PLAN; HOWEVER, SHARES OF THE FUND ARE NOT FDIC OR NCUSIF INSURED, ARE NOT GUARANTEED BY ANY CREDIT UNION OR ANY BANK, ARE NOT OBLIGATIONS OF ANY CREDIT UNION OR ANY BANK, AND INVOLVE INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. SHARES OF THE FUND ARE NOT CREDIT UNION OR BANK DEPOSITS. - ------------------------------------------------------------------------------- 1 4 SYNOPSIS CAPITALIZATION The Series offers three classes of shares; Class A Shares, Class B Shares and the Treasury Reserves Intermediate Fund Institutional Class. The Fund has an authorized capital of three billion shares of capital stock with a par value of $.001 per share, of which two billion shares have been allocated to the Series. One billion four hundred million shares of such capital stock have been allocated to these classes, as follows: one billion shares have been allocated to the Class A Shares, two hundred million shares have been allocated to the Class B Shares and two hundred million shares have been allocated to the Treasury Reserves Intermediate Fund Institutional Class. See Shares under Management of the Fund. INVESTMENT MANAGER, DISTRIBUTOR AND SERVICE AGENT Delaware Management Company, Inc. (the "Manager") is the investment manager for the Fund. The Manager or its affiliate, Delaware International Advisers Ltd., manages the other funds in the Delaware Group. Delaware Distributors, 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 CHARGE The price of the Class A Shares includes a maximum front-end sales charge of 3.00% of the offering price, which is equivalent to 3.10% of the amount invested, reduced on certain transactions of at least $100,000 but under $1,000,000. For purchases of $1,000,000 or more, the front-end sales charge is eliminated. Such shares are also subject to annual 12b-1 Plan expenses. The price of the Class B Shares is equal to the net asset value per share. Class B Shares are subject to a CDSC of: (i) 2% if shares are redeemed within two years of purchase; and (ii) 1% if shares are redeemed during the third 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 which are assessed against the Class B Shares for no longer than approximately five years after purchase. See Buying Shares and Automatic Conversion of Class B Shares thereunder; and Distribution (12b-1) and Service under Management of the Fund. MINIMUM INVESTMENT The minimum initial investment for each of the Classes is $1,000 (see Part B or contact your investment dealer for each Retirement Plan minimum) and subsequent investments must be at least $25 for the Class A Shares and $100 for the Class B Shares. Class B Shares are also subject to a maximum purchase limitation of $250,000. See Buying Shares. INVESTMENT OBJECTIVE The objective of the Series is to seek high, stable income by investing in a portfolio of short- and intermediate-term securities issued or guaranteed by the U.S. government, its agencies or instrumentalities and instruments secured by such securities. See Investment Objective and Policies. OPEN-END INVESTMENT COMPANY The Fund, which was organized as a Pennsylvania business trust in 1981 and reorganized as a Maryland corporation in 1990, is an open-end management investment company. The Series' portfolio of assets is diversified for purposes of the Investment Company Act of 1940. See Shares under Management of the Fund. INVESTMENT MANAGEMENT FEES The Manager furnishes investment management services to the Fund, subject to the supervision and direction of the Board of Directors. Under the Investment Management Agreement, the annual compensation paid to the Manager is equal to 1/2 of 1% of the average daily net assets, less a proportionate share of all directors' fees paid to the unaffiliated directors by the Series. See Management of the Fund. REDEMPTION AND EXCHANGE The Class A Shares of the Series are redeemed or exchanged at the net asset value calculated after receipt of the redemption or exchange request. Neither the Series nor the Distributor assesses a charge for redemptions or exchanges of the Class A Shares, except for certain redemptions of such shares purchased at net asset value, which may be subject to a contingent deferred sales charge if such purchase triggered the payment of a dealer's commission. The Class B Shares of the Series are redeemed or exchanged at the net asset value calculated after receipt of the redemption or exchange request, less, in the case of redemptions, any applicable CDSC. Neither the Series nor the Distributor assesses any additional charges for redemptions or exchanges of the Class B Shares. See Redemption and Exchange. 2 5 SUMMARY OF EXPENSES A general comparison of the sales arrangements and other expenses applicable to Class A and Class B Shares follows:
CLASS A CLASS B SHAREHOLDER TRANSACTION EXPENSES SHARES SHARES - ----------------------------------------------------------------------------------------------------- Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) . . . . . . . . . . . . . 3.00% None Maximum Sales Charge Imposed on Reinvested Dividends (as a percentage of offering price) . . . . . . . . . . . . . None None Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption proceeds, whichever is lower) . . . . . . . . . . . . . . . . None* 2%* Redemption Fees . . . . . . . . . . . . . . . . . . . . . . . . None** None**
ANNUAL OPERATING EXPENSES CLASS A CLASS B (AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS) SHARES SHARES - --------------------------------------------------------------------------------------------------- Management Fees . . . . . . . . . . . . . . . . . . . . . . . . 0.50% 0.50% 12b-1 Plan Expenses (including service fees) . . . . . . . . . 0.15%+*** 1.00%+ Other Operating Expenses . . . . . . . . . . . . . . . . . . . 0.26% 0.26%++ ----- ----- Total Operating Expenses . . . . . . . . . . . . . . . . . 0.91%*** 1.76% ===== =====
The purpose of this table is to assist the investor in understanding the various costs and expenses that an investor in the Classes will bear directly or indirectly. *With respect to the Class A Shares, purchases of $1 million or more may be made at net asset value; however, if in connection with any such purchase, certain dealer commissions are paid to financial advisers through whom such purchases are effected, a contingent deferred sales charge of 1% will be imposed in the event of certain redemptions within 12 months of purchase ("Limited CDSC"). The Class B Shares are subject to a CDSC of: (i) 2% if shares are redeemed within the first two years of purchase; (ii) 1% if shares are redeemed during the third year following purchase; and (iii) 0% thereafter. See Contingent Deferred Sales Charge for Certain Purchases of Class A Shares Made at Net Asset Value under Redemption and Exchange and Deferred Sales Charge Alternative--Class B Shares under Buying Shares. **CoreStates Bank, N.A. currently charges $7.50 per redemption for redemptions payable by wire. ***The actual 12b-1 Plan expenses to be paid and, consequently, the "Total Operating Expenses" of the Class A Shares, may be somewhat more (but the 12b-1 expenses may be no more than .15%) or somewhat less (but the 12b-1 expenses may be no less than .10%) because of the formula adopted by the Board of Directors for use in calculating the 12b-1 Plan expenses beginning June 1, 1992. See Distribution (12b-1) and Service. +Class A Shares and Class B Shares are subject to separate 12b-1 Plans. Long-term shareholders may pay more than the economic equivalent of the maximum front-end sales charges permitted by the rules of the National Association of Securities Dealers, Inc. ("NASD"). See Distribution (12b-1) and Service. ++"Other Operating Expenses" for Class B Shares are estimates based upon the actual expenses incurred by the Class A Shares for its fiscal year ended December 31, 1994. Also, see Treasury Reserves Intermediate Fund Institutional Class for expense information about that class. The following example illustrates the expenses that an investor would pay on a $1,000 investment over various time periods assuming (1) a 5% annual rate of return and (2) redemption at the end of each time period. As noted in the table above, the Fund charges no redemption fees with respect to the Class A Shares and, if shares are redeemed within three years after purchase, the Fund charges a CDSC with respect to the Class B Shares.
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS ------ ------- ------- -------- ------ ------- ------- -------- CLASS A SHARES $39(1) $58 $79 $139 CLASS B SHARES $38 $65 $95(2) $155(2)
An investor would pay the following expenses on the same $1,000 investment assuming no redemption at the end of the period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS ------ ------- ------- -------- ------ ------- ------- -------- CLASS A SHARES $39 $58 $79 $139 CLASS B SHARES $18 $55 $95(2) $155(2)
(1) Under certain circumstances, a Limited CDSC, which has not been reflected in this calculation, may be imposed in the event of certain redemptions within 12 months of purchase. See Contingent Deferred Sales Charge for Certain Purchases of Class A Shares Made at Net Asset Value under Redemption and Exchange. (2) At the end of no more than approximately five years after purchase, Class B Shares will be automatically converted into Class A Shares. The example above assumes conversion of Class B Shares at the end of year five. However, the conversion may occur as late as three months after the fifth anniversary of purchase, during which time the higher 12b-1 Plan fees payable by Class B Shares will continue to be assessed. See Automatic Conversion of Class B Shares under Buying Shares for a description of the automatic conversion feature. Years six through ten reflect expenses of the Class A Shares. The conversion will constitute a tax-free exchange for federal income tax purposes. See Taxes. THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. 3 6 FINANCIAL HIGHLIGHTS The following financial highlights are derived from the financial statements of Delaware Group Treasury Reserves, Inc.-Treasury Reserves Intermediate Series and have been audited by Ernst & Young LLP, independent auditors. The data should be read in conjunction with the financial statements, related notes, and the report of Ernst & Young LLP covering such financial information and highlights, all of which are incorporated by reference into Part B. Further information about the Series' performance is contained in its Annual Report to shareholders. A copy of the Series' Annual Report (including the report of Ernst & Young LLP) may be obtained from the Fund upon request at no charge.
- ------------------------------------------------------------------------------------------------------------------------- YEAR ENDED 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/28/89 12/29/88 Net Asset Value, Beginning of Period . . $9.840 $10.000 $10.190 $9.770 $9.720 $9.700 $9.800 INCOME FROM INVESTMENT OPERATIONS - --------------------------------- Net Investment Income . . . . . . . . . . 0.667 0.681 0.740 0.799 0.814 0.843 0.730 Net Gains or Losses on Securities (both realized and unrealized) . . . . . . . . (0.850) (0.160) (0.190) 0.420 0.050 0.020 (0.100) ------- -------- ------- ------- ------- ------- ------- Total From Investment Operations . . . (0.183) 0.521 0.550 1.219 0.864 0.863 0.630 ------- -------- ------- ------- ------- ------- ------- LESS DISTRIBUTIONS - ------------------ Dividends (from net investment income) . (0.667) (0.681) (0.740) (0.799) (0.814) (0.843) (0.730) Distributions (from capital gains) . . . none none none none none none none Returns of Capital . . . . . . . . . . . none none none none none none none ------- -------- ------- ------- ------- ------- ------- Total Distributions . . . . . . . . . . (0.667) (0.681) (0.740) (0.799) (0.814) (0.843) (0.730) ------- -------- ------- ------- ------- ------- ------- Net Asset Value, End of Period . . . . . $8.990 $9.840 $10.000 $10.190 $9.770 $9.720 $9.700 ======= ======== ======= ======= ======= ======= ======= - -------------------------------------------------------- ------- ------------------------------------------------------- TOTAL RETURN(2) . . . . . . . . . . . . . (1.88%) 5.31% 5.62%(2) 13.04%(2) 9.32% 9.28% 6.63% - --------------- - ------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA - ------------------------ Net Assets, End of Period (000's omitted) $789,525 $1,126,031 $861,829 $144,129 $107,739 $107,637 $132,859 Ratio of Expenses to Average Daily Net Assets . . . . . . . . . . . 0.91% 0.88% 0.87%(3) 0.90%(3) 0.99% 0.97% 0.90% Ratio of Net Investment Income to Average Daily Net Assets . . . . . . . . . . . 7.10% 6.77% 7.03%(4) 7.96%(4) 8.41% 8.72% 7.44% Portfolio Turnover Rate . . . . . . . . . 148% 171% 77% 42% 175% 311% 146%
- -------------------------------------------------------------------------- PERIOD 11/24/85(1) YEAR ENDED THROUGH 12/31/87 12/25/86 12/26/85 Net Asset Value, Beginning of Period . . $9.980 $10.040 $10.000 INCOME FROM INVESTMENT OPERATIONS - --------------------------------- Net Investment Income . . . . . . . . . . 0.695 0.836 0.057 Net Gains or Losses on Securities (both realized and unrealized) . . . . . . . . (0.180) (0.060) 0.040 ------- ------- ------- Total From Investment Operations . . . 0.515 0.776 0.097 ------- ------- ------- LESS DISTRIBUTIONS - ------------------ Dividends (from net investment income) . (0.695) (0.836) (0.057) Distributions (from capital gains) . . . none none none Returns of Capital . . . . . . . . . . . none none none ------- ------- ------- Total Distributions . . . . . . . . . . (0.695) (0.836) (0.057) ------- ------- ------- Net Asset Value, End of Period . . . . . $9.800 $9.980 $10.040 ======= ======= ======= - ---------------------------------------------------- ---------------------- TOTAL RETURN(2) . . . . . . . . . . . . . 5.46% 7.89%(2) (1) - --------------- - --------------------------------------------------- ---------------------- RATIOS/SUPPLEMENTAL DATA - ------------------------ Net Assets, End of Period (000's omitted) $138,818 $182,727 $8,070 Ratio of Expenses to Average Daily Net Assets . . . . . . . . . . . 1.06% 1.02%(3) (1) Ratio of Net Investment Income to Average Daily Net Assets . . . . . . . . . . . 6.86% 7.85%(4) (1) Portfolio Turnover Rate . . . . . . . . . 304% 39% (1)
- ------------------------ (1) November 24, 1985 was the date of the initial public offering of the Treasury Reserves Intermediate Fund class (now, known as Treasury Reserves Intermediate Fund A Class); the ratios of expenses and net investment income to average daily net assets, total return and portfolio turnover have been omitted as management believes that such ratios for this relatively short period are not meaningful. (2) Does not reflect maximum front-end sales charge, currently, 3.00% nor the 1% Limited CDSC that would apply in the event of certain redemptions within 12 months of purchase. See Contingent Deferred Sales Charge for Certain Purchases of Class A Shares Made at Net Asset Value. Total return for 1986, 1991 and 1992 reflect the expense limitations referenced in Notes 3 and 4. (3) Ratio of expenses to average daily net assets prior to expense limitation was 0.90% for 1992, 0.99% for 1991 and 1.08% for 1986 for the Treasury Reserves Intermediate Fund class. (4) Ratio of net investment income prior to expense limitation to average daily net assets was 7.01% for 1992, 7.87% for 1991 and 7.79% for 1986 for the Treasury Reserves Intermediate Fund class. 4 7 FINANCIAL HIGHLIGHTS (Continued)
- --------------------------------------------------------------------------- CLASS B SHARES --------------- PERIOD 5/2/94(1) THROUGH 12/31/94 Net Asset Value, Beginning of Period . . . . . . . . . $9.430 INCOME FROM INVESTMENT OPERATIONS - --------------------------------- Net Investment Income . . . . . . . . . . . . . . . . . 0.399 Net Gains or Losses on Securities (both realized and unrealized) . . . . . . . . . . . . . . . . . . . (0.440) ------ Total From Investment Operations . . . . . . . . . . (0.041) ------ LESS DISTRIBUTIONS - ------------------ Dividends (from net investment income) . . . . . . . . (0.399) Distributions (from capital gains) . . . . . . . . . . none Returns of Capital . . . . . . . . . . . . . . . . . . none ------ Total Distributions . . . . . . . . . . . . . . . . . (0.399) ------ Net Asset Value, End of Period . . . . . . . . . . . . $8.990 ====== - ----------------------------------------------------------------------------- TOTAL RETURN . . . . . . . . . . . . . . . . . . . . . (0.44%)(1/2) - ------------ - ----------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ------------------------ Net Assets, End of Period (000's omitted) . . . . . . . $6,282 Ratio of Expenses to Average Daily Net Assets . . . . . 1.76%(1) Ratio of Net Investment Income to Average Daily Net Assets . . . . . . . . . . . . . . . . . . 6.25%(1) Portfolio Turnover Rate . . . . . . . . . . . . . . . . 148%
- ---------------------------- (1) Date of initial public offering; ratios have been annualized and total return has not been annualized. (2) Total return does not reflect any applicable contingent deferred sales charge. 5 8 INVESTMENT OBJECTIVE AND POLICIES The Series seeks to provide a high stable level of income, while attempting to minimize fluctuations in principal and provide maximum liquidity. It seeks to do this by investing primarily in a portfolio of short- and intermediate-term securities issued or guaranteed by the U.S. government, its agencies or instrumentalities and instruments secured by such securities. The Series may also invest up to 20% of its assets in corporate notes and bonds, certificates of deposit and obligations of both U.S. and foreign banks, commercial paper and certain asset-backed securities. The Series is not a money market fund. A money market fund is designed for stability of principal; consequently, the level of income fluctuates. The Series is designed for greater stability of income at a relatively higher level; consequently, the principal value will fluctuate over time. The level of income will vary depending on interest rates and the portfolio. However, since longer-term rates are generally less volatile than short-term rates, the level of income for the Series may be less volatile than, for example, a money market fund. Because the Series invests in longer-term securities than a money market fund, the value of shares will fluctuate. When interest rates rise, the share value will tend to fall, and when interest rates fall, the share value will tend to rise. See Investment Strategy. SUITABILITY The Series' objective of a high stable income stream is suited for longer-term investments, such as tax-deferred Retirement Plans (e.g., IRA, 401(k), Profit Sharing, etc.), where the income stream can be left to compound on a tax-deferred basis. The Series' objective is also suitable for individuals who want a stable and high income flow, the security associated with U.S. government-backed investments and the convenience and liquidity of mutual funds. Also, ownership of Series shares reduces the bookkeeping and administrative inconveniences connected with direct purchases of these instruments. Investors should consider asset value fluctuation as well as yield in making an investment decision. Therefore, the Series may not be suitable for investors whose overriding objective is stability of principal. That is an objective of the Delaware Group money market funds. Also, the Series is not designed for the investor who is willing to assume the risks involved in maximizing the yield or capital gain potential of a long-term bond portfolio. These are objectives of other fixed income funds in the Delaware Group of funds that are generally available through registered investment dealers. INVESTMENT STRATEGY The Series will attempt to provide you with yields higher than those available in money market funds or bank money market accounts by extending its portfolio maturities. The yield curves, as shown in the chart below, reflect the additional return that may be obtained by a moderate extension of maturities. YIELD CURVE TREASURY RESERVES INTERMEDIATE FUND
12/31/93 12/31/94 3 Month 3.075 5.682 6 Month 3.287 6.495 1 Year 3.578 7.162 2 Year 4.234 7.690 3 Year 4.514 7.778 5 Year 5.197 7.827 7 Year 5.339 7.827 10 Year 5.792 7.827 30 Year 6.346 7.876
The Series expects to have an average portfolio maturity in the shaded area indicated above. The yields to maturity in the curves are for unmanaged Treasury securities with various remaining maturities. The black line shows the yield curve at December 31, 1993. The blue line represents the yield curve as of December 31, 1994. The data were obtained from Federal Reserve Statistical Release H.15 (519). These are not necessarily indicative of future performance or yield curves. The yield curve changes over time and short rates may occasionally be higher than intermediate rates. 6 9 MATURITY RESTRICTIONS The Series seeks to reduce the effects of interest rate volatility on principal by limiting the average effective maturity (as that term is defined in Part B) to no more than three to five years. If in the judgment of the Manager rates are low, it will tend to shorten the average effective maturity to three years or less. Conversely, if in its judgment rates are high, it will tend to extend the average effective maturity to five years or less. The Manager will increase the proportion of short-term instruments when short-term yields are higher. The Manager also has the ability to purchase individual securities with a remaining maturity of up to 15 years. QUALITY RESTRICTIONS The Series will invest primarily in securities issued or guaranteed by the U.S. government (e.g., Treasury Bills and Notes), its agencies (e.g., Federal Housing Administration) or instrumentalities (e.g., Federal Home Loan Bank) or government-sponsored corporations (e.g., Federal National Mortgage Association), and repurchase agreements and publicly- and privately-issued mortgage-backed securities collateralized by such securities. The Series may invest up to 20% of its assets in (1) corporate notes and bonds rated A or above, (2) certificates of deposit and obligations of both U.S. and foreign banks if they have assets of at least one billion dollars, (3) commercial paper rated P-1 by Moody's Investors Service ("Moody's") and/or A-1 by Standard and Poor's Corporation ("S&P") and (4) certain asset-backed securities rated Aaa by Moody's or AAA by S&P. The value of your shares will fluctuate in response to general interest rate changes. When rates rise, the value of securities in the portfolio will generally fall. Conversely, when rates fall, the value of securities in the portfolio will generally rise. INVESTMENT TECHNIQUES To achieve its objective, the Series may use certain hedging techniques which might not be conveniently available to individuals. These techniques will be used at the Manager's discretion to protect the Series' principal value. The Series may purchase put options, write secured put options, write covered call options, purchase call options and enter into closing transactions. A put option purchased by the Series gives it the right to sell one of its securities for an agreed price up to an agreed date. The advantage is that the Series can be protected should the market value of the security decline due to a rise in interest rates. However, the Series must pay a premium for this right, whether it exercises it or not. The Series will only purchase put options to the extent that the premiums on all outstanding put options do not exceed 2% of the Series' total assets. A put option written by the Series obligates it to buy the security underlying the option at the exercise price during the option period, and the purchaser of the option has the right to sell the security to the Series. During the option period, the Series, as writer of the put option, may be assigned an exercise notice by the broker/dealer through whom the option was sold requiring the Series to make payment of the exercise price against delivery of the underlying security. This obligation terminates upon expiration of the put option or at such earlier time at which the writer effects a closing purchase transaction. The Series will only write put options on a secured basis. The advantage to the Series of writing put options is that it receives premium income. The disadvantage is that the Series may be required, when the put is exercised, to purchase securities at higher prices than the current market price. A covered call option written by the Series obligates it to sell one of its securities for an agreed price up to an agreed date. The advantage is that the Series receives premium income, which may offset the cost of purchasing put options. However, the Series may lose the potential market appreciation of the security if the Manager's judgment is wrong and interest rates fall. When the Series purchases a call option, in return for a premium paid by the Series to the writer of the option, the Series obtains the right to buy the security underlying the option at a specified exercise price at any time during the term of the option. The writer of the call option, who receives the premium upon writing the option, has the obligation, upon exercise of the option, to deliver the underlying security against payment of the exercise price. The advantage is that the Series may hedge against an increase in the price of securities which it ultimately wishes to buy. However, the premium paid for the call option plus any transaction costs will reduce the benefit, if any, realized by the Series upon exercise of the option. The Series will only purchase call options to the extent that premiums paid on all outstanding call options do not exceed 2% of the Series' total assets. 7 10 Closing transactions essentially let the Series offset put options or call options prior to exercise or expiration. If the Series cannot effect closing transactions, it may have to hold a security it would otherwise sell or deliver a security it might want to hold. The Series may use both Exchange-traded and over-the-counter options. Certain over-the-counter options may be illiquid. The Series will not invest more than 10% of its assets in illiquid securities. The Series may invest in futures contracts and options on such futures contracts subject to certain limitations. Futures contracts are agreements for the purchase or sale for future delivery of securities. When a futures contract is sold, the Series incurs a contractual obligation to deliver the securities underlying the contract at a specified price on a specified date during a specified future month. A purchase of a futures contract means the acquisition of a contractual right to obtain delivery to the Series of the securities called for by the contract at a specified price during a specified future month. The Series will not enter into futures contracts to the extent that more than 5% of the Series' assets are required as futures contract margin deposits and will not engage in such transactions to the extent that obligations relating to such transactions exceed 20% of the Series' assets. The Series may also purchase and write options to buy or sell futures contracts. Options on futures are similar to options on securities except that options on futures give the purchaser the right, in return for the premium paid, to assume a position in a futures contract, rather than actually to purchase or sell the futures contract, at a specified exercise price at any time during the period of the option. The principal purpose of the purchase or sale of futures contracts for the Series is to protect the Series against the adverse effects of fluctuations in interest rates without actually buying or selling such securities. To the extent that interest rates move in an unexpected direction, however, the Series may not achieve the anticipated benefits of futures contracts or options on such futures contracts or may realize a loss. To the extent that the Series purchases an option on a futures contract and fails to exercise the option prior to the exercise date, it will suffer a loss of the premium paid. Further, the possible lack of a secondary market would prevent the Series from closing out its option positions relating to futures. The Series may invest in mortgage-backed securities issued or guaranteed by the U.S. government, its agencies or instrumentalities. In addition, the Series may invest up to 35% of its assets in securities issued by certain private, nongovernment corporations, such as financial institutions, if the securities are fully collateralized at the time of issuance by securities or certificates issued or guaranteed by the U.S. government, its agencies or instrumentalities. Two principal types of mortgage-backed securities are collateralized mortgage obligations (CMOs) and real estate mortgage investment conduits (REMICs). CMOs and REMICs issued by private entities are not government securities and are not directly guaranteed by any government securities and are not directly guaranteed by any government agency. They are secured by the underlying collateral of the private issuer. The Series will invest in such private-backed securities only if they are 100% collateralized at the time of issuance by securities issued or guaranteed by the U.S. government, its agencies or instrumentalities. The Series currently invests in privately-issued CMOs and REMICs only if they are rated at the time of purchase in the two highest grades by a nationally-recognized rating agency. Certain of the CMOs in which the Series may invest may have variable or floating interest rates and others may be stripped (securities which provide only the principal or interest feature of the underlying security). As noted and subject to the limitations set forth above, the Series may also invest in securities which are backed by assets such as receivables on home equity and credit card loans, and receivables regarding automobile, mobile home and recreational vehicle loans, wholesale dealer floor plans and leases. All such securities must be rated in the highest rating category by a reputable credit rating agency (e.g., AAA by S&P or Aaa by Moody's). Such receivables are securitized in either a pass-through or a pay-through structure. Pass-through securities provide investors with an income stream consisting of both principal and interest payments in respect of the receivables in the underlying pool. Pay-through asset-backed securities are debt obligations issued usually by a special purpose entity, which are collateralized by the various receivables and in which the payments on the underlying receivables provide the funds to pay the debt service on the debt obligations issued. The Series may invest in these and other types of asset-backed securities that may be developed in the future. It is the Series' current policy to limit asset-backed investments to those represented by interests in credit card receivables, wholesale dealer floor plans, home equity loans and automobile loans. 8 11 Due to the shorter maturity of the collateral backing such securities, there is less of a risk of substantial prepayment than with mortgage-backed securities. Such asset-backed securities do, however, involve certain risks not associated with mortgage-backed securities, including the risk that security interests cannot be adequately or in many cases, ever, established. In addition, with respect to credit card receivables, a number of state and federal consumer credit laws give debtors the right to set off certain amounts owed on the credit cards, thereby reducing the outstanding balance. In the case of automobile receivables, there is a risk that the holders may not have either a proper or first security interest in all of the obligations backing such receivables due to the large number of vehicles involved in a typical issuance and technical requirements under state laws. Therefore, recoveries on repossessed collateral may not always be available to support payments on the securities. For further discussion concerning the risks of investing in such asset-backed securities, see Part B. The Series may also use repurchase agreements which are at least 100% collateralized by securities in which the Series can invest directly. Repurchase agreements help the Series to invest cash on a temporary basis. Under a repurchase agreement, the Series acquires ownership and possession of a security, and the seller agrees to buy the security back at a specified time and higher price. If the seller is unable to repurchase the security, the Series could experience delays and losses in liquidating the securities. To minimize this possibility, the Series considers the creditworthiness of banks and dealers when entering into repurchase agreements. PORTFOLIO LOAN TRANSACTIONS The Series may loan up to 25% of its assets to qualified broker/dealers or institutional investors for their use relating to short sales or other security transactions. The major risk to which the Series would be exposed on a loan transaction is the risk that the borrower would go bankrupt at a time when the value of the security goes up. Therefore, the Series will only enter into loan arrangements after a review of all pertinent facts by the Manager, subject to overall supervision by the Board of Directors, including the creditworthiness of the borrowing broker, dealer or institution and then only if the consideration to be received from such loans would justify the risk. Creditworthiness will be monitored on an ongoing basis by the Manager. * * * The Series may invest in restricted securities, including securities eligible for resale without registration pursuant to Rule 144A ("Rule 144A Securities") under the Securities Act of 1933. Rule 144A permits many privately placed and legally restricted securities to be freely traded among certain institutional buyers such as the Series. The Series may invest no more than 10% of the value of its net assets in illiquid securities. While maintaining oversight, the Board of Directors has delegated to the Manager the day-to-day functions of determining whether or not individual Rule 144A Securities are liquid for purposes of the Series' 10% limitation on investments in illiquid assets. The Board has instructed the Manager to consider the following factors in determining the liquidity of a Rule 144A Security: (i) the frequency of trades and trading volume for the security; (ii) whether at least three dealers are willing to purchase or sell the security and the number of potential purchasers; (iii) whether at least two dealers are making a market in the security; (iv) the nature of the security and the nature of the marketplace trades (e.g., the time needed to dispose of the security, the method of soliciting offers, and the mechanics of transfer). If the Manager determines that a Rule 144A Security which was previously determined to be liquid is no longer liquid and, as a result, the Series' holdings of illiquid securities exceed the Series' 10% limit on investment in such securities, the Manager will determine what action shall be taken to ensure that the Series continues to adhere to such limitation. * * * Part B further clarifies the Series' investment policies as well as the methods used to determine maturity. A brief discussion of those factors that materially affected the Series' performance during its most recently completed fiscal year appears in the Series' Annual Report. 9 12 THE DELAWARE DIFFERENCE PLANS AND SERVICES The Delaware Difference is our commitment to provide you with superior information and quality service on your investments in the Delaware Group of funds. SHAREHOLDER PHONE DIRECTORY INVESTOR INFORMATION CENTER 800-523-4640 (PHILADELPHIA 215-988-1333) FUND INFORMATION; LITERATURE; PRICE, YIELD AND PERFORMANCE FIGURES SHAREHOLDER SERVICE CENTER 800-523-1918 (PHILADELPHIA 215-988-1241) INFORMATION ON EXISTING REGULAR INVESTMENT ACCOUNTS AND RETIREMENT PLAN ACCOUNTS; WIRE INVESTMENTS; WIRE LIQUIDATIONS; TELEPHONE LIQUIDATIONS; TELEPHONE EXCHANGES DELAPHONE 800-362-FUND (800-362-3863) SHAREHOLDER SERVICES During business hours, you can call the Fund's Shareholder Service Center. The representatives can answer any of your questions about your account, the Series, the various service features and other funds in the Delaware Group. PERFORMANCE INFORMATION During business hours, you can call the Investor Information Center anytime to get current yield information. Current yield and total return information may also be included in advertisements and information given to shareholders. Yield information is computed on an annual basis over a 30-day period. DELAPHONE SERVICE Delaphone is an account inquiry service for investors with Touch-Tone(R) phone service. It enables you to get information on your account faster than the mailed statements and confirmations seven days a week, 24 hours a day. ACCOUNT STATEMENTS A statement of account will be mailed each quarter summarizing all transactions during the period. A confirmation statement will be sent following all transactions other than dividend reinvestment. You should examine statements and confirmations immediately and promptly report any discrepancy by calling the Shareholder Service Center. DUPLICATE CONFIRMATIONS If your investment dealer is noted on your investment application, we will send your dealer a duplicate confirmation. This makes it easier for your investment dealer to help you manage your investments. TAX INFORMATION Each year, the Fund will mail you information on the tax status of your dividends and distributions. DIVIDEND REINVESTMENT PLAN You can elect to have your distributions (capital gains and/or dividend income) paid to you by check or reinvested in your account. Also, you may be permitted to invest your distributions in certain other funds in the Delaware Group, subject to the exceptions noted below as well as the eligibility and minimum purchase requirements set forth in each fund's prospectus. Reinvestments of distributions into Class A Shares of the Series or other Delaware Group funds may be effected without a front-end sales charge. Class B Shares of the Series or other Delaware Group funds acquired through reinvestments of distributions will not be subject to a contingent deferred sales charge if those shares are later redeemed. See Automatic Conversion of Class B Shares under Buying Shares for information concerning the automatic conversion of Class B Shares acquired by reinvesting dividends. Holders of Class A Shares of the Series may not reinvest their distributions in the Class B Shares of any fund in the Delaware Group, including the Series. Holders of Class B Shares of the Series may reinvest their distributions only in the Class B Shares of the funds in the Delaware Group which offer that class of shares (the "Class B Funds"). See Class B Funds under Buying Shares for a list of the funds offering Class B Shares. For more information about reinvestments, please call the Shareholder Service Center. 10 13 EXCHANGE PRIVILEGE The Exchange Privilege permits shareholders to exchange all or part of their shares into shares of the other funds in the Delaware Group, subject to the exceptions noted below as well as the eligibility and minimum purchase requirements set forth in each fund's prospectus. Shareholders of Class B Shares of the Series are permitted to exchange all or part of their Class B Shares only into the corresponding class of shares of the Class B Funds, subject to the minimum purchase and other requirements set forth in each fund's prospectus. Exchanges are not permitted between Class A Shares and Class B Shares of any of the funds of the Delaware Group. See Redemption and Exchange. Except as noted below, permissible exchanges can be made without payment of a front-end sales charge or the imposition of a contingent deferred sales charge at the time of the exchange, as applicable. Persons exchanging into the Class A Shares from a fund in the Delaware Group offered without a front-end sales charge may be required to pay the applicable front-end sales charge. See Investing by Exchange under How to Buy Shares and Redemption and Exchange. See Redemption and Exchange for additional information on exchanges. WEALTH BUILDER OPTION You may be permitted to elect to have amounts in your account automatically invested in shares of other funds in the Delaware Group. Investments under this feature are exchanges and are therefore subject to the same conditions and limitations as other exchanges of Class A and Class B Shares. See Redemption and Exchange. RIGHT OF ACCUMULATION With respect to Class A Shares, the Right of Accumulation feature allows the combining of Class A Shares and Class B Shares of the Series that are currently owned with the dollar amount of new purchases of Class A Shares for a reduced front-end sales charge. Under the COMBINED PURCHASES PRIVILEGE, this includes certain shares owned in certain other funds in the Delaware Group. See Buying Shares. LETTER OF INTENTION With respect to Class A Shares, the Letter of Intention feature permits the aggregation of purchases over a 13-month period to obtain a reduced front-end sales charge. See Part B. 12-MONTH REINVESTMENT PRIVILEGE The 12-Month Reinvestment Privilege permits shareholders to reinvest proceeds of Class A Shares redeemed, within one year from the redemption, without a front-end sales charge. See Part B. FINANCIAL INFORMATION ABOUT THE SERIES Each fiscal year, you will receive an audited annual report and an unaudited semi-annual report. These reports provide detailed information about the Series' investments and performance. The Fund's fiscal year ends on December 31. THE DELAWARE DIGEST You will receive newsletters covering topics of interest about your investment alternatives and services from the Delaware Group. 11 14 RETIREMENT PLANNING An investment in the Series may also be suitable for tax-deferred Retirement Plans. Among the Retirement Plans noted below, Class B Shares are available for investment only by Individual Retirement Accounts, Simplified Employee Pension Plans, 457 Deferred Compensation Plans and 403(b)(7) Deferred Compensation Plans. Prototype Profit Sharing and Money Purchase Pension Plans are each subject to a one-time fee of $200 per plan, or $300 for paired plans. No such fee is charged for owner-only plans. All Prototype Profit Sharing and Money Purchase Pension Plans are subject to an annual maintenance fee of $30 per participant account. Each of the other Retirement Plans described below (other than 401(k) Defined Contribution Plans) is subject to an annual maintenance fee of $15 for each participant's account, regardless of the number of funds selected. Annual maintenance fees for 401(k) Defined Contribution Plans are based on the number of participants in the Plan and the services selected by the employer. Fees are quoted upon request. All of the fees noted above are subject to change. Additional information about fees is contained in Part B. The minimum initial investment in the Classes (as available) for each Plan is $250; subsequent investments must be at least $25. Certain shareholder investment services available to non-retirement plan shareholders may not be available to Retirement Plan shareholders. Certain Retirement Plans may qualify to purchase the Treasury Reserves Intermediate 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. Class B Shares are not available for purchase by such Plans. PROTOTYPE 401(k) DEFINED CONTRIBUTION PLAN Permits employers to establish a tax-qualified plan based on salary deferral contributions. An employer may elect to make profit sharing contributions and/or matching contributions into the Plan. Class B Shares are not available for purchase by such Plans. 12 15 BUYING SHARES PURCHASE AMOUNTS The minimum initial purchase for each of the Classes is $1,000. Subsequent purchases must be $25 or more with respect to the Class A Shares and $100 or more with respect to the Class B Shares. Retirement Plans have other minimums. Refer to Part B or call the Shareholder Service Center for more information on these Plans. Class B Shares are also subject to a maximum purchase limitation of $250,000. ALTERNATIVE PURCHASE ARRANGEMENTS Shares may be purchased at a price equal to the next determined net asset value per share, plus a sales charge which may be imposed, at the election of the purchaser, at the time of the purchase with respect to Class A Shares ("front-end sales charge alternative") or on a contingent deferred basis with respect to Class B Shares ("deferred sales charge alternative"). Class A Shares. An investor who elects the front-end sales charge alternative acquires Class A Shares. Although Class A Shares incur a sales charge when they are purchased, generally they are not subject to any sales charge when they are redeemed, but are subject to annual 12b-1 Plan expenses of up to a maximum of .30% (currently, no more than .15% pursuant to Board action) of average daily net assets of such shares. See Contingent Deferred Charges for Certain Purchases of Class A Shares Made at Net Asset Value and Distribution (12b-1) and Service. Certain purchases of Class A Shares qualify for reduced front-end sales charges. See Front-End Sales Charge Alternative--Class A Shares, below. Class B Shares. An investor who elects the deferred sales charge alternative acquires Class B Shares. Class B Shares do not incur a front-end sales charge when they are purchased, but they are subject to a sales charge if they are redeemed within three years of purchase and are subject to annual 12b-1 Plan expenses of up to a maximum of 1% (.25% of which are service fees to be paid by the Series to the Distributor, dealers or others for providing personal service and/or maintaining shareholder accounts) of average daily net assets of such shares for no longer than approximately five years after purchase. Class B Shares permit all of the investor's dollars to work from the time the investment is made. The higher 12b-1 Plan expenses paid by Class B Shares will cause such shares to have a higher expense ratio and to pay lower dividends than those related to the Class A Shares. At the end of no more than approximately five years after purchase, the Class B Shares are automatically converted into Class A Shares. See Automatic Conversion of Class B Shares. Such conversion will constitute a tax-free exchange for federal income tax purposes. See Taxes. The alternative purchase arrangements permit investors in the Series to choose the method of purchasing shares that is most beneficial given the amount of their purchase, the length of time they expect to hold their shares and other relevant circumstances. Investors should determine whether under their particular circumstances it is more advantageous to incur a front-end sales charge by purchasing Class A Shares or to have the entire initial purchase price invested in the Series with the investment thereafter being subject to a CDSC, if shares are redeemed within three years of purchase, by purchasing Class B Shares. As an illustration, investors who qualify for significantly reduced front-end sales charges on purchases of Class A Shares, as described below, might elect the front-end sales charge alternative because similar sales charge reductions are not available for purchases under the deferred sales charge alternative. Moreover, shares acquired under the front-end sales charge alternative are subject to annual 12b-1 Plan expenses of up to .30% (currently, no more than .15%), whereas shares acquired under the deferred sales charge alternative are subject to higher annual 12b-1 Plan expenses of 1% for no more than approximately five years after purchase. See Automatic Conversion of Class B Shares. However, because front-end sales charges are deducted at the time of purchase, such investors would not have all their funds invested initially. Certain other investors might determine it to be more advantageous to have all their funds invested initially, although they would be subject to a CDSC for up to three years after purchase as well as annual 12b-1 Plan expenses of 1% until the shares are automatically converted into Class A Shares. The 12b-1 Plan distribution expenses with respect to the Class B Shares will be offset to the extent any return is realized on the additional funds initially invested under the deferred sales charge alternative. However, there can be no assurance as to the return, if any, that will be realized on such additional funds. For the distribution and related services provided to, and the expenses borne on behalf of, the Series, the Distributor and others will be paid, in the case of the Class A Shares, from the proceeds of the front-end sales charge and 12b-1 Plan fees and, in the case of the Class B Shares, from the proceeds of the 12b-1 Plan fees and, if applicable, the CDSC incurred upon redemption within three years of purchase. Sales personnel may receive different compensation for selling Class A or Class B Shares. INVESTORS SHOULD UNDERSTAND THAT THE PURPOSE AND FUNCTION OF THE 12B-1 PLAN AND THE CDSC WITH RESPECT TO THE CLASS B SHARES ARE THE SAME AS THOSE OF THE 12B-1 PLAN AND THE FRONT-END SALES CHARGE WITH RESPECT TO THE CLASS A SHARES IN THAT THE FEES AND CHARGES PROVIDE FOR THE FINANCING OF THE DISTRIBUTION OF THE RESPECTIVE CLASSES. SEE 12B-1 DISTRIBUTION PLANS--CLASS A AND CLASS B SHARES. 13 16 Dividends paid by the Series with respect to the Class A and Class B Shares, to the extent any dividends are paid, will be calculated in the same manner at the same time, on the same day and will be in the same amount, except that the additional amount of 12b-1 Plan expenses relating to the Class B Shares will be borne exclusively by such shares. See Calculation of Offering Price and Net Asset Value Per Share. The shareholders of the Class A and Class B Shares each have an exchange privilege by which they may exchange their Class A Shares or Class B Shares for the Class A Shares or Class B Shares, respectively, of certain other Delaware Group funds. See Exchange Privilege under The Delaware Difference and Redemption and Exchange. The NASD has adopted amendments to its Rules of Fair Practice relating to investment company sales charges. The Fund and the Distributor intend to operate in compliance with these rules with respect to both Class A and Class B Shares. FRONT-END SALES CHARGE ALTERNATIVE--CLASS A SHARES The Class A Shares may be purchased at the offering price which reflects a maximum front-end sales charge of 3.00%. See Calculation of Offering Price and Net Asset Value Per Share. Lower front-end sales charges apply for larger purchases. See the table below. The Class A Shares represent a proportionate interest in the Series' assets and are subject to annual 12b-1 Plan expenses. See Distribution (12b-1) and Service under Management of the Fund. REDUCED FRONT-END SALES CHARGE Purchases of $100,000 or more at the offering price carry a reduced front-end sales charge as shown in the following table.
Treasury Reserves Intermediate Fund A Class - -------------------------------------------------------------------------------------------- Front-End Sales Dealer's Charge as % of Concession** Amount of Purchase Offering Amount as % of Price Invested Offering Price - -------------------------------------------------------------------------------------------- Less than $100,000 3.00% 3.10% 2.50% $100,000 but under $250,000 2.50 2.56 2.00 $250,000 but under $500,000 2.00 2.04 1.60 $500,000 but under $1,000,000* 1.50 1.52 1.20
* There is no front-end sales charge on purchases of $1 million or more but, under certain limited circumstances, a 1% Limited CDSC may apply with respect to Class A Shares. - -------------------------------------------------------------------------------- The Fund must be notified when a sale takes place which would qualify for the reduced front-end sales charge on the basis of previous purchases and current purchases. The reduced front-end sales charge will be granted upon confirmation of the shareholder's holdings by the Fund. Such reduced front-end sales charges are not retroactive. From time to time, upon written notice to all of its dealers, the Distributor may hold special promotions for specified periods during which the Distributor may reallow dealers up to the full front-end sales charge shown above. In addition, certain dealers who enter into an agreement to provide extra training and information on Delaware Group products and services and who increase sales of Delaware Group funds may receive an additional concession of up to .15% of the offering price. Dealers who receive 90% or more of the sales charge may be deemed to be underwriters under the Securities Act of 1933. ** Financial institutions or their affiliated brokers may receive an agency transaction fee in the percentages set forth above. - -------------------------------------------------------------------------------- For initial purchases of Class A Shares of $1,000,000 or more made on or after June 1, 1993, a dealer's commission may be paid by the Distributor to financial advisers through whom such purchases are effected in accordance with the following schedule:
DEALER'S COMMISSION ------------------- AMOUNT OF PURCHASE (as a percentage of amount purchased) - ------------------ Up to $3 million .60% Next $2 million up to $5 million .40 Amount over $5 million .20
14 17 In determining a financial adviser's eligibility for the dealer's commission, purchases of Class A Shares of other Delaware Group funds as to which a Limited CDSC applies may be aggregated with those of the Class A Shares of the Series. Financial advisers should contact the Distributor concerning the applicability and calculation of the dealer's commission in the case of combined purchases. Financial advisers also may be eligible for a dealer's commission in connection with certain purchases made under a Letter of Intention or pursuant to an investor's Right of Accumulation. The Distributor also should be consulted concerning the availability of and program for these payments. An exchange from other Delaware Group funds will not qualify for payment of the dealer's commission, unless such exchange is from a Delaware Group fund with assets as to which a dealer's commission or similar payment has not been previously paid. The schedule and program for payment of the dealer's commission are subject to change or termination at any time by the Distributor in its discretion. Redemptions of Class A Shares purchased at net asset value may result in the imposition of a Limited CDSC if the dealer's commission described above was paid in connection with the purchase of those shares. See Contingent Deferred Sales Charge for Certain Purchases of Class A Shares Made at Net Asset Value under Redemption and Exchange. COMBINED PURCHASES PRIVILEGE By combining your holdings in the Class A Shares with your holdings in the Class B Shares of the Series and, except as noted below, shares of the other funds in the Delaware Group, you can reduce the front-end sales charges of any additional purchases of Class A Shares. Except for shares of Delaware Group Premium Fund, Inc. beneficially owned in connection with ownership of variable insurance products, shares of other funds which do not carry a front-end sales charge or CDSC may not be included unless they were acquired through an exchange from one of the other Delaware Group funds which carried a front-end sales charge or CDSC. This privilege permits you to combine your purchases and holdings with those of your spouse, your children under 21 and any trust, fiduciary or retirement account for the benefit of such family members. It also permits you to use these combinations under a Letter of Intention. This allows you to make purchases over a 13-month period and qualify the entire purchase for a reduction in front-end sales charges on Class A Shares. Combined purchases of $1,000,000 or more, including certain purchases made pursuant to a Right of Accumulation or under a Letter of Intention, may trigger the payment of a dealer's commission and the applicability of a Limited CDSC. Investors should consult their financial advisers or the Transfer Agent about the operation of these features. See Reduced Front-End Sales Charges under Buying Shares. BUYING AT NET ASSET VALUE Class A Shares of the Series may be purchased at net asset value under the Delaware Group Dividend Reinvestment Plan and, under certain circumstances, the 12-Month Reinvestment Privilege and the Exchange Privilege. (See The Delaware Difference and Redemption and Exchange for additional information.) Purchases of Class A Shares may be made at net asset value by officers, directors and employees (including former officers and directors and former employees who had been employed for at least ten years) and members of their immediate families of the Manager, any affiliate, any of the funds in the Delaware Group, certain of their agents and registered representatives and employees of authorized investment dealers and by employee benefit plans for such entities. Individual purchases include retirement accounts and must be for accounts in the name of the individual or a qualifying family member. Purchases of Class A Shares may be made by clients of registered representatives of an authorized investment dealer at net asset value within six months of a change of the registered representative's employment, if the purchase is funded by proceeds from an investment where a front-end sales charge has been assessed and the redemption of the investment did not result in the imposition of a contingent deferred sales charge or other redemption charge. Purchase of Class A Shares also may be made at net asset value by bank employees that provide services in connection with agreements between the bank and unaffiliated brokers or dealers concerning sales of Class A Shares. Also, officers, directors and key employees of institutional clients of the Manager, or any of its affiliates, may purchase Class A Shares at net asset value. Moreover, purchases may be effected at net asset value for the benefit of the clients of brokers, dealers and registered investment advisers affiliated with a broker or dealer, if such broker, dealer or investment adviser has entered into an agreement with the Distributor providing specifically for the purchase of Class A Shares in connection with special investment products, such as wrap accounts or similar fee based programs. 15 18 Investments of 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 Series must be notified in advance that an investment qualifies for purchase at net asset value. GROUP INVESTMENT PLANS Group Investment Plans (e.g., SEP/IRA, SAR/SEP, Prototype Profit Sharing, Pension and 401(k) Defined Contribution Plans) may also benefit from the reduced front-end sales charges relating to the Class A Shares set forth in the table on page 14, based on total plan assets. In addition, 403(b)(7) and 457 Retirement Plan Accounts may also benefit from a reduced front-end sales charge on Class A Shares based on the total amount invested by all participants in the plan by satisfying the following criteria: (i) the employer for which the plan was established has 250 or more eligible employees and the plan lists only one broker of record, or (ii) the plan includes employer contributions and the plan lists only one broker of record. If a company has more than one plan investing in the Delaware Group of funds, then the total amount invested in all plans would be used in determining the applicable front-end sales charge reduction. Employees participating in such Group Investment Plans may also combine the investments made in their plan account when determining the front-end sales charge on purchases to non-retirement Delaware Group investment accounts. For additional information on these Plans, including Plan forms, applications, minimum investments and any applicable account maintenance fees, contact your investment dealer or the Distributor. For other Retirement Plans and special services, see Retirement Planning. 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. The Class B Shares are being sold without a front-end sales charge so that the Series will invest the full amount of the investor's purchase payment. The Distributor currently anticipates compensating dealers or brokers for selling Class B Shares at the time of purchase from its own funds in an amount equal to no more than 2% the dollar amount purchased. As discussed below, however, Class B Shares are subject to annual 12b-1 Plan expenses and, if shares are redeemed within three years of purchase, a CDSC. Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to the Distributor and others for the distribution and related services provided to, and the related expenses borne on behalf of, the Series for the benefit of the Class B Shares in connection with the sale of the Class B Shares, including the compensation paid to dealers or brokers for selling Class B Shares. Payments to the Distributor and others under the 12b-1 Plan relating to the Class B Shares may be in an amount equal to no more than 1%. The combination of the CDSC and the proceeds of the 12b-1 Plan fees facilitates the ability of the Series to sell the Class B Shares without a front-end sales charge being deducted at the time of purchase. Shareholders of the Class B Shares exercising the exchange privilege described below will continue to be subject to the CDSC schedule of the Class B Shares described in this Prospectus. Such schedule may be higher than the CDSC schedule relating to the Class B Shares acquired as a result of the exchange. See Redemption and Exchange. AUTOMATIC CONVERSION OF CLASS B SHARES Except for shares acquired through a reinvestment of dividends, Class B Shares held for five 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 fifth 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 fifth 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 fifth anniversary falls on the day after a Conversion Date, that shareholder will have to hold Class B Shares for as long as an additional three months after the fifth anniversary after purchase before the shares will automatically convert into Class A Shares. Class B Shares of a fund acquired through a 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. 16 19 CONTINGENT DEFERRED SALES CHARGE Class B Shares redeemed within three years of purchase may be subject to a CDSC at the rates set forth below, charged as a percentage of the dollar amount subject thereto. The charge will be assessed on an amount equal to the lesser of the net asset value at the time of purchase of the shares being redeemed or the net asset value of the shares at the time of redemption. For purposes of this formula, the "net asset value at the time of purchase" will be the net asset value at purchase of the Class B Shares of the Series even if those shares are later exchanged for Class B Shares of another Delaware Group fund and, in the event of an exchange of the shares, the "net asset value of such shares at the time of redemption" will be the net asset value of the shares into which the shares have been exchanged. Accordingly, no CDSC will be imposed on increases in net asset value above the initial purchase price. In addition, no CDSC will be assessed on redemption of shares received upon reinvestment of dividends or capital gains distributions. The following table sets forth the rates of the CDSC for the Class B Shares of the Series:
CONTINGENT DEFERRED SALES CHARGE (AS A PERCENTAGE OF YEAR AFTER DOLLAR AMOUNT PURCHASE MADE SUBJECT TO CHARGE) ------------- ------------------ 0-2 2% 3 1% 4 and thereafter None
During the fourth year after purchase and, thereafter, until converted automatically into Class A Shares of the Series, the Class B Shares will continue to be subject to annual 12b-1 Plan expenses of 1% of average daily net assets representing those shares. See Automatic Conversion of Class B Shares above. Investors are reminded that the Class A Shares into which the Class B Shares will convert are subject to ongoing annual 12b-1 Plan expenses of up to a maximum of .30% (currently, no more than .15%) of average daily net assets representing such shares. In determining whether a CDSC is applicable to a redemption, the calculation will be determined in a manner that results in the lowest possible rate being charged. Therefore, with respect to the Class B Shares, it will be assumed that the redemption is first for shares held over three years or shares acquired pursuant to reinvestment of dividends or distributions and then of shares held longest during the three-year period. The charge will not be applied to dollar amounts representing an increase in the net asset value since the time of purchase. All investments made during a calendar month, regardless of when during the month the investment occurred, will age one month on the last day of that month and each subsequent month. The CDSC is waived on redemptions of Class B Shares in connection with the following redemptions: (i) redemptions effected pursuant to the Fund's right to liquidate a shareholder's account if the aggregate net asset value of the shares held in the account is less than the then-effective minimum account size; (ii) returns of excess contributions to an IRA or 403(b)(7) Deferred Compensation Plan; (iii) required minimum distributions from an IRA, 403(b)(7) Deferred Compensation Plan, or 457 Deferred Compensation Plan; and (iv) distributions from an IRA, 403(b)(7) Deferred Compensation Plan or 457 Deferred Compensation Plan due to death or disability. 12b-1 DISTRIBUTION PLANS--CLASS A AND CLASS B SHARES Pursuant to the distribution plans adopted by the Fund pursuant to Rule 12b-1 under the Investment Company Act of 1940, the Series is permitted to pay the Distributor annual distribution fees payable monthly up to a maximum of .30% (currently, no more than .15%) of the average daily net assets of the Class A Shares and 1% of the average daily net assets of the Class B Shares in order to compensate the Distributor for providing distribution and related services and bearing certain expenses of each Class. The Class B Shares' 12b-1 Plan is designed to permit an investor to purchase Class B Shares through dealers or brokers without the assessment of a front-end sales charge and at the same time permit the Distributor to compensate dealers and brokers in connection with the sale of the Class B Shares. In this regard, the purpose and function of the 12b-1 Plan and the CDSC with respect to the Class B Shares are the same as those of the front-end sales charge and 12b-1 Plan with respect to the Class A Shares in that the fees and charges provide for the financing of the distribution of the respective Classes. For more detailed discussion of the 12b-1 Plans relating to the Class A and Class B Shares, see Distribution (12b-1) and Service. 17 20 OTHER PAYMENTS TO DEALERS--CLASS A AND CLASS B SHARES In addition, from time to time at the discretion of the Distributor, all registered broker/dealers whose aggregate sales of the Classes exceed certain limits as set by the Distributor, may receive from the Distributor an additional payment of up to .25% of the dollar amount of such sales. The Distributor may also provide additional promotional incentives or payments to dealers that sell shares of the Delaware Group of funds. In some instances, these incentives or payments may be offered only to certain dealers who maintain, have sold or may sell certain amounts of shares. In connection with the promotion of Delaware Group fund shares, the Distributor may, from time to time, pay to participate in dealer-sponsored seminars and conferences, reimburse dealers for expenses incurred in connection with preapproved seminars, conferences and advertising and may, from time to time, pay or allow additional promotional incentives to dealers, which shall include non-cash concessions, such as certain luxury merchandise or a trip to or attendance at a business or investment seminar at a luxury resort, as part of preapproved sales contests. CLASS B FUNDS The following funds currently offer Class B Shares: DMC Tax-Free Income Trust-Pennsylvania, Delaware Group Delchester High-Yield Bond Fund, Inc., Delaware Group Government Fund, Inc., Delaware Group Value Fund, Inc., Delaware Group Cash Reserve, Inc., Tax-Free USA Fund, Tax-Free Insured Fund and Tax-Free USA Intermediate Fund of Delaware Group Tax-Free Fund, Inc., Delaware Group DelCap Fund, Inc., Delaware Fund and Dividend Growth 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. and the Series. TREASURY RESERVES INTERMEDIATE FUND INSTITUTIONAL CLASS In addition to offering the Class A and Class B Shares, the Series also offers the Treasury Reserves Intermediate Fund Institutional Class of shares, which is described in a separate prospectus relating to that class of shares. That class may be purchased only by: (a) retirement plans introduced by persons not associated with brokers or dealers that are primarily engaged in the retail securities business and rollover individual retirement accounts from such plans; (b) tax-exempt employee benefit plans of the Manager or its affiliates and securities dealer firms with a selling agreement with the Distributor; (c) institutional advisory accounts of the Manager or its affiliates and those having client relationships with Delaware Investment Advisers, a division of the Manager, or its affiliates and their corporate sponsors, as well as subsidiaries and related employee benefit plans and rollover individual retirement accounts from such institutional advisory accounts; (d) banks, trust companies and similar financial institutions investing for their own account or for the account of their trust customers for whom such financial institution is exercising investment discretion in purchasing shares of the class; and (e) registered investment advisers investing on behalf of clients that consist solely of institutions and high net-worth individuals having at least $1,000,000 entrusted to the adviser for investment purposes, but only if the adviser is not affiliated or associated with a broker or dealer and derives compensation for its services exclusively from its clients for such advisory services. Such Treasury Reserves Intermediate Fund Institutional Class shares generally are distributed directly by the Distributor and do not have a front-end or contingent deferred sales charge or a 12b-1 fee. Sales or service compensation available in respect of such class, therefore, differs from that available in respect of the Class A Shares and the Class B Shares. All three classes of the Series' shares have a proportionate interest in the underlying portfolio of securities of the Series. Total Operating Expenses incurred by the Treasury Reserves Intermediate Fund Institutional Class as a percentage of average daily net assets for the fiscal year ended December 31, 1994 were 0.76%. See Part B for performance information about Treasury Reserves Intermediate Fund Institutional Class. To obtain a prospectus which describes the Treasury Reserves Intermediate Fund Institutional Class, contact the Distributor. 18 21 DIVIDEND ORDERS SOME SHAREHOLDERS WANT THE DIVIDENDS EARNED IN ONE FUND AUTOMATICALLY INVESTED IN ANOTHER DELAWARE GROUP FUND WITH A DIFFERENT INVESTMENT OBJECTIVE. For more information on the requirements of the other funds, see Dividend Reinvestment Plan under The Delaware Difference or call the Shareholder Service Center. HOW TO BUY SHARES The Series makes it easy to invest by mail, by wire, by exchange and by arrangement with your investment dealer. INVESTING THROUGH YOUR INVESTMENT DEALER You can make a purchase of shares of the Classes through most investment dealers who, as part of the service they provide, must transmit orders promptly. They may charge for this service. If you want a dealer but do not have one, we can refer you to one. INVESTING BY MAIL 1. Initial Purchases--An Investment Application must be completed, signed and sent with a check payable to Treasury Reserves Intermediate Fund A Class or B Class, depending upon which Class is being purchased, to P.O. Box 7977, Philadelphia, PA 19101. 2. Subsequent Purchases--Additional purchases may be made at any time by mailing a check payable to Treasury Reserves Intermediate Fund A Class or B Class, depending upon which Class is being purchased. Your check should be identified with your name(s) and account number. An investment slip (similar to a deposit slip) is provided at the bottom of transaction confirmations and dividend statements that you will receive from the Fund, and should be used when you are making additional purchases. You can expedite processing by including an investment slip with your check when making additional purchases. Your investment may be delayed if you send additional purchases by certified mail. INVESTING BY WIRE You may purchase shares by requesting your bank to transmit funds by wire to CoreStates Bank, N.A., ABA #031000011, account number 0114-2596 (include your name(s) and your account number for the series and class in which you are investing). 1. Initial Purchases--Before you invest, telephone the Fund's Shareholder Service Center to get an account number. If you do not call first, it may delay processing your investment. In addition, you must promptly send your Investment Application to Treasury Reserves Intermediate Fund A Class or B Class, depending upon which Class is being purchased, to P.O. Box 7977, Philadelphia, PA 19101. 2. Subsequent Purchases--You may make additional investments anytime by wiring funds to CoreStates Bank, N.A., as described above. You 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. INVESTING BY EXCHANGE If you have an investment in another mutual fund in the Delaware Group, you may write and authorize an exchange of part or all of your investment into shares of the Series. If you wish to open an account by exchange, call the Shareholder Service Center for more information. Exchanges will not be permitted between Class A Shares and Class B Shares of the Series or between the Class A Shares and Class B Shares of any other funds in the Delaware Group. Class B Shares of any of the Class B Funds may be exchanged for Class B Shares of the Series. Class B Shares of the Series acquired by exchange will continue to carry the contingent deferred sales charge and automatic conversion schedules of the fund from which the exchange is made. Consequently, investors that purchase Class B Shares of the Series by exchange may be subject to the higher 12b-1 Plan fees applicable to Class B Shares longer than investors that purchase Class B Shares of the Series directly if the shares exchanged for Series shares are of a Class B Fund having a longer conversion feature than that of the Series. The holding period of the Class B Shares of the Series will be added to that of the exchanged shares for purposes of determining the time of the automatic conversion into Class A Shares of the Series. 19 22 Permissible exchanges into the Classes of the Series will be made without a front-end sales charge imposed by the Series or, at the time of the exchange, a contingent deferred sales charge imposed by the fund from which the exchange is being made, except for exchanges into Class A Shares from funds not subject to a front-end sales charge (unless such shares were acquired in an exchange from a fund subject to such a charge or such shares were acquired through the reinvestment of dividends). ADDITIONAL METHODS OF ADDING TO YOUR INVESTMENT Call the Shareholder Service Center for more information if you wish to use the following services: 1. Direct Deposit YOU MAY WISH YOUR EMPLOYER OR BANK TO MAKE REGULAR INVESTMENTS DIRECTLY TO YOUR ACCOUNT FOR YOU (for example: payroll deduction, pay by phone, annuity payments). The Series also accepts preauthorized recurring government and private payments by Electronic Fund Transfer, which avoids mail time and check clearing holds on payments such as social security, federal salaries, Railroad Retirement benefits, etc. 2. Automatic Investing Plan THE AUTOMATIC INVESTING PLAN ENABLES YOU TO MAKE REGULAR MONTHLY INVESTMENTS WITHOUT WRITING OR MAILING CHECKS. You may authorize the Fund to transfer a designated amount monthly from your checking account to your Class account. Many shareholders use this as an automatic savings plan for IRAs and other purposes. Shareholders should allow a reasonable amount of time for initial purchases and changes to these plans to become effective. This option is not available to participants in the following plans: SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k) Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457 Deferred Compensation Plans. * * * Should investments by these two methods be reclaimed or returned for some reason, the Fund has the right to liquidate your shares to reimburse the government or transmitting bank. If there are insufficient funds in your Class account, you are obligated to reimburse the Series. PURCHASE PRICE AND EFFECTIVE DATE The offering price and net asset value of the Class A and Class B Shares are determined as of the close of regular trading on the New York Stock Exchange (ordinarily, 4 p.m., Eastern time) on days when such exchange is open. The effective date of a purchase made through an investment dealer is the date the order is received by the Series. The effective date of a direct purchase is the day your wire, electronic transfer or check is received unless it is received after the time the offering price of shares is determined, as noted above. Those received after such time will be effective the next business day. THE CONDITIONS OF YOUR PURCHASE The Fund reserves the right to reject any purchase or exchange. If a purchase is 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, upon 60 days' written notice, to redeem accounts that remain under $1,000 as a result of redemptions. An investor making the minimum initial investment will be subject to involuntary redemption without the imposition of a CDSC or Limited CDSC if he or she redeems any portion of his or her account. 20 23 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 tax-advantaged funds, equity funds or more aggressive bond funds. Exchanges are subject to the requirements of each fund and all exchanges of shares from one fund or class to another pursuant to this privilege constitute taxable events. See Taxes. You may want to call us for more information or consult your financial adviser or investment dealer to discuss which funds in the Delaware Group will best meet your changing objectives, and the consequences of any exchange transaction. Your shares will be redeemed or exchanged based on the net asset value next determined after we receive your request in good order subject, in the case of a redemption, to any applicable CDSC or Limited CDSC. Redemption or exchange requests received in good order after the time the offering price and net asset value of shares are determined, as noted above, will be processed on the next business day. See Purchase Price and Effective Date under Buying Shares. Except as otherwise noted below, for a redemption request to be in "good order," you must provide your Class account number, account registration, and the total number of shares or dollar amount of the transaction. If a holder of Class B Shares submits a redemption request for a specific dollar amount, the Fund will redeem that number of shares necessary to deduct the applicable CDSC and tender to the shareholder the requested amount to the extent enough shares are then held in the shareholder account. With regard to exchanges, you must also provide the name of the fund you want to receive the proceeds. Exchange instructions and redemption requests must be signed by the record owner(s) exactly as the shares are registered. You may request a redemption or an exchange by calling the Fund at 800-523-1918 (in Philadelphia, 215-988-1241). The Fund reserves the right to reject exchange requests at any time. The Fund may suspend or terminate, or amend the terms of, the exchange privilege upon 60 days' written notice to shareholders. The Fund will not honor check or wire redemptions for Class shares recently purchased by check unless it is reasonably satisfied that the purchase check has cleared, which may take up to 15 days from the purchase date. The Fund may honor written redemption requests, but will not mail the proceeds until it is reasonably satisfied the purchase check has cleared. You can avoid this potential delay if you purchase shares by wiring Federal Funds. You may call the Shareholder Service Center to determine if your funds are available for redemption. The Fund reserves the right to reject a written or telephone redemption request or delay payment of redemption proceeds if there has been a recent change to the shareholder's address of record. Class A Shares may be exchanged for certain of the shares of the other funds in the Delaware Group, including other Class A Shares, subject to the eligibility and minimum purchase requirements set forth in each fund's prospectus. All Delaware Group funds offer Class A Shares. Class A Shares may not be exchanged for Class B Shares of the funds offering such shares. Class B Shares of the Series may be exchanged only for the Class B Shares of any of the Class B Funds. See Exchange Privilege under The Delaware Difference. In each instance, permissible exchanges are subject to the minimum purchase and other requirements set forth in each prospectus. Permissible exchanges may be made at net asset value provided: (1) the investment satisfies the eligibility and minimum purchase requirements set forth in the prospectus of the fund being acquired; and (2) the shares of the fund being acquired are in a state where that fund is registered. There is no front-end sales charge or fee for exchanges made between shares of funds which both carry a front-end sales charge. Any applicable front-end sales charge will apply to exchanges from shares of funds not subject to a front-end sales charge, except for transfers involving assets that were previously invested in a fund with a front-end sales charge and/or transfers involving the reinvestment of dividends. 21 24 Holders of the Class B Shares that exchange their shares ("outstanding Class B Shares") for the Class B Shares of other Class B Funds ("new Class B Shares") will not be subject to a CDSC that might otherwise be due upon redemption of the outstanding Class B Shares. However, such shareholders will continue to be subject to the CDSC and automatic conversion schedules of the outstanding Class B Shares described in this Prospectus and any CDSC assessed upon redemption will be charged by the Series. Such schedule may be higher than the CDSC schedule relating to the new Class B Shares acquired as a result of the exchange. For purposes of computing the CDSC that may be payable upon a disposition of the new Class B Shares, the holding period for the outstanding Class B Shares is added to the holding period of the new Class B Shares. Different redemption and exchange methods are outlined below. Except for the CDSC with respect to redemption of Class B Shares and the Limited CDSC with respect to certain redemptions of Class A Shares purchased at net asset value, there is no fee charged by the Fund or the Distributor for redeeming or exchanging your shares, but such fees could be charged in the future. You may also have your investment dealer arrange to have your shares redeemed or exchanged. Your investment dealer may charge for this service. All authorizations given by shareholders with respect to an account, including selection of any of the features described below, shall continue in effect until revoked or modified in writing and until such time as such written revocation or modification has been received by the Fund or its agent. All exchanges involve a purchase of shares of the fund into which the exchange is made. As with any purchase, an investor should obtain and carefully read that fund's prospectus before buying shares in an exchange. The prospectus contains more complete information about the fund, including charges and expenses. CHECKWRITING FEATURE PURCHASERS OF CLASS A SHARES CAN REQUEST SPECIAL CHECKS BY MARKING THE BOX ON THE INVESTMENT APPLICATION. The checks must be drawn for $500 or more and, unless otherwise indicated on the Investment Application or your checkwriting authorization form, must be signed by all owners of the account. Because the value of shares fluctuates, you cannot use checks to close your account. The Checkwriting Feature is not available with respect to the Class B Shares and for Retirement Plans, with respect to the Class A Shares. See Part B for additional information. WRITTEN REDEMPTION You can write to the Fund at 1818 Market Street, Philadelphia, PA 19103 to redeem some or all of your Class A or Class B Shares. The request must be signed by all owners of the account or your investment dealer of record. For redemptions of more than $50,000, or when the proceeds are not sent to the shareholder(s) at the address of record, the Fund requires a signature by all owners of the account and a signature guarantee for each owner. Each signature guarantee must be supplied by an eligible guarantor institution. The Fund reserves the right to reject a signature guarantee supplied by an eligible institution based on its creditworthiness. The Fund may require further documentation from corporations, executors, retirement plans, administrators, trustees or guardians. The redemption request is effective at the net asset value next determined after it is received in good order. Class B Shares may be subject to a CDSC and Class A Shares may be subject to a Limited CDSC with respect to certain shares purchased at net asset value. Payment is normally mailed the next business day, but no later than seven days, after receipt of your request. If your Class A Shares are in certificate form, the certificate must accompany your request and also be in good order. The Fund only issues certificates for Class A Shares if a shareholder submits a specific request. The Fund does not issue certificates for Class B Shares. WRITTEN EXCHANGE You can also write to the Fund (at 1818 Market Street, Philadelphia, PA 19103) to request an exchange of any or all of your Class A or Class B Shares into another mutual fund in the Delaware Group subject to the same conditions and limitations as other exchanges noted above. TELEPHONE REDEMPTION AND EXCHANGE To get the added convenience of the telephone redemption and exchange methods, you must have the Transfer Agent hold your shares (without charge) for you. If you choose to have your Class A Shares in certificate form, you can only redeem or exchange by written request and you must return your certificates. The Telephone Redemption service enabling you to have redemption proceeds mailed to your address of record and the Telephone Exchange service, both of which are described below, are automatically provided unless the Fund receives written notice from the shareholder to the contrary. The Fund reserves the right to modify, terminate or suspend these procedures upon 60 days' written notice to shareholders. It may be difficult to reach the Fund by telephone during periods when market or economic conditions lead to an unusually large volume of telephone requests. 22 25 Neither the Fund nor the Transfer Agent is responsible for any shareholder loss incurred in acting upon written or telephone instructions for redemption or exchange of Series shares which are reasonably believed to be genuine. With respect to such telephone transactions, the Fund will follow reasonable procedures to confirm that instructions communicated by telephone are genuine (including verification of a form of personal identification) as, if it does not, the Fund or the Transfer Agent may be liable for any losses due to unauthorized or fraudulent transactions. Instructions received by telephone are generally tape recorded, and a written confirmation will be provided for all purchase, exchange and redemption transactions initiated by telephone. By exchanging shares by telephone, the shareholder is acknowledging prior receipt of a prospectus for the fund into which shares are being exchanged. TELEPHONE REDEMPTION--CHECK TO YOUR ADDRESS OF RECORD THE TELEPHONE REDEMPTION FEATURE IS A QUICK AND EASY METHOD TO REDEEM SHARES. You or your investment dealer of record can have redemption proceeds of $50,000 or less mailed to you at your record address. Checks will be payable to the shareholder(s) of record. Payment is normally mailed the next business day, but no more than seven days, after receipt of the request. This service is only available to individual, joint and individual fiduciary-type accounts. TELEPHONE REDEMPTION--PROCEEDS TO YOUR BANK Redemption proceeds of $1,000 or more can be transferred to your predesignated bank account by wire or by check. You should authorize this service when you open your account. If you change your predesignated bank account, the Fund requires an Authorization Form with your signature guaranteed. For your protection, your authorization must be on file. If you request a wire, your funds will normally be sent the next business day. CoreStates Bank, N.A.'s fee (currently $7.50) will be deducted from your redemption. If you ask for a check, it will normally be mailed the next business day, but no later than seven days, after receipt of your request to your predesignated bank account. Except for any CDSC which may be applicable to the Class B Shares and the Limited CDSC which may be applicable to purchases made at net asset value with respect to the Class A Shares, there are no fees for this method, but the mail time may delay getting funds into your bank account. Simply call the Fund's Shareholder Service Center prior to the time the offering price and net asset value are determined, as noted above. If expedited payment by check or wire could adversely affect the Series, the Fund may take up to seven days to pay. TELEPHONE EXCHANGE The Telephone Exchange feature is a convenient and efficient way to adjust your investment holdings as your liquidity requirements and investment objectives change. You or your investment dealer of record can authorize an exchange of shares into a money market fund in the Delaware Group with just a phone call. Any such exchange is subject to the same conditions and limitations as other exchanges noted above. This service is useful if you are anticipating a major expenditure and want to move a portion of your investment into a fund where stability of principal is paramount. The Delaware Group money market fund investment minimums apply. Your Class A or Class B Shares can also be exchanged into other funds 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 PLAN 1. Regular Plans This plan provides holders of the Class A Shares with a consistent monthly (or quarterly) payment. THIS IS PARTICULARLY USEFUL TO SHAREHOLDERS LIVING ON FIXED INCOMES, SINCE IT PROVIDES THEM WITH A STABLE SUPPLEMENTAL AMOUNT. With accounts of at least $5,000, you may elect monthly withdrawals of $25 (quarterly $75) or more. The Fund does not recommend any particular monthly amount, as each shareholder's situation and needs vary. Payments are normally made by check. In the alternative, you may elect to have your payments transferred from your Series account to your predesignated bank account through the Delaware Group's MoneyLine service. Your funds will normally be credited to your bank account after two business days. Except with respect to the Limited CDSC which may be applicable to Class A Shares as noted below, there are no fees for this method. You can initiate this service by completing an Authorization Agreement. If the name and address on your bank account are not identical to the name and address on your Series account, you must have your signature guaranteed. Please call the Shareholder Service Center for additional information. 23 26 2. Retirement Plans For shareholders eligible under the applicable Retirement Plan to receive benefits in periodic payments, the Series' 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 described above is not available with respect to Retirement Plans. * * * Shareholders should not purchase Class A Shares while participating in a Systematic Withdrawal Plan. Also, redemptions of Class A Shares pursuant to a Systematic Withdrawal Plan may be subject to a Limited CDSC if the original purchase was made within the 12 months prior to the withdrawal at net asset value and a dealer's commission has been paid on that purchase. See Contingent Deferred Sales Charge for Certain Purchases of Class A Shares Made at Net Asset Value. For more information on both of these plans, call the Shareholder Service Center. The Systematic Withdrawal Plan is not available with respect to the Class B Shares. WEALTH BUILDER OPTION Shareholders may elect to invest in other mutual funds in the Delaware Group through our Wealth Builder Option. Under this automatic exchange program, shareholders can authorize regular monthly investments (minimum of $100 per fund) to be liquidated from their account and invested automatically into one or more funds in the Delaware Group. Investments under this option are exchanges and are therefore subject to the same conditions and limitations as other exchanges of Class A and Class B Shares noted above. Shareholders can also use the Wealth Builder Option to invest in the Series through regular liquidations of shares in their accounts in other funds in the Delaware Group subject to the same conditions and limitations as other exchanges noted above. Shareholders can terminate their participation at any time by written notice to the Fund. See Redemption and Exchange. This option is not available to participants in the following plans: SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k) Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457 Deferred Compensation Plans. CONTINGENT DEFERRED SALES CHARGE FOR CERTAIN PURCHASES OF CLASS A SHARES MADE AT NET ASSET VALUE For purchases of Class A Shares, a Limited CDSC will be imposed by the Series upon certain redemptions of Class A Shares (or shares into which such Class A Shares are exchanged) made within 12 months of purchase, if such purchases were made at net asset value and triggered the payment by the Distributor of the dealer's commission described above. See Buying Shares. The Limited CDSC will be paid to the Distributor and will be equal to the lesser of 1% of (1) the net asset value at the time of purchase of the Class A Shares being redeemed or (2) the net asset value of such Class A Shares at the time of redemption. For purposes of this formula, the "net asset value at the time of purchase" will be the net asset value at purchase of the Class A Shares even if those shares are later exchanged for shares of another Delaware Group fund and, in the event of an exchange of Class A Shares, the "net asset value of such shares at the time of redemption" will be the net asset value of the shares into which the Class A Shares have been exchanged. Redemptions of such Class A Shares held for more than 12 months will not be subjected to the Limited CDSC and an exchange of such Class A Shares into another Delaware Group fund will not trigger the imposition of the Limited CDSC at the time of such exchange. The period a shareholder owns shares into which Class A Shares are exchanged will count towards satisfying the 12-month holding period. The Fund assesses the Limited CDSC if such 12-month period is not satisfied irrespective of whether the redemption triggering its payment is of the Class A Shares of the Series or the Class A Shares into which the Class A Shares of the Series have been exchanged. In determining whether a Limited CDSC is payable, it will be assumed that shares not subject to the Limited CDSC are the first redeemed followed by other shares held for the longest period of time. The Limited CDSC will not be imposed upon shares representing reinvested dividends or capital gains distributions, or upon amounts representing share appreciation. All investments made during a calendar month, regardless of when during the month the investment occurred, will age one month on the last day of that month and each subsequent month. 24 27 The Limited CDSC will be waived in the following instances: (i) redemptions effected pursuant to the Fund's right to liquidate a shareholder's account if the aggregate net asset value of the shares held in the account is less than the then-effective minimum account size; (ii) distributions to participants from a retirement plan qualified under section 401(a) or 401(k) of the Internal Revenue Code of 1986, as amended ("the Code"), or due to death of a participant in such a plan, (iii) redemptions pursuant to the direction of a participant or beneficiary of a retirement plan qualified under section 401(a) or 401(k) of the Code with respect to that retirement plan; (iv) distributions from a section 403(b)(7) Plan or an IRA due to death, disability, or attainment of age 59 1/2; (v) tax-free returns of excess contributions to an IRA; (vi) distributions by other employee benefit plans to pay benefits; (vii) distributions described in (ii), (iv), and (vi) above pursuant to a systematic withdrawal plan; and (viii) redemptions by the classes of shareholders who are permitted to purchase shares at net asset value, regardless of the size of the purchase (see Buying at Net Asset Value). DIVIDENDS AND DISTRIBUTIONS The Fund declares a dividend to all shareholders of record of the Classes at the time the offering price of shares is determined. See Purchase Price and Effective Date under Buying Shares. Thus, when redeeming shares, dividends continue to accrue up to and including the date of redemption. Purchases of shares of each Class by wire begin earning dividends when converted into Federal Funds and available for investment, normally the next business day after receipt. Purchases by check earn dividends upon conversion to Federal Funds, normally one business day after receipt. Each class of the Series will share proportionately in the investment income and expenses of the Series, except that (i) the per share dividends and distributions on the Class B Shares will be lower than the per share dividends and distributions on the Class A Shares as a result of the higher expenses under the 12b-1 Plan relating to the Class B Shares; and (ii) the per share dividends and distributions on both the Class A Shares and the Class B Shares will be lower than the per share dividends and distributions on the Treasury Reserves Intermediate Fund Institutional Class as such class will not incur any expenses under the 12b-1 Plans. See Distribution (12b-1) and Service under Management of the Fund. The dividends are declared daily and paid monthly on the last business day of each month. Payment by check of cash dividends will ordinarily be mailed within three business days after the payable date. Short-term capital gains distributions, if any, may be paid quarterly, but in the discretion of the Fund's Board of Directors might be distributed less frequently. Long-term capital gains, if any, will be distributed annually. The Series can have two types of dividends: income and capital gains. Normally both types are automatically reinvested in your account unless you elect otherwise. Any check in payment of dividends or other distributions which cannot be delivered by the Post Office or which remains uncashed for a period of more than one year may be reinvested in the shareholder's account at the then-current net asset value and the dividend option may be changed from cash to reinvest. If you elect to have your dividends and distributions in cash and such dividends and distributions are in an amount of $25 or more, you may elect the Delaware Group's MoneyLine service to enable such payments to be transferred from your Series account to your predesignated bank account. Your funds will normally be credited to your bank account two business days after the payment date. There are no fees for this method. See Systematic Withdrawal Plan for Class A Shares under Redemption and Exchange for information regarding authorization of this service. This service is not available with respect to Retirement Plans. (See The Delaware Difference for more information on reinvestment options.) For the fiscal year ended December 31, 1994, dividends totaling $0.667 and $0.399 per share of the Class A Shares and Class B Shares, respectively, were paid from net investment income. 25 28 TAXES The Series has qualified, and intends to continue to qualify, as a regulated investment company under Subchapter M of the Internal Revenue Code (the "Code"). As such, the Series will not be subject to federal income tax, or to any excise tax, to the extent its earnings are distributed as provided in the Code. The Series intends to distribute substantially all of its net investment income and net capital gains, if any. Dividends from net investment income or net short-term capital gains will be taxable to you as ordinary income, whether received in cash or in additional shares. No portion of the Series' distributions will be eligible for the dividends-received deduction for corporations. Distributions paid by the Series from long-term capital gains, whether received in cash or in additional shares, are taxable to those investors who are subject to income taxes as long-term capital gains, regardless of the length of time an investor has owned shares in the Series. The Series does not seek to realize any particular amount of capital gains during a year; rather, realized gains are a byproduct of Series management activities. Consequently, capital gains distributions may be expected to vary considerably from year to year. Also, for those investors subject to tax, if purchases of shares in the Series are made shortly before the record date for a dividend or capital gains distribution, a portion of the investment will be returned as a taxable distribution. Dividends which are declared in October, November or December but which, for operational reasons, may not be paid to the shareholder until the following January, will be treated for tax purposes as if paid by the Series and received by the shareholder on December 31 of the calendar year in which they are declared. The sale of shares of the Series is a taxable event and may result in a capital gain or loss to shareholders subject to tax. Capital gain or loss may be realized from an ordinary redemption of shares or an exchange of shares between two mutual funds (or two series or portfolios of a mutual fund). Any loss incurred on sale or exchange of a Series' shares held for six months or less will be treated as a long-term capital loss to the extent of capital gain dividends received with respect to such shares. All or a portion of the sales charge incurred in purchasing Series shares will be excluded from the federal tax basis of any of such shares sold or exchanged within ninety (90) days of their purchase (for purposes of determining gain or loss upon sale of such shares) if the sale proceeds are reinvested in the Series or in another fund in the Delaware Group of funds and a sales charge that would otherwise apply to the reinvestment is reduced or eliminated. Any portion of such sales charge excluded from the tax basis of the shares sold will be added to the tax basis of the shares acquired in the reinvestment. The automatic conversion of Class B Shares into Class A Shares at the end of no longer than approximately five years after purchase will constitute a tax-free exchange for federal tax purposes. Shareholders should consult their own tax advisers regarding specific questions as to federal, state, local or foreign taxes. See Automatic Conversion of Class B Shares under Buying Shares. In addition to federal taxes, shareholders may be subject to state and local taxes on distributions. Distributions of interest income and capital gains realized from certain types of U.S. government securities may be exempt from state personal income taxes. Shares of the Series are exempt from Pennsylvania county personal property taxes. Each year, the Fund will mail you information on the tax status of the Series' dividends and distributions. Shareholders will also receive each year information as to the portion of dividend income, if any, that is derived from U.S. government securities that are exempt from state income tax. Of course, shareholders who are not subject to tax on their income would not be required to pay tax on amounts distributed to them by the Series. The Fund is required to withhold 31% of taxable dividends, capital gains distributions, and redemptions paid to shareholders who have not complied with IRS taxpayer identification regulations. You may avoid this withholding requirement by certifying on your Account Registration Form your proper Taxpayer Identification Number and by certifying that you are not subject to backup withholding. The tax discussion set forth above is included for general information only. Prospective investors should consult their own tax advisers concerning the federal, state, local or foreign tax consequences of an investment in the Series. See Accounting and Tax Issues in Part B for additional information on tax matters relating to the Series and its shareholders. 26 29 CALCULATION OF OFFERING PRICE AND NET ASSET VALUE PER SHARE Class A Shares are purchased at the offering price and Class B Shares are purchased at the net asset value ("NAV") per share. The offering price of the Class A Shares consists of the NAV per share next determined after the order is received, plus any applicable front-end sales charges. The offering price and NAV are computed as of the close of regular trading on the New York Stock Exchange (ordinarily, 4 p.m., Eastern time) on days when such exchange is open. The NAV per share is computed by adding the value of all securities and other assets in the portfolio, deducting any liabilities (expenses and fees are accrued daily) and dividing by the number of shares outstanding. Portfolio securities for which market quotations are available are priced at market value. Short-term investments having a maturity of less than 60 days are valued at amortized cost, which approximates market value. All other securities are valued at their fair value as determined in good faith and in a method approved by the Fund's Board of Directors. Each of the Series' three classes will bear, pro-rata, all of the common expenses of the Series. The net asset values of all outstanding shares of each class of the Series will be computed on a pro-rata basis for each outstanding share based on the proportionate participation in the Series represented by the value of shares of that class. All income earned and expenses incurred by the Series will be borne on a pro-rata basis by each outstanding share of a class, based on each class' percentage in the Series represented by the value of shares of such classes, except the Treasury Reserves Intermediate Fund Institutional Class will not incur any of the expenses under the Series' 12b-1 Plans and the Class A and Class B Shares alone will bear the 12b-1 Plan expenses payable under their respective Plans. Due to the specific distribution expenses and other costs that will be allocable to each class, the dividends paid to each class of the Series may vary. However, the NAV per share of each class is expected to be equivalent. MANAGEMENT OF THE FUND DIRECTORS The business and affairs of the Fund are managed under the direction of its Board of Directors. Part B contains additional information regarding the directors and officers. INVESTMENT MANAGER The Manager furnishes investment management services to the Series. The Manager and its predecessors have been managing the funds in the Delaware Group since 1938. On December 31, 1994, the Manager and its affiliate, Delaware International Advisers Ltd., were supervising in the aggregate more than $24 billion in assets in the various institutional (approximately $15,456,416,000) and investment company (approximately $9,253,901,000) accounts. The Manager is an indirect, wholly-owned subsidiary of Delaware Management Holdings, Inc. ("DMH"). By reason of its percentage ownership of DMH common stock and through Voting Trust Agreements with certain other DMH shareholders, Legend Capital Group, L.P. ("Legend") controls DMH and the Manager. As General Partners of Legend, Leonard M. Harlan and John K. Castle have the ability to direct the voting of more than a majority of the shares of DMH common stock and thereby control the Manager. On December 12, 1994, DMH entered into a merger agreement with Lincoln National Corporation ("Lincoln National") and a newly-formed subsidiary of Lincoln National. Pursuant to that agreement, the new subsidiary will be merged with and into DMH. This merger will result in DMH becoming a wholly-owned subsidiary of Lincoln National. The transaction is expected to close in the early spring of 1995, subject to the receipt of all regulatory approvals and satisfaction of conditions precedent to closing, including the approval described below. Lincoln National, with headquarters in Fort Wayne, Indiana, is a diversified organization with operations in many aspects of the financial services industry, including insurance and investment management. 27 30 The Manager manages the Series' portfolio, makes investment decisions and implements them. The Manager also pays the salaries of all the directors, officers and employees of the Fund who are affiliated with the Manager. For these services, the Manager is paid an annual fee of 1/2 of 1% of the average daily net assets of the Series, less a proportionate share of all directors' fees paid to the unaffiliated directors by the Series. Investment management fees paid by the Series were 0.50% of average daily net assets for the fiscal year ended December 31, 1994. Completion of the above-described merger transaction will result in an assignment, and consequently a termination, of the existing investment management agreement between the Manager and the Fund. Series shareholders will be asked to vote on a new investment management agreement with the Manager, to become effective at or about the time the trans-action is to be completed. It is not anticipated that there will be any changes in the compensation or other material terms of the existing investment management agreement as a result of the transaction. Details of the transaction are included in the proxy materials furnished to shareholders entitled to vote at the shareholder meeting called to consider the matter. Roger A. Early has assumed primary responsibility for making day-to-day investment decisions for the Series as of July 18, 1994. Mr. Early has an undergraduate degree in economics from the University of Pennsylvania's Wharton School and an MBA in finance and accounting from the University of Pittsburgh. He is also a CPA and a CFA. Prior to joining the Delaware Group, Mr. Early was a portfolio manager for Federated Investment Counseling's fixed income group, with over $1 billion in assets. In making investment decisions for the Series, Mr. Early consults regularly with Paul E. Suckow, Dorothea M. Dutton and Gary A. Reed. Mr. Suckow is the Chief Investment Officer for fixed income. A Chartered Financial Analyst, he is a graduate of Bradley University with an MBA from Western Illinois University. Mr. Suckow was a fixed income portfolio manager at the Delaware Group from 1981 to 1985. He returned to the Delaware Group in 1993 after eight years with Oppenheimer Management Corporation. Ms. Dutton, a Chartered Financial Analyst and a graduate of the University of Washington, joined the Delaware Group in 1986 as a vice president for fixed income. Mr. Reed, also a Chartered Financial Analyst, is a graduate of the University of Chicago with an MA from Columbia University. He joined the Delaware Group in 1989 as a vice president for fixed income. It is not anticipated that there will be any changes in the personnel responsible for managing the Series as a result of the above-described merger transaction. PORTFOLIO TRADING PRACTICES Portfolio trades are generally made on a net basis without brokerage commissions. However, the price may include a mark-up or mark-down. Banks, brokers or dealers are selected by the Manager to execute the Series' portfolio transactions. Although the Series trades principally to seek a high level of income and stability of principal and not for profits, the portfolio turnover may be high, particularly if interest rates are volatile. The degree of portfolio activity may affect brokerage costs of the Series and taxes payable by shareholders. During the fiscal years ended December 31, 1993 and 1994, the Series' portfolio turnover rates were 171% and 148%, respectively. See Portfolio Turnover under Trading Practices and Brokerage in Part B. The Manager uses its best efforts to obtain the best available price and most favorable execution for portfolio transactions. Orders may be placed with brokers or dealers who provide brokerage and research services to the Manager or its advisory clients. These services may be used by the Manager in servicing any of its accounts. Subject to best price and execution, the Manager may consider a broker/dealer's sales of Series shares in placing portfolio orders and may place orders with broker/dealers that have agreed to defray certain Series expenses such as custodian fees. 28 31 PERFORMANCE INFORMATION From time to time, the Series may quote yield or total return performance of the Classes in advertising and other types of literature. The current yield for a Class will be calculated by dividing the annualized net investment income earned by that Class during a recent 30-day period by the maximum offering price per share on the last day of the period. The yield formula provides for semi-annual compounding which assumes that net investment income is earned and reinvested at a constant rate and annualized at the end of a six-month period. Total return will be based on a hypothetical $1,000 investment, reflecting the reinvestment of all distributions at net asset value and (i) in the case of Class A Shares, the impact of the maximum front-end sales charge at the beginning of each specified period and (ii) in the case of Class B Shares, the deduction of any applicable CDSC at the end of the relevant period. Each presentation will include the average annual total return for a one-year period and five- and ten-year periods, as relevant. The Series may also advertise aggregate and average total return information concerning a Class over additional periods of time. In addition, the Series may present total return information that does not reflect the deduction of the maximum front-end sales charge or any applicable CDSC. 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. Yield and net asset value fluctuate and are not guaranteed. Past performance is not an indication 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 Series under an Amended and Restated Distribution Agreement dated as of May 2, 1994. The Fund has adopted a distribution plan under Rule 12b-1 for the Class A Shares and a separate distribution plan under Rule 12b-1 for the Class B Shares (the "Plans"). The Plans permit the Series to pay the Distributor from the assets of the respective 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 and Class B Shares, the Distributor may, from time to time, pay to participate in dealer-sponsored seminars and conferences, and reimburse dealers for expenses incurred in connection with preapproved seminars, conferences and advertising. The Distributor may pay or allow additional promotional incentives to dealers as part of preapproved sales contests and/or to dealers who provide extra training and information concerning each Class and increase sales of each Class. In addition, the Series may make payments from the assets of the respective Class directly to others, such as banks, who aid in the distribution of Class shares or provide services in respect of a Class, pursuant to agreements with the Series. The 12b-1 Plan expenses relating to the Class B Shares are also used to pay the Distributor for advancing the commission costs to dealers with respect to the initial sale of such shares. 29 32 The aggregate fees paid by the Series 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 Series to the Distributor, dealers and others, for providing personal service and/or maintaining shareholder accounts) of the Class B Shares' average daily net assets in any year. The Class A and Class B Shares will not incur any distribution expenses beyond these limits, which may not be increased without shareholder approval. The Distributor may, however, incur additional expenses and make additional payments to dealers from its own resources to promote the distribution of shares of the Classes. On May 21, 1987, the Board of Directors set the fee for the Class A Shares, pursuant to its Plan, at .15% of average daily net assets. This fee was effective until May 31, 1992. Effective June 1, 1992, the Board of Directors has determined that the annual fee payable on a monthly basis, under the Plan will be equal to the sum of: (i) the amount obtained by multiplying .10% by the average daily net assets represented by the Class A Shares which were originally purchased in the Investors Series I class (which was converted into the Class A Shares then known as Treasury Reserves Intermediate Fund class) on June 1, 1992 pursuant to a Plan of Recapitalization approved by the shareholders of the Investors Series I class), and (ii) the amount obtained by multiplying .15% by the average daily net assets represented by all other Class A Shares. While this is the method to be used to calculate the 12b-1 expenses to be paid by the Class A Shares under its Plan, the fee is a Class A Shares' expense so that all shareholders of the Class A Shares, regardless of whether they originally purchased or received shares in the Investors Series I class, the Treasury Reserves Intermediate Fund class (formerly the Investors Series II class) or the Class A Shares, will bear 12b-1 expenses at the same rate. While this describes the current formula for calculating the fees which will be payable under the Class A Shares' Plan beginning June 1, 1992, such Plan permits a full .30% on all Class A Shares' assets to be paid at any time following appropriate Board approval. See Shares. The Series' Plans do not apply to the Treasury Reserves Intermediate 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 Treasury Reserves Intermediate Fund Institutional Class shares. While payments pursuant to the Plans may not exceed .30% annually with respect to the Class A Shares and 1% annually with respect to the Class B Shares, the Plans do not limit fees to amounts actually expended by the Distributor. It is therefore possible that the Distributor may realize a profit in any particular year. However, the Distributor currently expects that its distribution expenses will likely equal or exceed payments to it under the Plans. The monthly fees paid to the Distributor are subject to the review and approval of the Fund's unaffiliated directors who may reduce the fees or terminate the Plans at any time. The staff of the Securities and Exchange Commission ("SEC") has proposed amendments to Rule 12b-1 and other related regulations that could impact Rule 12b-1 Distribution Plans. The Fund intends to amend the Plans, if necessary, to comply with any new rules or regulations the SEC may adopt with respect to Rule 12b-1. The Transfer Agent, Delaware Service Company, Inc., serves as the shareholder servicing, dividend disbursing and transfer agent for the Series under an Agreement dated December 20, 1990. The unaffiliated directors review service fees paid to the Transfer Agent. The Distributor and the Transfer Agent are also indirect, wholly-owned subsidiaries of DMH. EXPENSES The Series is responsible for all of its own expenses other than those borne by the Manager under the Investment Management Agreement and those borne by the Distributor under the Amended and Restated Distribution Agreement. The Class A Shares' ratio of expenses to average daily net assets for the fiscal year ended December 31, 1994 was 0.91%. Based on expenses incurred by the Class A Shares during its fiscal year ended December 31, 1994, the expenses of the Class B Shares are expected to be 1.76% for the fiscal year ending December 31, 1995. The ratio of each Class reflects the impact of its respective 12b-1 Plan. 30 33 SHARES The Treasury Reserves Intermediate Series is the second series of Delaware Group Treasury Reserves, Inc., which is an open-end management investment company, commonly known as a mutual fund. The Series' portfolio of assets is diversified for purposes of the Investment Company Act of 1940. The Fund was organized as a Pennsylvania business trust in 1981 and was reorganized as a Maryland corporation in 1990. The authorized capital of the Fund consists of three billion shares of common stock, of which two billion shares have been allocated to the Treasury Reserves Intermediate Series. One billion shares have been allocated to the Class A Shares and two hundred million shares each have been allocated to the Class B Shares and the Treasury Reserves Intermediate Fund Institutional Class shares. Series' shares have a $.001 par value per share, equal voting rights, except as noted below, and are equal in all other respects. Shares of the Series will have a priority over shares of any other series of the Fund in the assets and income of the Series and will vote separately on any matter that affects only the Treasury Reserves Intermediate Series. The Series also offers the Treasury Reserves Intermediate Fund Institutional Class of shares as well as Class A and Class B Shares. Shares of each class represent proportionate interests in the assets of the Series and have the same voting and other rights and preferences as the other classes of shares of the Series, except that shares of the Treasury Reserves Intermediate Fund Institutional Class may not vote on matters affecting, the Distribution Plans under Rule 12b-1 relating to the Class A and Class B Shares. Similarly, the shareholders of the Class A Shares may not vote on matters affecting the Series' Plan under Rule 12b-1 relating to the Class B Shares, and the shareholders of the Class B Shares may not vote on matters affecting the Series' Plan under Rule 12b-1 relating to the Class A Shares. Until May 31, 1992, the Fund offered two retail classes of shares, Investors Series I and Investors Series II (now Class A Shares). Investors Series I class offered shares with a front-end sales charge, but without the imposition of a Rule 12b-1 fee. Effective June 1, 1992, following shareholder approval of a plan of recapitalization on May 15, 1992, shareholders of the Investors Series I class had their shares converted into shares of the Investors Series II class and became subject to the latter class' Rule 12b-1 charges. Effective at the same time, following approval by shareholders, the name of the Investors Series was changed to the Treasury Reserves Intermediate Series and the name of the Investors Series II class was changed to the Treasury Reserves Intermediate Fund class. Until May 2, 1994, the Class A Shares were known as the Treasury Reserves Intermediate Fund class. The Class B Shares of the Series were not offered prior to May 2, 1994. All Fund shares have noncumulative voting rights which means that the holders of more than 50% of the Fund's shares voting for the election of directors can elect 100% of the directors if they choose to do so. Under Maryland law, the Fund is not required, and does not intend, to hold annual meetings of shareholders unless, under certain circumstances, it is required to do so under the Investment Company Act of 1940. Shareholders of 10% or more of the Fund's shares may request that a special meeting be called to consider the removal of a director. 31 34 The Delaware Group includes 22 different funds with a wide range of investment objectives. Stock funds, income funds, tax-free funds, money market funds and closed-end equity funds give investors the ability to create a portfolio that fits their personal financial goals. For more information contact your financial adviser or call the Delaware Group at 800-523-4640, in Philadelphia 215-988-1333. INVESTMENT MANAGER Delaware Management Company, Inc. One Commerce Square 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 [PHOTO OF GEORGE WASHINGTON CROSSING THE DELAWARE RIVER] LEGAL COUNSEL Stradley, Ronon, Stevens & Young One Commerce Square Philadelphia, PA 19103 INDEPENDENT AUDITORS Ernst & Young LLP Two Commerce Square Philadelphia, PA 19103 CUSTODIAN Morgan Guaranty Trust Company of New York 60 Wall Street New York, NY 10260 P-022/P-054-2/95-ALG Printed in the U.S.A. TREASURY RESERVES INTERMEDIATE FUND - ------------ A CLASS B CLASS PROSPECTUS FEBRUARY 28, 1995 DELAWARE GROUP
-----END PRIVACY-ENHANCED MESSAGE-----