DELAWARE GROUP FOUNDATION FUNDS, N-1A/A, 1997-12-30

DELAWARE GROUP FOUNDATION FUNDS
N-1A/A, 1997-12-30

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<PAGE>

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-1A

File No. 33-38801
File No. 811-8457

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / x /

Pre-Effective Amendment No. 1 / x /
---

Post-Effective Amendment No. / /
---

AND

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / x /

Amendment No. 1
---

DELAWARE GROUP FOUNDATION FUNDS
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)

1818 Market Street, Philadelphia, Pennsylvania 19103
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: (215) 751-2923
--------------

George M. Chamberlain, Jr., 1818 Market Street, Philadelphia, PA 19103
- --------------------------------------------------------------------------------
(Name and Address of Agent for Service)

Approximate Date of Public Offering: December 31, 1997
-----------------

The registrant hereby amends this registration statement on such
date or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
section 8(a) of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission acting pursuant to said
section 8(a), may determine.

Title of Securities Being Registered: The securities being registered are a
number of individual classes of separate series of shares of beneficial
interest of Delaware Group Foundation Funds, a Delaware business trust, as
follows:

Income Portfolio
----------------
Income Portfolio A Class
Income Portfolio B Class
Income Portfolio C Class
Income Portfolio Institutional Class

Balanced Portfolio
------------------
Balanced Portfolio A Class
Balanced Portfolio B Class
Balanced Portfolio C Class
Balanced Portfolio Institutional Class

Growth Portfolio
----------------
Growth Portfolio A Class
Growth Portfolio B Class
Growth Portfolio C Class
Growth Portfolio Institutional Class

<PAGE>

--- C O N T E N T S ---

1. Facing Page

2. Contents Page

3. Cross-Reference Sheet

4. Part A - Prospectus

5. Part B - Statements of Additional Information

6. Part C - Other Information

7. Signatures

<PAGE>

CROSS-REFERENCE SHEET
PART A

Location in
Item No. Description Prospectuses
- -------- ----------- ------------

Income Portfolio
Balanced Portfolio
Growth Portfolio
A Class/ Institutional
B Class/ Class
C Class
<S> <C> <C> <C>
1 Cover Page...................................................... Cover Cover

2 Synopsis........................................................ Synopsis; Synopsis;
Summary of Summary of
Expenses Expenses

3 Condensed Financial Information................................. Financial Financial
Highlights Highlights

4 General Description of Registrant .............................. Investment Investment
Objectives and Objectives and
Policies; Shares; Policies; Shares;
Investments of the Investments of the
Underlying Funds; Underlying Funds;
Other Investment Other Investment
Policies and Policies and
Risk Factors Risk Factors

5 Management of the Fund ......................................... Management of Management of
the Portfolios the Portfolios

6 Capital Stock and Other Securities ............................. Delaware Dividends and
Difference; Distributions;
Dividends and Taxes;
Distributions; Shares
Taxes; Shares

7 Purchase of Securities Being Offered............................ Cover; Cover;
How to Buy How to Buy Shares;
Shares; Calculation Calculation of
of Offering Price Net Asset
and Net Asset Value Per Share;
Value Per Share; Management of
Management of the Portfolios
the Portfolios

</TABLE>

<PAGE>

CROSS-REFERENCE SHEET
PART A
(continued)
<TABLE>
<CAPTION>

Location in
Item No. Description Prospectuses
-------- ----------- ------------

Income Portfolio
Balanced Portfolio
Growth Portfolio
A Class/ Institutional
B Class/ Class
C Class

<S> <C> <C> <C>
8 Redemption or Repurchase........................................ How to Buy How to Buy
Shares; Shares;
Redemption and Redemption and
Exchange Exchange

9 Pending Legal Proceedings....................................... None None

</TABLE>

<PAGE>

CROSS-REFERENCE SHEET
PART B

Location in Statement
Item No. Description of Additional Information
-------- ----------- -------------------------

10 Cover Page........................................................... Cover

11 Table of Contents.................................................... Table of Contents

12 General Information and History...................................... General Information

13 Investment Objectives and Policies................................... Investment Objectives
and Policies

14 Management of the Registrant......................................... Officers and Trustees

15 Control Persons and Principal Holders
of Securities........................................................ Officers and Trustees

16 Investment Advisory and Other Services............................... Plans Under Rule 12b-1
for the Fund Classes
(under Purchasing Shares);
Asset Allocation
Agreements; Officers and
Trustees; General Information;
Financial Statements

17 Brokerage Allocation................................................. Trading Practices
and Brokerage

18 Capital Stock and Other Securities................................... Capitalization and
Noncumulative Voting
(under General Information)

19 Purchase, Redemption and Pricing of
Securities Being Offered............................................. Purchasing Shares;
Determining Offering Price
and Net Asset Value;
Redemption and Repurchase;
Exchange Privilege

</TABLE>

<PAGE>

CROSS-REFERENCE SHEET
PART B
(Continued)

Location in Statement
Item No. Description of Additional Information
-------- ----------- -------------------------

<S> <C> <C>
20 Tax Status.......................................................... Taxes

21 Underwriters ....................................................... Purchasing Shares

22 Calculation of Performance Data..................................... Performance Information

23 Financial Statements................................................ Financial Statements

</TABLE>

<PAGE>

CROSS REFERENCE SHEET

PART C

Location
Item No. Description in Part C
-------- ----------- ---------

<S> <C> <C>
24 Financial Statements and Exhibits................................... Item 24

25 Persons Controlled by or under Common
Control with Registrant............................................. Item 25

26 Number of Holders of Securities..................................... Item 26

27 Indemnification..................................................... Item 27

28 Business and Other Connections of
Investment Adviser.................................................. Item 28

29 Principal Underwriters.............................................. Item 29

30 Location of Accounts and Records.................................... Item 30

31 Management Services................................................. Item 31

32 Undertakings........................................................ Item 32

</TABLE>

<PAGE>

SUBJECT TO CHANGE

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.

PROSPECTUS
DECEMBER 31, 1997

DELAWARE GROUP FOUNDATION FUNDS
1818 Market Street, Philadelphia, PA 19103

Delaware Group Foundation Funds (the "Trust") is an open-end
management investment company with three separate Portfolios: the Income
Portfolio, the Balanced Portfolio and the Growth Portfolio. Each Portfolio is
in effect a separate fund issuing its own shares. The investment objectives
and principal policies of the Portfolios are described below. See Investment
Objectives and Policies. Although each Portfolio will constantly strive to
attain its objective, there can be no assurance that it will be attained.

The Portfolios will invest in open-end investment companies (mutual
funds) that are members of the Delaware Group of Mutual Funds (individually,
an "Underlying Fund" and collectively, the "Underlying Funds"). The Underlying
Funds include funds investing in U.S. and foreign stocks, bonds, and money
market instruments. In addition, if the Trust receives an exemptive order from
the Securities and Exchange Commission ("SEC"), the Portfolios may, to the
extent consistent with their respective investment objectives, invest in the
same securities and employ the same investment strategies as any of the
Underlying Funds. At any point in time, it can be expected that each
Portfolio will invest in a different combination of securities and Underlying
Funds, reflecting the different investment objectives and levels of risk and
return each Portfolio seeks.

This Prospectus describes the Portfolios and their Class A Shares,
Class B Shares and Class C Shares and sets forth information that you should
read and consider before you invest. Please retain it for future reference. A
Statement of Additional Information ("Part B" of the Trust's registration
statement), dated December 31, 1997, as it may be amended from time to time,
contains additional information about the Trust and has been filed with the
Securities and Exchange Commission ("SEC"). Part B is incorporated by
reference into this Prospectus and is available, without charge, by writing to
the Trust at the above address or by calling 800-523-4640. The Portfolios'
financial statements, when available, appear in the Trust's Annual Report,
which will accompany any response to requests for Part B. The SEC also
maintains a Web site (http://www.sec.gov) that contains Part B, material we
incorporated by reference, and other information regarding registrants that
electronically file with the SEC.

-1-

<PAGE>

Each Portfolio also offers Institutional Class Shares, which are
available for purchase only by certain investors. A prospectus for the
Institutional Classes can be obtained by writing to Delaware Distributors,
L.P. at the above address or by calling 800-828-5052.

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
PORTFOLIOS ARE NOT FDIC OR NCUSIF INSURED, ARE NOT GUARANTEED BY ANY BANK OR
ANY CREDIT UNION, ARE NOT OBLIGATIONS OF ANY BANK OR ANY CREDIT UNION, AND
INVOLVE INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT
INVESTED. SHARES OF THE PORTFOLIOS ARE NOT BANK OR CREDIT UNION DEPOSITS.

TABLE OF CONTENTS

Cover Page
Synopsis
Summary of Expenses
Financial Highlights
Investment Objectives and Policies
Suitability
Investment Strategy
Investments of the Underlying Funds
The Delaware Difference
Plans and Services
Classes of Shares
How to Buy Shares
Redemption and Exchange
Dividends and Distributions
Taxes
Calculation of Offering Price and Net Asset Value per Share
Management of the Portfolios
Other Investment Policies and Risk Considerations
Appendix A--Ratings

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<PAGE>

SYNOPSIS

Investment Objectives
The investment objective of the Income Portfolio is to seek a
combination of current income and preservation of capital with capital
appreciation. The investment objective of the Balanced Portfolio is to seek
capital appreciation with current income as a secondary objective. The
investment objective of the Growth Portfolio is to seek long term capital
growth. Each Portfolio has different levels of risk and return. For further
details, see Investment Objectives and Policies and Other Investment Policies.

Risk Factors and Special Considerations
Each Portfolio invests in Underlying Funds in the Delaware Group of
Mutual Funds, and may, if the Trust receives an exemptive order from the SEC,
invest in the same securities and employ the same investment strategies as
any of the Underlying Funds , and is therefore subject to the same risks as
those attendant to the Underlying Funds. See Investment Objectives and
Policies and Other Investment Policies and Risk Considerations.

Investment Manager, Distributor and Service Agent
Delaware Management Company, Inc. (the "Manager") furnishes
investment management services to each Portfolio, subject to the supervision
and direction of the Company's Board of Trustees. The Manager and certain of
its affiliates also provide investment management services to the Underlying
Funds and certain of the other funds in the Delaware Group. Delaware
Distributors, L.P. (the "Distributor"), an affiliate of the Manager, is the
national distributor for each Portfolio and for all of the other mutual funds
in the Delaware Group, including the Underlying Funds. Delaware Service
Company, Inc. (the "Transfer Agent"), an affiliate of the Manager, is the
shareholder servicing, dividend disbursing, accounting services and transfer
agent for each Portfolio and for all of the other mutual funds in the Delaware
Group, including the Underlying Funds. See Summary of Expenses and Management
of the Portfolios for further information regarding the Manager, the
Distributor and the Transfer Agent and the fees payable to these entities by
each of the Portfolios.

Sales Charges
The price of each of the Class A Shares includes a maximum front-end
sales charge of 4.75% of the offering price . The sales charge is reduced on
certain transactions of at least $100,000 but under $1,000,000. For purchases
of $1,000,000 or more, the front-end sales charge is eliminated. Class A
Shares are subject to annual 12b-1 Plan expenses for the life of the
investment.

The price of each of the Class B Shares is equal to the net asset
value per share. Class B Shares are subject to a contingent deferred sales
charge ("CDSC") of: (i) 4% if shares are redeemed within two years of
purchase; (ii) 3% if shares are redeemed during the third or fourth year
following purchase; (iii) 2% if shares are redeemed during the fifth year
following purchase; and (iv) 1% if shares are redeemed during the sixth year
following purchase. Class B Shares are subject to annual 12b-1 Plan expenses
for approximately eight years after purchase. See Deferred Sales Charge
Alternative - Class B Shares and Automatic Conversion of Class B Shares under
Classes of Shares.

The price of the Class C Shares is equal to the net asset value per
share. Class C Shares are subject to a CDSC of 1% if shares are redeemed
within 12 months of purchase. Class C Shares are subject to annual 12b-1 Plan
expenses for the life of the investment.

-3-

<PAGE>

See Classes of Shares and Distribution (12b-1) and Service under
Management of the Portfolios.

Purchase Amounts
Generally, the minimum initial investment in any Class is $1,000.
Subsequent investments generally must be at least $100.

Each purchase of Class B Shares is subject to a maximum purchase
limitation of $250,000. For Class C Shares, each purchase must be in an amount
that is less than $1,000,000. An investor may exceed these maximum purchase
limitations for Class B Shares and Class C Shares by making cumulative
purchases over a period of time. An investor should keep in mind, however,
that reduced front-end sales charges apply to investments of $100,000 or more
in Class A Shares, and that Class A Shares are subject to lower annual 12b-1
Plan expenses than Class B and Class C Shares and generally are not subject to
a CDSC. The minimum and maximum purchase amounts for retirement plans may
vary. See How to Buy Shares.

Redemption and Exchange
Class A Shares of each Portfolio may be redeemed or exchanged at the
net asset value calculated after receipt of the redemption or exchange
request. Neither the Portfolios nor the Distributor assesses a charge for
redemptions or exchanges of Class A Shares, except for certain redemptions of
shares purchased at net asset value, which may be subject to a CDSC if a
dealer's commission was paid in connection with such purchases. See Front-End
Sales Charge Alternative - Class A Shares under Classes of Shares.

Class B Shares and Class C Shares may be redeemed or exchanged at the
net asset value calculated after receipt of the redemption or exchange request
subject, in the case of redemptions, to any applicable CDSC. Neither the
Portfolios nor the Distributor assesses any charges other than the CDSC for
redemptions or exchanges of Class B or Class C Shares. There are certain
limitations on an investor's ability to exchange shares between the various
classes of shares that are offered. See Redemption and Exchange.

Open-End Investment Company
The Trust, which was organized as a Delaware Business Trust on
October 24, 1997, is an open-end management investment company. Each
Portfolio is nondiversified as defined by the Investment Company Act of 1940
(the "1940 Act"). See Shares under Management of the Portfolios.

-4-

<PAGE>

SUMMARY OF EXPENSES

A general comparison of the sales arrangements and other expenses
applicable to each Portfolio's Class A, Class B and Class C Shares follows:
<TABLE>
<CAPTION>

Income Portfolio
Balanced Portfolio
Growth Portfolio
----------------
Class A Class B Class C
Shareholder Transaction Expenses Shares Shares Shares
- -------------------------------------------------------------------------------------------------------------------

Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) .......................... 4.75% None None

Maximum Sales Charge Imposed on Reinvested
Dividends (as a percentage of offering price) ................ None None None

Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price or
redemption proceeds, as applicable) ......................... None* 4.00%* 1.00%*

Redemption Fees............................................... None** None** None**

</TABLE>
*Class A purchases of $1 million or more may be made at net asset value.
However, if in connection with any such purchase a dealer commission is paid
to the financial adviser through whom such purchase is effected, a CDSC of 1%
will be imposed on certain redemptions within 12 months of purchase ("Limited
CDSC"). Class B Shares are subject to a CDSC of: (i) 4% if shares are redeemed
within two years of purchase; (ii) 3% if shares are redeemed during the third
or fourth year following purchase; (iii) 2% if shares are redeemed during the
fifth year following purchase; (iv) 1% if shares are redeemed during the sixth
year following purchase; and (v) 0% thereafter. Class C Shares are subject to
a CDSC of 1% if shares are redeemed within 12 months of purchase. See
Contingent Deferred Sales Charge for Certain Redemptions of Class A Shares
Purchased at Net Asset Value under Redemption and Exchange; Deferred Sales
Charge Alternative - Class B Shares and Level Sales Charge Alternative - Class
C Shares under Classes of Shares.

**CoreStates Bank, N.A. currently charges $7.50 per redemption for redemptions
payable by wire.

-5-

Income Portfolio
Balanced Portfolio
Growth Portfolio
----------------
Annual Operating Expenses Class A Class B Class C
(as a percentage of average daily net assets) Shares Shares Shares
- -------------------------------------------------------------------------------------------------------------------

<S> <C> <C> <C>
Management Fees (after waivers)(1) ........................ 0.10% 0.10% 0.10%

12b-1 Plan Expenses (including service fees)(2) ............. 0.25% 1.00% 1.00%

Other Operating Expenses
(after payments)(3).................................. 1.10% 1.10% 1.10%

Total Operating Expenses
(after waivers and payments) ....................... 1.45% 2.20% 2.20%
</TABLE>

(1) The Manager has elected voluntarily to waive that portion, if any, of the
annual management fees ("Asset Allocation Fees") payable by the Portfolios
and to pay the Portfolios' expenses to the extent necessary to ensure that
the "Total Operating Expenses" of the Portfolios do not exceed 1.20%
(exclusive of taxes, interest, brokerage commissions, extraordinary
expenses and 12b-1 expenses) during the commencement of the public offering
of the Portfolios through June 30, 1998. If the voluntary expense waivers
and payments were not in effect, it is estimated that the "Total Operating
Expenses" as a percentage of average daily net assets would be 1.92%, 2.67%
and 2.67% for each Portfolio's A Class, B Class and C Class, respectively,
reflecting Asset Allocation Fees of 0.25% for each Portfolio and "Other
Operating Expenses" of 1.42%.

(2) Class A Shares, Class B Shares and Class C Shares of each Portfolio are
subject to separate 12b-1 Plans. Long-term shareholders may pay more than
the economic equivalent of the maximum front-end sales charges permitted by
rules of the National Association of Securities Dealers, Inc. (the "NASD").
The annual 12b-1 Plan expenses for Class A Shares have been set by the
Board of Trustees at 0.25% of the average daily net assets of such Classes.
The maximum annual 12b-1 Plan expenses permitted under the 12b-1 Plan for
Class A Shares are 0.30% of the average daily net assets of such Class. See
Distribution (12b-1) and Service under Management of the Portfolios.

(3) "Other Operating Expenses" are based on estimated amounts for the current
fiscal year. In the absence of voluntary expense payments, "Other Operating
Expenses" would be 1.42% for each Class.

Each Portfolio, as a shareholder in the Underlying Funds, will
indirectly bear its proportionate share of any management fees and other
expenses paid by the Underlying Funds. The investment adviser, sub-adviser
(where applicable) and the management fee (as an annual percentage of net
assets before fee waivers) and expense ratio for the most recent fiscal year
for each of the Institutional Class shares of the Underlying Funds are set
forth below:

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<PAGE>

Underlying Fund Adviser Sub-Adviser** Fee Rate Expense Ratio

Aggressive Growth Manager 1.00% 0.90%(7)

Blue Chip Manager Vantage* 0.65%(1) 1.20%

Decatur Total Return Manager 0.57%(2) 0.81%

DelCap Manager 0.75% 1.05%

Devon Manager 0.60%(3) 0.95%(7)

Small Cap Value Manager 0.75% 1.15%

Real Estate Investment
Trust Manager Lincoln National* 0.75% 0.86%(7)

Trend Manager 0.75% 1.08%

U.S. Growth Manager Lynch & Mayer* 0.70% 1.50%(7)

Emerging Markets Delaware International* 1.25% 1.70%(7)

International Equity Delaware International* 0.75% 1.55%(7)

International Small Cap Delaware International* 1.25% 1.70%(7)

New Pacific Manager AIB Govett 0.80% 1.50%

Delchester Manager 0.59%(4) 0.79%

High-Yield Opportunities Manager 0.65%(5) 0.75%(7)

Global Bond Delaware International* 0.75% 0.95%(7)

Limited-Term Gov't Manager 0.50% 0.78%

U.S. Government Manager 0.60% 0.86%

Delaware Cash Reserve Manager 0.49%(6) 0.88%

</TABLE>
* Affiliate of the Manager.

** Fees payable by the Manager to a Sub-Adviser have no effect on the
management fees payable by an Underlying Fund.

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<PAGE>

1. Under the Investment Management Agreement for Blue Chip Fund, the Manager
is paid an annual fee equal to 0.65% on the first $500 million of average
daily net assets, 0.625% on the next $500 million and 0.60% on the average
daily net assets in excess of $1 billion.

2. Under the Investment Management Agreement for Decatur Total Return Fund,
the Manager is paid an annual fee equal to 0.60% on the first $500 million
of average daily net assets, 0.575% on the next $250 million of average
daily net assets and 0.55% on the average daily net assets in excess of
$750 million, less all directors fees paid by the fund.

3. Under the Investment Management Agreement for Devon Fund, the Manager is
paid an annual fee equal to 0.60% on the first $500 million of average
daily net assets and 0.50% on the average daily net assets in excess of
$500 million.

4. Under the Investment Management Agreement for Delchester Fund, the Manager
is paid an annual fee equal to 0.60% on the first $500 million of average
daily net assets, 0.575% on the next $250 million of average daily net
assets and 0.55% on the average daily net assets in excess of $750 million,
less all directors fees paid by the fund.

5. Under the Investment Management Agreement for Delchester Fund, the Manager
is paid an annual fee equal to 0.65% on the first $500 million of average
daily net assets, 0.625% on the next $500 million and 0.60% on the average
daily net assets in excess of $1 billion.

6. Under the Investment Management Agreement for Delaware Cash Reserve, the
Manager is paid an annual fee equal to 0.50% on the first $500 million of
average daily net assets, 0.475% on the next $250 million of average daily
net assets, 0.45% on the next $250 million of average daily net assets,
0.425% on the next $250 million of average daily net assets, 0.375% on the
next $250 million of average daily net assets, 0.325% on the next $250
million of average daily net assets, 0.30% on the next $250 million of
average daily net assets and 0.275% on the average daily net assets in
excess of $2 billion, less all directors fees paid by the fund.

7. Reflects voluntary waivers and payments of fees by the investment manager.

-8-

<PAGE>

Aggregate average total expenses of the Underlying Funds are
estimated to be 0.84% for the Income Portfolio, 1.02% for the Balanced
Portfolio, and 1.12% for the Growth Portfolio. This estimate is based on
static asset allocations assumptions. Actual expenses will differ depending on
the actual asset allocations among the Underlying Funds in effect from time
to time.

Investors utilizing the Delaware Group Asset Planner asset allocation
service also typically incur an annual maintenance fee of $35 per Strategy.
However, effective November 1, 1996, the annual maintenance fee is waived
until further notice. Investors who utilize the Asset Planner for an
Individual Retirement Account ("IRA") will pay an annual IRA fee of $15 per
Social Security number. See Delaware Group Asset Planner in Part B.

The following example illustrates the expenses that an investor would
pay on a $1,000 investment over various time periods, assuming (1) a 5% annual
rate of return, (2) redemption and no redemption at the end of each time
period and (3) for Class B Shares and Class C Shares, payment of a CDSC at the
time of redemption, if applicable. The following example assumes the voluntary
waiver of the asset allocation fee and payment of certain expenses by the
Manager as discussed in this Prospectus.

-9-

<PAGE>

INCOME PORTFOLIO
BALANCED PORTFOLIO
GROWTH PORTFOLIO
- ----------------
<TABLE>
<CAPTION>

Assuming Redemption Assuming No Redemption
--------------------- ----------------------
1 Year 3 Years 1 Year 3 Years
------ ------- ------ -------
<S> <C> <C> <C> <C>
Class A Shares(1) $62 $91 $62 $91
Class B Shares(2) $62 $99 $22 $69
Class C Shares $32 $69 $22 $69
</TABLE>

(1) Generally, no redemption charge is assessed upon redemption of Class A
Shares. Under certain circumstances, however, a Limited CDSC, which has not
been reflected in this calculation, may be imposed on certain redemptions
within 12 months of purchase. See Contingent Deferred Sales Charge for
Certain Redemptions of Class A Shares Purchased at Net Asset Value under
Redemption and Exchange.

(2) At the end of approximately eight years after purchase, Class B Shares
will be automatically converted into Class A Shares. The example above
does not assume conversion of Class B Shares since it reflects figures
only for one and three years. See Automatic Conversion of Class B Shares
under Classes of Shares for a description of the automatic conversion
feature.

This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be greater or less than those
shown.

The purpose of the above tables is to assist the investor in
understanding the various costs and expenses that an investor in each Class
will bear directly or indirectly.

-10-

<PAGE>
- --------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS

Financial Highlights for the Portfolios are not included because, as of the
date of this Prospectus, the Portfolios had no operating history.
- --------------------------------------------------------------------------------

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<PAGE>

INVESTMENT OBJECTIVES AND POLICIES

The investment objective of the Income Portfolio is to seek a
combination of current income and preservation of capital with capital
appreciation. It seeks to achieve this objective by investing in primarily a
mix of fixed income and domestic equity securities, including fixed income and
domestic equity Underlying Funds, although it may invest up to 10% of its
assets in international equity securities, including international equity
Underlying Funds. The Income Portfolio will generally invest at least 45% of
its portfolio in fixed income securities and 20% in domestic equity
securities.

The investment objective of the Balanced Portfolio is to seek capital
appreciation with current income as a secondary objective. The Balanced
Portfolio seeks to achieve its objective by investing primarily in domestic
equity and fixed income securities, including domestic equity and fixed income
Underlying Funds. The Balanced Portfolio may also invest in international
equity and fixed income securities, including international equity and fixed
income Underlying Funds. The Balanced Portfolio will generally invest at least
25% of its net assets in fixed income securities, including fixed-income
Underlying Funds.

The investment objective of the Growth Portfolio is to seek long term
capital growth. The Growth Portfolio seeks to achieve this objective by
investing primarily in equity securities, including equity Underlying Funds,
and, to a lesser extent, in fixed income securities, including fixed-income
Underlying Funds. The equity securities may include international securities,
including international Underlying Funds.

Each Portfolio will pursue its investment objective through active
asset allocation implemented primarily with investments in a combination of
the Underlying Funds. The Portfolios may also separately invest directly in
the same securities and employ the same investment strategies as any of the
Underlying Funds , to the extent consistent with each Portfolio's investment
objectives. The Portfolios will invest directly in securities or other
investment instruments for such purposes as avoiding undue disruption of the
activities of the Underlying Funds, hedging of the Portfolios' investment
positions, or to make investments in asset classes not available in the
Underlying Funds. While it is anticipated that at most times the Portfolios
will be primarily invested in the Underlying Funds, it is possible, from time
to time, for the Portfolios to be substantially invested directly in
securities. The investment objective of each Portfolio is considered a
"non-fundamental policy," which means that it may be changed without
approval of a Portfolio's shareholders. There is no assurance that a Portfolio
will achieve its objective.

Suitability
The Trust consists of three separate Portfolios. The Portfolios
pursue different investment objectives, with different levels of risk and
return. Each Portfolio is designed to be a long-term investment. The
descriptions below compare the three Portfolios' levels of risk and return
relative to one another and are not intended to imply any particular absolute
level of risk or return for any Portfolio.

Income Portfolio (Wealth Preservation Phase - Lower Risk Tolerance)
May be appropriate for the investor in the pre-Retirement/Retirement
phase (55+ yrs.) or the investor looking for reduced portfolio risk and/or an
increase in current income.

Balanced Portfolio (Wealth Accumulation Phase - Moderate Risk Tolerance)
May be appropriate for the investor looking for the capital
appreciation potential of the stock market and the income potential of the
bond market.
Growth Portfolio (Earlier Wealth Accumulation Phase - Higher Risk Tolerance)

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May be appropriate for the investor looking for long term capital
growth with no need for current income.

Investment Strategy
The Portfolios will invest primarily in open-end investment companies
(mutual funds) that are members of the Delaware Group of Funds (individually,
an "Underlying Fund" and collectively, the "Underlying Funds"), as well as, if
the Trust receives an exemptive order from the SEC, invest in the same kinds
of securities and employ the same investment strategies as any of the
Underlying Funds , to the extent consistent with each Portfolio's investment
objectives. The Underlying Funds include funds investing in U.S. and foreign
stocks, bonds, and money market instruments. At any point in time, it can be
expected that each Portfolio will invest in a different combination of
securities and Underlying Funds, reflecting the different investment
objectives and levels of risk and return that each Portfolio seeks. In
allocating the Portfolios' assets, the Manager will evaluate the expected
return of the Underlying Funds, the volatility of the Underlying Funds (i.e.,
the variability of returns from one period to the next), and the correlation
of the Underlying Funds (i.e. the degree to which the Underlying Funds move
together).

The allocation of the assets of each Portfolio will be determined by
the Manager. The Manager is the investment manager for each Portfolio. The
Manager or its affiliates also serve as the investment manager to each
Underlying Fund. In determining the asset allocation of the Portfolios, the
Manager will establish an allocation according to asset classes and will
implement such allocation through investment in an appropriate combination of
securities and Underlying Funds.

The Underlying Funds that will be considered for investment by each
Portfolio are listed below, grouped within broad asset classes. The asset
class headings below are provided for convenience and are approximate in
nature. For more detailed information on the investment policies of each
Underlying Fund, see Investment Policies of the Underlying Funds. The list of
Underlying Funds may change from time to time, and Underlying Funds may be
added or deleted upon the recommendation of the Manager without shareholder
approval.

UNDERLYING FUND

U.S. Equity International Equity
Aggressive Growth Fund Emerging Markets Fund
Blue Chip Fund International Equity Fund
Decatur Total Return Fund International Small Cap Fund
DelCap Fund New Pacific Fund
Devon Fund
Small Cap Value Fund Fixed Income
The Real Estate Investment Trust Delchester Fund
Portfolio Global Bond Fund
Trend Fund Limited-Term Government Fund
U.S. Growth Fund U.S. Government Fund
High-Yield Opportunities Fund
Money Market
Delaware Cash Reserve

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<PAGE>

Under normal circumstances, it can generally be anticipated that of
the three Portfolios, the Growth Portfolio will hold a higher percentage of
its assets in U.S. equity and international securities (including Underlying
Funds which invest primarily in those securities) than will the Balanced
Portfolio, which in turn will hold a higher percentage in such securities and
Underlying Funds than will the Income Portfolio. Likewise, it can generally be
anticipated that of the three Portfolios, the Income Portfolio will hold a
higher percentage of its assets in fixed-income securities (including
Underlying Funds which invest primarily in those securities) than will the
Balanced Portfolio, which in turn will hold a higher percentage in such
securities and Underlying Funds than will the Growth Portfolio.

The percentage ranges targeted for each Portfolio by broad asset
class are set forth below. The percentage ranges applicable to each asset
class for each Portfolio may be changed from time to time by the Manager
without the approval of shareholders.

Percentage Ranges of Investment in Asset Classes
------------------------------------------------
<TABLE>
<CAPTION>

Asset Class Income Portfolio Balanced Portfolio Growth Portfolio
- ----------- ---------------- ------------------ ----------------
<S> <C> <C> <C>
U.S. Equity 20%-50% 35%-65% 45%-75%

International Equity 0%-10% 5%-15% 10%-30%

Fixed Income 45%-75% 25%-55% 5%-35%

Money Market 0%-35% 0%-35% 0%-35%
</TABLE>

A Portfolio will generally at all times be invested in at least four
Underlying Funds, consistent with the table above. Any Portfolio may invest up
to 100% of its total assets in cash, money market instruments or in Delaware
Cash Reserve for temporary, defensive purposes.

Purchases of Shares of the Underlying Funds
To the extent the Portfolios invest in Underlying Funds, they will
invest only in Institutional Class Shares of such Underlying Funds.
Accordingly, the Portfolios will not pay any sales load or 12b-1 service or
distribution fees in connection with their investments in shares of the
Underlying Funds. The Portfolios, however, will indirectly bear their pro rata
share of the fees and expenses incurred by the Underlying Funds that are
applicable to holders of Institutional Class Shares. The investment returns of
each Portfolio, therefore, will be net of the expenses of the Underlying Funds
in which it is invested.

Direct Investment in Securities and Other Investment Strategies
The Trust has applied for an exemptive order from the SEC to permit
the Portfolios to invest directly in the same securities which the Underlying
Funds may invest. Until such order is granted, the Portfolios will only invest
in the Underlying Funds and such other securities as are expressly permitted
by the 1940 Act. There is no guarantee that the SEC will grant such an order.
In the event this order is granted, each Portfolio may, to the extent
consistent with its investment objective, invest its assets directly in the
same types of securities as those in which the Underlying Funds invest. In
addition, if the order is granted, each Portfolio may, to the extent
consistent with its investment objective, engage directly in the same types of
investment strategies as those in which each Underlying Fund may engage. Each
Portfolio would use such investment strategies to hedge investment positions,
including investments directly in securities and investments in the Underlying
Funds, to

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<PAGE>
protect the Portfolio against a decline in an Underlying Fund's value. Each
Portfolio does not intend to engage in these investment strategies for
non-hedging purposes such that more than 5% of its assets will be exposed. For
a description of these securities and investment strategies, see Investment
Policies of the Underlying Funds.

Risk Factors
The value of the Portfolios' shares will increase as the value of the
securities owned by the Portfolios increases and will decrease as the value of
the Portfolios' investments decrease. In addition, the Portfolios' share
prices and yields will fluctuate in response to movements in the securities
markets as a whole. Over time, the value of an investment in the Growth
Portfolio is generally expected to fluctuate more than an investment in the
Balanced Portfolio, which in turn is generally expected to fluctuate more over
time then an investment in the Income Portfolio.

Each Portfolio's assets may be primarily invested in a combination of
the Underlying Funds. As a result, each Portfolio's investment performance may
be directly related to the investment performance of the Underlying Funds held
by it. The ability of each Portfolio to meet its investment objective may thus
be directly related to the ability of the Underlying Funds to meet their
objectives as well as the allocation among those Underlying Funds by the
Manager. There can be no assurance that the investment objective of any
Portfolio or Underlying Fund will be achieved.

The Underlying Funds may engage in a variety of investment strategies
which involve certain risks. Moreover, each Portfolio may, if the Trust is
granted an exemptive order by the SEC, to the extent consistent with its
investment objectives, invest in the same securities and employ the same
investment strategies as any of the Underlying Funds. The Portfolios may
therefore be subject to some of the risks resulting from these strategies. The
Portfolios, to the extent consistent with their investment objectives, and
certain of the Underlying Funds may purchase foreign securities; purchase high
yielding, high risk debt securities (commonly referred to as "junk bonds");
enter into foreign currency transactions; engage in options transactions;
engage in futures contracts and options on futures; purchase zero coupon bonds
and pay-in-kind bonds; purchase restricted and illiquid securities; enter into
forward roll transactions; purchase securities on a when-issued or delayed
delivery basis; enter into repurchase agreements; borrow money; loan portfolio
securities and engage in various other investment strategies. Further
information on these investment strategies can be found under Other Investment
Policies and Risk Considerations and in Part B.

Because the Underlying Funds are separately managed, it is possible
that certain Underlying Funds in which a Portfolio invests may be acquiring
securities at the same time that other Underlying Funds in which that
Portfolio invests are selling the same security. Similarly, it is possible
that a Portfolio may directly acquire a security at the same time that an
Underlying Fund in which it invests is selling the same security, or vice
versa. This practice could result in higher indirect transactions costs for a
Portfolio, and thus adversely effect the Portfolio's returns, than would be
the case if the Portfolio were only investing directly in securities.

Each Portfolio is considered a nondiversified investment company
under the regulations which govern mutual funds because it may invest in a
limited number of securities and Underlying Funds. As a result, each Portfolio
may be subject to greater risk with respect to its individual portfolio than a
fund that is more broadly diversified among a number of issuers. However, most
of the Underlying Funds themselves are diversified investment companies. The
Portfolios may not concentrate in any particular industry, sector or
foreign government security (except for investment companies, to the extent
that it is considered an industry or sector).

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<PAGE>

The Manager has adopted Asset Allocation Guidelines (the
"Guidelines") which govern the Portfolios' purchases and redemptions of shares
of the Underlying Funds. Pursuant to these Guidelines, if the Manager
anticipates that a Portfolio's allocation transaction will disrupt the
investment activities of an Underlying Fund, the portfolio managers of the
relevant Portfolio and Underlying Fund will confer on steps to minimize
adverse effects on both the Portfolio and the Underlying Fund, such as
staggering the timing and amounts of such allocation transactions. In
addition, the Manager will attempt to minimize the number and size of
allocation transactions taking place at any one time while attempting to avoid
losing investment opportunities for the Portfolio. As a result, the Portfolios
may, on occasion, be unable to purchase or redeem shares of an Underlying Fund
as quickly or in such amounts as they otherwise would in the absence of such
Guidelines. Such delays or changes in amounts may decrease the total return
and/or increase the volatility of the Portfolios.

* * *

For additional information about each Portfolio's investment policies
and certain risks associated with investments in certain types of securities,
see Other Investment Policies and Risk Considerations.

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<PAGE>

INVESTMENTS OF THE UNDERLYING FUNDS

The following is a summary of the investment objectives and
strategies of the Underlying Funds and the types of securities in which they
may invest. The investment objectives of the Underlying Funds are fundamental
policies and there is no assurance that they will achieve their respective
investment objectives. Each Underlying Fund will constantly strive to achieve
its objectives and, in investing to do so, may hold securities for any period
of time. To the extent that an Underlying Fund (other than a Money Market
Fund) engages in short-term trading in attempting to achieve its objectives,
it may increase its portfolio turnover rate and incur larger portfolio
transaction expenses (including brokerage commissions) and other expenses than
might otherwise be the case. Additional investment strategies with respect to
the Underlying Funds are described in Other Investment Policies and Risk
Considerations and in Part B, as well as in the prospectuses of each
Underlying Fund. For a free copy of a prospectus of any of the Underlying
Funds, call 1-800-523-4640 or write to the Trust at the address given above.
Except where noted, the Manager serves as investment manager for each of the
Underlying Funds.

U.S. Equity Funds
As described below, the following Underlying Funds invest primarily
in equity securities of companies located or conducting their business
primarily in the United States.

Aggressive Growth Fund. The investment objective of Aggressive Growth Fund is
long-term capital appreciation which the Aggressive Growth Fund attempts to
achieve by investing primarily in equity securities of companies which the
Manager believes have the potential for high earnings growth. Although the
Aggressive Growth Fund, in seeking its objective, may receive current income
from dividends and interest, income is only an incidental consideration in the
selection of the Aggressive Growth Fund's investments. The Aggressive Growth
Fund seeks to achieve its investment objective by investing primarily (at
least 65% of its total assets) in equity securities (including convertible
securities) of companies which the Manager believes have the potential for
high earnings growth and which are U.S. companies with stock market
capitalizations of at least $300 million. The Aggressive Growth Fund has been
designed to provide investors with potentially greater long-term rewards than
provided by an investment in a fund that seeks capital appreciation from
common stocks with more established earnings histories.

The Aggressive Growth Fund will invest in equity securities of
companies the Manager believes to be undervalued and to have the potential for
high earnings growth. Companies in which the Aggressive Growth Fund invests
generally will meet one or more of the following criteria: high historical
earnings-per-share (EPS) growth; high projected future EPS growth; an increase
in research analyst earnings estimates; attractive relative price to earnings
ratios; and high relative discounted cash flows. In selecting the Aggressive
Growth Fund's investments, the Manager also focuses on companies with capable
management teams, strong industry positions, sound capital structures, high
returns on equity, high reinvestment rates and conservative financial
accounting policies.

In pursuing its objective, the Aggressive Growth Fund anticipates
that it will invest substantially all, and under normal conditions not less
than 65%, of its assets in common stocks, preferred stocks, convertible bonds,
convertible debentures, convertible notes, convertible preferred stocks and
warrants or rights. To the extent that the Aggressive Growth Fund invests in
convertible debt securities, those securities will be purchased on the basis
of their equity characteristics, and ratings, if any, of those securities will
not be an important factor in their selection.

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<PAGE>

At no time will the investments of the Aggressive Growth Fund in bank
obligations, including time deposits, exceed 25% of the value of the
Aggressive Growth Fund's assets.

Blue Chip Fund. The investment objective of Blue Chip Fund is to achieve
long-term capital appreciation. Current income is a secondary objective. It
seeks to achieve these objectives by investing primarily in equity securities
and securities that are convertible into equity securities. The sub-adviser,
Vantage Global Advisors, Inc. ("Vantage"), an affiliate of the Manager, will
invest in companies which it believes exhibit growth potential that
significantly exceeds the average anticipated growth rate of companies
included in the Standard and Poor's 500 Index ("S&P 500"). Under normal market
conditions, at least 65% of the total assets of Blue Chip Fund will be in
companies determined by Vantage to be "Blue Chip." Generally, the median
market capitalization of companies targeted for investment by Blue Chip Fund
will be greater than $5 billion. For investment purposes, however, "Blue Chip"
companies are those whose market capitalization is greater than $2.5 billion
at the time of investment.

Vantage believes "Blue Chip" companies have characteristics which are
desirable in seeking to achieve the investment objectives of Blue Chip Fund.
For example, such companies tend to have a lengthy history of profit growth
and dividend payment, and a reputation for quality management structure,
products and service. Securities of "Blue Chip" companies generally are
considered to be highly liquid, because compared to those of lesser
capitalized companies, more shares of these securities are outstanding in the
marketplace and their trading volume tends to be higher.

While it is anticipated that Blue Chip Fund will invest principally
in common stock and securities that are convertible into common stock, Blue
Chip Fund may invest in all available types of equity securities, including
without limitation, preferred stock and warrants. Investments in equity
securities other than common stock or securities that are convertible into
common stock will be made when such securities are more attractively priced
relative to the underlying common stock. Such investments may be made in any
proportion deemed prudent under existing market and economic conditions.
Convertible securities include preferred stock and debentures that pay a
stated interest rate or dividend and are convertible into common stock at an
established ratio. These securities, which are usually priced at a premium to
their conversion value, may allow Blue Chip Fund to receive current income
while participating to some extent in any appreciation in the underlying
common stock. The value of a convertible security tends to be affected by
changes in interest rates as well as factors affecting the market value of the
underlying common stock.

Up to 20% of Blue Chip Fund's total assets may be invested directly
or indirectly in securities of issuers domiciled in foreign countries,
including investments in American, European and Global Depositary Receipts.
("ADRs", "EDRs" and "GDRs," respectively or, collectively, "Depositary
Receipts"). Blue Chip Fund may enter into options and futures transactions for
hedging purposes to attempt to counterbalance portfolio volatility.

Decatur Total Return Fund. The investment objective of Decatur Total Return
Fund is to seek to achieve long-term growth. It seeks to achieve its objective
by investing primarily in securities that provide the potential for income and
capital appreciation without undue risk to principal. The Decatur Total Return
Fund seeks to provide shareholders with a current return while allowing them
to participate in the capital gains potential associated with equity
investments.

The Decatur Total Return Fund generally invests in common stocks and
income-producing securities that are convertible into common stocks. The
Manager looks for securities having a better dividend yield than the average
of the Standard & Poor's ("S&P") 500 Stock Index, as well as capital gains
potential.

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<PAGE>

All available types of appropriate securities are under continuous
study. The Decatur Total Return Fund may invest in all classes of securities,
bonds and preferred and common stocks in any proportion deemed prudent under
existing market and economic conditions. In seeking to obtain its objective,
the Decatur Total Return Fund may hold securities for any period of time. For
temporary, defensive purposes, it may hold a substantial portion of its assets
in cash or short-term obligations.

Income-producing convertible securities include preferred stock and
debentures that pay a stated or variable interest rate or dividend and are
convertible into common stock at an established ratio. These securities, which
are usually priced at a premium to their conversion value, may allow the
Decatur Total Return Fund to receive current income while participating to
some extent in any appreciation in the underlying common stock. The value of a
convertible security tends to be affected by changes in interest rates, as
well as factors affecting the market value of the underlying common stock.

DelCap Fund. The investment objective of DelCap Fund is long-term capital
appreciation. DelCap Fund's strategy is to invest primarily in common stocks
that, in the judgment of the Manager, are of superior quality and in
securities that are convertible into such common stocks. DelCap Fund will
attempt to achieve its objective by purchasing securities issued by companies
whose earnings the Manager believes will grow more rapidly than the average of
those listed in the S&P 500 Stock Index. The Manager's emphasis will be on the
securities of companies that, in its judgment, have the characteristics
supporting such earnings growth. This judgment will be based on, among other
things, the financial strength of the company, the expertise of its
management, the growth potential of the company within the industry and the
growth potential of the industry itself. The focus will be on those securities
of companies the Manager believes have established themselves within their
industry while maintaining growth potential.

While the Manager believes its objective may best be achieved by
investing in common stock, DelCap Fund may also invest in other securities
including, but not limited to, convertible securities, warrants, preferred
stock, bonds and foreign securities. Any specific investment will be dependent
upon the judgment of the Manager. DelCap Fund may make foreign investments
through the purchase and sale of sponsored or unsponsored ADRs.

Devon Fund. The investment objective of Devon Fund is to seek current income
and capital appreciation. The Devon Fund will seek to achieve its objective by
investing primarily in income-producing common stocks, with a focus on common
stocks that the Manager believes have the potential for above average dividend
increases over time. Under normal circumstances, the Devon Fund will generally
invest at least 65% of its total assets in dividend paying common stocks.

In selecting stocks for the Devon Fund, the Manager will focus
primarily on dividend paying common stocks issued by companies with market
capitalizations in excess of $100 million, but is not precluded from
purchasing shares of companies with market capitalizations of less than $100
million. In seeking stocks with potential for above average dividend
increases, the Manager will consider such factors as the historical growth
rate of a dividend, the frequency of prior dividend increases, the issuing
company's potential to generate cash flows, and the price/earnings multiple of
the stock relative to the market. The Manager will generally avoid stocks that
it believes are overvalued and may select stocks with current dividend yields
that are lower than the current yield of the S&P 500 Stock Index in
exchange for anticipated dividend growth.

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<PAGE>

and preferred securities, rights and warrants to purchase common stock, and
various types of fixed-income securities, such as U.S. government and
government agency securities, corporate debt securities and bank obligations,
and may also engage in futures transactions. The Devon Fund may also invest in
foreign securities.

Small Cap Value Fund. The investment objective of Small Cap Value Fund is
capital appreciation. The strategy will be to invest primarily in common
stocks and securities convertible into common stocks which, in the opinion of
the Manager, have market values which appear low relative to their underlying
value or future earnings and growth potential. Small Cap Value Fund is
designed primarily for capital appreciation; providing current income is not
an objective. Any income produced is expected to be minimal.

Securities will be purchased that the Manager believes to be
undervalued in relation to asset value or long-term earning power of the
companies. The Manager may also invest in securities of companies where
current or anticipated favorable changes within a company provide an
opportunity for capital appreciation. The Manager's emphasis will be on
securities of companies that may be temporarily out of favor or whose value is
not yet recognized by the market.

While not a fundamental policy, under normal market conditions the
Small Cap Value Fund intends to invest at least 65% of its net assets in
securities issued by small cap companies, those currently having a market
capitalization generally of less than $1.5 billion. As a general matter, small
cap companies may have more limited product lines, markets and financial
resources than large cap companies. In addition, securities of small cap
companies, generally, may trade less frequently (and with lesser volume), may
be more volatile and may be somewhat less liquid than securities issued by
larger capitalization companies.

The Manager will consider the financial strength of the company, the
nature of its management and any developments affecting the security, the
company or the industry. Securities may be out of favor due to a variety of
factors, such as lack of an institutional following, or unfavorable
developments affecting the issuer of the securities, such as poor earning
reports, dividend reductions or cyclical economic or business conditions.
Other securities considered by the Manager would include those of companies
where current or anticipated favorable changes such as a new product or
service, technological breakthrough, management change, projected takeovers,
changes in capitalization or redefinition of future corporate operations
provide an opportunity for capital appreciation. The Manager will also
consider securities where trading patterns suggest that significant positions
are being accumulated by officers of the company, outside investors or the
company itself. The Manager feels it may uncover situations where those who
have a vested interest in the company feel the securities are undervalued and
have appreciation potential.

While the Manager believes that Small Cap Value Fund's objective may
best be attained by investing in common stocks, it may also invest in other
securities including, but not limited to, convertible securities, warrants,
preferred stocks, bonds and foreign securities. Although it is expected to
receive relatively less emphasis, Small Cap Value Fund may also invest in
fixed-income securities without regard to a minimum grade level in pursuit of
its objective where there are favorable changes in a company's earnings or
growth potential or where general economic conditions and the interest rate
environment provide an opportunity for declining interest rates and consequent
appreciation in these securities. Lower rated high yield, high risk bonds are
sometimes referred to as "junk bonds." The strategies employed are dependent
upon the judgment of the Manager.

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<PAGE>

options on stock indices. It may also purchase put options on individual
issues and on stock indices. The Manager will employ these techniques in an
attempt to protect appreciation attained, to offset capital losses and to take
advantage of the liquidity available in the option markets. The ability to
hedge effectively using options on stock indices will depend, in part, on the
correlation between the composition of the index and Small Cap Value Fund's
portfolio as well as the price movement of individual securities. Small Cap
Value Fund does not currently intend to write or purchase stock index options.
While there is no limit on the amount of Small Cap Value Fund's assets which
may be invested in covered call options, it will not invest more than 2% of
its net assets in put options. Small Cap Value Fund will only use
exchange-traded options. It may enter into futures contracts and buy and sell
options on futures contracts relating to securities, securities indices or
interest rates.

Although it will receive relatively minor emphasis in pursuit of its
objective, Small Cap Value Fund may also purchase, at times, lower rated or
unrated corporate bonds without regard to a grade minimum, which may be
considered speculative and may increase the portfolio's credit risk. Although
Small Cap Value Fund will not ordinarily purchase bonds rated below B by
Moody's or S&P (i.e., high-yield, high-risk fixed-income securities), it may
do so if the Manager believes that capital appreciation is likely. Small Cap
Value Fund will not invest more than 25% of its net assets in bonds rated
below B. Investing in such lower rated debt securities may involve certain
risks not typically associated with higher rated securities. Such bonds,
commonly referred to as "junk bonds," are considered very speculative and may
possibly be in default or have interest payments in arrears.

The Real Estate Investment Trust Portfolio. The investment objective of The
Real Estate Investment Trust Portfolio is to achieve maximum long-term total
return. Capital appreciation is a secondary objective. The Real Estate
Investment Trust Portfolio seeks to achieve its objectives by investing in
securities of companies principally engaged in the real estate industry. Under
normal circumstances, at least 65% of The Real Estate Investment Trust
Portfolio's total assets will be invested in equity securities of real estate
investment trusts ("REITs"). The Real Estate Investment Trust Portfolio will
operate as a nondiversified fund as defined by the 1940 Act.

The Real Estate Investment Trust Portfolio invests in equity
securities of REITs and other real estate industry operating companies
("REOCs"). For purposes of The Real Estate Investment Trust Portfolio's
investments, a REOC is a company that derives at least 50% of its gross
revenues or net profits from either (1) the ownership, development,
construction, financing, management or sale of commercial, industrial or
residential real estate, or (2) products or services related to the real
estate industry, such as building supplies or mortgage servicing. The Real
Estate Investment Trust Portfolio's investments in equity securities of REITs
and REOCs may include, from time to time, sponsored or unsponsored American
Depositary Receipts actively traded in the United States. Equity securities
for this purpose include common stocks, securities convertible into common
stocks and securities having common stock characteristics, such as rights and
warrants to purchase common stocks. The Real Estate Investment Trust Portfolio
may also purchase preferred stock. The Real Estate Investment Trust Portfolio
may invest up to 10% of its assets in foreign securities, and in convertible
securities. The Real Estate Investment Trust Portfolio may also invest in
mortgage-backed securities.

The Real Estate Investment Trust Portfolio may hold cash or invest in
short-term debt securities and other money market instruments when, in the
Manager's opinion, such holdings are prudent given then prevailing market
conditions. Except when the Manager believes a temporary defensive approach is
appropriate, The Real Estate Investment Trust Portfolio will not hold more
than 5% of its total assets in cash or such short-term investments. All these
short-term investments will be of the highest quality as

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<PAGE>

determined by a nationally-recognized statistical rating organization (e.g.
AAA by S&P or Aaa by Moody's) or be of comparable quality as determined by the
Manager.

Although The Real Estate Investment Trust Portfolio does not invest
directly in real estate, The Real Estate Investment Trust Portfolio does
invest primarily in REITs, and may purchase equity securities of REOCs. Thus,
because The Real Estate Investment Trust Portfolio concentrates its
investments in the real estate industry, an investment in The Real Estate
Investment Trust Portfolio may be subject to certain risks associated with
direct ownership of real estate and with the real estate industry in general.
These risks include, among others: possible declines in the value of real
estate; risks related to general and local economic conditions; possible lack
of availability of mortgage funds; overbuilding; extended vacancies of
properties; increases in competition; property taxes and operating expenses;
changes in zoning laws; costs resulting from the clean-up of, and liability to
third parties resulting from, environmental problems; casualty for
condemnation losses, uninsured damages from floods, earthquakes or other
natural disasters; limitations on and variations in rents; and changes in
interest rates.

The Real Estate Investment Trust Portfolio may invest without
limitation in shares of REITs. REITs are pooled investment vehicles which
invest primarily in income-producing real estate or real estate related loans
or interests. REITs are generally classified as equity REITs, mortgage REITs
or a combination of equity and mortgage REITs. Equity REITs invest the
majority of their assets directly in real property and derive income primarily
from the collection of rents. Equity REITs can also realize capital gains by
selling properties that have appreciated in value. Mortgage REITs invest the
majority of their assets in real estate mortgages and derive income from the
collection of interest payments. Like investment companies such as The Real
Estate Investment Trust Portfolio, REITs are not taxed on income distributed
to shareholders provided they comply with several requirements in the Internal
Revenue Code of 1986, as amended (the "Code"). REITs are subject to
substantial cash flow dependency, defaults by borrowers, self-liquidation, and
the risk of failing to qualify for tax-free pass-through of income under the
Code, and/or to maintain exemptions from the 1940 Act. By investing in REITs
indirectly The Real Estate Investment Trust Portfolio, a shareholder bears not
only a proportionate share of the expenses of The Real Estate Investment Trust
Portfolio, but also, indirectly, similar expenses of the REITs.

While The Real Estate Investment Trust Portfolio does not intend to
invest directly in real estate, The Real Estate Investment Trust Portfolio
could, under certain circumstances, own real estate directly as a result of a
default on securities that it owns. In addition, if The Real Estate Investment
Trust Portfolio has rental income or income from the direct disposition of
real property, the receipt of such income may adversely affect The Real Estate
Investment Trust Portfolio's ability to retain its tax status as a regulated
investment company.

The Real Estate Investment Trust Portfolio may also, to a limited
extent, enter into futures contracts on stocks, purchase or sell options on
such futures, engage in certain options transactions on stocks and enter into
closing transactions with respect to those activities. However, these
activities will not be entered into for speculative purposes, but rather to
facilitate the ability quickly to deploy into the stock market The Real Estate
Investment Trust Portfolio's positions in cash, short-term debt securities and
other money market instruments, at times when The Real Estate Investment Trust
Portfolio's assets are not fully invested in equity securities. Such positions
will generally be eliminated when it becomes possible to invest in securities
that are appropriate for The Real Estate Investment Trust Portfolio.

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In connection with The Real Estate Investment Trust Portfolio's
ability to invest up to 10% of its total assets in the securities of foreign
issuers, currency considerations may present risks if The Real Estate
Investment Trust Portfolio holds international securities. Currency
considerations carry a special risk for a portfolio of international
securities. In this regard, The Real Estate Investment Trust Portfolio may
actively carry on hedging activities, and may invest in forward foreign
currency exchange contracts to hedge currency risks associated with the
purchase of individual securities denominated in a particular currency.

The Manager does not normally intend to respond to short-term market
fluctuations or to acquire securities for the purpose of short-term trading;
however, the Manager may take advantage of short-term opportunities that are
consistent with The Real Estate Investment Trust Portfolio's
investment objectives.

Trend Fund. The investment objective of Trend Fund is long-term capital
appreciation. The strategy is to invest primarily in the common stocks and
securities convertible into common stocks of emerging and other
growth-oriented companies that, in the judgment of the Manager, are responsive
to changes within the marketplace and have the fundamental characteristics to
support growth. Income is not an objective of Trend Fund.

Trend Fund will seek to identify changing and dominant trends within
the economy, the political arena and our society. It will purchase securities
which the Manager believes will benefit from these trends and which have the
fundamentals to exploit them. The fundamentals include managerial skills,
product development and sales and earnings.

Trend Fund may purchase privately placed securities the resale of
which is restricted under applicable securities laws. Such securities may
offer a higher return than comparably registered securities but involve some
additional risk as they can be resold only in privately negotiated
transactions, in accordance with an exemption from the registration
requirements under applicable securities laws or after registration.

Trend Fund may invest in repurchase agreements, but will not normally
do so except to invest excess cash balances. Trend Fund may also invest in
foreign securities. For hedging purposes, Trend Fund may engage in options
activity and enter into futures contracts and options on futures contracts.

U.S. Growth Fund. The U.S. Growth Fund's fundamental investment objective is
to seek to maximize capital appreciation by investing in companies of all
sizes which have low dividend yields, strong balance sheets and high expected
earnings growth rates relative to their industry. The Manager or sub-adviser,
Lynch & Mayer, Inc. ("Lynch & Mayer"), an affiliate of the Manager, will seek
investments in companies of all sizes that the Manager or sub-adviser believes
have earnings that may be expected to grow faster than the U.S. economy in
general. Such companies may offer the possibility of accelerated earnings
growth because of management changes, new products or structural changes in
the economy. In addition, those companies with relatively high rates of return
on invested capital may be able to finance future growth from internal
sources. Income derived from securities in such companies will be only an
incidental consideration of U.S. Growth Fund.

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debt securities, bonds, convertible bonds, preferred stock and convertible
preferred stock. The U.S. Growth Fund may also invest up to 10% of its assets
in securities rated lower than Baa by Moody's or BBB by S&P if, in the
opinion of the Manager or sub-adviser, doing so would further U.S. Growth
Fund's objective. Lower-rated or unrated securities, commonly referred to as
"junk bonds," are more likely to react to developments affecting market and
credit risk than are more highly rated securities, which react primarily to
movements in the general level of interest rates. The U.S. Growth Fund may
invest up to 20% of its assets in foreign securities.

International Equity Funds
As described below, the following Underlying Funds invest primarily
in equity securities of companies located or conducting their business
primarily in foreign countries.

Emerging Markets Fund. The investment objective of Emerging Markets Fund is to
achieve long-term capital appreciation. It seeks to achieve this objective by
investing primarily in equity securities of issuers located or operating in
emerging countries. Under normal circumstances, at least 65% of Emerging
Market's Fund's assets will be invested in equity securities of issuers
organized or having a majority of their assets or deriving a majority of their
operating income in at least three different emerging market countries. It
will attempt to achieve its objective by investing in a broad range of equity
securities, including common stocks, preferred stocks, convertible securities
and warrants issued by companies located or operating in emerging countries.
It is managed by Delaware International Advisers Ltd. ("Delaware
International"), an affiliate of the Manager.

Emerging Markets Fund considers an "emerging country" to be any
country which is generally recognized to be an emerging or developing country
by the international financial community, including the World Bank and the
International Finance Corporation, as well as countries that are classified by
the United Nations or otherwise regarded by their authorities as developing.
In addition, any country that is included in the IFC Free Index or MSCI EMF
Index will be considered to be an "emerging country." As of the date of this
Prospectus, there are more than 130 countries which, in Delaware
International's judgment, are generally considered to be emerging or
developing countries by the international financial community, approximately
40 of which currently have stock markets. Within this group of developing or
emerging countries are included almost every nation in the world, except the
United States, Canada, Japan, Australia, New Zealand and most nations located
in Western and Northern Europe.

Currently, investing in many emerging countries is not feasible, or
may, in Delaware International's opinion, involve unacceptable political
risks. Emerging Markets Fund will focus its investments in those emerging
countries where Delaware International considers the economies to be
developing strongly and where the markets are becoming more sophisticated.
Delaware International believes that investment opportunities may result from
an evolving long-term international trend favoring more market-oriented
economies, a trend that may particularly benefit certain countries having
developing markets. This trend may be facilitated by local or international
political, economic or financial developments that could benefit the capital
markets in such countries.

In considering possible emerging countries in which Emerging Markets
Fund may invest, Delaware International will place particular emphasis on
certain factors, such as economic conditions (including growth trends,
inflation rates and trade balances), regulatory and currency controls,
accounting standards and political and social conditions. It is currently
anticipated that the countries in which Emerging Markets Fund may invest will
include, but not be limited to, Argentina, Brazil, Chile, China, Columbia,
Czech Republic, Egypt, Greece, Hong Kong, Hungary, India, Indonesia, Israel,
Jamaica, Jordan, Kenya, Korea, Malaysia, Mexico, Nigeria,

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Pakistan, Peru, the Philippines, Poland, Portugal, Russia, South Africa, Sri
Lanka, Taiwan, Thailand, Turkey, Venezuela and Zimbabwe. As markets in other
emerging countries develop, Delaware International expects to expand and
further diversify the countries in which the Emerging Markets Fund invests.

Although not an exclusive list of criteria to be considered by
Delaware International, an emerging country equity security is one issued by a
company that, in the opinion of Delaware International, exhibits one or more
of the following characteristics: (i) its principal securities trading market
is an emerging country, as defined above; (ii) while traded in any market,
alone or on a consolidated basis, the company derives 50% or more of its
annual revenues from either goods produced, sales made or services performed
in emerging countries; or (iii) it is organized under the laws of, and has a
principal office in, an emerging country. Determinations as to eligibility
will be made by Delaware International based on publicly available information
and inquiries made of the companies.

Emerging Markets Fund may invest in Depositary Receipts, and in both
open-end and listed or unlisted closed-end investment companies, as well as
unregistered investment companies. The Emerging Markets Fund may also invest
in convertible preferred stocks that offer enhanced yield features, such as
Preferred Equity Redemption Cumulative Stock, and certain other
non-traditional equity securities.

The Emerging Markets may invest up to 35% of its net assets in
fixed-income securities issued by emerging country companies, and foreign
governments, their agencies, instrumentalities or political subdivisions, all
of which may be high yield, high risk fixed-income securities rated lower than
BBB by S&P and Baa by Moody's or, if unrated, are considered by Delaware
International to be of equivalent quality and which present special investment
risks. Such securities are commonly referred to as "junk bonds." Emerging
Markets Fund may also invest in Brady Bonds and zero coupon securities.

International Equity Fund. The investment objective of the International
Equity Fund is to achieve long-term growth without undue risk to principal. It
seeks to achieve this objective by investing primarily in securities that
provide the potential for capital appreciation and income. As an international
fund, International Equity Fund may invest in securities issued in any
currency and may hold foreign currency. Under normal circumstances, at least
65% of International Equity Fund's assets will be invested in the securities
of issuers organized or having a majority of their assets in or deriving a
majority of their operating income in at least three different countries
outside of the United States. Securities of issuers within a given country may
be denominated in the currency of another country or in multinational currency
units such as the European Currency Unit ("ECU"). International Equity Fund is
managed by Delaware International.

International Equity Fund will attempt to achieve its objective by
investing in a broad range of equity securities including common stocks,
preferred stocks, convertible securities and warrants. Delaware International
will employ a dividend discount analysis across country boundaries and will
also use a purchasing power parity approach to identify currencies and markets
that are overvalued or undervalued relative to the U.S.
dollar.

With a dividend discount analysis, Delaware International looks at
future anticipated dividends and discounts the value of those dividends back
to what they would be worth if they were being paid today. Delaware
International uses this technique to attempt to compare the value of different
investments. With a purchasing power parity approach, Delaware International
attempts to identify the amount of goods and services that a dollar will buy
in the United States and compare that to the amount of a foreign currency
required to buy the same amount of goods and services in another country. When
the dollar buys less, the foreign currency may

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be considered to be overvalued. When the dollar buys more, the currency may be
considered to be undervalued. Eventually, currencies should trade at levels
that should make it possible for the dollar to buy the same amount of goods
and services overseas as in the United States. International Equity Fund may
also invest in sponsored or unsponsored ADRs or EDRs.

While International Equity Fund may purchase securities in any
foreign country, developed and underdeveloped, or emerging market countries,
it is currently anticipated that the countries in which International Equity
Fund may invest will include, but not be limited to, Canada, Germany, the
United Kingdom, France, the Netherlands, Belgium, Spain, Switzerland, Japan,
Australia, Hong Kong, and Singapore/Malaysia. With respect to certain
countries, investments by an investment company may only be made through
investments in closed-end investment companies that in turn are authorized to
invest in the securities of such countries. Any investment International
Equity Fund may make in other investment companies is limited in amount by the
1940 Act and would involve the indirect payment of a portion of the expenses,
including advisory fees, of such other investment companies.

Although International Equity Fund values its assets daily in terms
of U.S. dollars, it does not intend to convert its holdings of foreign
currencies into U.S. dollars on a daily basis. It will, however, from time to
time, purchase or sell foreign currencies and/or engage in forward foreign
currency transactions in order to expedite settlement of portfolio
transactions and to minimize currency value fluctuations. International Equity
Fund may conduct its foreign currency exchange transactions on a spot (i.e.,
cash) basis at the spot rate prevailing in the foreign currency exchange
market or through entering into contracts to purchase or sell foreign
currencies at a future date (i.e., a "forward foreign currency" contract or
"forward" contract). The International Equity Fund will convert currency on a
spot basis from time to time, and investors should be aware of the costs of
currency conversion. The International Equity Fund also may purchase and write
put and call options on foreign currencies (trade on U.S. and foreign
exchanges or over-the-counter) for hedging purposes to protect against
declines in the U.S. dollar cost of foreign securities held by International
Equity Fund and against increases in the U.S. dollar cost of such securities
to be acquired.

International Small Cap Fund. The investment objective of International Small
Cap Fund is to achieve long-term capital appreciation. This Fund seeks to
achieve its objective by investing primarily in equity securities of smaller
non-U.S. companies, which may include companies located or operating in
established or emerging countries. International Small Cap Fund is an
international fund. Under normal circumstances, at least 65% of International
Small Cap Fund's total assets will be invested in equity securities of
companies organized or having a majority of their assets in or deriving a
majority of their operating income in at least three different countries
outside of the United States. The current market capitalization of the
companies in which International Small Cap Fund intends to invest primarily
generally will be $1.5 billion or less (at the time of purchase).
International Small Cap Fund is managed by Delaware International.

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within the relevant markets, and will purchase securities of companies which
it believes will benefit from these trends. In addition, Delaware
International will consider the financial strength of the company, the nature
of its management, and any developments affecting the company or its industry.
Delaware International may invest in smaller capitalization companies that may
be temporarily out of favor or overlooked by securities analysts and whose
value, therefore, may not yet be fully recognized by the market. See Special
Risk Considerations Small Company Investment Risks.

While International Small Cap Fund may purchase securities in any
foreign country, developed and underdeveloped, or emerging market countries,
it is currently anticipated that the countries in which International Small
Cap Fund may invest will include, but not be limited to, Canada, Germany, the
United Kingdom, France, the Netherlands, Belgium, Spain, Switzerland, Japan,
Australia, Hong Kong and Singapore/Malaysia as well as Indonesia, Korea, the
Philippines, Taiwan and Thailand. With respect to certain countries,
investments by an investment company may only be made through investments in
closed-end investment companies that in turn are authorized to invest in the
securities of such countries. See Investment Company Securities under Other
Investment Policies and Risk Considerations.

In selecting investments for International Small Cap Fund, Delaware
International will employ a dividend discount analysis across country
boundaries and will also use a purchasing power parity approach to identify
currencies and markets that are overvalued or undervalued relative to the U.S.
dollar. Delaware International uses the dividend discount analysis to compare
the value of different investments. Using this technique, Delaware
International looks at future anticipated dividends and discounts the value of
those dividends back to what they would be worth if they were being paid
today. With a purchasing parity approach, Delaware International attempts to
identify the amount of goods and services that a dollar will buy in the United
States and compare that to the amount of a foreign currency required to buy
the same amount of goods and services in another country. Eventually,
currencies should trade at levels that should make it possible for the dollar
to buy the same amount of goods and services overseas as in the United States.
When the dollar buys less, the foreign currency may be considered to be
overvalued. When the dollar buys more, the currency may be considered to be
undervalued.

International Small Cap Fund may invest in both open-end and listed
or unlisted closed-end investment companies, as well as unregistered
investment companies. See Investment Company Securities under Other Investment
Policies and Risk Considerations. International Small Cap Fund may also invest
in convertible preferred stocks that offer enhanced yield features, such as
Preferred Equity Redemption Cumulative Stock, and certain other
non-traditional equity securities.

International Small Cap Fund may invest up to 15% of its net assets
in fixed-income securities issued by emerging country companies, and foreign
governments, their agencies, instrumentalities or political subdivisions, all
of which may be high yield, high risk fixed-income securities rated lower than
BBB by S&P and Baa by Moody's or, if unrated, are considered by Delaware
International to be of equivalent quality and which present special investment
risks. International Small Cap Fund may also invest in Brady Bonds. See High
Yield, High Risk Securities and Special Risk Considerations.

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equity markets are excessively volatile or overvalued so that International
Small Cap Fund's objective cannot be achieved in such markets. Any corporate
debt obligations will be rated AA or better by S&P, or Aa or better by
Moody's, or if unrated, will be determined to be of comparable quality by
Delaware International. International Small Cap Fund may also invest in the
securities listed above pending investment of proceeds from new sales of Fund
shares and to maintain sufficient cash to meet redemption requests.

New Pacific Fund. New Pacific Fund's investment objective is to seek to
maximize long-term capital appreciation by investing primarily in equity
securities of companies domiciled or having their principal business
activities in countries located in the Pacific Basin. John Govett & Company
Limited ("John Govett") serves as sub-adviser for New Pacific Fund.

The New Pacific Fund will invest in companies of varying size,
measured by assets, sales and capitalization. It will invest in companies in
one or more of the following Pacific Basin countries: Australia, Pakistan,
China, Philippines, Hong Kong, Singapore, India, South Korea, Indonesia, Sri
Lanka, Japan, Taiwan, Malaysia, Thailand, and New Zealand.

New Pacific Fund may invest in companies located in other countries
or regions in the Pacific Basin as those economies and markets become more
accessible. While New Pacific Fund will generally have investments in
companies located in at least three different countries or regions, it may
from time to time have investments only in one or a few countries or regions.

New Pacific Fund invests in common stock and may invest in other
securities with equity characteristics, consisting of trust or limited
partnership interests, preferred stock, rights and warrants. It may also
invest in convertible securities, consisting of debt securities or preferred
stock that may be converted into common stock or that carry the right to
purchase common stock. New Pacific Fund may invest in securities listed on
foreign or domestic securities exchanges and securities traded in foreign and
domestic over-the-counter markets and may invest in restricted or unlisted
securities.

Under normal circumstances, at least 65% of New Pacific Fund's assets
will be invested in equity securities of foreign issuers located in the
Pacific Basin. It may invest in securities of companies located in, or
governments of, developing countries within the Pacific Basin. New Pacific
Fund may invest up to 35% of its assets in securities of U.S. issuers. In
addition, it may be invested in short-term debt instruments to meet
anticipated day-to-day operating expenses and liquidity requirements.

Fixed Income Funds
As described below, the following Underlying Funds invest primarily
in fixed income securities.

Delchester Fund. The investment objective of the Delchester Fund is to seek
the highest current income which the Manager believes is consistent with
prudent investment management. The strategy is to invest primarily in those
securities having a liberal and consistent yield and those tending to reduce
the risk of market fluctuations. Delchester Fund will invest at least 80% of
its assets at the time of purchase in:

(1) Corporate Bonds. Delchester Fund will invest in both rated and unrated
bonds. Unrated bonds may be more speculative in nature than rated
bonds;

(2) Securities issued or guaranteed by the U.S. government, its agencies
or instrumentalities; and

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(3) Commercial paper of companies rated A-1 or A-2 by S&P or rated P-1 or
P-2 by Moody's.

Delchester Fund must invest the remaining assets, if any, in
income-producing securities, including common stocks and preferred stocks,
some of which may have convertible features or attached warrants.

In the long run, Delchester Fund's assets are expected to be invested
primarily in unrated corporate bonds and bonds rated BBB or lower by S&P or
Baa or lower by Moody's and in unrated corporate bonds. See Appendix A to this
Prospectus for more rating information. Investing in these so-called "junk" or
"high-yield" bonds entails certain risks, including the risk of loss of
principal, which may be greater than the risks involved in investment grade
bonds. Such bonds are sometimes issued by companies whose earnings at the time
of issuance are less than the projected debt service on the junk bonds.

High-Yield Opportunities Fund. The objective of High-Yield Opportunities Fund
is to seek total return and, as a secondary objective, high current income.
High-Yield Opportunities Fund seeks to achieve its objective by investing
primarily in corporate bonds rated BB or lower by S&P or Ba or lower by
Moody's, or similarly rated by another nationally-recognized statistical
rating organization or, if unrated (which may be more speculative in nature
than rated bonds), judged to be of comparable quality by the Manager.

High-Yield Opportunities Fund will invest at least 65% of its assets
at the time of purchase in corporate bonds that may be rated BB or lower by
S&P or Ba or lower by Moody's, or similarly rated by another
nationally-recognized statistical rating organization, or if unrated (which
may be more speculative in nature than rated bonds), judged to be of
comparable quality by the Manger. High-Yield Opportunities Fund generally will
not purchase corporate bonds which, at the time of purchase, are rated lower
than CCC by S&P or Caa by Moody's. See Appendix A to this Prospectus for more
rating information. If a corporate bond held by High-Yield Opportunities Fund
drops below these levels, including a security that goes into default,
High-Yield Opportunities Fund will commence with an orderly sale of the
security in a manner devised to minimize any adverse affect on High-Yield
Opportunities Fund. If a sale of the security is not practicable for any
reason, High-Yield Opportunities Fund will pursue other available measures
reasonably anticipated by the Manager to facilitate repayment of the bond.

High-Yield Opportunities Fund may also invest in securities of, or
guaranteed by, the U.S. and foreign governments, their agencies or
instrumentalities and commercial paper of companies having, at the time of
purchase, an issue of outstanding debt securities rated as described above or
commercial paper rated A-1 or A-2 by S&P or rated P-1 or P-2 by Moody's or, if
unrated, judged to be of comparable quality by the Manager.

High-Yield Opportunities Fund may acquire zero coupon bonds and, to a
lesser extent, pay-in-kind (PIK) bonds. High-Yield Opportunities Fund may also
invest in other types of income-producing securities, including common stocks
and preferred stocks, some of which may have convertible features or attached
warrants and which may be speculative.

High-Yield Opportunities Fund may purchase privately-placed debt and
other securities the resale of which is restricted under applicable securities
laws. Such securities may be less liquid than

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securities that are not subject to resale restrictions. High-Yield
Opportunities Fund will not purchase illiquid assets, if more than 15% of its
net assets would consist of such illiquid securities.

High-Yield Opportunities Fund may invest up to 15% of its total
assets in securities of issuers domiciled in foreign countries.

High-Yield Opportunities Fund may hold cash or invest in short-term
debt securities and other money market instruments when, in the Manager's
opinion, such holdings are prudent given then prevailing market conditions or
pending investment in other types of securities. All these short-term
investments will be of the highest quality as determined by a
nationally-recognized statistical rating organization (e.g., AAA by S&P or Aaa
by Moody's) or, if unrated, judged to be of comparable quality as determined
by the Manager.

Global Bond Fund. The investment objective of it Global Bond Fund is to
achieve current income consistent with the preservation of investors'
principal. It seeks to achieve this objective by investing primarily in
fixed-income securities that may also provide the potential for capital
appreciation. As is a global fund, under normal circumstances, at least 65% of
its assets will be invested in the fixed-income securities of issuers
organized or having a majority of their assets in or deriving a majority of
their operating income in at least three different countries, one of which may
be the United States. Global Bond Fund may invest in securities issued in any
currency and may hold foreign currency. Securities of issuers within a given
country may be denominated in the currency of another country or in
multinational currency units such as the ECU. Global Bond Fund is managed by
Delaware International.

Global Bond Fund will attempt to achieve its objective by investing
at least 65% of its assets in a broad range of fixed-income securities,
including foreign and U.S. government securities and debt obligations of
foreign and U.S. companies which are generally rated A or better by S&P or
Moody's, or if unrated, are deemed to be of comparable quality by Delaware
International. It may also invest in zero coupon bonds and in the debt
securities of supranational entities denominated in any currency. Generally,
the value of fixed-income securities moves inversely to the movement of market
interest rates. The value of Global Bond Fund's portfolio securities and,
thus, an investor's shares will be affected by changes in such rates.

Zero coupon bonds are debt obligations which do not entitle the
holder to any periodic payments of interest prior to maturity or a specified
date when the securities begin paying current interest, and therefore are
issued and traded at a discount from their face amounts or par value. A
supranational entity is an entity established or financially supported by the
national governments of one or more countries to promote reconstruction or
development. Examples of supranational entities include, among others, the
World Bank, the European Economic Community, the European Coal and Steel
Community, the European Investment Bank, the Inter-Development Bank, the
Export-Import Bank and the Asian Development Bank. For increased safety,
Global Bond Fund currently anticipates that a large percentage of its assets
will be invested in U.S. and foreign government securities and securities of
supranational entities.

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instrumentalities which are backed by the full faith and credit of the United
States. Direct obligations of the U.S. government which are available for
purchase by the Global Bond Fund include bills, notes, bonds and other debt
securities issued by the U.S. Treasury. These obligations differ mainly in
interest rates, maturities and dates of issuance. Agencies whose obligations
are backed by the full faith and credit of the United States include the
Farmers Home Administration, Federal Financing Bank and others.

With respect to securities issued by foreign governments, their
agencies, instrumentalities or political subdivisions, the Global Bond Fund
will generally invest in such securities if they have been rated AAA or AA by
S&P or Aaa or Aa by Moody's or, if unrated, have been determined by Delaware
International to be of comparable quality. Global Bond Fund may also invest in
sponsored or unsponsored American Depositary Receipts or European Depositary
Receipts. While Global Bond Fund may purchase securities of issuers in any
foreign country, developed and underdeveloped, or emerging market countries,
it is currently anticipated that the countries in which Global Bond Fund may
invest will include, but not be limited to, Canada, Germany, the United
Kingdom, France, the Netherlands, Belgium, Spain, Switzerland, Ireland,
Denmark, Portugal, Italy, Austria, Norway, Sweden, Finland, Luxembourg, Japan
and Australia. With respect to certain countries, investments by an investment
company may only be made through investments in closed-end investment
companies that in turn are authorized to invest in the securities of such
countries. Any investment Global Bond Fund may make in other investment
companies is limited in amount by the 1940 Act and would involve the indirect
payment of a portion of the expenses, including advisory fees, of such other
investment companies.

From time to time, the Global Bond Fund may find opportunities to
pursue its objective outside of the fixed-income markets, but in no event will
such investments exceed 5% of Global Bond Fund's net assets. Global Bond Fund
may invest in restricted securities, including securities eligible for resale
without registration pursuant to Rule 144A under the Securities Act of 1933
("Rule 144A Securities"). It may invest no more than 10% of the value of its
net assets in illiquid securities. Global Bond Fund will not concentrate its
investments in any particular industry, which means that it will not invest
25% or more of its total assets in any one industry.

It is anticipated that the average weighted maturity of the portfolio
will be in the five-to-ten year range. If, however, Delaware International
anticipates a declining interest rate environment, the average weighted
maturity may be extended past ten years. Conversely, if Delaware International
anticipates a rising rate environment, the average weighted maturity may be
shortened to less than five years.

In order to attempt to protect Global Bond Fund's investments from
interest rate fluctuations, it may engage in interest rate swaps. Global Bond
Fund intends to use interest rate swaps as a hedge and not as a speculative
investment. Interest rate swaps involve the exchange by Global Bond Fund with
another party of their respective rights to receive interest, e.g., an
exchange of fixed rate payments for floating rate payments. For example, if
Global Bond Fund holds an interest-paying security whose interest rate is
reset once a year, it may swap the right to receive interest at this fixed
rate for the right to receive interest at a rate that is reset daily. Such a
swap position would offset changes in the value of the underlying security
because of subsequent changes in interest rates. This would protect Global
Bond Fund from a decline in the value of the underlying security due to rising
rates, but would also limit its ability to benefit from falling interest
rates.

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Global Bond Fund believe such obligations do not constitute senior securities
and, accordingly, will not treat them as being subject to its borrowing
restrictions. The net amount of the excess, if any, of Global Bond Fund's
obligations over its entitlement with respect to each interest rate swap will
be accrued on a daily basis and an amount of cash or high-quality liquid
securities having an aggregate net asset value at least equal to the accrued
excess will be maintained in a segregated account by the Custodian Bank. If
Global Bond Fund enters into an interest rate swap on other than a net basis,
it would maintain a segregated account in the full amount accrued on a daily
basis of Global Bond Fund's obligations with respect to the swap.

Limited-Term Government Fund. Limited-Term Government Fund 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. Limited-Term Government Fund 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-back securities. Limited-Term Government Fund is not a money
market fund. A money market fund is designed for stability of principal;
consequently, the level of income fluctuates. Limited-Term Government Fund 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 Limited-Term Government Fund may
tend to be less volatile than, for example, a money market fund. Limited-Term
Government Fund attempts to provide yields higher than those available in
money market funds or bank money market accounts by extending its portfolio
maturities. By extending average maturity, Limited-Term Government Fund seeks
higher income than may be available from money market securities but may also
experience greater principal fluctuation.

Limited-Term Government Fund seeks to reduce the effects of interest
rate volatility on principal by keeping the average effective maturity (as
that term is defined in Part B) to no more than 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 as high as five
years. The Manager will increase the proportion of short-term instruments when
short-term yields are higher. The Manager may purchase individual securities
with a remaining maturity of up to fifteen years.

Limited-Term Government Fund 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), as well as repurchase agreements and
publicly- and privately-issued mortgage-backed securities collateralized by
such securities. It 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 and/or A-1 by S&P's and (4)
securities which are backed by assets such as receivables on home equity and
credit loans, receivables regarding automobile, mobile home and recreational
vehicle loans, wholesale dealer floor plans and leases or other loans or
financial receivables currently available or which may be developed in the
future. 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).

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<PAGE>

write secured put options, write covered call options, purchase call options
and enter into closing transactions. It may also invest in futures contracts
and options on such futures contracts subject to certain limitations.

Limited-Term Government Fund 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). Limited-Term Government
Fund may also invest in securities which are backed by assets such as
receivables on home equity and credit card loans, and receivables on
automobile, mobile home and recreational vehicle loans, wholesale dealer floor
plans and leases or other loans or financial receivables currently available
or which may be developed in the future. 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).

Limited-Term Government Fund may also use repurchase agreements
which are at least 100% collateralized by securities in which Limited-Term
Government Fund can invest directly. Repurchase agreements may be used to
invest cash on a temporary basis. Limited-Term Government Fund may loan up to
25% of its assets to qualified broker/dealers or institutional investors for
their use relating to short sales or other security transactions. Limited-Term
Government Fund may invest in restricted securities, including Rule 144A
securities. Limited-Term Government may invest no more than 10% of the value
of its net assets in illiquid securities.

U.S. Government Fund. The objective of U.S. Government Fund is high current
income consistent with safety of principal by investing primarily in debt
obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities. These include securities issued or backed by U.S.
government agencies and government-sponsored corporations which may not be
backed by the full faith and credit of the U.S. government, such as the
Export-Import Bank, Federal Housing Authority, Federal National Mortgage
Association and Federal Home Loan Banks and mortgage-backed securities issued
by non-government entities but collateralized by securities of the U.S.
government, its agencies and instrumentalities. The weighted average maturity
will be approximately 10 years. Although these securities are issued or
guaranteed as to principal and interest by the U.S. government or its agencies
or instrumentalities, the market value of these securities, upon which daily
net asset value is based, may fluctuate and is not guaranteed.

U.S. government securities include U.S. Treasury securities
consisting of Treasury Bills, Treasury Notes and Treasury bonds. Some of the
other government securities in which U.S. Government Fund may invest include
securities of the Federal Housing Administration, the Government National
Mortgage Association, the Department of Housing and Urban Development, the
Export-Import Bank, the Farmers Home Administration, the General Services
Administration, the Maritime Administration and the Small Business
Administration. The maturities of such securities usually range from three
months to 30 years.

U.S. Government Fund may also 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 and/or A-1 by S& P;
and (4) asset-backed securities rated Aaa by Moody's or AAA by S&P.

U.S. Government Fund may invest in certificates of the Government
National Mortgage Association ("GNMA"). GNMA Certificates are mortgage-backed
securities. It may also invest in securities issued by

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certain private, non-government 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). U.S. Government Fund may invest in
securities which are backed by assets such as receivables on home equity and
credit loans, receivables regarding automobile, mobile home and recreational
vehicle loans, wholesale dealer floor plans and leases or other loans or
financial receivables currently available or which may be developed in the
future. 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).

U.S. Government Fund may use repurchase agreements which are at least
100% collateralized by securities in which it can invest directly. Repurchase
agreements may be used to invest cash on a temporary basis. U.S. Government Fund
may purchase put options, write secured put options, write covered call options,
purchase call options and enter into closing transactions. It may invest in
futures contracts and options on such futures contracts subject to certain
limitations. U.S. Government Fund may invest in restricted securities, including
Rule 144A securities. U.S. Government Fund may invest no more than 10% of the
value of its net assets in illiquid securities. U.S. Government Fund may loan up
to 25% of its assets to qualified broker/dealers or institutional investors for
their use relating to short sales or other security transactions.

Money Market Funds
As described below, the following Underlying Fund invest primarily
in money market instruments.

Delaware Cash Reserve . As a money market fund, Delaware Cash Reserve's
investment objective is to seek to provide maximum current income, while
preserving principal and maintaining liquidity, by investing its assets in a
diversified portfolio of money market securities and managing the portfolio to
maintain a constant net asset value of $1.00 per share . While Delaware
Cash Reserve will make every effort to maintain a fixed net asset value of
$1.00 per share, there can be no assurance that this objective will be
achieved.

Delaware Cash Reserve limits its investments to those which its
Board of Directors has determined present minimal credit risks and are of high
quality and which will otherwise meet the maturity, quality and
diversification conditions with which taxable money market funds must comply.

Delaware Cash Reserve's investments include securities issued or
guaranteed by the U.S. government (e.g., Treasury Bills and Notes) or by the
credit of its agencies or instrumentalities (e.g., Federal Housing
Administration and Federal Home Loan Bank). It may invest in the certificates
of deposit and obligations of both U.S. and foreign banks if they have assets
of at least one billion dollars in accordance with the maturity, quality and
diversification conditions with which taxable money market funds must comply.
It also may purchase commercial paper and other corporate obligations; if, at
the time of purchase, such a security or, as relevant, its issuer, is rated
in one of the two highest rating categories (e.g., for commercial paper, A-2
or better by S&P and P-2 or better by Moody's; and, for other corporate
obligations, AA or better by S&P and Aa or better by Moody's) by at least two
nationally-recognized statistical rating organizations approved by the Board
of Directors or, if such security is not so rated, the purchase of the
security must be approved or ratified by the Board of Directors in accordance
with the maturity, quality and diversification conditions with which taxable
money market funds must comply. Delaware Cash Reserve will not invest more
than 5% of its total assets in securities rated in the second highest category
by a rating organization. Appendix A describes the ratings of S&P and Moody's.

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<PAGE>

Delaware Cash Reserve maintains an average maturity of not more
than 90 days. Also, it does not purchase any instruments with an effective
remaining maturity of more than 13 months. Delaware Cash Reserve intends to
hold its investments until maturity, but may sell them prior to maturity for a
number of reasons. These reasons include: to shorten or lengthen the average
maturity, to increase the yield, to maintain the quality of the portfolio or
to maintain a stable share value. If there were a national credit crisis, an
issuer were to become insolvent or interest rates were to rise, principal
values could be adversely affected. Investments in foreign banks and overseas
branches of U.S. banks may be subject to less stringent regulations and
different risks than U.S. domestic banks.

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<PAGE>

THE DELAWARE DIFFERENCE

PLANS AND SERVICES
The Delaware Difference is our commitment to provide you with
superior information and quality service on your investments in the Delaware
Group of Funds.

SHAREHOLDER PHONE DIRECTORY

Investor Information Center
800-523-4640
Portfolio Information; Literature; Price; Yield and
Performance Figures

Shareholder Service Center
800-523-1918
Information on Existing Regular Investment Accounts and
Retirement Plan Accounts; Wire Investments; Wire Liquidations;
Telephone Liquidations and Telephone Exchanges

Delaphone
800-362-FUND
(800-362-3863)

Performance Information
You can call the Investor Information Center at any time for current
performance information. Current yield and total return information may also
be included in advertisements and information given to shareholders.
Yields are computed on an annual basis over a 30-day period.

Shareholder Services
During business hours, you can call the Delaware Group's Shareholder
Service Center. Our representatives can answer any questions about your
account, the Portfolios, various service features and other funds in the
Delaware Group.

Delaphone Service
Delaphone is an account inquiry service for investors with
Touch-Tone(R) phone service. It enables you to get information on your account
faster than the mailed statements and confirmations. Delaphone also provides
current performance information on the Portfolios, as well as other funds in the
Delaware Group. Delaphone is available seven days a week, 24 hours a day.

Statements and Confirmations
You will receive quarterly statements of your account summarizing all
transactions during the period. A confirmation statement will be sent
following all transactions other than those involving a reinvestment of
dividends. You should examine statements and confirmations immediately and
promptly report any discrepancy by calling the Shareholder Service Center.

Duplicate Confirmations
If your financial adviser or investment dealer is noted on your
investment application, we will send a duplicate confirmation to him or her.
This makes it easier for your adviser to help you manage your investments.

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<PAGE>
Tax Information
Each year, the Trust will mail to you information on the tax status
of your dividends and distributions.

Dividend Payments
Dividends, capital gains and other distributions are automatically
reinvested in your account, unless you elect to receive them in cash. You may
also elect to have the dividends earned in one fund automatically invested in
another Delaware Group fund with a different investment objective, subject to
certain exceptions and limitations.

For more information, see Additional Methods of Adding to Your
Investment - Dividend Reinvestment Plan under How to Buy Shares or call the
Shareholder Service Center.

MoneyLine(SM) Services
Delaware Group offers the following services for fast and convenient
transfer of funds between your personal bank account and your Delaware Group
fund account.

1. MoneyLine(SM) Direct Deposit Service
If you elect to have your dividends and distributions paid in cash
and such dividends and distributions are in an amount of $25 or more, you may
choose the MoneyLine(SM) Direct Deposit Service and have such payments
transferred from your Portfolio account to your predesignated bank account.
See Dividends and Distributions. In addition, you may elect to have your
Systematic Withdrawal Plan payments transferred from your Portfolio account to
your predesignated bank account through this service. See Systematic
Withdrawal Plans under Redemption and Exchange. This service is not available
for certain retirement plans.

2. MoneyLine(SM) On Demand
You or your investment dealer may request purchases and redemptions
of Portfolio shares by using MoneyLine(SM) On Demand. When you authorize a
Portfolio to accept such requests from you or your investment dealer, funds
will be withdrawn from (for share purchases) or deposited to (for share
redemptions) your predesignated bank account. Your request will be processed
the same day if you call prior to 4 p.m., Eastern time. There is a $25 minimum
and a $50,000 maximum limit for MoneyLine(SM) On Demand transactions. This
service is not available for retirement plans, except for purchases of shares
by IRAs.

For each MoneyLine(SM) Service, it may take up to four business days
for the transactions to be completed. You can initiate either service by
completing an Account Services form. If your name and address are not
identical to the name and address on your Portfolio account, you must have
your signature guaranteed. The Portfolios do not charge a fee for any
MoneyLine(SM) Service; however, your bank may change a fee. Please call the
Shareholder Service Center for additional information about these services.

Retirement Planning
An investment in the Portfolios may be a suitable investment option
for tax-deferred retirement plans. Delaware Group offers a full spectrum of
qualified and non-qualified retirement plans, including the popular 401(k)
deferred compensation plan, IRA, and the new Roth IRA. Please call the
Delaware Group at 800-523-1918 for more information.

Right of Accumulation
With respect to Class A Shares, the Right of Accumulation feature
allows you to combine the value of your current holdings of Class A Shares,
Class B Shares and Class C Shares of a Portfolio with the dollar

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<PAGE>

amount of new purchases of Class A Shares of a Portfolio to qualify for a
reduced front-end sales charge on such purchases of Class A Shares. Under the
Combined Purchases Privilege, you may also include certain shares that you own
in other funds in the Delaware Group. See Classes of Shares.

Letter of Intention
The Letter of Intention feature permits you to obtain a reduced
front-end sales charge on purchases of Class A Shares by aggregating certain
of your purchases of Delaware Group fund shares over a 13-month period. See
Classes of Shares and Part B.

12-Month Reinvestment Privilege
The 12-Month Reinvestment Privilege permits you to reinvest proceeds
from a redemption of Class A Shares, within one year of the date of the
redemption, without paying a front-end sales charge. See Part B.

Exchange Privilege
The Exchange Privilege permits shareholders to exchange all or part
of their shares into shares of other funds in the Delaware Group, subject to
certain exceptions and limitations. For additional information on exchanges,
see Investing by Exchange under How to Buy Shares and Redemption and Exchange.

Wealth Builder Option
You may elect to invest in the Portfolios through regular
liquidations of shares in your accounts in 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 Portfolio shares. See
Additional Methods of Adding to Your Investment - Wealth Builder Option and
Investing by Exchange under How to Buy Shares, and Redemption and Exchange.

Financial Information about the Portfolios
Each fiscal year, you will receive an audited annual report and an
unaudited semi-annual report. These reports provide detailed information about
each Portfolio's investments and performance. The Trust's fiscal year ends on
September 30.

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CLASSES OF SHARES

Alternative Purchase Arrangements
Shares may be purchased at a price equal to the next determined net
asset value per share, subject to a sales charge which may be imposed, at the
election of the purchaser, at the time of the purchase for Class A Shares
("front-end sales charge alternative"), or on a contingent deferred basis for
Class B Shares ("deferred sales charge alternative") or Class C Shares ("level
sales charge alternative").

Class A Shares. An investor who elects the front-end sales charge
alternative acquires Class A Shares, which incur a sales charge when they are
purchased, but generally are not subject to any sales charge when they are
redeemed. Class A Shares are subject to annual 12b-1 Plan expenses of up to a
maximum of 0.30% of average daily net assets of such shares (currently set
at 0.25%). Certain purchases of Class A Shares qualify for reduced front-end
sales charges. See Front-End Sales Charge Alternative - Class A Shares, below.
See also Contingent Deferred Sales Charge for Certain Redemptions of Class A
Shares Purchased at Net Asset Value under Redemption and Exchange and
Distribution (12b-1) and Service under Management of the Portfolios.

Class B Shares. An investor who elects the deferred sales charge
alternative acquires Class B Shares, which do not incur a front-end sales
charge when they are purchased, but are subject to a contingent deferred sales
charge if they are redeemed within six years of purchase. Class B Shares are
subject to annual 12b-1 Plan expenses of up to a maximum of 1% (0.25% of which
are service fees to be paid to the Distributor, dealers or others for
providing personal service and/or maintaining shareholder accounts) of average
daily net assets of such shares for approximately eight years after purchase.
Class B Shares permit all of the investor's dollars to work from the time the
investment is made. The higher 12b-1 Plan expenses paid by Class B Shares will
cause such shares to have a higher expense ratio and to pay lower dividends
than Class A Shares. At the end of approximately eight years after purchase,
the Class B Shares will automatically be converted into Class A Shares and,
thereafter, for the remainder of the life of the investment, the annual 0.30%
12b-1 Plan fee for the Class A Shares (currently set at 0.25%) will apply.
See Automatic Conversion of Class B Shares, below.

Class C Shares. An investor who elects the level sales charge
alternative acquires Class C Shares, which do not incur a front-end sales
charge when they are purchased, but are subject to a contingent deferred sales
charge if they are redeemed within 12 months of purchase. Class C Shares are
subject to annual 12b-1 Plan expenses of up to a maximum of 1% (0.25% of which
are service fees to be paid to the Distributor, dealers or others for
providing personal service and/or maintaining shareholder accounts) of average
daily net assets of such shares for the life of the investment. The higher
12b-1 Plan expenses paid by Class C Shares will cause such shares to have a
higher expense ratio and to pay lower dividends than Class A Shares. Unlike
Class B Shares, Class C Shares do not convert to another class.

The alternative purchase arrangements described above permit
investors to choose the method of purchasing shares that is most suitable
given the amount of their purchase, the length of time they expect to hold
their shares and other relevant circumstances. Investors should determine
whether, given their particular circumstances, it is more advantageous to
purchase Class A Shares and incur a front-end sales charge, purchase Class B
Shares and have the entire initial purchase amount invested in a Portfolio
with their investment being subject to a CDSC if they redeem shares within six
years of purchase, or purchase Class C Shares and have the entire initial
purchase amount invested in a Portfolio with their investment being subject to
a CDSC if they redeem shares within 12 months of purchase. In addition,
investors should consider the level of annual 12b-1 Plan expenses applicable
to each Class. The higher 12b-1 Plan expenses on Class B Shares and Class C
Shares will be offset to the extent a return is realized on the additional
money initially invested upon the purchase of

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such shares. However, there can be no assurance as to the return, if any, that
will be realized on such additional money and the effect of earning a return
on such additional money will diminish over time. In comparing Class B Shares
to Class C Shares, investors should also consider the desirability of an
automatic conversion feature, which is available only for Class B Shares.

For the distribution and related services provided to, and the
expenses borne on behalf of, the Portfolios, the Distributor and others will
be paid, in the case of the Class A Shares, from the proceeds of the front-end
sales charge and 12b-1 Plan fees and, in the case of the Class B Shares and
the Class C Shares, from the proceeds of the 12b-1 Plan fees and, if
applicable, the CDSC incurred upon redemption. Financial advisers may receive
different compensation for selling Class A, Class B and Class C Shares.
Investors should understand that the purpose and function of the respective
12b-1 Plans and the CDSCs applicable to Class B Shares and Class C Shares are
the same as those of the 12b-1 Plan and the front-end sales charge applicable
to Class A Shares in that such fees and charges are used to finance the
distribution of the respective Classes. See Distribution (12b-1) and Service
under Management of the Portfolios.

Dividends paid on Class A, Class B and Class C Shares, to the extent
any dividends are paid, will be calculated in the same manner, at the same
time, on the same day and will be in the same amount, except that the
additional amount of 12b-1 Plan expenses relating to Class B Shares and Class
C Shares will be borne exclusively by such shares. See Calculation of Offering
Price and Net Asset Value Per Share.

The NASD has adopted certain rules relating to investment company
sales charges. The Trust and the Distributor intend to operate in compliance
with these rules.

Front-End Sales Charge Alternative - Class A Shares
Class A Shares may be purchased at the offering price, which reflects
a maximum front-end sales charge of 4.75%. See Calculation of Offering Price
and Net Asset Value Per Share.

Purchases of $100,000 or more carry a reduced front-end sales charge
as shown in the following table.

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Class A Sales Charges

- ---------------------------------------------------------------------------------------------------------------------------------

Dealer's
Commission***
Front-End Sales Charge as % of as % of
Offering Offering
Amount of Purchase Price Amount Invested** Price
- ---------------------------------------------------------------------------------------------------------------------------------

Income Balanced Growth
Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C> <C> <C>
Less than $100,000 4.75% 4.94% 4.94% 4.94% 4.00%
$100,000 but under $250,000 3.75 3.88 3.88 3.88 3.00
$250,000 but under $500,000 2.50 2.59 2.59 2.59 2.00
$500,000 but under $1,000,000* 2.00 2.00 2.00 2.00 1.60
- -------------------------------------------------------------------------------------------------------------------
</TABLE>

* There is no front-end sales charge on purchases of Class A Shares of $1
million or more but, under certain limited circumstances, a 1% Limited CDSC
may apply upon redemption of such shares.

** Based upon an initial net asset value of $8.50 per share of the
respective Class A Shares.

*** Financial institutions or their affiliated brokers may receive an agency
transaction fee in the percentages set forth above.

- --------------------------------------------------------------------------------

The Trust must be notified when a sale takes place which would
qualify for the reduced front-end sales charge on the basis of previous or
current purchases. The reduced front-end sales charge will be granted upon
confirmation of the shareholder's holdings by the Trust. Such reduced
front-end sales charges are not retroactive.

From time to time, upon written notice to all of its dealers, the
Distributor may hold special promotions for specified periods during which the
Distributor may reallow to dealers up to the full amount of the front-end
sales charge shown above. In addition, certain dealers who enter into an
agreement to provide extra training and information on Delaware Group products
and services and who increase sales of Delaware Group funds may receive an
additional commission of up to 0.15% 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.

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For initial purchases of Class A Shares of $1,000,000 or more, a
dealer's commission may be paid by the Distributor to financial advisers
through whom such purchases are made in accordance with the following
schedule:

Dealer's Commission
(as a percentage of
Amount of Purchase amount purchased)
------------------ -----------------

Up to $2 million 1.00%
Next $1 million up to $3 million 0.75
Next $2 million up to $5 million 0.50
Amount over $5 million 0.25

In determining a financial adviser's eligibility for the dealer's
commission, purchases of Class A Shares of other Delaware Group funds as to
which a Limited CDSC applies may be aggregated with those of the Class A
Shares of a Portfolio. Financial advisers also may be eligible for a dealer's
commission in connection with certain purchases made under a Letter of
Intention or pursuant to an investor's Right of Accumulation. Financial
advisers should contact the Distributor concerning the applicability and
calculation of the dealer's commission in the case of combined purchases.

An exchange from other Delaware Group funds will not qualify for
payment of the dealer's commission, unless a dealer's commission or similar
payment has not been previously paid on the assets being exchanged. The
schedule and program for payment of the dealer's commission are subject to
change or termination at any time by the Distributor at its discretion.

Redemptions of Class A Shares purchased at net asset value may result
in the imposition of a Limited CDSC if the dealer's commission described above
was paid in connection with the purchase of those shares. See Contingent
Deferred Sales Charge for Certain Redemptions of Class A Shares Purchased at
Net Asset Value under Redemption and Exchange.

Combined Purchases Privilege
By combining your holdings of Class A Shares with your holdings of
Class B Shares and/or Class C Shares of a Portfolio and shares of other funds
in the Delaware Group, except those noted below, you can reduce the front-end
sales charges on any additional purchases of Class A Shares. Shares of
Delaware Group Premium Fund, Inc. beneficially owned in connection with
ownership of variable insurance products may be combined with other Delaware
Group fund holdings. Assets held by investment advisory clients of the Manager
or its affiliates in a stable value account may be combined with other
Delaware Group fund holdings. Shares of other funds that do not carry a
front-end sales charge or CDSC may not be included unless they were acquired
through an exchange from a Delaware Group fund that does carry a front-end
sales charge or CDSC.

This privilege permits you to combine your purchases and holdings
with those of your spouse, your children under 21 and any trust, fiduciary or
retirement account for the benefit of such family members. It also permits you
to use these combinations under a Letter of Intention. A Letter of Intention
allows you to make purchases over a 13-month period and qualify the entire
purchase for a reduction in front-end sales charges on Class A Shares.

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Combined purchases of $1,000,000 or more, including certain purchases
made at net asset value pursuant to a Right of Accumulation or under a Letter
of Intention, may result in the payment of a dealer's commission and the
applicability of a Limited CDSC. Investors should consult their financial
advisers or the Shareholder Service Center about the operation of these
features. See Front-End Sales Charge Alternative Class A Shares, above.

Allied Plans
Class A Shares are available for purchase by participants in certain
401(k) Defined Contribution Plans ("Allied Plans") which are made available
under a joint venture agreement between the Distributor and another
institution through which mutual funds are marketed and which allow
investments in Class A Shares of designated Delaware Group funds ("eligible
Delaware Group fund shares"), as well as shares of designated classes of
non-Delaware Group funds ("eligible non-Delaware Group fund shares"). Class B
Shares and Class C Shares are not eligible for purchase by Allied Plans.

With respect to purchases made in connection with an Allied Plan, the
value of eligible Delaware Group and eligible non-Delaware Group fund shares
held by the Allied Plan may be combined with the dollar amount of new
purchases by that Allied Plan to obtain a reduced front-end sales charge on
additional purchases of eligible Delaware Group fund shares.

Participants in Allied Plans may exchange all or part of their
eligible Delaware Group fund shares for other eligible Delaware Group fund
shares or for eligible non-Delaware Group fund shares at net asset value
without payment of a front-end sales charge. However, exchanges of eligible
fund shares, both Delaware Group and non-Delaware Group, which were not
subject to a front end sales charge, will be subject to the applicable sales
charge if exchanged for eligible Delaware Group fund shares to which a sales
charge applies. No sales charge will apply if the eligible fund shares were
previously acquired through the exchange of eligible shares on which a sales
charge was already paid or through the reinvestment of dividends. See
Investing by Exchange.

A dealer's commission may be payable on purchases of eligible
Delaware Group fund shares under an Allied Plan. In determining a financial
adviser's eligibility for a dealer's commission on net asset value purchases
of eligible Delaware Group fund shares in connection with Allied Plans, all
participant holdings in the Allied Plan will be aggregated.

The Limited CDSC is applicable to redemptions of net asset value
purchases from an Allied Plan on which a dealer's commission has been paid.
Waivers of the Limited CDSC, as described under Waiver of Limited Contingent
Deferred Sales Charge - Class A Shares under Redemption and Exchange, apply to
redemptions by participants in Allied Plans except in the case of exchanges
between eligible Delaware Group and non-Delaware Group fund shares. When
eligible Delaware Group fund shares are exchanged into eligible non-Delaware
Group fund shares, the Limited CDSC will be imposed at the time of the
exchange, unless the joint venture agreement specifies that the amount of the
Limited CDSC will be paid by the financial adviser or selling dealer. See
Contingent Deferred Sales Charge for Certain Redemptions of Class A Shares
Purchased at Net Asset Value under Redemption and Exchange.

Buying Class A Shares at Net Asset Value

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Class A Shares of a Portfolio may be purchased at net asset value
under the Delaware Group Dividend Reinvestment Plan and, under certain
circumstances, the Exchange Privilege and the 12-Month Reinvestment Privilege.
See The Delaware Difference and Redemption and Exchange for additional
information.

Purchases of Class A Shares may be made at net asset value by current
and former officers, directors and employees (and members of their 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, including those in retirement accounts, must be for accounts in the
name of the individual or a qualifying family member.

Purchases of Class A Shares may also be made by clients of registered
representatives of an authorized investment dealer at net asset value within
12 months after the registered representative changes employment, if the
purchase is funded by proceeds from an investment where a front-end sales
charge, contingent deferred sales charge or other sales charge has been
assessed. Purchases of Class A Shares may also be made at net asset value by
bank employees who provide services in connection with agreements between the
bank and unaffiliated brokers or dealers concerning sales of shares of
Delaware Group funds. Officers, directors and key employees of institutional
clients of the Manager or any of its affiliates may purchase Class A Shares at
net asset value. Moreover, purchases may be effected at net asset value for
the benefit of the clients of brokers, dealers and registered investment
advisers affiliated with a broker or dealer, if such broker, dealer or
investment adviser has entered into an agreement with the Distributor
providing specifically for the purchase of Class A Shares in connection with
special investment products, such as wrap accounts or similar fee based
programs.

Purchases of Class A Shares at net asset value may also be made by
the following: financial institutions investing for the account of their trust
customers when they are not eligible to purchase shares of the institutional
class of a Portfolio; and any group retirement plan (excluding defined benefit
pension plans), or such plans of the same employer, that (i) has in excess of
$500,000 of plan assets invested in Class A Shares of Delaware Group funds and
in any stable value product available through the Delaware Group, or (ii) is
sponsored by an employer that has at any point after May 1, 1997 more than 100
employees while such plan has held Class A Shares of a Delaware Group fund and
such employer has properly represented to DIRSI in writing that it has the
requisite number of employees and has received written confirmation back from
DIRSI. See Group Investment Plans for information regarding the applicability
of the Limited CDSC.

Investors in Delaware-Voyageur Unit Investment Trusts may reinvest
monthly dividend checks and/or repayment of invested capital into Class A
Shares of any of the funds in the Delaware Group at net asset value.

Investments in Class A Shares made by plan level and/or participant
retirement accounts that are for the purpose of repaying a loan taken from
such accounts will be made at net asset value. Loan repayments made to a
Delaware Group account in connection with loans originated from accounts
previously maintained by another investment firm will also be invested at net
asset value.

The Trust 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, SIMPLE IRA, SIMPLE
401(k), Profit Sharing and Money Purchase Pension Plans, 401(k) Defined
Contribution Plans, and 403(b)(7) and 457 Deferred Compensation Plans) may
benefit from the reduced front-end sales charges available on Class A Shares
based on total plan assets. If a company has more than one plan investing in
the Delaware Group of funds, then the

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total amount invested in all plans will be aggregated to determine the
applicable front-end sales charge reduction on each purchase, both initial and
subsequent, if, at the time of each such purchase, the company notifies the
Company that it qualifies for the reduction. Employees participating in such
Group Investment Plans may also combine the investments held in their plan
account to determine the front-end sales charge applicable to purchases in
non-retirement Delaware Group investment accounts if, at the time of each such
purchase, they notify the Portfolio in which they are investing that they are
eligible to combine purchase amounts held in their plan account.

The Limited CDSC is applicable to any redemptions of net asset value
purchases made on behalf of any group retirement plan on which a dealer's
commission has been paid only if such redemption is made pursuant to a
withdrawal of the entire plan from Delaware Group funds. See Contingent
Deferred Sales Charge for Certain Redemptions of Class A Shares Purchased at
Net Asset Value under Redemption and Exchange.

For additional information on retirement plans, including plan forms,
applications, minimum investments and any applicable account maintenance fees,
contact your investment dealer or the Distributor.

Deferred Sales Charge Alternative - Class B Shares
Class B Shares may be purchased at net asset value without a
front-end sales charge and, as a result, the full amount of the investor's
purchase payment will be invested in a Portfolio's shares. The Distributor
currently anticipates compensating dealers or brokers for selling Class B
Shares at the time of purchase from its own assets in an amount equal to no
more than 4% of the dollar amount purchased. In addition, 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 pay
additional compensation to dealers or brokers for selling Class B Shares at
the time of purchase. As discussed below, however, Class B Shares are subject
to annual 12b-1 Plan expenses and, if redeemed within six years of purchase, a
CDSC.

Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to the
Distributor and others for providing distribution and related services, and
bearing related expenses, in connection with the sale of Class B Shares. These
payments support the compensation paid to dealers or brokers for selling Class
B Shares. Payments to the Distributor and others under the Class B 12b-1 Plan
may be in an amount equal to no more than 1% annually. The combination of the
CDSC and the proceeds of the 12b-1 Plan fees makes it possible for a Portfolio
to sell Class B Shares without deducting a front-end sales charge at the time
of purchase.

Holders of Class B Shares who exercise the exchange privilege
described below will continue to be subject to the CDSC schedule for the Class
B Shares described in this Prospectus, even after the exchange. Such CDSC
schedule may be higher than the CDSC schedule for the Class B Shares acquired
as a result of the exchange. See Redemption and Exchange.

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Automatic Conversion of Class B Shares
Class B Shares, other than shares acquired through reinvestment of
dividends, held for eight years after purchase are eligible for automatic
conversion into Class A Shares. Conversions of Class B Shares into Class A
Shares will occur only four times in any calendar year, on the last business
day of the second full week of March, June, September and December (each, a
"Conversion Date"). If the eighth anniversary after a purchase of Class B
Shares falls on a Conversion Date, an investor's Class B Shares will be
converted on that date. If the eighth anniversary occurs between Conversion
Dates, an investor's Class B Shares will be converted on the next Conversion
Date after such anniversary. Consequently, if a shareholder's eighth
anniversary falls on the day after a Conversion Date, that shareholder will
have to hold Class B Shares for as long as three additional months after the
eighth anniversary of 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.

Level Sales Charge Alternative - Class C Shares
Class C Shares may be purchased at net asset value without a
front-end sales charge and, as a result, the full amount of the investor's
purchase payment will be invested in Portfolio shares. The Distributor
currently anticipates compensating dealers or brokers for selling Class C
Shares at the time of purchase from its own assets in an amount equal to no
more than 1% of the dollar amount purchased. As discussed below, however,
Class C Shares are subject to annual 12b-1 Plan expenses and, if redeemed
within 12 months of purchase, a CDSC.

Holders of Class C Shares who exercise the exchange privilege
described below will continue to be subject to the CDSC schedule for the Class
C Shares as described in this Prospectus. See Redemption and Exchange.

Contingent Deferred Sales Charge - Class B Shares and Class C Shares
Class B Shares redeemed within six years of purchase may be subject
to a CDSC at the rates set forth below and Class C Shares redeemed within 12
months of purchase may be subject to a CDSC of 1%. CDSCs are charged as a
percentage of the dollar amount subject to the CDSC. The charge will be
assessed on an amount equal to the lesser of the net asset value at the time
of purchase of the shares being redeemed or the net asset value of those
shares at the time of redemption. No CDSC will be imposed on increases in net
asset value

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above the initial purchase price, nor will a CDSC be assessed on redemptions
of shares acquired through reinvestments of dividends or capital gains
distributions. For purposes of this formula, the "net asset value at the time
of purchase" will be the net asset value at purchase of the Class B Shares or
the Class C Shares of a Portfolio, even if those shares are later exchanged
for shares of another Delaware Group fund. In the event of an exchange of the
shares, the "net asset value of such shares at the time of redemption" will be
the net asset value of the shares that were acquired in the exchange.

The following table sets forth the rates of the CDSC for the Class B
Shares of the Portfolios:

Contingent Deferred
Sales Charge (as a
Percentage of
Dollar Amount
Year After Purchase Made Subject to Charge)
------------------------ ------------------

0-2 4%
3-4 3%
5 2%
6 1%
7 and thereafter None

During the seventh year after purchase and thereafter, until converted
automatically into Class A Shares, Class B Shares will still be subject to the
annual 12b-1 Plan expenses of up to 1% of average daily net assets of those
shares. See Automatic Conversion of Class B Shares, above. Investors are
reminded that the Class A Shares into which the Class B Shares will convert
are subject to ongoing annual 12b-1 Plan expenses of up to a maximum of 0.30%
(currently set at 0.25%) of average daily net assets of such shares.

In determining whether a CDSC applies to a redemption of Class B
Shares, it will be assumed that shares held for more than six years are
redeemed first, followed by shares acquired through the reinvestment of
dividends or distributions, and finally by shares held longest during the
six-year period. With respect to Class C Shares, it will be assumed that
shares held for more than 12 months are redeemed first followed by shares
acquired through the reinvestment of dividends or distributions, and finally
by shares held for 12 months or less.

All investments made during a calendar month, regardless of what day
of the month the investment occurred, will age one month on the last day of
that month and each subsequent month.

The CDSC is waived on certain redemptions of Class B Shares and Class
C Shares. See Waiver of Contingent Deferred Sales Charge - Class B and Class C
Shares under Redemption and Exchange.

Other Payments to Dealers -- Class A, Class B and Class C Shares
From time to time at the discretion of the Distributor, all
registered broker/dealers whose aggregate sales of the Classes exceed certain
limits, as set by the Distributor, may receive from the Distributor an
additional payment of up to 0.25% 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.

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Subject to pending amendments to the NASD's Rules of Fair Practice,
in connection with the promotion of Delaware Group fund shares, the
Distributor may, from time to time, pay to participate in dealer-sponsored
seminars and conferences, reimburse dealers for expenses incurred in
connection with preapproved seminars, conferences and advertising and may,
from time to time, pay or allow additional promotional incentives to dealers,
which shall include non-cash concessions, such as certain luxury merchandise
or a trip to or attendance at a business or investment seminar at a luxury
resort, as part of preapproved sales contests. Payment of non-cash
compensation to dealers is currently under review by the NASD and the
Securities and Exchange Commission. It is likely that the NASD's Rules of Fair
Practice will be amended such that the ability of the Distributor to pay
non-cash compensation as described above will be restricted in some fashion.
The Distributor intends to comply with the NASD's Rules of Fair Practice as
they may be amended.

Institutional Class
In addition to offering the Class A, Class B and Class C Shares, the
Portfolios also offer Institutional Class shares, which are described in a
separate prospectus and are available for purchase only by certain
institutional investors. Institutional Class shares generally are distributed
directly by the Distributor and do not have a front-end sales charge, a CDSC
or a Limited CDSC, and are not subject to 12b-1 Plan distribution expenses. To
obtain the prospectus that describes Institutional Class shares, contact the
Distributor by writing to the address on the cover of this Prospectus or by
calling 800-828-5052.

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HOW TO BUY SHARES

Purchase Amounts
Generally, the minimum initial purchase is $1,000 for Class A Shares,
Class B Shares and Class C Shares. Subsequent purchases of shares of any Class
generally must be $100 or more. For purchases under a Uniform Gifts to Minors
Act or Uniform Transfers to Minors Act or through an Automatic Investing Plan,
there is a minimum initial purchase of $250 and a minimum subsequent purchase
of $25. Minimum purchase requirements do not apply to retirement plans other
than IRAs, for which there is a minimum initial purchase of $250, and a
minimum subsequent purchase of $25, regardless of which Class is selected.

There is a maximum purchase limitation of $250,000 on each purchase
of Class B Shares. For Class C Shares, each purchase must be in an amount that
is less than $1,000,000. An investor may exceed these maximum purchase
limitations by making cumulative purchases over a period of time. In doing so,
an investor should keep in mind that reduced front-end sales charges are
available on investments of $100,000 or more in Class A Shares, and that Class
A Shares (i) are subject to lower annual 12b-1 Plan expenses than Class B
Shares and Class C Shares and (ii) generally are not subject to a CDSC. For
retirement plans, the maximum purchase limitations apply only to the initial
purchase of Class B Shares or Class C Shares by the plan.

Investing through Your Investment Dealer
You can make a purchase of shares of the Portfolios 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, the Delaware Group can refer you to one.

Investing by Mail
1. Initial Purchases--An Investment Application or, in the case of a
retirement account, an appropriate retirement plan application, must be
completed, signed and sent with a check, payable to the specific Portfolio and
Class selected to Delaware Group at 1818 Market Street, Philadelphia, PA
19103.

2. Subsequent Purchases--Additional purchases may be made at any time by
mailing a check payable to the specific Portfolio and Class selected. 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
Portfolio. Use of this investment slip can help expedite processing of your
check when making additional purchases. Your investment may be delayed if you
send additional purchases by certified mail.

Investing by Wire
You may purchase shares by requesting your bank to transmit funds by
wire to CoreStates Bank, N.A., ABA #031000011, account number 1412893401
(include your name(s) and your account number for the Class in which you are
investing).

1. Initial Purchases--Before you invest, telephone the Shareholder Service
Center to get an account number. If you do not call first, processing of your
investment may be delayed. In addition, you must promptly send your Investment
Application or, in the case of a retirement account, an appropriate retirement
plan application, to the specific Portfolio and Class selected, to Delaware
Group at 1818 Market Street, Philadelphia, PA 19103.

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<PAGE>

2. Subsequent Purchases--You may make additional investments anytime by wiring
funds to CoreStates Bank, N.A., as described above. You should advise the
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 a Portfolio. If you wish to open an account by
exchange, call the Shareholder Service Center for more information. All
exchanges are subject to the eligibility and minimum purchase requirements set
forth in each fund's prospectus. See Redemption and Exchange for more complete
information concerning your exchange privileges.

Holders of Class A Shares of a Portfolio may exchange all or part of
their shares for certain of the shares of other funds in the Delaware Group,
including other Class A Shares, but may not exchange their Class A Shares for
Class B Shares or Class C Shares of the Portfolios or of any other fund in the
Delaware Group. Holders of Class B Shares of a Portfolio are permitted to
exchange all or part of their Class B Shares only into Class B Shares of other
Delaware Group funds. Similarly, holders of Class C Shares of a Portfolio are
permitted to exchange all or part of their Class C Shares only into Class C
Shares of other Delaware Group funds. Class B Shares of a Portfolio and
Class C Shares of a Portfolio acquired by exchange will continue to carry the
CDSC and, in the case of Class B Shares, the automatic conversion schedule of
the fund from which the exchange is made. The holding period of Class B Shares
of a Portfolio acquired by exchange will be added to that of the shares that
were exchanged for purposes of determining the time of the automatic
conversion into Class A Shares of that Portfolio.

Permissible exchanges into Class A Shares of a Portfolio will be made
without a front-end sales charge, except for exchanges of shares that were not
previously subject to a front-end sales charge (unless such shares were
acquired through the reinvestment of dividends). Permissible exchanges into
Class B Shares or Class C Shares of a Portfolio will be made without the
imposition of a CDSC by the fund from which the exchange is being made at the
time of the exchange.

See Allied Plans under Classes of Shares for information on
exchanges by participants in an Allied Plan.

Additional Methods of Adding to Your Investment
Call the Shareholder Service Center for more information if you wish
to use the following services:

1. Automatic Investing Plan
The Automatic Investing Plan enables you to make regular monthly
investments without writing or mailing checks. You may authorize the Trust to
transfer a designated amount monthly from your checking account to your
Portfolio account. Many shareholders use this as an automatic savings plan.
Shareholders should allow a reasonable amount of time for initial purchases
and changes to these plans to become effective.

This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money Purchase
Pension Plans, 401(k) Defined Contribution Plans, or 403(b)(7) or 457 Deferred
Compensation Plans.

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2. Direct Deposit
You may have your employer or bank make regular investments directly
to your account for you (for example: payroll deduction, pay by phone, annuity
payments). Each Portfolio 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.

* * *

Should investments through an automatic investing plan or by direct
deposit be reclaimed or returned for some reason, the Trust has the right to
liquidate your shares to reimburse the government or transmitting bank. If
there are insufficient funds in your account, you are obligated to reimburse
the Trust.

3. MoneyLine(SM) On Demand
Through the MoneyLine(SM) On Demand service, you or your investment
dealer may call a Portfolio to request a transfer of funds from your
predesignated bank account to your Portfolio account. See MoneyLine(SM)
Services under The Delaware Difference for additional information about this
service.

4. Wealth Builder Option
You can use our Wealth Builder Option to invest in a Portfolio
through regular liquidations of shares in your accounts in other funds in the
Delaware Group. You may also elect to invest in other mutual funds in the
Delaware Group through the Wealth Builder Option through regular liquidations
of shares in your Portfolio account.

Under this automatic exchange program, you can authorize regular
monthly amounts (minimum of $100 per fund) to be liquidated from your account
in one or more funds in the Delaware Group and invested automatically into any
other Delaware Group mutual fund account that you may specify. If in
connection with the election of the Wealth Builder Option, you wish to open a
new account to receive the automatic investment, such new account must meet
the minimum initial purchase requirements described in the prospectus of the
fund that you select. All investments under this option are exchanges and are
therefore subject to the same conditions and limitations as other exchanges
noted above. You can terminate your participation in Wealth Builder at any
time by written notice to the fund from which the exchanges are made. See
Redemption and Exchange.

5. 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. Or, you
may invest your distributions in certain other funds in the Delaware Group,
subject to the exceptions noted below as well as the eligibility and minimum
purchase requirements set forth in each fund's prospectus.

Reinvestments of distributions into Class A Shares of a Portfolio or
of other Delaware Group funds are made without a front-end sales charge.
Reinvestments of distributions into Class B Shares of a Portfolio or of other
Delaware Group funds or into Class C Shares of a Portfolio or of other
Delaware Group funds are also made without any sales charge and will not be
subject to a CDSC if later redeemed. See Automatic Conversion

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<PAGE>

of Class B Shares under Classes of Shares for information concerning the
automatic conversion of Class B Shares acquired by reinvesting dividends.

Holders of Class A Shares of a Portfolio may not reinvest their
distributions into Class B Shares or Class C Shares of any fund in the
Delaware Group, including the Portfolios. Holders of Class B Shares of a
Portfolio may reinvest their distributions only into Class B Shares of the
funds in the Delaware Group which offer that class of shares. Similarly,
holders of Class C Shares of a Portfolio may reinvest their distributions only
into Class C Shares of the funds in the Delaware Group which offer that class
of shares. For more information about reinvestments, call the Shareholder
Service Center.

Capital gains and/or dividend distributions for participants in the
following retirement plans are automatically reinvested into the same Delaware
Group fund in which their investments are held: SAR/SEP, SEP/IRA, SIMPLE IRA,
SIMPLE 401(k), Profit Sharing and Money Purchase Pension Plans, 401(k) Defined
Contribution Plans, or 403(b)(7) or 457 Deferred Compensation Plans.

Purchase Price and Effective Date
The offering price and net asset value of the Class A, Class B and
Class C Shares are determined as of the close of regular trading on the New
York Stock Exchange (ordinarily, 4 p.m., Eastern time) on days when the
Exchange is open.

The effective date of a purchase is the date the order is received by
a Portfolio, its designee. The effective date of a direct purchase is the day
your wire, electronic transfer or check is received, unless it is received
after the time the offering price or net asset value of shares is determined,
as noted above. Purchase orders received after such time will be effective the
next business day.

The Conditions of Your Purchase
Each Portfolio reserves the right to reject any purchase order. If a
purchase is canceled because your check is returned unpaid, you are
responsible for any loss incurred. A Portfolio 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. Each
Portfolio reserves the right to reject purchase orders paid by third-party
checks or checks that are not drawn on a domestic branch of a United States
financial institution. If a check drawn on a foreign financial institution is
accepted, you may be subject to additional bank charges for clearance and
currency conversion.

Each Portfolio also reserves the right, following shareholder
notification, to charge a service fee on non-retirement accounts that, as a
result of a redemption, have remained below the minimum stated account balance
for a period of three or more consecutive months. Holders of such accounts may
be notified of their insufficient account balance and advised that they have
until the end of the current calendar quarter to raise their balance to the
stated minimum. If the account has not reached the minimum balance requirement
by that time, the Portfolio will charge a $9 fee for that quarter and each
subsequent calendar quarter until the account is brought up to the minimum
balance. The service fee will be deducted from the account during the first
week of each calendar quarter for the previous quarter, and will be used to
help defray the cost of maintaining low-balance accounts. No fees will be
charged without proper notice, and no CDSC will apply to such assessments.

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Each Portfolio also reserves the right, upon 60 days' written notice,
to involuntarily redeem accounts that remain under the minimum initial
purchase amount as a result of redemptions. An investor making the minimum
initial investment may be subject to involuntary redemption without the
imposition of a CDSC or Limited CDSC if he or she redeems any portion of his
or her account.

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REDEMPTION AND EXCHANGE

You can redeem or exchange your shares in a number of different ways.
The exchange service is useful if your investment requirements change and you
want an easy way to invest in equity funds, tax-advantaged funds, bond funds
or money market funds. This service is also useful if you are anticipating a
major expenditure and want to move a portion of your investment into a fund
that has the checkwriting feature. Exchanges are subject to the requirements
of each fund and all exchanges of shares constitute taxable events. See Taxes.
Further, in order for an exchange to be processed, shares of the fund being
acquired must be registered in the state where the acquiring shareholder
resides. You may want to consult your financial adviser or investment dealer
to discuss which funds in the Delaware Group will best meet your changing
objectives, and the consequences of any exchange transaction. You may also
call the Delaware Group directly for fund information.

Your shares will be redeemed or exchanged at a price based on the net
asset value next determined after a Portfolio receives your request in good
order, subject, in the case of a redemption, to any applicable CDSC or Limited
CDSC. For example, 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 How to Buy Shares. A shareholder
submitting a redemption request may indicate that he or she wishes to receive
redemption proceeds of a specific dollar amount. In the case of such a
request, and in the case of certain redemptions from retirement plan accounts,
a Portfolio will redeem the number of shares necessary to deduct the
applicable CDSC in the case of Class B and Class C Shares, and, if applicable,
the Limited CDSC in the case of Class A Shares and tender to the shareholder
the requested amount, assuming the shareholder holds enough shares in his or
her account for the redemption to be processed in this manner. Otherwise, the
amount tendered to the shareholder upon redemption will be reduced by the
amount of the applicable CDSC or Limited CDSC. Redemption proceeds will be
distributed promptly, as described below, but not later than seven days after
receipt of a redemption request.

Except as noted below, for a redemption request to be in "good
order," you must provide your account number, account registration, and the
total number of shares or dollar amount of the transaction. For exchange
requests, you must also provide the name of the fund in which you want to
invest 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 Shareholder Service Center
at 800-523-1918. Each Portfolio may suspend, terminate, or amend the terms of
the exchange privilege upon 60 days' written notice to shareholders.

Each Portfolio will process written and telephone redemption requests
to the extent that the purchase orders for the shares being redeemed have
already settled. Each Portfolio will honor redemption requests as to shares
for which a check was tendered as payment, but a Portfolio will not mail or
wire the proceeds until it is reasonably satisfied that the purchase check has
cleared, which may take up to 15 days from the purchase date. You can avoid
this potential delay if you purchase shares by wiring Federal Funds. Each
Portfolio 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.

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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 exchanges involving assets
that were previously invested in a fund with a front-end sales charge and/or
exchanges involving the reinvestment of dividends.

Holders of Class B Shares or Class C Shares that exchange their
shares ("Original Shares") for shares of other funds in the Delaware Group (in
each case, "New Shares") in a permitted exchange, will not be subject to a
CDSC that might otherwise be due upon redemption of the Original Shares.
However, such shareholders will continue to be subject to the CDSC and, in the
case of Class B Shares, the automatic conversion schedule of the Original
Shares as described in this Prospectus and any CDSC assessed upon redemption
will be charged by the fund from which the Original Shares were exchanged. In
an exchange of Class B Shares from a Portfolio, the Portfolio's CDSC schedule
may be higher than the CDSC schedule relating to the New Shares acquired as a
result of the exchange. For purposes of computing the CDSC that may be payable
upon a disposition of the New Shares, the period of time that an investor held
the Original Shares is added to the period of time that an investor held the
New Shares. With respect to Class B Shares, the automatic conversion schedule
of the Original Shares may be longer than that of the New Shares.
Consequently, an investment in New Shares by exchange may subject an investor
to the higher 12b-1 fees applicable to Class B Shares of a Portfolio for a
longer period of time than if the investment in New Shares were made directly.

Various redemption and exchange methods are outlined below. Except
for the CDSC applicable to certain redemptions of Class B and Class C Shares
and the Limited CDSC applicable to certain redemptions of Class A Shares
purchased at net asset value, there is no fee charged by the Trust or the
Distributor for redeeming or exchanging your shares, but such fees could be
charged in the future. You may have your investment dealer arrange to have
your shares redeemed or exchanged. Your investment dealer may charge for this
service.

All authorizations given by shareholders, including selection of any
of the features described below, shall continue in effect until such time as a
written revocation or modification has been received by a Portfolio or its
agent.

Written Redemption
You can write to each Portfolio at 1818 Market Street, Philadelphia,
PA 19103 to redeem some or all of your shares. The request must be signed by
all owners of the account or your investment dealer of record. For redemptions
of more than $50,000, or when the proceeds are not sent to the shareholder(s)
at the address of record, the Portfolios require 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. Each Portfolio reserves
the right to reject a signature guarantee supplied by an eligible institution
based on its creditworthiness. The Portfolios may require further
documentation from corporations, executors, retirement plans, administrators,
trustees or guardians.

Payment is normally mailed the next business day after receipt of
your redemption request. If your Class A Shares are in certificate form, the
certificate must accompany your request and also be in good order.
Certificates are issued for Class A Shares only if a shareholder submits a
specific request. Certificates are not issued for Class B Shares or Class C
Shares.

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Written Exchange
You may also write to each Portfolio (at 1818 Market Street,
Philadelphia, PA 19103) to request an exchange of any or all of your shares
into another mutual fund in the Delaware Group, subject to the same conditions
and limitations as other exchanges noted above.

Telephone Redemption and Exchange
To get the added convenience of the telephone redemption and exchange
methods, you must have the Transfer Agent hold your shares (without charge)
for you. If you choose to have your Class A Shares in certificate form, you
may redeem or exchange only by written request and you must return your
certificates.

The Telephone Redemption - Check to Your Address of Record service
and the Telephone Exchange service, both of which are described below, are
automatically provided unless you notify the Portfolio in which you have your
account in writing that you do not wish to have such services available with
respect to your account. Each Portfolio reserves the right to modify,
terminate or suspend these procedures upon 60 days' written notice to
shareholders. It may be difficult to reach the Portfolios by telephone during
periods when market or economic conditions lead to an unusually large volume
of telephone requests.

Neither the Portfolios nor their Transfer Agent is responsible for
any shareholder loss incurred in acting upon written or telephone instructions
for redemption or exchange of Portfolio shares which are reasonably believed
to be genuine. With respect to such telephone transactions, each Portfolio
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, such Portfolio or the Transfer Agent may
be liable for any losses due to unauthorized or fraudulent transactions.
Instructions received by telephone are generally tape recorded, and a written
confirmation will be provided for all purchase, exchange and redemption
transactions initiated by telephone. By exchanging shares by telephone, you
are acknowledging prior receipt of a prospectus for the fund into which your
shares are being exchanged.

Telephone Redemption--Check to Your Address of Record
The Telephone Redemption feature is a quick and easy method to redeem
shares. You or your investment dealer of record can have redemption proceeds
of $50,000 or less mailed to you at your address of record. Checks will be
payable to the shareholder(s) of record. Payment is normally mailed the next
business day after receipt of the redemption 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, you must complete an Authorization Form and have your signature
guaranteed. For your protection, your authorization must be on file. If you
request a wire, your funds will normally be sent the next business day.
CoreStates Bank, N.A.'s fee (currently $7.50) will be deducted from your
redemption proceeds. If you ask for a check, it will normally be mailed the
next business day after receipt of your redemption request to your
predesignated bank account. There are no separate fees for this redemption
method, but the mail time may delay getting funds into your bank account.
Simply call the Shareholder Service Center prior to the time the offering
price and net asset value are determined, as noted above.

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MoneyLine(SM) On Demand
Through the MoneyLine(SM) On Demand service, you or your investment
dealer may call a Portfolio to request a transfer of funds from your Portfolio
account to your predesignated bank account. See MoneyLine(SM) Services under
The Delaware Difference for additional information about this service.

Telephone Exchange
The Telephone Exchange feature is a convenient and efficient way to
adjust your investment holdings as your liquidity requirements and investment
objectives change. You or your investment dealer of record can exchange your
shares into 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 Plans
1. Regular Plans
This plan provides shareholders with a consistent monthly (or
quarterly) payment. This is particularly useful to shareholders living on
fixed incomes, since it can provide them with a stable supplemental amount.
With accounts of at least $5,000, you may elect monthly withdrawals of $25
(quarterly $75) or more. The Portfolios do 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 Portfolio account to your predesignated bank
account through the MoneyLine(sm) Direct Deposit Service. Your funds will
normally be credited to your bank account up to four business days after the
payment date. There are no separate fees for this redemption method. See
MoneyLine(sm) Services under The Delaware Difference for more information
about this service.

2. Retirement Plans
For shareholders eligible under the applicable retirement plan to
receive benefits in periodic payments, the 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(SM) Direct Deposit Service
described above is not available for certain retirement plans.

* * *

Shareholders should not purchase additional shares while
participating in a Systematic Withdrawal Plan.

Redemptions of Class A Shares via a Systematic Withdrawal Plan may be
subject to a Limited CDSC if the original purchase was made at net asset value
within the 12 months prior to the withdrawal and a dealer's commission was
paid on that purchase. See Contingent Deferred Sales Charge for Certain
Redemptions of Class A Shares Purchased at Net Asset Value, below.

The applicable CDSC for Class B Shares and Class C Shares redeemed
via a Systematic Withdrawal Plan will be waived if, on the date that the Plan
is established, the annual amount selected to be withdrawn is less than 12% of
the account balance. If the annual amount selected to be withdrawn exceeds 12%
of the account balance on the date that the Systematic Withdrawal Plan is
established, all redemptions under the Plan will be subject to the applicable
CDSC. Whether a waiver of the CDSC is available or not, the first shares to be

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redeemed for each Systematic Withdrawal Plan payment will be those not subject
to a CDSC because they have either satisfied the required holding period or
were acquired through the reinvestment of distributions. The 12% annual limit
will be reset on the date that any Systematic Withdrawal Plan is modified (for
example, a change in the amount selected to be withdrawn or the frequency or
date of withdrawals), based on the balance in the account on that date. See
Waiver of Contingent Deferred Sales Charge - Class B and Class C Shares,
below.

For more information on Systematic Withdrawal Plans, call the
Shareholder Service Center.

Contingent Deferred Sales Charge for Certain Redemptions of Class A Shares
Purchased at Net Asset Value
A Limited CDSC will be imposed on 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 previously
described. See Classes of Shares.

The Limited CDSC will be paid to the Distributor and will be equal to
the lesser of 1% of: (1) the net asset value at the time of purchase of the
Class A Shares being redeemed; or (2) the net asset value of such Class A
Shares at the time of redemption. For purposes of this formula, the "net asset
value at the time of purchase" will be the net asset value at purchase of the
Class A Shares even if those shares are later exchanged for shares of another
Delaware Group fund and, in the event of an exchange of Class A Shares, the
"net asset value of such shares at the time of redemption" will be the net
asset value of the shares acquired in the exchange.

Redemptions of such Class A Shares held for more than 12 months will
not be subjected to the Limited CDSC and an exchange of such Class A Shares
into another Delaware Group fund will not trigger the imposition of the
Limited CDSC at the time of such exchange. The period a shareholder owns
shares into which Class A Shares are exchanged will count towards satisfying
the 12-month holding period. The Limited CDSC is assessed if such 12-month
period is not satisfied irrespective of whether the redemption triggering its
payment is of the Class A Shares of a Portfolio or the Class A Shares acquired
in the exchange.

In determining whether a Limited CDSC is payable, it will be assumed
that shares not subject to the Limited CDSC are the first redeemed followed by
other shares held for the longest period of time. The Limited CDSC will not be
imposed upon shares representing reinvested dividends or capital gains
distributions, or upon amounts representing share appreciation. All
investments made during a calendar month, regardless of what day of the month
the investment occurred, will age one month on the last day of that month and
each subsequent month.

Waiver of Limited Contingent Deferred Sales Charge - Class A Shares
The Limited CDSC for Class A Shares on which a dealer's commission
has been paid will be waived in the following instances: (i) redemptions that
result from a Portfolio'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) periodic
distributions from an IRA, SIMPLE IRA, or 403(b)(7) or 457 Deferred
Compensation Plan due to death, disability, or attainment of age 59 1/2, and
IRA distributions qualifying under Section 72(t) of the Internal Revenue Code;
(v) returns of excess

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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 Class A Shares at
Net Asset Value under Classes of Shares).

Waiver of Contingent Deferred Sales Charge - Class B and Class C Shares
The CDSC is waived on certain redemptions of Class B Shares in
connection with the following redemptions: (i) redemptions that result from a
Portfolio'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, SIMPLE
IRA, SEP/IRA or 403(b)(7) or 457 Deferred Compensation Plan, (iii) periodic
distributions from an IRA, SIMPLE IRA, SAR/SEP, SEP/IRA, 403(b)(7) or 457
Deferred Compensation Plan due to death, disability or attainment of age 59
1/2, and IRA distributions qualifying under Section 72(t) of the Internal
Revenue Code; and (iv) distributions from an account if the redemption results
from the death of all registered owners of the account (in the case of
accounts established under the Uniform Gifts to Minors or Uniform Transfers to
Minors Acts or trust accounts, the waiver applies upon the death of all
beneficial owners) or a total and permanent disability (as defined in Section
72 of the Code) of all registered owners occurring after the purchase of the
shares being redeemed.

The CDSC on Class C Shares is waived in connection with the following
redemptions: (i) redemptions that result from A Portfolio'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, SIMPLE IRA, 403(b)(7) or 457 Deferred
Compensation Plan, Profit Sharing Plan, Money Purchase Pension Plan, or 401(k)
Defined Contribution Plan; (iii) periodic distributions from a 403(b)(7) or
457 Deferred Compensation Plan upon attainment of age 59 1/2, Profit Sharing
Plan, Money Purchase Pension Plan, or 401(k) Defined Contribution Plans upon
attainment of age 70 1/2, and IRA distributions qualifying under Section 72(t)
of the Internal Revenue Code; (iv) distributions from a 403(b)(7) Deferred
Compensation Plan, 457 Deferred Compensation Plan, Profit Sharing Plan, or
401(k) Defined Contribution Plan, under hardship provisions of the plan; (v)
distributions from a 403(b)(7) Deferred Compensation Plan, 457 Deferred
Compensation Plan, Profit Sharing Plan, Money Purchase Pension Plan or a
401(k) Defined Contribution Plan upon attainment of normal retirement age
under the plan or upon separation from service; (vi) periodic distributions
from an IRA or SIMPLE IRA on or after attainment of age 59 1/2; and (vii)
distributions from an account if the redemption results from the death of all
registered owners of the account (in the case of accounts established under
the Uniform Gifts to Minors or Uniform Transfers to Minors Acts or trust
accounts, the waiver applies upon the death of all beneficial owners) or a
total and permanent disability (as defined in Section 72 of the Code) of all
registered owners occurring after the purchase of the shares being redeemed.

In addition, the CDSC will be waived on Class B and Class C Shares
redeemed in accordance with a Systematic Withdrawal Plan if the annual amount
selected to be withdrawn under the Plan does not exceed 12% of the value of
the account on the date that the Systematic Withdrawal Plan was established or
modified.

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DIVIDENDS AND DISTRIBUTIONS

The Income and Balanced Portfolios will normally make payments from
net investment income, if any, on a quarterly basis. The Growth Portfolio will
normally make payments from net investment income, if any, on a annual basis.
Payments from net realized securities profits of a Portfolio, if any, will
normally be distributed annually in the quarter following the close of the
fiscal year.

Each class of a Portfolio will share proportionately in the
investment income and expenses of that Portfolio, except that the per share
dividends from net investment income on the Class A Shares, the Class B Shares
and Class C Shares will vary due to the expenses under the 12b-1 Plan
applicable to each Class. Generally, the dividends per share on Class B Shares
and Class C Shares can be expected to be lower than the dividends per share on
Class A Shares because the expenses under the 12b-1 Plans relating to Class B
and Class C Shares will be higher than the expenses under the 12b-1 Plan
relating to Class A Shares. See Distribution (12b-1) and Service under
Management of the Portfolios.

Both dividends and distributions, if any, are automatically
reinvested in your account at net asset value unless you elect otherwise. Any
check in payment of dividends or other distributions which cannot be delivered
by the United States Post Office or which remains uncashed for a period of
more than one year may be reinvested in your account at the then-current net
asset value and the dividend option may be changed from cash to reinvest. If
you elect to take your dividends and distributions in cash and such dividends
and distributions are in an amount of $25 or more, you may choose the
MoneyLine(SM) Direct Deposit Service and have such payments transferred from
your Portfolio account to your predesignated bank account. This service is not
available for retirement plans. See MoneyLine(SM) Services under The Delaware
Difference for more information about this service.

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TAXES

The tax discussion set forth below is included for general
information only. Investors should consult their own tax advisers concerning
the federal, state, local or foreign tax consequences of an investment in a
Portfolio.

Each Portfolio has qualified, and intends to continue to qualify, as
a regulated investment company under Subchapter M of the Code. As such, a
Portfolio 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 and it
satisfies certain other requirements relating to the sources of its income and
diversification of its assets. Although the Portfolios are nondiversified for
1940 Act purposes, they will be diversified for purposes of the Code. Under
the Code, a mutual fund's holdings of cash, U.S. government securities and
other regulated investment companies are, by definition, qualified assets for
purposes of the IRS' diversification rules.

On August 5, 1997, President Clinton signed into law the Taxpayer
Relief Act of 1997 (the "1997 Act"). This new law makes sweeping changes in
the Internal Revenue Code (the "Code"). Because many of these changes are
complex, and only indirectly affect a Portfolio and its distributions to you,
they are discussed in Part B. Changes in the treatment of capital gains,
however, are discussed in this section.

Each Portfolio 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 those investors who
are subject to income taxes as ordinary income, whether received in cash or in
additional shares. For corporate investors, dividends from net investment
income will generally qualify in part for the corporate dividends-received
deduction. The portion of dividends paid by a Portfolio that so qualifies will
be designated each year in a notice from the Portfolio to the Portfolio's
shareholders.

Distributions paid by a Portfolio 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 that
Portfolio. The Portfolios do not seek to realize any particular amount of
capital gains during a year; rather, realized gains are a by-product of
Portfolio 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 a Portfolio 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.

The Treatment of Capital Gain Distributions under the Taxpayer Relief Act of
1997
The 1997 Act creates a category of long-term capital gain for
individuals that will be taxed at new lower tax rates. For investors who are
in the 28% or higher federal income tax brackets, these gains will be taxed at
a maximum of 20%. For investors who are in the 15% federal income tax bracket,
these gains will be taxed at a maximum of 10%. Capital gain distributions will
qualify for these new maximum tax rates, depending on when a Portfolio's
securities were sold and how long they were held by a Portfolio before they
were sold. Investors who want more information on holding periods and other
qualifying rules relating to these new rates should review the expanded
discussion in Part B, or should contact their own tax advisers.

The Trust will advise you in its annual information reporting at
calendar year end of the amount of its capital gain distributions which will
qualify for these maximum federal tax rates.

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Although dividends generally will be treated as distributed when
paid, dividends which are declared in October, November, or December to
shareholders of record on a specified date in one of those months, but which,
for operational reasons, may not be paid to the shareholder until the
following January, will be treated for tax purposes as if paid by the
Portfolios and received by the shareholder on December 31 of the year
declared.

The sale of shares of a Portfolio 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 the Portfolios and any other fund in the Delaware Group. Any loss
incurred on a sale or exchange of Portfolio shares that had been held for six
months or less will be treated as a long-term capital loss to the extent of
capital gain dividends received with respect to such shares. All or a portion
of the sales charge incurred in acquiring a Portfolio's shares will be
excluded from the federal tax basis of any of such shares sold or exchanged
within 90 days of their purchase (for purposes of determining gain or loss
upon sale of such shares) if the sale proceeds are reinvested in that
Portfolio or in another fund in the Delaware Group of funds and a sales charge
that would otherwise apply to the reinvestment is reduced or eliminated. Any
portion of such sales charge excluded from the tax basis of the shares sold
will be added to the tax basis of the shares acquired in the reinvestment.

The automatic conversion of Class B Shares into Class A Shares at the
end of approximately eight years after purchase will be tax-free for federal
tax purposes. See Automatic Conversion of Class B Shares under Classes of
Shares.

In addition to the federal taxes described above, shareholders may or
may not be subject to various state and local taxes . For example,
distributions of interest income and capital gains realized from certain
types of U.S. government securities may be exempt from state personal income
taxes. Because investors' state and local taxes may be different than the
federal taxes described above, investors should consult their own tax
advisers.

Each year, the Trust will mail to you information on the tax status
of a Portfolio's dividends and distributions. Shareholders will also receive
each year information as to the portion of dividend income, if any, that is
derived from U.S. government securities that are exempt from state income tax.
Of course, shareholders who are not subject to tax on their income would not
be required to pay tax on amounts distributed to them by a Portfolio.

The Trust 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 Investment Application your
proper Taxpayer Identification Number and by certifying that you are not
subject to backup withholding.

See Taxes in Part B for additional information on tax matters
relating to each Portfolio and its shareholders.

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CALCULATION OF OFFERING PRICE AND NET ASSET VALUE PER SHARE

The net asset value ("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. The securities of the Underlying Funds held by the Portfolios are
priced at market value.

Class A Shares are purchased at the offering price per share, while
Class B Shares and Class C Shares are purchased at the NAV per share. The
offering price per share of Class A Shares consists of the NAV per share next
computed after the order is received, plus any applicable front-end sales
charges.

The offering price and NAV are computed as of the close of regular
trading on the New York Stock Exchange (ordinarily, 4 p.m., Eastern time) on
days when the Exchange is open.

The net asset values of all outstanding shares of each class of a
Portfolio will be computed on a pro-rata basis for each outstanding share
based on the proportionate participation in that Portfolio represented by the
value of shares of that class. All income earned and expenses incurred by a
Portfolio will be borne on a pro-rata basis by each outstanding share of a
class, based on each class' percentage in that Portfolio represented by the
value of shares of such classes, except that the Institutional Class will not
incur any of the expenses under the Trust's 12b-1 Plans and the Class A, Class
B and Class C Shares of each Portfolio 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 NAV of each
class of a Portfolio will vary.

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MANAGEMENT OF THE PORTFOLIOS

Trustees
The business and affairs of the Trust are managed under the direction
of its Board of Trustees. Part B contains additional information regarding the
Trust's trustees and officers.

Investment Manager
The Manager furnishes asset allocation services to each Portfolio.

The Manager and its predecessors have been managing the funds in the
Delaware Group since 1938. On October 31, 1997, the Manager and its
affiliates within the Delaware Group, including Delaware International
Advisers Ltd., were managing in the aggregate more than $38 billion in
assets in the various institutional or separately managed (approximately
$22,496,609,000) and investment company (approximately $16,012,252,000)
accounts.

The Manager is an indirect, wholly owned subsidiary of Delaware
Management Holdings, Inc. ("DMH"). On April 3, 1995, a merger between DMH and
a wholly owned subsidiary of Lincoln National Corporation ("Lincoln National")
was completed. DMH and the Manager are now indirect, wholly owned
subsidiaries, and subject to the ultimate control, of Lincoln National.
Lincoln National, with headquarters in Fort Wayne, Indiana, is a diversified
organization with operations in many aspects of the financial services
industry, including insurance and investment management.

The Manager manages each Portfolio's assets by allocating the
Portfolio's assets among the Underlying Funds. Such management services
include monitoring the Underlying Funds in order to determine whether they are
investing their assets in a manner that is consistent with the asset classes
targeted for investment by each Portfolio. The Manager also oversees the
Portfolios' direct investment in securities. The Manager also administers the
Trust's affairs and pays the salaries of all the trustees, officers and
employees of the Trust who are affiliated with the Manager. For these
services, the Manager is paid an annual Asset Allocation Fee equal to 0.25%
(currently waived to 0.10%) of average daily net assets of each of the
Portfolios.

Portfolio Manager
J. Paul Dokas serves as portfolio manager of each of the Portfolios.
Mr. Dokas is responsible for both asset allocations among the Underlying Funds
and the Portfolios' direct investments in securities. Mr. Dokas holds a BBA in
Business from Loyola College and an MBA in Business from the University of
Maryland. Prior to joining the Delaware Group in 1997, he was a Director of
Trust Investments for Bell Atlantic Corporation in Philadelphia. Mr. Dokas is
a CFA charterholder.

Portfolio Trading Practices
No commissions are paid directly by the Portfolios upon the purchase
or sale of Underlying Fund shares. The Portfolios normally will not invest for
short-term trading purposes. However, each Portfolio may sell its shares of an
Underlying Fund without regard to the length of time they have been held. The
degree of portfolio activity may affect taxes payable by the Portfolios'
shareholders to the extent that net capital gains are realized. Given the
Portfolios' investment objectives, their annual portfolio turnover rates are
not expected to exceed 100%. A turnover rate of 100% would occur, for example,
if all the investments held by a Portfolio at the beginning of the year were
replaced by the end of the year.

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Because the Manager must consider the interests of the Portfolios as
well as those of the Underlying Funds, the Manager has adopted Asset
Allocation Guidelines ("Guidelines") for the Manager. Pursuant to these
Guidelines, in the event that the Manager anticipates that an allocation
transaction (either a purchase or redemption) may disrupt the activities of an
Underlying Fund , the portfolio managers of the relevant Portfolio and
Underlying Fund will confer on steps to minimize adverse effects on both the
Portfolio and the Underlying Fund, such as staggering the timing and amounts
of such allocation transactions. In addition, the Portfolios' portfolio
manager will attempt to minimize the number and size of allocation
transactions occurring at any one time, while attempting to avoid losing
investment opportunities for the Portfolios.

A Portfolio 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, a
Portfolio may consider a broker/dealer's sales of shares of funds in the
Delaware Group of funds in placing portfolio orders and may place orders with
broker/dealers that have agreed to defray certain expenses of such funds, such
as custodian fees.

Performance Information
From time to time, the Portfolios may quote total return performance
of their respective Classes in advertising and other types of literature.

Total return will be based on a hypothetical $1,000 investment,
reflecting the reinvestment of all distributions at net asset value and: (i)
in the case of Class A Shares, the impact of the maximum front-end sales
charge at the beginning of each specified period; and (ii) in the case of
Class B Shares and Class C Shares, the deduction of any applicable CDSC at the
end of the relevant period. Each presentation will include the average annual
total return for one-, five- and ten-year or life-of-fund periods, as
relevant. Each Portfolio may also advertise aggregate and average total return
information concerning a Class over additional periods of time. In addition,
each Portfolio 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 that includes the deductions of the maximum front-end sales
charge or any applicable CDSC.

Because securities prices fluctuate, investment results of the
Classes will fluctuate over time. Past performance is not a guarantee of
future results.

Distribution (12b-1) and Service
The Distributor, Delaware Distributors, L.P., serves as the national
distributor of each Portfolios' shares under separate Distribution Agreements
with the Trust.

The Trust has adopted a separate distribution plan under Rule 12b-1
for each of the Class A Shares, Class B Shares and Class C Shares of the
Portfolios (the "Plans"). Each Plan permits the Portfolios to which the Plan
relates to pay the Distributor from the assets of the respective Classes a
monthly fee for the Distributor's 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,

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dealers and others. In connection with the promotion of shares of the Classes,
the Distributor may, from time to time, pay to participate in dealer-sponsored
seminars and conferences, and reimburse dealers for expenses incurred in
connection with preapproved seminars, conferences and advertising. The
Distributor may pay or allow additional promotional incentives to dealers as
part of preapproved sales contests and/or to dealers who provide extra
training and information concerning a Class and increase sales of the Class.
In addition, each Portfolio may make payments from the 12b-1 Plan fees of its
respective Classes directly to others, such as banks, who aid in the
distribution of Class shares or provide services in respect of a Class,
pursuant to service agreements with the Trust.

The 12b-1 Plan expenses relating to each of the Class B Shares and
Class C Shares of the Portfolios are also used to pay the Distributor for
advancing the commission costs to dealers with respect to the initial sale of
such shares.

The aggregate fees paid by a Portfolio from the assets of the
respective Classes to the Distributor and others under the Plans may not
exceed (i) 0.30% (currently set at 0.25%) of a Class A Shares' average daily
net assets in any year, and (ii) 1.00% (0.25% of which are service fees to be
paid by the Portfolios to the Distributor, dealers and others, for providing
personal service and/or maintaining shareholder accounts) of each Portfolio's
Class B Shares' and Class C Shares' average daily net assets in any year. Each
Portfolio's Class A, Class B and Class C Shares will not incur any
distribution expenses beyond these limits, which may not be increased without
shareholder approval.

While payments pursuant to the Plans may not exceed 0.30% annually
(currently set at 0.25%) with respect to each Portfolio's Class A Shares, and
1.00% annually with respect to each Portfolio's Class B Shares and Class C
Shares, the Plans do not limit fees to amounts actually expended by the
Distributor. It is therefore possible that the Distributor may realize a
profit in any particular year. However, the Distributor currently expects that
its distribution expenses will likely equal or exceed payments to it under the
Plans. The Distributor may, however, incur such additional expenses and make
additional payments to dealers from its own resources to promote the
distribution of shares of the Classes. The monthly fees paid to the
Distributor under the Plans are subject to the review and approval of the
Trust's unaffiliated trustees, who may reduce the fees or terminate the Plans
at any time.

The Plans do not apply to the Institutional Class Shares of each of
the Portfolios. Those shares are not included in calculating the Plans' fees,
and the Plans are not used to assist in the distribution and marketing of the
Institutional Class.

The Transfer Agent, Delaware Service Company, Inc., serves as the
shareholder servicing, dividend disbursing and transfer agent for the
Portfolios pursuant to a Shareholder Services Agreement. The Transfer Agent
also provides accounting services to each Portfolio pursuant to the terms of a
separate Fund Accounting Agreement. The trustees of the Trust annually review
service fees paid to the Transfer Agent.

The trustees annually review fees paid to the Distributor and the
Transfer Agent. The Distributor and the Transfer Agent are also indirect,
wholly owned subsidiaries of DMH.

Expenses
Each Portfolio is responsible for all of its own expenses other than
those borne by the Manager under the Asset Allocation Agreements and those borne
by the Distributor under the Distribution Agreements. The expense ratios of each
Class will reflect the impact of its 12b-1 Plan.

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Shares
The Trust is an open-end management investment company. Each
Portfolio is nondiversified, as defined by the 1940 Act. Commonly known as a
mutual fund, the Trust was organized as a Delaware Business Trust on October
24, 1997. The Trust currently offers three series of shares: the Income,
Balanced and Growth Portfolios. Portfolio shares have a par value of $0.01,
equal voting rights, except as noted below, and are equal in all other
respects. Each Portfolio will vote separately on any matter which affects only
that Portfolio. Shares of each Portfolio have a priority over shares of any
other series of the Trust in the assets and income of that Portfolio.

The Trust's shares have noncumulative voting rights, which means that
the holders of more than 50% of the Trust's shares voting for the election of
trustees can elect 100% of the trustees if they choose to do so. Under
Delaware law and the Trust's Declaration of Trust, the Trust is not required,
and does not intend, to hold annual meetings of shareholders unless, under
certain circumstances, it is required to do so under the 1940 Act.
Shareholders of 10% or more of the Trust's outstanding shares may request that
a special meeting be called to consider the removal of a trustee.

Shares of each Class represent proportionate interests in the assets
of the respective Portfolio and have the same voting and other rights and
preferences as the other classes of that Portfolio, except that shares of the
Institutional Classes are not subject to, and may not vote on, matters
affecting the Distribution Plans under Rule 12b-1 relating to the Class A,
Class B and Class C Shares. Similarly, as a general matter, the shareholders
of the Class A Shares, Class B Shares and Class C Shares may vote only on
matters affecting the 12b-1 Plan that relates to the class of shares that they
hold. However, the Class B Shares of a Portfolio may vote on any proposal to
increase materially the fees to be paid by that Portfolio under the 12b-1 Plan
relating to the Class A Shares.

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OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

Discussed below are other investment policies and risk considerations
relating to the Underlying Funds. In addition, if the Trust receives an
exemptive order from the SEC, each Portfolio may, to the extent consistent
with its investment objectives, invest in any of the securities in which an
Underlying Fund may invest and may pursue any of the same strategies as an
Underlying Fund.

High-Yield, High Risk Securities
The Delchester and High-Yield Opportunities Funds will invest
primarily in, and Decatur Total Return, U.S. Growth, Small Cap Value and
Emerging Markets Funds may invest in, high risk, high yield securities,
commonly known as "junk bonds." These securities entail the following risks:

Youth and Volatility of the High-Yield Market. Although the market
for high-yield bonds has been in existence for many years, including periods
of economic downturns, the high-yield market grew rapidly during the long
economic expansion which took place in the United States during the 1980s.
During that economic expansion, the use of high-yield debt securities to fund
highly leveraged corporate acquisitions and restructurings increased
dramatically. As a result, the high-yield market grew substantially during
that economic expansion. Although experts disagree on the impact recessionary
periods have had and will have on the high-yield market, some analysts believe
a protracted economic downturn would severely disrupt the market for
high-yield bonds, would adversely affect the value of outstanding bonds and
would adversely affect the ability of high-yield issuers to repay principal
and interest. Those analysts cite volatility experienced in the high-yield
market in the past as evidence for their position. It is likely that
protracted periods of economic uncertainty would result in increased
volatility in the market prices of high-yield bonds, an increase in the number
of high-yield bond defaults and corresponding volatility in an Underlying
Fund's net asset value. At times in the past, uncertainty and volatility in
the high-yield market resulted in volatility in certain Underlying Funds' net
asset value.

Redemptions. If, as a result of volatility in the high-yield market
or other factors, an Underlying Fund experiences substantial net redemptions
of the Underlying Fund's shares for a sustained period of time (i.e., more
shares are redeemed than are purchased), it may be required to sell securities
without regard to the investment merits of the securities to be sold. If the
Underlying Fund sells a substantial number of securities to generate proceeds
for redemptions, its asset base will decrease and its expense ratio may
increase.

Liquidity and Valuation. The secondary market for high-yield
securities is currently dominated by institutional investors, including mutual
funds and certain financial institutions. There is generally no established
retail secondary market for high-yield securities. As a result, the secondary
market for high-yield securities is more limited and less liquid than other
secondary securities markets. The high-yield secondary market is particularly
susceptible to liquidity problems when the institutions which dominate it
temporarily cease buying bonds for regulatory, financial or other reasons,
such as the savings and loan crisis. A less liquid secondary market may have
an adverse affect on an Underlying Fund's ability to dispose of particular
issues, when necessary, to meet it's liquidity needs or in response to a
specific economic event, such as the deterioration in the creditworthiness of
the issuer. In addition, a less liquid secondary market makes it more
difficult for the Fund to obtain precise valuations of the high-yield
securities in its portfolio. During periods involving such liquidity problems,
judgment plays a greater role in valuing high-yield securities than is
normally the case. The secondary market for high-yield securities is also
generally considered to be more likely to be disrupted by adverse publicity
and investor perceptions than the more established secondary securities
markets.

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Such Underlying Fund's privately placed high-yield securities are particularly
susceptible to the liquidity and valuation risks outlined above.

Legislative and Regulatory Action and Proposals. There are a variety
of legislative actions which have been taken or which are considered from time
to time by the United States Congress which could adversely affect the market
for high-yield bonds. For example, Congressional legislation limited the
deductibility of interest paid on certain high-yield bonds used to finance
corporate acquisitions. Also, Congressional legislation has, with some
exceptions, generally prohibited federally-insured savings and loan
institutions from investing in high-yield securities. Regulatory actions have
also affected the high-yield market. For example, many insurance companies
have restricted or eliminated their purchases of high-yield bonds as a result
of, among other factors, actions taken by the National Association of
Insurance Commissioners. If similar legislative and regulatory actions are
taken in the future, they could result in further tightening of the secondary
market for high-yield issues, could reduce the number of new high-yield
securities being issued and could make it more difficult for the Portfolio to
attain its investment objective.

Zero Coupon Bonds and Pay-in-Kind Bonds. The Real Estate Investment
Trust Portfolio and the Global Bond, Delchester, High-Yield Opportunities and
Emerging Markets Funds may invest in zero coupon bonds or pay-in-kind ("PIK)
bonds. Zero coupon bonds and PIK bonds are generally considered to be more
interest-sensitive than income-bearing bonds, to be more speculative than
interest-bearing bonds, and to have certain tax consequences which could,
under certain circumstances, be adverse to the Underlying Fund. For example,
an Underlying Fund accrues, and is required to distribute to shareholders,
income on its zero coupon bonds. However, the Underlying Fund may not receive
the cash associated with this income until the bonds are sold or mature. If
the Underlying Fund did not have sufficient cash to make the required
distribution of accrued income, the it could be required to sell other
securities in its portfolio or to borrow to generate the cash required.

When-Issued and Delayed Delivery Securities
Consistent with their respective objectives, The Real Estate
Investment Trust Portfolio and the Aggressive Growth, Blue Chip, Decatur Total
Return, U.S. Growth, Devon and New Pacific Funds may invest in U.S. government
securities and corporate debt obligations on a when-issued or delayed delivery
basis. Such transactions involve commitments to buy a new issue with
settlement up to 60 days later. The average settlement date for when-issued or
delayed delivery securities purchased by such Underlying Funds is generally
between 30 and 45 days. During the time between the commitment and settlement,
an Underlying Fund does not accrue interest, but the market value of the bonds
may fluctuate. This can result in the Underlying Fund's share value increasing
or decreasing. The Underlying Funds will not ordinarily sell when-issued or
delayed delivery securities prior to settlement. If an Underlying Funds invest
in securities of this type, they will maintain a segregated account to pay for
them and mark the account to market daily.

Mortgage-Backed Securities
The Real Estate Investment Trust Portfolio and the Devon, U.S.
Government and Limited-Term Government Funds may invest in mortgage-backed
securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities or government sponsored corporations or those issued by
certain private, non-government corporations, such as financial institutions.
Two principal types of mortgage-backed securities are collateralized mortgage
obligations (CMOs) and real estate mortgage investment conduits (REMICs).

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underlying mortgages are repaid. Prepayment may shorten the stated maturity of
the obligation and can result in a loss of premium, if any has been paid.
Certain of these securities 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).

REMICs, which were authorized under the Tax Reform Act of 1986, are
private entities formed for the purpose of holding a fixed pool of mortgages
secured by an interest in real property. REMICs are similar to CMOs in that
they issue multiple classes of securities.

CMOs and REMICs issued by private entities are not government
securities and are not directly guaranteed by any government agency. They are
secured by the underlying collateral of the private issuer. Such
private-backed securities may be 100% collateralized at the time of issuance
by securities issued or guaranteed by the U.S. government, its agencies, or
instrumentalities (so-called "agency mortgage-backed securities") or may not
be so collateralized (so-called "non-agency mortgage-backed securities"). The
aforementioned Underlying Funds may invest in agency and non-agency
mortgage-backed securities. Non-agency mortgage-backed securities may comprise
up to 20% of such Underlying Funds' respective assets, but all non-agency
mortgage-backed securities must (i) be rated at the time of purchase in the
four top rating categories by a nationally-recognized statistical rating
organization (e.g., BBB or better by Standard & Poor's Ratings Group ("S&P")
or Baa or better by Moody's Investors Service, Inc. ("Moody's")) and (ii)
represent interests in whole-loan mortgages, multi-family mortgages,
commercial mortgages or other mortgage collateral supported by a first
mortgage lien on real estate. Non-agency mortgage-backed securities are
subject to the interest rate and prepayment risks to which other CMOs and
REMICs issued by private issuers are subject. Non-agency mortgage-backed
securities may also be subject to a greater risk of loss of interest and
principal because they are not collateralized by securities issued or
guaranteed by the U.S. government. In addition, timely information concerning
the loans underlying these securities may not be as readily available and the
market for these securities may be less liquid than the market for other CMOs
and REMICs.

Asset-Backed Securities
Delaware Cash Reserve and Devon, U.S. Government and Limited-Term
Government Funds may invest in securities which are backed by assets such as
receivables on home equity and credit loans, receivables regarding automobile,
mobile home and recreational vehicle loans, wholesale dealer floor plans and
leases or other loans or financial receivables currently available or which
may be developed in the future. For these Underlying Funds, all such
securities must be rated in one of the four highest rating categories by a
reputable rating agency (e.g., BBB or better by S&P or Baa or better by
Moody's). It is Delaware Cash Reserve 's current policy to limit asset-backed
investments to those rated in the highest rating category by a reputable
rating agency (e.g., AAA by S&P or Aaa by Moody's) and represented by
interests in credit card receivables, wholesale dealer floor plans, home
equity loans and automobile loans.

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.

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Therefore, the yield may be difficult to predict and actual yield to maturity
may be more or less than the anticipated yield to maturity. Due to the shorter
maturity of the collateral backing such securities, there tends to be less of
a risk of substantial prepayment than with mortgage-backed securities but the
risk of such a prepayment does exist. See Mortgage-Backed Securities, above.
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, and other risks which
may be peculiar to particular classes of collateral. For example, 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.

REITs
The Real Estate Investment Trust Portfolio invests primarily in and
Devon Fund may invest in REITs. REITs are pooled investment vehicles which
invest primarily in income-producing real estate or real estate related loans
or interests. REITs are generally classified as equity REITs, mortgage REITs
or a combination of equity and mortgage REITs. Equity REITs invest the
majority of their assets directly in real property and derive income primarily
from the collection of rents. Equity REITs can also realize capital gains by
selling properties that have appreciated in value. Mortgage REITs invest the
majority of their assets in real estate mortgages and derive income from the
collection of interest payments.

Investment in REITs presents certain further risks that are unique
and in addition to the risks associated with investing in the real estate
industry in general. Equity REITs may be affected by changes in the value of
the underlying property owned by the REITs, while mortgage REITs may be
affected by the quality of any credit extended. REITs are dependent on
management skills, are not diversified, and are subject to the risks of
financing projects. REITs whose underlying assets include long-term health
care properties, such as nursing, retirement and assisted living homes, may be
impacted by federal regulations concerning the health care industry.

REITs (especially mortgage REITs) are also subject to interest rate
risks - when interest rates decline, the value of a REIT's investment in fixed
rate obligations can be expected to rise. Conversely, when interest rates
rise, the value of a REIT's investment in fixed rate obligations can be
expected to decline. In contrast, as interest rates on adjustable rate
mortgage loans are reset periodically, yields on a REIT's investments in such
loans will gradually align themselves to reflect changes in market interest
rates, causing the value of such investments to fluctuate less dramatically in
response to interest rate fluctuations than would investments in fixed rate
obligations.

REITs may have limited financial resources, may trade less frequently
and in a limited volume, and may be subject to more abrupt or erratic price
movements than other securities.

Like investment companies, REITs are not taxed on income distributed
to shareholders provided they comply with several requirements in the Code.
REITs are subject to substantial cash flow dependency, defaults by borrowers,
self-liquidation, and the risk of failing to qualify for tax-free pass-through
of income under the Code, and/or to maintain exemptions from the 1940 Act.

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Foreign Securities and Foreign Currency Transactions
The Underlying Funds in the International Equity category invest
their assets primarily in securities of foreign issuers, and the Global Bond
Fund will invest at least 65% of its assets in fixed-income securities of
issuers organized or having a majority of their assets in or deriving a
majority of their operating income in at least three different countries, one
of which may be the United States. The Real Estate Investment Trust Portfolio
and the Blue Chip, Devon, DelCap , Small Cap Value and High-Yield
Opportunities Funds may also invest a portion of their assets in securities of
issuers organized or having a majority of their assets in or deriving a
majority of their operating income outside the United States. In connection
with investments in foreign securities, such Underlying Funds may, from time
to time, conduct foreign currency exchange transactions on a spot (i.e., cash)
basis at the spot rate prevailing in the foreign currency exchange market or
through entering into contracts to purchase or sell foreign currencies at a
future date (i.e., a "forward foreign currency" contract or "forward"
contract). Such Underlying Funds will engage in these foreign currency
transactions in order to expedite settlement of portfolio transactions and to
minimize currency value fluctuations. Investing in foreign securities and, in
conjunction therewith, engaging in foreign currency transactions present
special considerations not presented by investments in securities issued by
United States companies.

The risk involved in investing in foreign securities include the
possibility of expropriation, nationalization or confiscatory taxation,
taxation of income earned in foreign nations or other taxes imposed with
respect to investments in foreign nations, foreign exchange control (which may
include suspension of the ability to transfer currency from a given country),
default in foreign government securities, political or social instability or
diplomatic developments which could affect investments in securities of
issuers in those nations. In addition, in many countries, there is less
publicly available information about issuers than is available in reports
about companies in the United States, and the information that is available is
often of lesser quality than information available on U.S. companies. Foreign
companies are not subject to uniform accounting, auditing and financial
reporting standards, and auditing practices and requirements may not be
comparable to those applicable to United States companies. Further, such
Underlying Funds may encounter difficulty or be unable to pursue legal
remedies and obtain judgments in foreign courts. Commission rates on
securities transactions in foreign countries, which are sometimes fixed rather
than subject to negotiation as in the United States, are likely to be higher.
Moreover, the settlement period of securities transactions in foreign markets
may be longer than in domestic markets. In many foreign countries, there is
less government supervision and regulation of business and industry practices,
stock exchanges, brokers and listed companies than in the United States. The
foreign securities markets of many of the countries in which such Underlying
Funds may invest may also be smaller, less liquid and subject to greater price
volatility than those in the United States.

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current repatriation restrictions would affect its decision to invest in such
countries. Countries such as those in which the aforementioned Underlying
Funds may invest have historically experienced and may continue to experience,
high rates of inflation, high interest rates, exchange rate fluctuations or
currency depreciation, large amounts of external debt, balance of payments and
trade difficulties and extreme poverty and unemployment. Additional factors
which may influence the ability or willingness to service debt include, but
are not limited to, a country's cash flow situation, the availability of
sufficient foreign exchange on the date a payment is due, the relative size of
its debt service burden to the economy as a whole, its government's policy
towards the International Monetary Fund, the World Bank and other
international agencies and the political constraints to which a government
debtor may be subject.

With respect to investment in debt issues of foreign governments,
including Brady Bonds, the ability of a foreign government or
government-related issuer to make timely and ultimate payments on its external
debt obligations will also be strongly influenced by the issuer's balance of
payments, including export performance, its access to international credits
and investments, fluctuations in interest rates and the extent of its foreign
reserves. A country whose exports are concentrated in a few commodities or
whose economy depends on certain strategic imports could be vulnerable to
fluctuations in international prices of these commodities or imports. To the
extent that a country receives payment for its exports in currencies other
than dollars, its ability to make debt payments denominated in dollars could
be adversely affected.

The issuers of the emerging market country government and
government-related high yield securities in which such Underlying Funds may
invest have in the past experienced substantial difficulties in servicing
their external debt obligations, which have led to defaults on certain
obligations and the restructuring of certain indebtedness. Restructuring
arrangements have included, among other things, reducing and rescheduling
interest and principal payments by negotiating new or amended credit
agreements or converting outstanding principal and unpaid interest to Brady
Bonds, and obtaining new credit to finance interest payments. Holders of
certain foreign government and government-related high yield securities may be
requested to participate in the restructuring of such obligations and to
extend further loans to their issuers. There can be no assurance that the
Brady Bonds and other foreign government and government-related high yield
securities in which such Underlying Funds may invest will not be subject to
similar defaults or restructuring arrangements which may adversely affect the
value of such investments. Furthermore, certain participants in the secondary
market for such debt may be directly involved in negotiating the terms of
these arrangements and may therefore have access to information not available
to other market participants.

Foreign Currency Transactions. Underlying Funds which invest in
foreign securities may also purchase options and forward contracts in foreign
currency for hedging purposes in connection with such foreign securities
transactions. As in the case of other kinds of options, the writing of an
option on foreign currency will constitute only a partial hedge, up to the
amount of the premium received, and such Underlying Funds could be required to
purchase or sell foreign currencies at disadvantageous exchange rates, thereby
incurring losses. The purchase of an option on foreign currency may constitute
an effective hedge against fluctuations in exchange rates, although, in the
event of rate movements adverse to the Underlying Fund's position, it may
forfeit the entire amount of the premium plus related transaction costs.

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dollars or foreign currency, of the amount of foreign currency involved in the
underlying security transaction, the Underlying Funds will be able to protect
itself against a possible loss resulting from an adverse change in currency
exchange rates during the period between the date the security is purchased or
sold and the date on which payment is made or received.

When such Underlying Fund's investment manager believes that the
currency of a particular country may suffer a significant decline against the
U.S. dollar or against another currency, the Underlying Fund may enter into a
forward foreign currency contract to sell, for a fixed amount of U.S. dollars
or other appropriate currency, the amount of foreign currency approximating
the value of some or all of the Underlying Fund's securities denominated in
such foreign currency.

An Underlying Fund will not enter into forward contracts or maintain
a net exposure to such contracts where the consummation of the contracts would
obligate the Underlying Fund to deliver an amount of foreign currency in
excess of the value of the Underlying Fund's securities or other assets
denominated in that currency.

At the maturity of a forward contract, the Underlying Funds may
either sell the portfolio security and make delivery of the foreign currency,
or it may retain the security and terminate its contractual obligation to
deliver the foreign currency by purchasing an "offsetting" contract with the
same currency trader obligating it to purchase, on the same maturity date, the
same amount of the foreign currency. The Underlying Fund may realize a gain or
loss from currency transactions.

The precise matching of forward contract amounts and the value of the
securities involved is generally not possible since the future value of such
securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the forward
contract is entered into and the date it matures. The projection of short-term
currency strategy is highly uncertain.

It is impossible to forecast the market value of portfolio securities
at the expiration of the contract. Accordingly, it may be necessary for the
Underlying Fund to purchase additional foreign currency on the spot market
(and bear the expense of such purchase) if the market value of the security is
less than the amount of foreign currency the Underlying Fund is obligated to
deliver (and if a decision is made to sell the security and make delivery of
the foreign currency). Conversely, it may be necessary to sell on the spot
market some of the foreign currency received upon the sale of the portfolio
security if its market value exceeds the amount of foreign currency the
Underlying Fund is obligated to deliver.

Such Underlying Funds also may purchase and write put and call
options on foreign currencies (traded on U.S. and foreign exchanges or
over-the-counter) for hedging purposes to protect against declines in the U.S.
dollar cost of foreign securities held by the Underlying Funds and against
increases in the U.S. dollar cost of such securities to be acquired. Call
options on foreign currency written by the Underlying Fund will be covered,
which means that the Fund will own the underlying foreign currency. With
respect to put options on foreign currency written by the Underlying Fund, the
Underlying Fund will establish a segregated account with its custodian bank
consisting of cash, U.S. government securities or other high-grade liquid debt
securities in an amount equal to the amount the Underlying Fund will be
required to pay upon exercise of the put.

Such Underlying Funds may enter into contracts for the purchase or
sale for future delivery of securities or foreign currencies. The principal
purpose of the purchase or sale of futures contracts for the Underlying Fund
is to protect the Underlying Fund against the fluctuations in interest or
exchange rates which otherwise might adversely affect the value of the
Underlying Fund's portfolio securities or adversely affect the prices of

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securities which the Underlying Fund intends to purchase at a later date
without actually buying or selling such securities.

Depositary Receipts. The aforementioned Underlying Funds may make
foreign investments through the purchase and sale of sponsored or unsponsored
American, European and Global Depositary Receipts. Depositary Receipts are
receipts typically issued by a U.S. or foreign bank or trust company which
evidence ownership of underlying securities issued by a foreign corporation.
"Sponsored" Depositary Receipts are issued jointly by the issuer of the
underlying security and a depository, whereas "unsponsored" Depositary
Receipts are issued without participation of the issuer of the deposited
security. Holders of unsponsored Depositary Receipts generally bear all the
costs of such facilities and the depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited security or to pass through voting
rights to the holders of such receipts in respect of the deposited securities.
Therefore, there may not be a correlation between information concerning the
issuer of the security and the market value of an unsponsored Depositary
Receipt.

Options
To achieve their investment objectives, The Real Estate Investment
Trust Portfolio and the Aggressive Growth, Blue Chip, Decatur Total Return,
U.S. Growth, Devon, DelCap, Small Cap Value, Emerging Markets, International
Equity, International Small Cap New Pacific, U.S. Government, Global Bond and
Limited-Term Government Funds use certain hedging techniques. These techniques
will be used at the respective investment manager's discretion to protect the
Underlying Funds' principal value.

Such Underlying Funds may purchase put options, write covered call
options and enter into closing transactions in connection therewith in respect
of securities in which they may invest. Such Underlying Funds may also
purchase call options and enter into related closing transactions, or may
write covered put options. In purchasing put and call options, the premium
paid by the Underlying Fund, plus any transaction costs, will reduce any
benefit realized by the Underlying Fund upon exercise of the option.

Purchasing a put option gives the Underlying Fund the right to sell
one of its securities for an agreed price up to an agreed date. The advantage
is that the Underlying Fund can be protected should the market value of the
security decline. However, the Underlying Fund must pay a premium for this
right, whether it exercises it or not.

Writing a covered call option obligates the Underlying Fund to sell
one of its securities for an agreed price up to an agreed date. The advantage
is that the Underlying Fund receives premium income, which may offset the cost
of purchasing put options. However, the Underlying Fund may lose the potential
market appreciation of the security if the respective investment manager's
judgment is wrong and interest rates fall or stock prices rise.

A call option enables the purchaser, in return for the premium paid,
to purchase securities from the writer of the option at an agreed upon date.
The advantage is that the purchaser may hedge against an increase in the price
of securities it ultimately wishes to buy.

Closing transactions essentially let the Underlying Fund offset a put
option or call option prior to its exercise or expiration. If it cannot effect
a closing transaction, it may have to hold a security it would otherwise sell
with a potential decline in net asset value, or deliver a security it might
want to hold.

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These Underlying Funds may use both exchange-traded and
over-the-counter options. Certain over-the-counter options may be illiquid.
These Underlying Funds will only invest in such options to the extent
consistent with their limit on investments in illiquid securities.

These Underlying Funds may write call options and purchase put
options on stock indices and enter into closing transactions in connection
therewith. Such Underlying Funds also may purchase call options on stock
indices and enter into closing transactions in connection therewith. No such
Underlying Fund will engage in transactions on stock indices for speculative
purposes. Writing or purchasing a call option on stock indices is similar to
the writing or purchasing of a call option on an individual stock. Purchasing
a protective put option on stock indices is similar to the purchase of
protective puts on an individual stock. Stock indices used will include, but
will not be limited to, the S&P 100 and the S&P Over-the-Counter 250. The
ability to hedge effectively using options on stock indices will depend on the
degree to which price movements in the underlying index correlate with price
movements in the portfolio securities of, as the case may be, the applicable
Underlying Fund.

Futures Contracts and Options on Futures Contracts
For hedging purposes, each of The Real Estate Investment Trust
Portfolio and the Aggressive Growth, International Equity, International Small
Cap, Small Cap Value, Trend, Global Bond, Devon, Blue Chip, Decatur Total
Return, U.S. Growth, New Pacific, U.S. Government, Limited-Term Government and
Emerging Markets Funds may enter into futures contracts relating to
securities, securities indices or interest rates. In addition, The Real Estate
Investment Trust Portfolio and the International Equity, International Small
Cap, Global Bond, Devon, Blue Chip and Emerging Markets Funds may enter into
futures transactions relating to foreign currency.

A futures contract is a bilateral agreement providing for the
purchase and sale of a specified type and amount of a financial instrument or
foreign currency, or for the making and acceptance of a cash settlement at a
stated time in the future for a fixed price. By its terms, a futures contract
provides for a specified settlement date on which, in the case of the majority
of interest rate and foreign currency futures contracts, the fixed-income
securities or currency underlying the contract are delivered by the seller and
paid for by the purchaser, or on which, in the case of securities index
futures contracts and certain interest rate and foreign currency futures
contracts, the difference between the price at which the contract was entered
into and the contract's closing value is settled between the purchaser and
seller in cash. Futures contracts differ from options in that they are
bilateral agreements, with both the purchaser and the seller equally obligated
to complete the transaction. In addition, futures contracts call for
settlement only on the expiration date, and cannot be "exercised" at any other
time during their term.

The purchase or sale of a futures contract also differs from the
purchase or sale of a security or the purchase of an option in that no
purchase price is paid or received. Instead, an amount of cash or cash
equivalents, which varies but may be as low as 5% or less of the value of the
contract, must be deposited with or on behalf of the broker as "initial
margin" as a good faith deposit. Subsequent payments to and from the broker,
referred to as "variation margin," are made on a daily basis as the value of
the index or instrument underlying the futures contract fluctuates, making
positions in the futures contract more or less valuable, a process known as
"marking to the market."

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paid on each completed purchase and sale transaction. The contract market
clearing house guarantees the performance of each party to a futures contract,
by in effect taking the opposite side of such contract. At any time prior to
the expiration of a futures contract, a trader may elect to close out its
position by taking an opposite position on the contract market on which the
position was entered into, subject to the availability of a secondary market,
which will operate to terminate the initial position. At that time, a final
determination of variation margin is made and any loss experienced by the
trader is required to be paid to the contract market clearing house while any
profit due to the trader must be delivered to it.

Interest rate futures contracts currently are traded on a variety of
fixed-income securities, including long-term U.S. Treasury Bonds, U.S.
Treasury Notes, GNMA modified pass-through mortgage-backed securities, U.S.
Treasury Bills, bank certificates of deposit and commercial paper. In
addition, interest rate futures contracts include contracts on indexes of
municipal securities. Foreign currency futures contracts currently are traded
on the British pound, Canadian dollar, Japanese yen, Swiss franc, German mark
and on Eurodollar deposits.

A securities index or municipal bond index futures contract provides
for the making and acceptance of a cash settlement in much the same manner as
the settlement of an option on a securities index. The types of indexes
underlying securities index futures contracts are essentially the same as
those underlying securities index options, as described above. The index
underlying a municipal bond index futures contract is a broad based index of
municipal securities designed to reflect movements in the municipal securities
market as a whole. The index assigns weighted values to the securities
included in the index and its composition is changed periodically.

Such Underlying Funds may also purchase and write options on the
types of futures contracts that they can invest in.

A call option on a futures contract provides the holder with the
right to purchase, or enter into a "long" position in, the underlying futures
contract. A put option on a futures contract provides the holder with the
right to sell, or enter into a "short" position in, the underlying futures
contract. In both cases, the option provides for a fixed exercise price up to
a stated expiration date. Upon exercise of the option by the holder, the
contract market clearing house establishes a corresponding short position for
the writer of the option, in the case of a call option, or a corresponding
long position in the case of a put option and the writer delivers to the
holder the accumulated balance in the writer's margin account which represents
the amount by which the market price of the futures contract at exercise
exceeds, in the case of a call, or is less than, in the case of a put, the
exercise price of the option on the futures contract. In the event that an
option written by the Underlying Fund is exercised, the Underlying Fund will
be subject to all the risks associated with the trading of futures contracts,
such as payment of variation market deposits. In addition, the writer of an
option on a futures contract, unlike the holder, is subject to initial and
variation margin requirements on the option position.

A position in an option on a futures contract may be terminated by
the purchaser or seller prior to expiration by effecting a closing purchase or
sale transaction, subject to the availability of a liquid secondary market,
which is the purchase or sale of an option of the same series (i.e., the same
exercise price and expiration date) as the option previously purchased or
sold. The difference between the premiums paid and received represents the
trader's profit or loss on the transaction.

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clearing house assigns exercise notices on a random basis to those of its
members which have written options of the same series and with the same
expiration date. A brokerage firm receiving such notices then assigns them on
a random basis to those of its customers which have written options of the
same series and expiration date. A writer therefore has no control over
whether an option will be exercised against it, nor over the timing of such
exercise.

To the extent that interest or exchange rates or securities prices
move in an unexpected direction, the Underlying Fund may not achieve the
anticipated benefits of investing in futures contracts and options thereon, or
may realize a loss. To the extent that the Underlying Fund 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 could prevent the Underlying Fund from closing out its
positions relating to futures.

Borrowings
Each Underlying Fund, except Delaware Cash Reserve and U.S.
Government and Limited-Term Government Funds, and the Portfolios may borrow
money as a temporary measure for extraordinary purposes or to facilitate
redemptions. Such Underlying Funds and Portfolios will not borrow money in
excess of one-third of the value of their net assets. These Underlying Funds
and Portfolios have no intention of increasing their net income through
borrowing. Any borrowing will be done from a bank and, to the extent that such
borrowing exceeds 5% of the value of such Underlying Fund's or Portfolio's net
assets, asset coverage of at least 300% is required. In the event that such
asset coverage shall at any time fall below 300%, the Underlying Funds or
Portfolios shall, within three days thereafter (not including Sunday or
holidays) or such longer period as the U.S. Securities and Exchange Commission
may prescribe by rules and regulations, reduce the amount of their borrowings
to an extent that the asset coverage of such borrowings shall be at least
300%. An Underlying Fund or Portfolio will not purchase investment securities
while it has an outstanding borrowing. See Part B for additional possible
restrictions on borrowing.

Repurchase Agreements
The Underlying Funds may invest in repurchase agreements. Each
Underlying Fund may enter into repurchase agreements with broker/dealers or
banks which are deemed creditworthy by the respective investment manager under
guidelines approved by the Board of Directors. A repurchase agreement is a
short-term investment in which the purchaser (i.e., the Underlying Fund)
acquires ownership of a security and the seller agrees to repurchase the
security at a future time and set price, thereby determining the yield during
the purchaser's holding period. The value of the securities subject to the
repurchase agreement is marked to market daily. In the event of a bankruptcy
or other default of the seller, the Underlying Fund could experience delays
and expenses in liquidating the underlying securities.

The funds in the Delaware Group have obtained an exemption from the
joint-transaction prohibitions of Section 17(d) of the 1940 Act to allow the
Delaware Group funds jointly to invest cash balances. Each Underlying Fund may
invest cash balances in joint repurchase agreements in accordance with the
terms of the Order and subject to the conditions described above.

Portfolio Loan Transactions
Each Underlying Fund, except for Delaware Cash Reserve , may, from
time to time, lend securities (but not in excess of 25% of its assets) from
its portfolio to brokers, dealers and financial institutions and receive
collateral in cash or short-term U.S. government securities. While the loan is
outstanding, this collateral will be maintained at all times in an account
equal to at least 100% of the current market value of the loaned

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securities plus accrued interest. Such cash collateral will be invested in
short-term securities, the income from which will increase the return of the
Underlying Fund.

The major risk to which the Underlying Funds 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 Underlying Funds will
only enter into loan arrangements after a review of all pertinent facts by the
respective investment 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 respective investment manager.

Liquidity and Rule 144A Securities
In order to assure that each Underlying Fund has sufficient
liquidity, no Underlying Fund may invest more than 10% of its net assets in
illiquid assets (15% for The Real Estate Investment Trust Portfolio and the
Blue Chip and High-Yield Opportunities Funds), including repurchase
agreements maturing in more than seven days. While maintaining oversight, the
Board of Directors has delegated to the respective investment manager the
day-to-day functions of determining whether or not individual securities
eligible for resale without registration pursuant to Rule 144A ("Rule 144A
Securities") of the Securities Act of 1933 ("1933 Act") are liquid for
purposes of the limitation on investments in illiquid assets. Rule 144A
permits many privately placed and legally restricted securities to be freely
traded among certain institutional buyers such as the Underlying Funds. The
Board has instructed the managers 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). Investing in Rule 144A
Securities could have the effect of increasing the level of illiquidity of an
Underlying Fund to the extent that qualified institutional buyers become
uninterested, for a time, in purchasing these securities.

If the respective manager determines that a Rule 144A Security which
was previously determined to be liquid is no longer liquid and, as a result,
the applicable Underlying Fund's holdings of illiquid securities exceed the
Underlying Fund's limit on investment in such securities, the respective
manager will determine what action shall be taken to ensure that the
Underlying Fund continues to adhere to such limitation.

Investment Company Securities
Any investments that the Underlying Funds in the Aggressive Growth,
International Equity, International Small Cap, Emerging Markets or the Global
Bond Funds may make in either closed-end or unregistered investment companies
will be limited by the 1940 Act, and would involve an indirect payment of a
portion of the expenses, including advisory fees, of such other investment
companies.

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participate in the capital appreciation resulting from a market price advance
in the convertible security's underlying common stock. Just as with debt
securities, convertible securities tend to increase in market value when
interest rates decline and tend to decrease in value when interest rates rise.
However, the price of a convertible security is also influenced by the market
value of the security's underlying common stock and tends to increase as the
market value of the underlying stock rises, whereas it tends to decrease as
the market value of the underlying stock declines.

The aforementioned Underlying Funds may invest in convertible
preferred stocks that offer enhanced yield features, such as Preferred Equity
Redemption Cumulative Stock ("PERCS"), which provide an investor with the
opportunity to earn higher dividend income than is available on a company's
common stock. A PERCS is a preferred stock which generally features a
mandatory conversion date, as well as a capital appreciation limit which is
usually expressed in terms of a stated price. Upon the conversion date, most
PERCS convert into common stock of the issuer (PERCS are generally not
convertible into cash at maturity). Under a typical arrangement, if after a
predetermined number of years the issuer's common stock is trading at a price
below that set by the capital appreciation limit, each PERCS would convert to
one share of common stock. If, however, the issuer's common stock is trading
at a price above that set by the capital appreciation limit, the holder of the
PERCS would receive less than one full share of common stock. The amount of
that fractional share of common stock received by the PERCS holder is
determined by dividing the price set by the capital appreciation limit of the
PERCS by the market price of the issuer's common stock. PERCS can be called at
any time prior to maturity, and hence do not provide call protection. However,
if called early, the issuer may pay a call premium over the market price to
the investor. This call premium declines at a preset rate daily, up to the
maturity date of the PERCS.

The aforementioned Underlying Funds may also invest in other enhanced
convertible securities. These include but are not limited to ACES
(Automatically Convertible Equity Securities), PEPS (Participating Equity
Preferred Stock), PRIDES (Preferred Redeemable Increased Dividend Equity
Securities), SAILS (Stock Appreciation Income Linked Securities), TECONS (Term
Convertible Notes), QICS (Quarterly Income Cumulative Securities) and DECS
(Dividend Enhanced Convertible Securities). ACES, PEPS, PRIDES, SAILS, TECONS,
QICS and DECS generally have the following features: they are company-issued
convertible preferred stock; unlike PERCS, they do not have capital
appreciation limits; they seek to provide the investor with high current
income, with some prospect of future capital appreciation; they are typically
issued with three to four-year maturities; they typically have some built-in
call protection for the first two to three years; investors have the right to
convert them into shares of common stock at a preset conversion ratio or hold
them until maturity; and upon maturity, they will automatically convert to
either cash or a specified number of shares of common stock.

Temporary Defensive Measures
Each Underlying Fund (other than Delaware Cash Reserve) may hold
cash or invest in short-term debt securities and other money market
instruments when, in the Manager's opinion, such holdings are prudent for
temporary defensive purposes given then prevailing market conditions. An
Underlying Fund may also invest in such instruments pending investment by the
Underlying Fund of proceeds from the sale of portfolio securities or proceeds
from new sales of its shares pending investment in other types of securities
or to maintain sufficient liquidity to meet redemptions. All such short-term
investments will be of the highest quality as determined by a
nationally-recognized statistical rating organization (e.g., AAA by S&P or Aaa
by Moody's or, if unrated, judged to be of comparable quality as determined by
the Manager. Certain Funds may also invest in corporate bonds of investment
grade quality (rated not less than BBB or S&P or Baa by Moody's) for
temporary, defensive purposes. Securities rated BBB or Baa are regarded as
having speculative characteristics.

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U.S. Government Securities
All of the Underlying Funds may invest in securities of the U.S.
government. Securities guaranteed by the U.S. government include: (1) direct
obligations of the U.S. Treasury (such as Treasury bills, notes and bonds) and
(2) federal agency obligations guaranteed as to principal and interest by the
U.S. Treasury (such as GNMA certificates and Federal Housing Administration
debentures). For these securities, the payment of principal and interest is
unconditionally guaranteed by the U.S. government, and thus they are of the
highest possible credit quality. Such securities are subject to variations in
market value due to fluctuations in interest rates, but if held to maturity
are deemed to be free of credit risk for the life of the investment.

Securities issued by U.S. government instrumentalities and certain
federal agencies are neither direct obligations of, nor guaranteed by, the
U.S. Treasury. However, they generally involve federal sponsorship in one way
or another: some are backed by specific types of collateral; some are
supported by the issuer's right to borrow from the U.S. Treasury; some are
supported by the discretionary authority of the U.S. Treasury to purchase
certain obligations of the issuer; and others are supported only by the credit
of the issuing government agency or instrumentality. These agencies and
instrumentalities include, but are not limited to, Federal Land Banks, Farmers
Home Administration, Central Bank for Cooperatives, Federal Intermediate
Credit Banks, and Federal Home Loan Banks.

Quality Restrictions
Delaware Cash Reserve limits its investments to those which its
Board of Directors have determined present minimal credit risks and are of
high quality and which are otherwise in accordance with the maturity, quality
and diversification conditions with which taxable money market funds must
comply.

Delaware Cash Reserve's investments include direct obligations
issued by the U.S. Treasury which include bills, notes and bonds which differ
from each other principally in interest rates, maturities and dates of
issuance. These issues, plus some federal agency obligations, are guaranteed
by the full faith and credit of the U.S. government. Examples include Federal
Housing Administration, Farmers Home Administration, Government National
Mortgage Association and Export-Import Bank of the United States. Other
federal agency obligations only have the guarantee of the agency. Examples
include Federal Home Loan Banks, Federal Land Banks, Federal Home Loan
Mortgage Corporation, The Tennessee Valley Authority and the International
Bank for Reconstruction and Development. Although obligations of agencies and
instrumentalities are not direct obligations of the U.S. Treasury, payment of
the interest and principal on such obligations is generally backed directly or
indirectly by the U.S. government. This support can range from the backing of
the full faith and credit of the United States, to U.S. Treasury guarantees,
or to the backing solely of the issuing agency or instrumentality itself.

Delaware Cash Reserve's investments also include certificates of
deposit and obligations of both U.S. and foreign banks if they have assets of
at least one billion dollars in accordance with the maturity, quality and
diversification conditions with which taxable money market funds must comply.
Delaware Cash Reserve may also purchase commercial paper and other corporate
obligations; if a security or, as relevant, its issuer is considered to be
rated at the time of the proposed purchase it, or, as relevant, its issuer
must be so rated in one of the two highest rating categories (e.g., for
commercial paper, A-2 or better by S&P and P-2 or better by Moody's; and, for
other corporate obligations, AA or better by S&P and Aa or better by Moody's)
by at least two nationally-recognized statistical rating organizations
approved by the Board of Directors or, if such security is not so rated, the
purchase of the security must be approved or ratified by the Board of
Directors in accordance with the maturity, quality and diversification
conditions with which taxable money market funds must comply.
Appendix A describes the ratings of S&P and Moody's.

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Maturity Restrictions
Delaware Cash Reserve maintains an average maturity of not more
than 90 days. Also, it does not purchase any instruments with an effective
remaining maturity of more than 13 months.

Small to Medium-Sized Companies
The Small/Mid Cap U.S. Equity Funds invest their assets in equity
securities of small to medium-sized companies. These stocks have historically
been more volatile in price than larger capitalization stocks, such as those
included in the S& P 500 Index. This is because, among other things, smaller
companies have a lower degree of liquidity and tend to have a greater
sensitivity to changing economic conditions. These companies may have narrow
product lines, markets or financial resources, or may depend on a limited
management group. The companies' securities may trade less frequently and have
a smaller trading volume. The securities may be traded only in the
over-the-counter markets or on a regional securities exchange. In addition to
exhibiting greater volatility, smaller capitalization securities may, to some
degree, fluctuate independently of the stocks of larger capitalization
companies. For example, the stocks of smaller capitalization companies may
decline in price as the price of larger company stocks rise, or vice versa.

Unseasoned Companies
The High-Yield Opportunities Fund may invest in relatively new or
unseasoned companies which are in their early stages of development, or small
companies positioned in new and emerging industries where the opportunity for
rapid growth is expected to be above average. Securities of unseasoned
companies present greater risks than securities of larger, more established
companies. The companies in which the Fund may invest may have relatively
small revenues, limited product lines, and may have a small share of the
market for their products or services. Small companies may lack depth of
management, they may be unable to internally generate funds necessary for
growth or potential development or to generate such funds through external
financing or favorable terms, or they may be developing or marketing new
products or services for which markets are not yet established and may never
become established. Due these and other factors, small companies may suffer
significant losses as well as realize substantial growth, and investments in
such companies tend to be volatile and are therefore speculative.

GNMA Securities
U.S. Government Fund may invest in certificates of the Government
National Mortgage Association ("GNMA"). GNMA Certificates are mortgage-backed
securities. Each Certificate evidences an interest in a specific pool of
mortgages insured by the Federal Housing Administration or the Farmers Home
Administration or guaranteed by the Veterans Administration. Scheduled
payments of principal and interest are made to the registered holders of GNMA
Certificates. The GNMA Certificates in which U.S. Government Fund will invest
are of the modified pass-through type. U.S. Government GNMA guarantees the
timely payment of monthly installments of principal and interest on modified
pass-through Certificates at the time such payments are due, whether or not
such amounts are collected by the issuer on the underlying mortgages. The
National Housing Act provides that the full faith and credit of the United
States is pledged to the timely payment of principal and interest by GNMA of
amounts due on these GNMA Certificates.

The average life of GNMA Certificates varies with the maturities of
the underlying mortgage instruments with maximum maturities of 30 years. The
average life is likely to be substantially less than the original maturity of
the mortgage pools underlying the securities as the result of prepayments of
refinancing of such mortgages or foreclosure. Such prepayments are passed
through to the registered holder with the regular

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monthly payments of principal and interest, and have the effect of reducing
future payments. Due to the GNMA guarantee, foreclosures impose no risk to
principal investments.

The average life of pass-through pools varies with the maturities of
the underlying mortgage instruments. In addition, a pool's term may be
shortened by unscheduled or early payments of principal and interest on the
underlying mortgages. The occurrence of mortgage prepayments is affected by
factors including the level of interest rates, general economic conditions,
the location and age of the mortgage and other social and demographic
conditions. As prepayment rates vary widely, it is not possible to accurately
predict the average life of a particular pool. However, statistics indicate
that the average life of the type of mortgages backing the majority of GNMA
Certificates is approximately 12 years. For this reason, it is standard
practice to treat GNMA Certificates as 30-year mortgage-backed securities
which prepay fully in the twelfth year. Pools of mortgages with other
maturities or different characteristics will have varying assumptions for
average life. The assumed average life of pools of mortgages having terms of
less than 30 years is less than 12 years, but typically not less than five
years.

The coupon rate of interest of GNMA Certificates is lower than the
interest rate paid on the VA-guaranteed or FHA-insured mortgages underlying
the Certificates, but only by the amount of the fees paid to GNMA and the
issuer. Such fees in the aggregate usually amount to approximately 1/2 of 1%.

Yields on pass-through securities are typically quoted by investment
dealers and vendors based on the maturity of the underlying instruments and
the associated average life assumption. In periods of falling interest rates,
the rate of prepayment tends to increase, thereby shortening the actual
average life of a pool of mortgage-related securities. Conversely, in periods
of rising rates, the rate of prepayment tends to decrease, thereby lengthening
the actual average life of the pool. Prepayments generally occur when interest
rates have fallen. Reinvestments of prepayments will be at lower rates.
Historically, actual average life has been consistent with the 12-year
assumption referred to above. The actual yield of each GNMA Certificate is
influenced by the prepayment experience of the mortgage pool underlying the
Certificates and may differ from the yield based on the assumed average life.
Interest on GNMA Certificates is paid monthly rather than semi-annually as for
traditional bonds.

Special Risk Considerations
Shareholders should understand that all investments involve risk and
there can be no guarantee against loss resulting from an investment in a
Portfolio, nor can there be any assurance that the Portfolio's investment
objective will be attained.

The use of interest rate swaps by the Global Bond, U.S. Growth and
New Pacific Funds involves investment techniques and risks different from
those associated with ordinary portfolio securities transactions. If such
Underlying Fund's investment adviser is incorrect in its forecasts of market
values, interest rates and other applicable factors, the investment
performance of the Underlying Funds will be less favorable than it would have
been if this investment technique were never used. Interest rate swaps do not
involve the delivery of securities or other underlying assets or principal.
Thus, if the other party to an interest rate swap defaults, the Underlying
Funds' risk of loss consists of the net amount of interest payments that the
Underlying Fund is contractually entitled to receive.

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of the 1940 Act. Thus, while at least 50% of each Underlying Funds' total
assets will be represented by cash, cash items, and other securities limited
in respect of any one issuer to an amount not greater than 5% of such
Underlying Funds' total assets, it will not satisfy the 1940 Act requirement
in this respect, which applies that test to 75% of the Underlying Funds'
assets. The Portfolios are also nondiversified with respect to both direct
investments in securities and investments in the Underlying Funds. A
nondiversified portfolio is believed to be subject to greater risk because
adverse effects on the portfolio's security holdings may affect a larger
portion of the overall assets.

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OTHER INVESTMENT POLICIES

Each Portfolio may invest up to 100% of its assets directly in cash,
money market instruments or in Delaware Cash Reserve , for temporary,
defensive purposes, such as during periods of market instability.

Each Portfolio anticipates that its annual portfolio turnover rate
generally will not exceed 100%. A Portfolio may purchase or sell its portfolio
securities to: (a) accommodate purchases and sales of its shares; (b) change
the percentage of its assets invested in securities or in the Underlying Funds
in response to market conditions; and (c) maintain or modify the allocation of
its assets among the Underlying Funds. High turnover rates with respect to the
Underlying Funds may result in higher expenses being incurred by the
Portfolios.

Each Portfolio's designation as an open-end investment company and
certain other policies of the Portfolios may not be changed unless authorized
by the vote of a majority of the Portfolios' outstanding voting securities, as
defined in the 1940 Act. Part B lists other more specific investment
restrictions of the Portfolios which may not be changed without a majority
shareholder vote. A brief discussion of those factors that materially affected
the Portfolios' performance during its most recently completed fiscal year
will appear in the Portfolios' Annual Report. The remaining investment
policies are not fundamental and may be changed by the Board of Trustees of
the Trust without a shareholder vote.

Ratings
Appendix A describes the ratings of S&P and Moody's.

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APPENDIX A -- RATINGS

Bonds
Excerpts from Moody's description of its bond ratings:
Aaa--judged to be the best quality. They carry the smallest degree of
investment risk; Aa--judged to be of high quality by all standards; A--possess
favorable attributes and are considered "upper medium" grade obligations;
Baa--considered as medium grade obligations. Interest payments and principal
security appear adequate for the present but certain protective elements may
be lacking or may be characteristically unreliable over any great length of
time; Ba--judged to have speculative elements; their future cannot be
considered as well assured. Often the protection of interest and principal
payments may be very moderate and thereby not well safeguarded during both
good and bad times over the future. Uncertainty of position characterizes
bonds in this class; B--generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small;
Caa--are of poor standing. Such issues may be in default or there may be
present elements of danger with respect to principal or interest;
Ca--represent obligations which are speculative in a high degree. Such issues
are often in default or have other marked shortcomings; C--the lowest rated
class of bonds and issues so rated can be regarded as having extremely poor
prospects of ever attaining any real investment standing.

Excerpts from S&P's description of its bond ratings:
AAA--highest grade obligations. They possess the ultimate degree of
protection as to principal and interest; AA--also qualify as high grade
obligations, and in the majority of instances differ from AAA issues only in a
small degree; A--strong ability to pay interest and repay principal although
more susceptible to changes in circumstances; BBB--regarded as having an
adequate capacity to pay interest and repay principal; BB, B, CCC,
CC--regarded, on balance, as predominantly speculative with respect to
capacity to pay interest and repay principal in accordance with the terms of
the obligation. BB indicates the lowest degree of speculation and CC the
highest degree of speculation. While such debt will likely have some quality
and protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions; C--reserved for income bonds on
which no interest is being paid; D--in default, and payment of interest and/or
repayment of principal is in arrears.

Excerpts from Fitch's description of its bond ratings:
AAA--Bonds considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events; AA--Bonds considered to be investment grade and of very
high credit quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated AAA. Because bonds
rated in the AAA and AA categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is generally
rated F-1+; A--Bonds considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances that bonds with higher ratings;
BBB--Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these bonds,
and therefore impair timely payment. The likelihood that the ratings of these
bonds will fall below investment grade is higher than for bonds with higher
ratings; BB--Bonds are considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified which
could assist the obligor in satisfying its debt service requirements; B--Bonds

-86-
<PAGE>

are considered highly speculative. While bonds in this class are currently
meeting debt service requirements, the probability of continued timely payment
of principal and interest reflects the obligor's limited margin of safety and
the need for reasonable business and economic activity throughout the life of
the issue; CCC--Bonds have certain identifiable characteristics which, if not
remedied, may lead to default. The ability to meet obligations requires an
advantageous business and economic environment; CC--Bonds are minimally
protected. Default in payment of interest and/or principal seems probable over
time; C--Bonds are in imminent default in payment of interest or principal;
and DDD, DD and D--Bonds are in default on interest and/or principal payments.
Such bonds are extremely speculative and should be valued on the basis of
their ultimate recovery value in liquidation or reorganization of the obligor.
"DDD" represents the highest potential for recovery on these bonds, and "D"
represents the lowest potential for recovery.

Plus and minus signs are used with a rating symbol to indicate the
relative position of a credit within the rating category. Plus and minus
signs, however, are not used in the "AAA" category.

Commercial Paper
Excerpts from Moody's description of its two highest commercial paper
ratings: P-1--the highest grade possessing greatest relative strength;
P-2--second highest grade possessing less relative strength than the highest
grade.

Excerpts from S&P's description of its two highest commercial paper
ratings: A-1--judged to be the highest investment grade category possessing
the highest relative strength; A-2--investment grade category possessing less
relative strength than the highest rating.

-87-
<PAGE>

(DGFF-I)

SUBJECT TO CHANGE

PROSPECTUS
DECEMBER 31, 1997

DELAWARE GROUP FOUNDATION FUNDS
1818 Market Street, Philadelphia, PA 19103

The Portfolios will invest in open-end investment companies (mutual
funds) that are members of the Delaware Group of Mutual Funds (individually,
an "Underlying Fund" and collectively, the "Underlying Funds"). The Underlying
Funds include funds investing in U.S. and foreign stocks, bonds, and money
market instruments. In addition, if the Trust receives an exemptive order from
the Securities and Exchange Commission ("SEC"), the Portfolios may, to the
extent consistent with their respective investment objectives, invest in the
same securities and employ the same investment strategies as any of the
Underlying Funds . At any point in time, it can be expected that each
Portfolio will invest in a different combination of securities and Underlying
Funds, reflecting the different investment objectives and levels of risk and
return each Portfolio seeks.

This Prospectus relates to the Portfolios and their Institutional
Class Shares and sets forth information that you should read and consider
before you invest. Please retain it for future reference. A Statement of
Additional Information ("Part B" of the Trust's registration statement), dated
December 31, 1997, as it may be amended from time to time, contains additional
information about the Trust 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 the Trust at the above address
or by calling 1-800-523-4640. The Portfolios' financial statements, when
available, appear in the Trust's Annual Report, which will accompany any
response to requests for Part B.

<PAGE>

(DGFF-I)

Each Portfolio also offers Class A, B and C Shares. Shares of these
classes are subject to sales charges and other expenses, which may affect
their performance. A prospectus for these classes can be obtained by writing
to Delaware Distributors, L.P. at the above address or by calling
800-523-4640.

<PAGE>

(DGFF-I)

TABLE OF CONTENTS

COVER PAGE
SYNOPSIS
SUMMARY OF EXPENSES
FINANCIAL HIGHLIGHTS
INVESTMENT OBJECTIVES AND POLICIES
SUITABILITY
INVESTMENT STRATEGY
INVESTMENTS OF THE UNDERLYING FUNDS
CLASSES OF SHARES
HOW TO BUY SHARES
REDEMPTION AND EXCHANGE
DIVIDENDS AND DISTRIBUTIONS
TAXES
CALCULATION OF NET ASSET VALUE PER SHARE
MANAGEMENT OF THE PORTFOLIOS
OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS
APPENDIX A - RATINGS

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SYNOPSIS

Investment Objectives
The investment objective of the Income Portfolio is to seek a combination
of current income and preservation of capital with capital appreciation. The
investment objective of the Balanced Portfolio is to seek capital appreciation
with current income as a secondary objective. The investment objective of the
Growth Portfolio is to seek long term capital growth. Each Portfolio has
different levels of risk and return. For further details, see Investment
Objectives and Policies and Other Investment Policies.

Risk Factors and Special Considerations

Each Portfolio invests in Underlying Funds in the Delaware Group of
Mutual Funds, and may, if the Trust receives an exemptive order from the SEC,
invest in the same securities and employ the same investment strategies as
any of the Underlying Funds , and is therefore subject to the same risks as
those attendant to the Underlying Funds. See Investment Objectives and
Policies and Other Investment Policies and Risk Considerations.

Investment Manager, Distributor and Service Agent
Delaware Management Company, Inc. (the "Manager") furnishes investment
management services to each Portfolio, subject to the supervision and
direction of the Company's Board of Trustees. The Manager and certain of its
affiliates also provide investment management services to the Underlying Funds
and certain of the other funds in the Delaware Group. Delaware Distributors,
L.P. (the "Distributor"), an affiliate of the Manager, is the national
distributor for each Portfolio and for all of the other mutual funds in the
Delaware Group, including the Underlying Funds. Delaware Service Company, Inc.
(the "Transfer Agent"), an affiliate of the Manager, is the shareholder
servicing, dividend disbursing, accounting services and transfer agent for
each Portfolio and for all of the other mutual funds in the Delaware Group,
including the Underlying Funds. See Summary of Expenses and Management of the
Portfolios for further information regarding the Manager, the Distributor and
the Transfer Agent and the fees payable to these entities by each of the
Portfolios.

Purchase Price
Shares of each Class offered by this Prospectus are available at net
asset value, without a front-end or contingent deferred sales charge, and are
not subject to distribution fees under a Rule 12b-1 distribution plan. See
Classes of Shares.

Redemption and Exchange
Shares of each Class are redeemed or exchanged at the net asset value
calculated after receipt of the redemption or exchange request. See Redemption
and Exchange.

Open-End Investment Company

The Trust, which was organized as a Delaware Business Trust on October
24, 1997, is an open-end management investment company. Each Portfolio is
nondiversified as defined by the Investment Company Act of 1940 (the "1940
Act"). See Shares under Management of the Portfolios.

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SUMMARY OF EXPENSES

A general comparison of the sales arrangements and other expenses
applicable to each Portfolio's Institutional Class Shares follows:
<TABLE>
<CAPTION>

Income Portfolio
Balanced Portfolio
Growth Portfolio
Shareholder Transaction Expenses
- ------------------------------------------------------------------------------------------------------
<S> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)........................... None
Maximum Sales Charge Imposed on
Reinvested Dividends (as a
percentage of offering price)................................. None
Exchange Fees................................................. None(1)

Annual Operating Expenses (as a percentage of average daily net assets)
- ------------------------------------------------------------------------------------------------------
Management Fees............................................... 0.10%(2)
(after waivers)
12b-1 Fees.................................................... None
Other Operating Expenses...................................... 1.10%(3)
------

Total Operating Expenses................................. 1.20%
(after waivers) =======

</TABLE>

1 Exchanges are subject to the requirements of each fund and a front-end
sales charge may apply.

2 The Manager has elected voluntarily to waive that portion, if any, of the
annual Asset Allocation Fees payable by the Portfolios and to reimburse
the Portfolios to the extent necessary to ensure that the "Total
Operating Expenses" of the Portfolios do not exceed 1.20% (exclusive of
taxes, interest, brokerage commissions and extraordinary expenses) during
the commencement of the public offering of the Portfolios through June
30, 1998. If the voluntary expense waivers and reimbursements were not in
effect, it is estimated that the "Total Operating Expenses" as a
percentage of average daily net assets would be 1.67% for each
Portfolio's Institutional Class, respectively, reflecting Asset
Allocation Fees of 0.25% for each Portfolio.

3 "Other Operating Expenses" are based on estimated amounts for the current
fiscal year.

Underlying Fund Adviser Sub-Adviser** Fee Rate Expense
Ratio
- --------------- -------- -------------- --------- --------
<S> <C> <C> <C> <C>
Aggressive Growth Manager 1.00% 0.90%(7)

Blue Chip Manager Vantage* 0.65%(1) 1.20%

Decatur Total Return Manager 0.57%(2) 0.81%

DelCap Manager 0.75% 1.05%

Devon Manager 0.60%(3) 0.95%(7)

Small Cap Value Manager 0.75% 1.15%

Real Estate Investment
Trust Manager Lincoln National* 0.75% 0.86%(7)

Trend Manager 0.75% 1.08%

U.S. Growth Manager Lynch & Mayer* 0.70% 1.50%(7)

Emerging Markets Delaware International* 1.25% 1.70%(7)

International Equity Delaware International* 0.75% 1.55%(7)

International Small Cap Delaware International* 1.25% 1.70%(7)

New Pacific Manager AIB Govett 0.80% 1.50%

Delchester Manager 0.59%(4) 0.79%

High-Yield Opportunities Manager 0.65%(5) 0.75%(7)

Global Bond Delaware International* 0.75% 0.95%(7)

Limited-Term Gov't Manager 0.50% 0.78%

U.S. Government Manager 0.60% 0.86%

Delaware Cash Reserve Manager 0.49%(6) 0.88%

* Affiliate of the Manager.
</TABLE>

<PAGE>
(DGFF-I)

** Fees payable by the Manager to a Sub-Adviser have no effect on the
management fees payable by an Underlying Fund.

2. Under the Investment Management Agreement for Decatur Total Return Fund,
the Manager is paid an annual fee equal to 0.60% on the first $500
million of average daily net assets, 0.575% on the next $250 million of
average daily net assets and 0.55% on the average daily net assets in
excess of $750 million, less all directors fees paid by the fund.

4. Under the Investment Management Agreement for Delchester Fund, the
Manager is paid an annual fee equal to 0.60% on the first $500 million of
average daily net assets, 0.575% on the next $250 million of average
daily net assets and 0.55% on the average daily net assets in excess of
$750 million, less all directors fees paid by the fund.

5. Under the Investment Management Agreement for Delchester Fund, the
Manager is paid an annual fee equal to 0.65% on the first $500 million of
average daily net assets, 0.625% on the next $500 million and 0.60% on
the average daily net assets in excess of $1 billion.

6. Under the Investment Management Agreement for Delaware Cash Reserve, the
Manager is paid an annual fee equal to 0.50% on the first $500 million of
average daily net assets, 0.475% on the next $250 million of average
daily net assets, 0.45% on the next $250 million of average daily net
assets, 0.425% on the next $250 million of average daily net assets,
0.375% on the next $250 million of average daily net assets, 0.325% on
the next $250 million of average daily net assets, 0.30% on the next $250
million of average daily net assets and 0.275% on the average daily net
assets in excess of $2 billion, less all directors fees paid by the fund.

7. Reflects voluntary waivers and payments of fees by the investment
manager.

<PAGE>

(DGFF-I)

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 and no redemption at the end of each time
period. The following example assumes the voluntary waiver of the asset
allocation fee by the Manager as discussed in this Prospectus.

INCOME PORTFOLIO
BALANCED PORTFOLIO
GROWTH PORTFOLIO
- --------------------
Assuming Redemption
1 Year 3 Years
------ -------
Institutional Class $12 $38
Shares

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.

The purpose of the above tables is to assist the investor in
understanding the various costs and expenses that an investor in each Class
will bear directly or indirectly.

- -------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS

Financial Highlights for the Portfolios are not included because, as of the
date of this Prospectus, the Portfolios had no operating history.

- -------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES

The investment objective of the Income Portfolio is to seek a
combination of current income and preservation of capital with capital
appreciation . It seeks to achieve this objective by investing in primarily a
mix of fixed income and domestic equity securities, including fixed income and
domestic equity Underlying Funds, although it may invest up to 10% of its
assets in international equity securities, including international equity
Underlying Funds. The Income Portfolio will generally invest at least 45% of
its portfolio in fixed income securities and 20% in domestic equity
securities.

<PAGE>
(DGFF-I)

Each Portfolio will pursue its investment objective through active
asset allocation implemented primarily with investments in a combination of
the Underlying Funds. The Portfolios may also separately invest directly in
the same securities and employ the same investment strategies as any of the
Underlying Funds , to the extent consistent with each Portfolio's investment
objectives. The Portfolios will invest directly in securities of other
investment instruments for such purposes as avoiding undue disruption of the
activities of the Underlying Funds, hedging of the Portfolios' investment
positions, or to make investments in asset classes not available in the
Underlying Funds. While it is anticipated that at most times the Portfolios
will be primarily invested in the Underlying Funds, it is possible, from time
to time, for the Portfolios to be substantially invested directly in
securities. The investment objective of each Portfolio is considered a
"non-fundamental policy," which means that it may be changed without
approval of a Portfolio's shareholders. There is no assurance that a Portfolio
will achieve its objective.

<PAGE>

(DGFF-I)

Investment Strategy

The Portfolios will invest primarily in open-end investment companies
(mutual funds) that are members of the Delaware Group of Funds (individually,
an "Underlying Fund" and collectively, the "Underlying Funds"), as well as, if
the Trust receives an exemptive order from the SEC, invest in the same kinds
of securities and employ the same investment strategies as any of the
Underlying Funds , to the extent consistent with each Portfolio's investment
objectives. The Underlying Funds include funds investing in U.S. and foreign
stocks, bonds, and money market instruments. At any point in time, it can be
expected that each Portfolio will invest in a different combination of
securities and Underlying Funds, reflecting the different investment
objectives and levels of risk and return that each Portfolio seeks. In
allocating the Portfolios' assets, the Manager will evaluate the expected
return of the Underlying Funds, the volatility of the Underlying Funds (i.e.,
the variability of returns from one period to the next), and the correlation
of the Underlying Funds (i.e. the degree to which the Underlying Funds move
together).

UNDERLYING FUND International Equity
Emerging Markets Fund
U.S. Equity
Aggressive Growth Fund International Equity Fund
Blue Chip Fund
Decatur Total Return Fund International Small Cap Fund
DelCap Fund
Devon Fund New Pacific Fund
Small Cap Value Fund
The Real Estate Investment Trust
Portfolio Fixed Income
Trend Fund Delchester Fund
U.S. Growth Fund Global Bond Fund
Limited-Term Government Fund
U.S. Government Fund
High-Yield Opportunities Fund

Money Market

<PAGE>

(DGFF-I)

Delaware Cash Reserve

Percentage Ranges of Investment in Asset Classes
<TABLE>
<CAPTION>

Asset Class Income Portfolio Balanced Portfolio Growth
Portfolio
<S> <C> <C> <C>
U.S. Equity 20%-50% 35%-65% 45%-75%

International Equity 0%-10% 5%-15% 10%-30%

Fixed Income 45%-75% 25%-55% 5%-35%

Money Market 0%-35% 0%-35% 0%-35%
</TABLE>

<PAGE>

(DGFF-I)

Portfolios will only invest in the Underlying Funds and such other securities
as are expressly permitted by the 1940 Act. There is no guarantee that the SEC
will grant such an order. In the event this order is granted, each Portfolio
may, to the extent consistent with its investment objective, invest its assets
directly in the same types of securities as those in which the Underlying
Funds invest. In addition, if the order is granted, each Portfolio may, to the
extent consistent with its investment objective, engage directly in the same
types of investment strategies as those in which each Underlying Fund may
engage. Each Portfolio would use such investment strategies to hedge
investment positions, including investments directly in securities and
investments in the Underlying Funds, to protect the Portfolio against a
decline in an Underlying Fund's value. Each Portfolio does not intend to
engage in these investment strategies for non-hedging purposes such that more
than 5% of its assets will be exposed. For a description of these securities
and investment strategies, see Investment Policies of the Underlying Funds.

Because the Underlying Funds are separately managed, it is possible
that certain Underlying Funds in which a Portfolio invests may be acquiring
securities at the same time that

<PAGE>

(DGFF-I)

other Underlying Funds in which that Portfolio invests are selling the same
security. Similarly, it is possible that a Portfolio may directly acquire a
security at the same time that an Underlying Fund in which it invests is
selling the same security, or vice versa. This practice could result in higher
indirect transactions costs for a Portfolio, and thus adversely effect the
Portfolio's returns, than would be the case if the Portfolio were only
investing directly in securities.

* * *

<PAGE>

(DGFF-I)

INVESTMENTS OF THE UNDERLYING FUNDS

U.S. Equity Funds
As described below, the following Underlying Funds invest primarily
in equity securities of companies located or conducting their business
primarily in the United States.

<PAGE>

(DGFF-I)

rights. To the extent that the Aggressive Growth Fund invests in convertible
debt securities, those securities will be purchased on the basis of their
equity characteristics, and ratings, if any, of those securities will not be
an important factor in their selection.

At no time will the investments of the Aggressive Growth Fund in bank
obligations, including time deposits, exceed 25% of the value of the
Aggressive Growth Fund's assets.

<PAGE>

(DGFF-I)

<PAGE>

(DGFF-I)

stocks, with a focus on common stocks that the Manager believes have the
potential for above average dividend increases over time. Under normal
circumstances, the Devon Fund will generally invest at least 65% of its total
assets in dividend paying common stocks.

While the Manager believes that the Devon Fund's objective may best
be attained by investing in common stocks, the Devon Fund may also invest in
other securities including, but not limited to, convertible and preferred
securities, rights and warrants to purchase common stock, and various types of
fixed-income securities, such as U.S. government and government agency
securities, corporate debt securities and bank obligations, and may also
engage in futures transactions. The Devon Fund may also invest in foreign
securities.

The Manager will consider the financial strength of the company, the
nature of its management and any developments affecting the security, the
company or the industry. Securities may be out of favor

<PAGE>

(DGFF-I)

due to a variety of factors, such as lack of an institutional following, or
unfavorable developments affecting the issuer of the securities, such as poor
earning reports, dividend reductions or cyclical economic or business
conditions. Other securities considered by the Manager would include those of
companies where current or anticipated favorable changes such as a new product
or service, technological breakthrough, management change, projected
takeovers, changes in capitalization or redefinition of future corporate
operations provide an opportunity for capital appreciation. The Manager will
also consider securities where trading patterns suggest that significant
positions are being accumulated by officers of the company, outside investors
or the company itself. The Manager feels it may uncover situations where those
who have a vested interest in the company feel the securities are undervalued
and have appreciation potential.

If the Manager believes that market conditions warrant, Small Cap
Value Fund may employ options strategies. Small Cap Value Fund may write
covered call options on individual issues as well as write call options on
stock indices. It may also purchase put options on individual issues and on
stock indices. The Manager will employ these techniques in an attempt to
protect appreciation attained, to offset capital losses and to take advantage
of the liquidity available in the option markets. The ability to hedge
effectively using options on stock indices will depend, in part, on the
correlation between the composition of the index and Small Cap Value Fund's
portfolio as well as the price movement of individual securities. Small Cap
Value Fund does not currently intend to write or purchase stock index options.
While there is no limit on the amount of Small Cap Value Fund's assets which
may be invested in covered call options, it will not invest more than 2% of
its net assets in put options. Small Cap Value Fund will only use
exchange-traded options. It may enter into futures contracts and buy and sell
options on futures contracts relating to securities, securities indices or
interest rates.

<PAGE>

(DGFF-I)

<PAGE>

(DGFF-I)

The Manager does not normally intend to respond to short-term market
fluctuations or to acquire securities for the purpose of short-term trading;
however, the Manager may take

<PAGE>

(DGFF-I)

advantage of short-term opportunities that are consistent with The Real Estate
Investment Trust Portfolio's investment objectives.

The U.S. Growth Fund intends to invest primarily in common stocks
believed by the Manager or sub-adviser to have appreciation potential.
However, common stock is not always the class of security that provides the
greatest possibility for appreciation. The U.S. Growth Fund may invest up to
35% of its assets in debt securities, bonds, convertible bonds, preferred
stock and convertible preferred stock. The U.S. Growth Fund may also invest up
to 10% of its assets in securities rated lower than Baa by Moody's or BBB by
S&P if, in the opinion of the Manager or sub-adviser, doing so would further
U.S. Growth Fund's objective. Lower-rated or unrated securities, commonly
referred to as "junk bonds," are more likely to react to developments
affecting market and credit risk than are more highly rated securities,

<PAGE>

(DGFF-I)

which react primarily to movements in the general level of interest rates. The
U.S. Growth Fund may invest up to 20% of its assets in foreign securities.

International Equity Funds
As described below, the following Underlying Funds invest primarily
in equity securities of companies located or conducting their business
primarily in foreign countries.

<PAGE>

(DGFF-I)

Russia, South Africa, Sri Lanka, Taiwan, Thailand, Turkey, Venezuela and
Zimbabwe. As markets in other emerging countries develop, Delaware
International expects to expand and further diversify the countries in which
the Emerging Markets Fund invests.

With a dividend discount analysis, Delaware International looks at
future anticipated dividends and discounts the value of those dividends back
to what they would be worth if they were being paid

<PAGE>

(DGFF-I)

today. Delaware International uses this technique to attempt to compare the
value of different investments. With a purchasing power parity approach,
Delaware International attempts to identify the amount of goods and services
that a dollar will buy in the United States and compare that to the amount of
a foreign currency required to buy the same amount of goods and services in
another country. When the dollar buys less, the foreign currency may be
considered to be overvalued. When the dollar buys more, the currency may be
considered to be undervalued. Eventually, currencies should trade at levels
that should make it possible for the dollar to buy the same amount of goods
and services overseas as in the United States. International Equity Fund may
also invest in sponsored or unsponsored ADRs or EDRs.

<PAGE>

(DGFF-I)

The equity securities in which International Small Cap Fund may
invest include common stocks, preferred stocks, rights or warrants to purchase
common stocks and securities convertible into common stocks. International
Small Cap Fund may also invest in foreign companies through sponsored or
unsponsored American Depositary Receipts, European Depositary Receipts or
Global Depositary Receipts ("Depositary Receipts"), which are receipts
typically issued by a bank or trust company evidencing ownership of underlying
securities issued by a foreign company. By focusing on smaller, non-U.S.
companies, International Small Cap Fund seeks to identify equity securities of
emerging and other growth-oriented companies which in the opinion of Delaware
International, are responsive to changes within their markets, and have the
fundamental characteristics to support growth. Delaware International will
seek to identify changing and dominant trends within the relevant markets, and
will purchase securities of companies which it believes will benefit from
these trends. In addition, Delaware International will consider the financial
strength of the company, the nature of its management, and any developments
affecting the company or its industry. Delaware International may invest in
smaller capitalization companies that may be temporarily out of favor or
overlooked by securities analysts and whose value, therefore, may not yet be
fully recognized by the market. See Special Risk Considerations--Small Company
Investment Risks.

<PAGE>

(DGFF-I)

For temporary defensive purposes, International Small Cap Fund may
invest all or a substantial portion of its assets in high quality debt
instruments issued by foreign governments, their agencies, instrumentalities
or political subdivisions, the U.S. government, its agencies or
instrumentalities (and which are backed by the full faith and credit of the
U.S. government), or issued by foreign or U.S. companies. For example,
International Small Cap Fund may invest in U.S. fixed-income markets when
Delaware International believes that the global equity markets are excessively
volatile or overvalued so that International Small Cap Fund's objective cannot
be achieved in such markets. Any corporate debt obligations will be rated AA
or better by S&P, or Aa or better by Moody's, or if unrated, will be
determined to be of comparable quality by Delaware International.
International Small Cap Fund may also invest in the securities listed above
pending investment of proceeds from new sales of Fund shares and to maintain
sufficient cash to meet redemption requests.

<PAGE>

(DGFF-I)

in, or governments of, developing countries within the Pacific Basin. New
Pacific Fund may invest up to 35% of its assets in securities of U.S. issuers.
In addition, it may be invested in short-term debt instruments to meet
anticipated day-to-day operating expenses and liquidity requirements.

Fixed Income Funds
As described below, the following Underlying Funds invest primarily
in fixed income securities.

(1) Corporate Bonds. Delchester Fund will invest in both rated and
unrated bonds. Unrated bonds may be more speculative in nature than
rated bonds;

(2) Securities issued or guaranteed by the U.S. government, its agencies
or instrumentalities; and

(3) Commercial paper of companies rated A-1 or A-2 by S&P or rated P-1
or P-2 by Moody's.

<PAGE>

(DGFF-I)

more speculative in nature than rated bonds), judged to be of comparable
quality by the Manger. High-Yield Opportunities Fund generally will not
purchase corporate bonds which, at the time of purchase, are rated lower than
CCC by S&P or Caa by Moody's. See Appendix A to this Prospectus for more
rating information. If a corporate bond held by High-Yield Opportunities Fund
drops below these levels, including a security that goes into default,
High-Yield Opportunities Fund will commence with an orderly sale of the
security in a manner devised to minimize any adverse affect on High-Yield
Opportunities Fund. If a sale of the security is not practicable for any
reason, High-Yield Opportunities Fund will pursue other available measures
reasonably anticipated by the Manager to facilitate repayment of the bond.

High-Yield Opportunities Fund may purchase privately-placed debt and
other securities the resale of which is restricted under applicable securities
laws. Such securities may be less liquid than securities that are not subject
to resale restrictions. High-Yield Opportunities Fund will not purchase
illiquid assets, if more than 15% of its net assets would consist of such
illiquid securities.

High-Yield Opportunities Fund may invest up to 15% of its total
assets in securities of issuers domiciled in foreign countries.

<PAGE>

(DGFF-I)

securities of issuers organized or having a majority of their assets in or
deriving a majority of their operating income in at least three different
countries, one of which may be the United States. Global Bond Fund may invest
in securities issued in any currency and may hold foreign currency. Securities
of issuers within a given country may be denominated in the currency of
another country or in multinational currency units such as the ECU. Global
Bond Fund is managed by Delaware International.

With respect to U.S. government securities, Global Bond Fund may
invest only in securities issued or guaranteed as to the payment of principal
and interest by the U.S. government, and those of its agencies or
instrumentalities which are backed by the full faith and credit of the United
States. Direct obligations of the U.S. government which are available for
purchase by the Global Bond Fund include bills, notes, bonds and other debt
securities issued by the U.S. Treasury. These obligations differ mainly in
interest rates, maturities and dates of issuance. Agencies whose obligations
are backed by the full faith and credit of the United States include the
Farmers Home Administration, Federal Financing Bank and others.

<PAGE>

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Japan and Australia. With respect to certain countries, investments by an
investment company may only be made through investments in closed-end
investment companies that in turn are authorized to invest in the securities
of such countries. Any investment Global Bond Fund may make in other
investment companies is limited in amount by the 1940 Act and would involve
the indirect payment of a portion of the expenses, including advisory fees, of
such other investment companies.

Global Bond Fund may enter into interest rate swaps on either an
asset-based or liability-based basis, depending upon whether it is hedging its
assets or its liabilities, and will usually enter into interest rate swaps on
a net basis, i.e., the two payment streams are netted out, with Global Bond
Fund receiving or paying, as the case may be, only the net amount of the two
payments. Inasmuch as these hedging transactions are entered into for
non-speculative purposes and not for the purpose of leveraging its
investments, Delaware International and Global Bond Fund believe such
obligations do not constitute senior securities and, accordingly, will not
treat them as being subject to its borrowing restrictions. The net amount of
the excess, if any, of Global Bond Fund's obligations over its entitlement
with respect to each interest rate swap will be accrued on a daily basis and
an amount of cash or high-quality liquid securities having an aggregate net
asset value at least equal to the accrued excess will be maintained in a
segregated account by the Custodian Bank. If Global Bond Fund enters into an
interest rate swap on other than a net basis, it would maintain a segregated
account in the full amount accrued on a daily basis of Global Bond Fund's
obligations with respect to the swap.

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To achieve its objective, Limited-Term Government Fund may use
certain hedging techniques at the Manager's discretion to protect it's
principal value. Limited-Term Government Fund may purchase put options, write
secured put options, write covered call options, purchase call options and
enter into

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closing transactions. It may also invest in futures contracts and options on
such futures contracts subject to certain limitations.

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assets of at least one billion dollars; (3) commercial paper rated P-1 by
Moody's and/or A-1 by S& P; and (4) asset-backed securities rated Aaa by
Moody's or AAA by S&P.

U.S. Government Fund may invest in certificates of the Government
National Mortgage Association ("GNMA"). GNMA Certificates are mortgage-backed
securities. It may also invest in securities issued by certain private,
non-government 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). U.S. Government Fund may invest in securities which are
backed by assets such as receivables on home equity and credit loans,
receivables regarding automobile, mobile home and recreational vehicle loans,
wholesale dealer floor plans and leases or other loans or financial
receivables currently available or which may be developed in the future. 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).

U.S. Government Fund may use repurchase agreements which are at least
100% collateralized by securities in which it can invest directly. Repurchase
agreements may be used to invest cash on a temporary basis. U.S. Government
Fund may purchase put options, write secured put options, write covered call
options, purchase call options and enter into closing transactions. It may
invest in futures contracts and options on such futures contracts subject to
certain limitations. U.S. Government Fund may invest in restricted securities,
including Rule 144A securities. U.S. Government Fund may invest no more than
10% of the value of its net assets in illiquid securities. U.S. Government
Fund may loan up to 25% of its assets to qualified broker/dealers or
institutional investors for their use relating to short sales or other
security transactions.

Money Market Funds
As described below, the following Underlying Fund invest primarily
in money market instruments.

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accordance with the maturity, quality and diversification conditions with
which taxable money market funds must comply. It also may purchase commercial
paper and other corporate obligations; if, at the time of purchase, such a
security or, as relevant, its issuer, is rated in one of the two highest
rating categories (e.g., for commercial paper, A-2 or better by S&P and P-2 or
better by Moody's; and, for other corporate obligations, AA or better by S&P
and Aa or better by Moody's) by at least two nationally-recognized statistical
rating organizations approved by the Board of Directors or, if such security
is not so rated, the purchase of the security must be approved or ratified by
the Board of Directors in accordance with the maturity, quality and
diversification conditions with which taxable money market funds must comply.
Delaware Cash Reserve will not invest more than 5% of its total assets in
securities rated in the second highest category by a rating organization.
Appendix A describes the ratings of S&P and Moody's.

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CLASSES OF SHARES

The Distributor serves as the national distributor for each
Portfolio. Shares of the Classes may be purchased directly by contacting a
Portfolio or its agent or through authorized investment dealers. All purchases
of shares of each Class are at net asset value. There is no front-end or
contingent deferred sales charge.

Investment instructions given on behalf of participants in an
employer-sponsored retirement plan are made in accordance with directions
provided by the employer. Employees considering purchasing shares of the
Classes as part of their retirement program should contact their employer for
details.

Shares of each Class are available for purchase only by: (a)
retirement plans introduced by persons not associated with brokers or dealers
that are primarily engaged in the retail securities business and rollover
individual retirement accounts from such plans; (b) tax-exempt employee
benefit plans of the Manager or its affiliates and securities dealer firms
with a selling agreement with the Distributor; (c) institutional advisory
accounts of the Manager or its affiliates and those having client
relationships with Delaware Investment Advisers, a division of the Manager, or
its affiliates and their corporate sponsors, as well as subsidiaries and
related employee benefit plans and rollover individual retirement accounts
from such institutional advisory accounts; (d) a bank, trust company and
similar financial institution investing for its own account or for the account
of its trust customers for whom such financial institution is exercising
investment discretion in purchasing shares of the Class, except where the
investment is part of a program that requires payment to the financial
institution of a Rule 12b-1 Plan fee; 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.

Class A Shares Class B Shares and Class C Shares
In addition to offering Institutional Class Shares, each Portfolio
also offers Class A Shares, Class B Shares and Class C Shares, which are
described in a separate prospectus. Class A Shares, Class B Shares and Class C
Shares may be purchased through authorized investment dealers or directly by
contacting a Portfolio or the Distributor. Class A Shares carry a front-end
sales charge and have annual 12b-1 expenses equal to a maximum of 0.30%. The
maximum front-end sales charge as a percentage of the offering price is 4.75%
and is reduced on certain transactions of $100,000 or more. Class B and Class
C Shares have no front-end sales charge but are subject to annual 12b-1
expenses equal to a maximum of 1%. Shares of Class B and C and certain shares
of Class A may be subject to a contingent deferred sales charge upon
redemption. To obtain a prospectus relating to such classes, contact the
Distributor by writing to the address on the cover of this Prospectus or by
calling 800-523-4640.

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HOW TO BUY SHARES
Each Portfolio makes it easy to invest by mail, by wire, by exchange
and by arrangement with your investment dealer. In all instances, investors
must qualify to purchase shares of the Classes.

Investing Directly by Mail
1. Initial Purchases--An Investment Application or, in the case of a
retirement account, an appropriate retirement plan application, must be
completed, signed and sent with a check payable to the specific Portfolio and
Class selected, to Delaware Group at 1818 Market Street, Philadelphia, PA
19103.

Investing Directly by Wire
You may purchase shares by requesting your bank to transmit funds by
wire to CoreStates Bank, N.A., ABA #031000011, account number 1412893401
(include your name(s) and your account number for the class in which you are
investing).

1. Initial Purchases--Before you invest, telephone the Fund's Client Services
Department at 800-828-5052 to get an account number. If you do not call
first, it may delay processing your investment. In addition, you must promptly
send your Investment Application or, in the case of a retirement account, an
appropriate retirement plan application, to the specific Portfolio and Class
selected, to Delaware Group at 1818 Market Street, Philadelphia, PA 19103.

2. Subsequent Purchases--You may make additional investments anytime by wiring
funds to CoreStates Bank, N.A., as described above. You must advise your
Client Services Representative by telephone at 800-828-5052 prior to sending
your wire.

Investing by Exchange
If you have an investment in another mutual fund in the Delaware
Group and you qualify to purchase shares of the Classes, you may write and
authorize an exchange of part or all of your investment into a Portfolio.
However, Class B Shares and Class C Shares of the Portfolios and the Class B
Shares and the Class C Shares of the other funds in the Delaware Group
offering such classes of shares may not be exchanged into the Classes. If you
wish to open an account by exchange, call your Client Services Representative
at 800-828-5052 for more information. See Redemption and Exchange for more
complete information concerning your exchange privileges.

Investing through Your Investment Dealer
You can make a purchase of Portfolio shares through most investment
dealers who, as part of the service they provide, must promptly transmit
orders to the Portfolios. They may charge for this service.

Purchase Price and Effective Date
The purchase price (net asset value) is determined as of the close of
regular trading on the New York Stock Exchange (ordinarily, 4 p.m., Eastern
time) on days when the Exchange is open.

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The effective date of a purchase is the date the order is received by
a Portfolio, its agent or designee. The effective date of a direct purchase is
the day your wire, electronic transfer or check is received, unless it is
received after the time the share price is determined, as noted above.
Purchase orders received after such time will be effective the next business
day.

The Conditions of Your Purchase
Each Portfolio reserves the right to reject any purchase order. If a
purchase is canceled because your check is returned unpaid, you are
responsible for any loss incurred. Each Portfolio 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. Each
Portfolio reserves the right to reject purchase orders paid by third-party
checks or checks that are not drawn on a domestic branch of a United States
financial institution. If a check drawn on a foreign financial institution is
accepted, you may be subject to additional bank charges for clearance and
currency conversion.

Each Portfolio also reserves the right, upon 60 days' written notice,
to involuntarily redeem accounts that remain under $250 as a result of
redemptions.

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REDEMPTION AND EXCHANGE

Redemption and exchange requests made on behalf of participants in an
employer-sponsored retirement plan are made in accordance with directions
provided by the employer. Employees should therefore contact their employer for
details.

Your shares will be redeemed or exchanged based on the net asset
value next determined after a Portfolio receives your request in good order.
For example, redemption and exchange requests received in good order after the
time the net asset value of shares is determined will be processed on the next
business day. See Purchase Price and Effective Date under How to Buy Shares.
Except as otherwise noted below, for a redemption request to be in "good
order," you must provide your Class account number, account registration, and
the total number of shares or dollar amount of the transaction. With regard to
exchanges, you must also provide the name of the fund in which you want to
invest 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 a Portfolio at 800-828-5052.
Redemption proceeds will be distributed promptly, as described below, but not
later than seven days after receipt of a redemption request.

Each Portfolio will process written and telephone redemption requests
to the extent that the purchase orders for the shares being redeemed have
already settled. Each Portfolio will honor redemption requests as to shares
for which a check was tendered as payment, but no Portfolio will mail or wire
the proceeds until it is reasonably satisfied that the check has cleared,
which may take up to 15 days from the purchase date. You can avoid this
potential delay if you purchase shares by wiring Federal Funds. Each Portfolio
reserves the right to reject a written or telephone redemption request or
delay payment of redemption proceeds if there has been a recent change to the
shareholder's address of record.

Shares of the Classes may be exchanged into any other Delaware Group
mutual fund, provided: (1) the investment satisfies the eligibility and other
requirements set forth in the prospectus of the fund being acquired, including
the payment of any applicable front-end sales charge; and (2) the shares of
the fund being acquired are in a state where that fund is registered. If
exchanges are made into other shares that are eligible for purchase only by
those permitted to purchase shares of the Classes, such exchange will be
exchanged at net asset value. Shares of the Classes may not be exchanged into
the Class B Shares or Class C Shares of the funds in the Delaware Group. Each
Portfolio may suspend, terminate or amend the terms of the exchange privilege
upon 60 days' written notice to shareholders.

Various redemption and exchange methods are outlined below. No fee is
charged by a Portfolio or the Distributor for redeeming or exchanging your
shares although, in the case of an exchange, a sales charge may apply. You may
also have your investment dealer arrange to have your shares redeemed or
exchanged. Your investment dealer may charge for this service.

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Written Redemption and Exchange
You can write to a Portfolio at 1818 Market Street, Philadelphia, PA
19103 to redeem some or all of your shares or to request an exchange of any or
all of your shares into another mutual fund in the Delaware Group, subject to
the same conditions and limitations as other exchanges noted above. 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, a Portfolio requires a
signature by all owners of the account and may require a signature guarantee.
Each signature guarantee must be supplied by an eligible guarantor
institution. Each Portfolio reserves the right to reject a signature guarantee
supplied by an eligible institution based on its creditworthiness. Each
Portfolio may require further documentation from corporations, executors,
retirement plans, administrators, trustees or guardians.

Payment is normally mailed the next business day after receipt of
your redemption request. Certificates are issued for shares only if you submit
a specific request. If your shares are in certificate form, the certificate(s)
must accompany your request and also be in good order.

You also may submit your written request for redemption or exchange
by facsimile transmission at the following number: 215-255-8864.

Telephone Redemption and Exchange
To get the added convenience of the telephone redemption and exchange
methods, you must have the Transfer Agent hold your shares (without charge)
for you. If you choose to have your shares in certificate form, you may redeem
or exchange only by written request and you must return your certificates.

The Telephone Redemption--Check to Your Address of Record service and
the Telephone Exchange service, both of which are described below, are
automatically provided unless you notify a Portfolio in writing that you do
not wish to have such services available with respect to your account. Each
Portfolio reserves the right to modify, terminate or suspend these procedures
upon 60 days' written notice to shareholders. It may be difficult to reach a
Portfolio by telephone during periods when market or economic conditions lead
to an unusually large volume of telephone requests.

Neither a Portfolio nor its Transfer Agent is responsible for any
shareholder loss incurred in acting upon written or telephone instructions for
redemption or exchange of Portfolio shares which are reasonably believed to be
genuine. With respect to such telephone transactions, a Portfolio 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, a Portfolio or the Transfer Agent may be liable for any losses
due to unauthorized or fraudulent transactions. A written confirmation will be
provided for all purchase, exchange and redemption transactions initiated by
telephone. By exchanging

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shares by telephone, you are acknowledging prior receipt of a prospectus for
the fund into which your shares are being exchanged.

Telephone Redemption-Check to Your Address of Record
You or your investment dealer of record can have redemption proceeds
of $50,000 or less mailed to you at your record address. Checks will be
payable to the shareholder(s) of record. Payment is normally mailed the next
business day after receipt of the redemption request.

Telephone Redemption-Proceeds to Your Bank
Redemption proceeds of $1,000 or more can be transferred to your
predesignated bank account by wire or by check. You should authorize this
service when you open your account. If you change your predesignated bank
account, you must submit a written authorization and you may need to have your
signature guaranteed. For your protection, your authorization must be on file.
If you request a wire, your funds will normally be sent the next business day.
If you ask for a check, it will normally be mailed the next business day after
receipt of your redemption request to your predesignated bank account. There
are no fees for this redemption method, but the mail time may delay getting
funds into your bank account. Simply call your Client Services Representative
prior to the time the net asset value is determined, as noted above.

Telephone Exchange
You or your investment dealer of record can exchange shares into any
fund in the Delaware Group under the same registration. As with the written
exchange service, telephone exchanges are subject to the same conditions and
limitations as other exchanges noted above. Telephone exchanges may be subject
to limitations as to amounts or frequency.

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DIVIDENDS AND DISTRIBUTIONS

Each class of each Portfolio will share proportionately in the
investment income and expenses of that Portfolio, except that a Class will not
incur any distribution fees under the 12b-1 Plans which apply to Class A, B
and C Shares.

Both dividends and distributions, if any, are automatically
reinvested in your account at net asset value.

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TAXES

The Treatment of Capital Gain Distributions under the Taxpayer Relief Act
of 1997
The 1997 Act creates a category of long-term capital gain for
individuals that will be taxed at new lower tax rates. For investors who are
in the 28% or higher federal income tax brackets, these gains will be taxed at
a minimum of 20%. For investors who are in the 15% federal income tax bracket,
these gains will be taxed at a maximum of 10%. Capital gain distributions will
qualify for these new maximum tax rates, depending on when a Portfolio's
securities were sold and how long they were held by a Portfolio before they
were sold. Investors who want more information on

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holding periods and other qualifying rules relating to these new rates should
review the expanded discussion in Part B, or should contact their own tax
advisers.

The Trust will advise you in its annual information reporting at
calendar year end of the amount of its capital gain distributions which will
qualify for these maximum federal tax rates.

See Taxes in Part B for additional information on tax matters
relating to each Portfolio and its shareholders.

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CALCULATION OF OFFERING PRICE AND NET ASSET VALUE PER SHARE

The purchase and redemption price of each Class is the net asset
value ("NAV") per share of Class shares next computed after the order is
received. The NAV is computed as of the close of regular trading on the New
York Stock Exchange (ordinarily, 4 p.m., Eastern time) on days when the
Exchange is open.

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MANAGEMENT OF THE PORTFOLIOS

Trustees
The business and affairs of the Trust are managed under the direction
of its Board of Trustees. Part B contains additional information regarding the
Trust's trustees and officers.

Investment Manager
The Manager furnishes asset allocation services to each Portfolio.

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degree of portfolio activity may affect taxes payable by the Portfolios'
shareholders to the extent that net capital gains are realized. Given the
Portfolios' investment objectives, their annual portfolio turnover rates are
not expected to exceed 100%. A turnover rate of 100% would occur, for example,
if all the investments held by a Portfolio at the beginning of the year were
replaced by the end of the year.

Performance Information
From time to time, the Portfolios may quote total return performance
of their respective Classes in advertising and other types of literature.

Total return will be based on a hypothetical $1,000 investment,
reflecting the reinvestment of all distributions at net asset value. Each
presentation will include the average annual total return for one-, five- and
ten-year or life-of-fund periods, as relevant. Each Portfolio may also
advertise aggregate and average total return information concerning a Class
over additional periods of time.

Because securities prices fluctuate, investment results of the
Classes will fluctuate over time. Past performance is not a guarantee of
future results.

Distribution (12b-1) and Service
The Distributor, Delaware Distributors, L.P., serves as the national
distributor of each Portfolios' shares under separate Distribution Agreements
with the Trust.

The Transfer Agent, Delaware Service Company, Inc., serves as the
shareholder servicing, dividend disbursing and transfer agent for the
Portfolios under an Agreement. The Transfer Agent also provides accounting
services to the Portfolios pursuant to the terms of a separate Fund Accounting
Agreement. Certain recordkeeping and other shareholder services that otherwise
would be performed by the Transfer Agent may be performed by certain other
entities and the Transfer Agent may elect to enter into an agreement to pay
such other entities for those services. In addition, participant account

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maintenance fees may be assessed for certain recordkeeping provided as part of
retirement plan and administration service packages. These fees are based on
the number of participants in the plan and the various services selected. Fees
will be quoted upon request and are subject to change.

The trustees annually review fees paid to the Distributor and the
Transfer Agent. The Distributor and the Transfer Agent are also indirect,
wholly owned subsidiaries of DMH.

Expenses
Each Portfolio is responsible for all of its own expenses other than
those borne by the Manager under the Asset Allocation Agreements and those
borne by the Distributor under the Distribution Agreements.

Shares
The Trust is an open-end management investment company. Each
Portfolio is non-diversified, as defined by the 1940 Act. Commonly known as a
mutual fund, the Trust was organized as a Delaware Business Trust on October
24, 1997. The Trust currently offers three series of shares: the Income,
Balanced and Growth Portfolios. Portfolio shares have a par value of $0.01,
equal voting rights, except as noted below, and are equal in all other
respects. Each Portfolio will vote separately on any matter which affects only
that Portfolio. Shares of each Portfolio have a priority over shares of any
other series of the Trust in the assets and income of that Portfolio.

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OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

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securities in its portfolio. During periods involving such liquidity problems,
judgment plays a greater role in valuing high-yield securities than is
normally the case. The secondary market for high-yield securities is also
generally considered to be more likely to be disrupted by adverse publicity
and investor perceptions than the more established secondary securities
markets. Such Underlying Fund's privately placed high-yield securities are
particularly susceptible to the liquidity and valuation risks outlined above.

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CMOs are debt securities issued by U.S. government agencies or by
financial institutions and other mortgage lenders and collateralized by a pool
of mortgages held under an indenture. CMOs are issued in a number of classes
or series with different maturities. The classes or series are retired in
sequence as the underlying mortgages are repaid. Prepayment may shorten the
stated maturity of the obligation and can result in a loss of premium, if any
has been paid. Certain of these securities 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).

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the future. For these Underlying Funds, all such securities must be rated in
one of the four highest rating categories by a reputable rating agency (e.g.,
BBB or better by S&P or Baa or better by Moody's). It is Delaware Cash Reserve
's current policy to limit asset-backed investments to those rated in the
highest rating category by a reputable rating agency (e.g., AAA by S&P or Aaa
by Moody's) and represented by interests in credit card receivables, wholesale
dealer floor plans, home equity loans and automobile loans.

The rate of principal payment on asset-backed securities generally
depends on the rate of principal payments received on the underlying assets.
Such rate of payments may be affected by economic and various other factors
such as changes in interest rates or the concentration of collateral in a
particular geographic area. Therefore, the yield may be difficult to predict
and actual yield to maturity may be more or less than the anticipated yield to
maturity. Due to the shorter maturity of the collateral backing such
securities, there tends to be less of a risk of substantial prepayment than
with mortgage-backed securities but the risk of such a prepayment does exist.
See Mortgage-Backed Securities, above. 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, and other risks which may be peculiar to particular
classes of collateral. For example, 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.

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assets include long-term health care properties, such as nursing, retirement
and assisted living homes, may be impacted by federal regulations concerning
the health care industry.

REITs may have limited financial resources, may trade less frequently
and in a limited volume, and may be subject to more abrupt or erratic price
movements than other securities.

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information that is available is often of lesser quality than information
available on U.S. companies. Foreign companies are not subject to uniform
accounting, auditing and financial reporting standards, and auditing practices
and requirements may not be comparable to those applicable to United States
companies. Further, such Underlying Funds may encounter difficulty or be
unable to pursue legal remedies and obtain judgments in foreign courts.
Commission rates on securities transactions in foreign countries, which are
sometimes fixed rather than subject to negotiation as in the United States,
are likely to be higher. Moreover, the settlement period of securities
transactions in foreign markets may be longer than in domestic markets. In
many foreign countries, there is less government supervision and regulation of
business and industry practices, stock exchanges, brokers and listed companies
than in the United States. The foreign securities markets of many of the
countries in which such Underlying Funds may invest may also be smaller, less
liquid and subject to greater price volatility than those in the United
States.

Emerging Markets. Compared to the United States and other developed
countries, emerging countries may have relatively unstable governments,
economies based on only a few industries, and securities markets that trade a
small number of securities. Prices on these exchanges tend to be volatile and,
in the past, securities in these countries have offered greater potential for
gain (as well as loss) than securities of companies located in developed
countries. Further, investments by foreign investors (such as the Emerging
Markets Fund) are subject to a variety of restrictions in many emerging
countries. These restrictions may take the form of prior governmental
approval, limits on the amount or type of securities held by foreigners, and
limits on the types of companies in which foreigners may invest. Additional
restrictions may be imposed at any time by these or other countries in which
such Underlying Funds invests. In addition, the repatriation of both
investment income and capital from several foreign countries is restricted and
controlled under certain regulations, including, in some cases, the need for
certain governmental consents. Although these restrictions may in the future
make it undesirable to invest in emerging countries, Delaware International
and the Manager do not believe that any current repatriation restrictions
would affect its decision to invest in such countries. Countries such as those
in which the aforementioned Underlying Funds may invest have historically
experienced and may continue to experience, high rates of inflation, high
interest rates, exchange rate fluctuations or currency depreciation, large
amounts of external debt, balance of payments and trade difficulties and
extreme poverty and unemployment. Additional factors which may influence the
ability or willingness to service debt include, but are not limited to, a
country's cash flow situation, the availability of sufficient foreign exchange
on the date a payment is due, the relative size of its debt service burden to
the economy as a whole, its government's policy towards the International
Monetary Fund, the World Bank and other international agencies and the
political constraints to which a government debtor may be subject.

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currencies other than dollars, its ability to make debt payments denominated
in dollars could be adversely affected.

A forward contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days from
the date of the contract, agreed upon by the parties, at a price set at the
time of the contract. Such Underlying Funds may enter into forward contracts
to "lock in" the price of a security it has agreed to purchase or sell, in
terms of U.S. dollars or other currencies in which the transaction will be
consummated. By entering into a forward contract for the purchase or sale, for
a fixed amount of U.S. dollars or foreign currency, of the amount of foreign
currency involved in the underlying security transaction, the Underlying Funds
will be able to protect itself against a possible loss resulting from an
adverse change in currency exchange rates during the period between the date
the security is purchased or sold and the date on which payment is made or
received.

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which evidence ownership of underlying securities issued by a foreign
corporation. "Sponsored" Depositary Receipts are issued jointly by the issuer
of the underlying security and a depository, whereas "unsponsored" Depositary
Receipts are issued without participation of the issuer of the deposited
security. Holders of unsponsored Depositary Receipts generally bear all the
costs of such facilities and the depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited security or to pass through voting
rights to the holders of such receipts in respect of the deposited securities.
Therefore, there may not be a correlation between information concerning the
issuer of the security and the market value of an unsponsored Depositary
Receipt.

<PAGE>

(DGFF-I)

<PAGE>

(DGFF-I)

A futures contract may be purchased or sold only on an exchange,
known as a "contract market," designated by the Commodity Futures Trading
Commission for the trading of such contract, and only through a registered
futures commission merchant which is a member of such contract market. A
commission must be paid on each completed purchase and sale transaction. The
contract market clearing house guarantees the performance of each party to a
futures contract, by in effect taking the opposite side of such contract. At
any time prior to the expiration of a futures contract, a trader may elect to
close out its position by taking an opposite position on the contract market
on which the position was entered into, subject to the availability of a
secondary market, which will operate to terminate the initial position. At
that time, a final determination of variation margin is made and any loss
experienced by the trader is required to be paid to the contract market
clearing house while any profit due to the trader must be delivered to it.

Such Underlying Funds may also purchase and write options on the
types of futures contracts that they can invest in.

<PAGE>

(DGFF-I)

An option, whether based on a futures contract, a securities index, a
security or foreign currency, becomes worthless to the holder when it expires.
Upon exercise of an option, the exchange or contract market clearing house
assigns exercise notices on a random basis to those of its members which have
written options of the same series and with the same expiration date. A
brokerage firm receiving such notices then assigns them on a random basis to
those of its customers which have written options of the same series and
expiration date. A writer therefore has no control over whether an option will
be exercised against it, nor over the timing of such exercise.

<PAGE>

(DGFF-I)

the repurchase agreement is marked to market daily. In the event of a
bankruptcy or other default of the seller, the Underlying Fund could
experience delays and expenses in liquidating the underlying securities.

<PAGE>

(DGFF-I)

Convertible and Non-Traditional Equity Securities
The Real Estate Investment Trust Portfolio and the Blue Chip, U.S.
Growth, Devon and New Pacific Funds may invest in convertible securities. From
time to time, a portion of the High-Yield Opportunities Fund's assets may be
invested in convertible securities. A convertible security is a security which
may be converted at a stated price within a specified period of time into a
certain quantity of the common stock of the same or a different issuer.
Convertible securities are senior to common stocks in a corporation's capital
structure, although convertible securities are usually subordinated to similar
nonconvertible securities. Convertible securities provide a fixed-income
stream and the opportunity, through its conversion feature, to participate in
the capital appreciation resulting from a market price advance in the
convertible security's underlying common stock. Just as with debt securities,
convertible securities tend to increase in market value when interest rates
decline and tend to decrease in value when interest rates rise. However, the
price of a convertible security is also influenced by the market value of the
security's underlying common stock and tends to increase as the market value
of the underlying stock rises, whereas it tends to decrease as the market
value of the underlying stock declines.

<PAGE>

(DGFF-I)

<PAGE>

(DGFF-I)

<PAGE>
(DGFF-I)

paper, A-2 or better by S&P and P-2 or better by Moody's; and, for other
corporate obligations, AA or better by S&P and Aa or better by Moody's) by at
least two nationally-recognized statistical rating organizations approved by
the Board of Directors or, if such security is not so rated, the purchase of
the security must be approved or ratified by the Board of Directors in
accordance with the maturity, quality and diversification conditions with
which taxable money market funds must comply. Appendix A describes the ratings
of S&P and Moody's.

<PAGE>

(DGFF-I)

U.S. Government Fund will invest are of the modified pass-through type. U.S.
Government GNMA guarantees the timely payment of monthly installments of
principal and interest on modified pass-through Certificates at the time such
payments are due, whether or not such amounts are collected by the issuer on
the underlying mortgages. The National Housing Act provides that the full
faith and credit of the United States is pledged to the timely payment of
principal and interest by GNMA of amounts due on these GNMA Certificates.

<PAGE>

(DGFF-I)

While the Global Bond and Emerging Markets Funds intend to seek to
qualify as "diversified" investment companies under provisions of Subchapter M
of the Code, they will not be diversified for purposes of the 1940 Act. Thus,
while at least 50% of each Underlying Funds' total assets will be represented
by cash, cash items, and other securities limited in respect of any one issuer
to an amount not greater than 5% of such Underlying Funds' total assets, it
will not satisfy the 1940 Act requirement in this respect, which applies that
test to 75% of the Underlying Funds' assets. The Portfolios are also
nondiversified with respect to both direct investments in securities and
investments in the Underlying Funds. A nondiversified portfolio is believed to
be subject to greater risk because adverse effects on the portfolio's security
holdings may affect a larger portion of the overall assets.

<PAGE>

(DGFF-I)

OTHER INVESTMENT POLICIES

Ratings
Appendix A describes the ratings of S&P and Moody's.

<PAGE>

(DGFF-I)

APPENDIX A -- RATINGS

<PAGE>

(DGFF-I)

The likelihood that the ratings of these bonds will fall below investment
grade is higher than for bonds with higher ratings; BB--Bonds are considered
speculative. The obligor's ability to pay interest and repay principal may be
affected over time by adverse economic changes. However, business and
financial alternatives can be identified which could assist the obligor in
satisfying its debt service requirements; B--Bonds are considered highly
speculative. While bonds in this class are currently meeting debt service
requirements, the probability of continued timely payment of principal and
interest reflects the obligor's limited margin of safety and the need for
reasonable business and economic activity throughout the life of the issue;
CCC--Bonds have certain identifiable characteristics which, if not remedied,
may lead to default. The ability to meet obligations requires an advantageous
business and economic environment; CC--Bonds are minimally protected. Default
in payment of interest and/or principal seems probable over time; C--Bonds are
in imminent default in payment of interest or principal; and DDD, DD and
D--Bonds are in default on interest and/or principal payments. Such bonds are
extremely speculative and should be valued on the basis of their ultimate
recovery value in liquidation or reorganization of the obligor. "DDD"
represents the highest potential for recovery on these bonds, and "D"
represents the lowest potential for recovery.

Plus and minus signs are used with a rating symbol to indicate the
relative position of a credit within the rating category. Plus and minus
signs, however, are not used in the "AAA" category.

<PAGE>
SUBJECT TO CHANGE

The Delaware Group includes --------------------------------------
funds with a wide range of investment
objectives. Stock funds, income funds,
national and state-specific tax-exempt DELAWARE GROUP FOUNDATION FUNDS
funds, money market funds, global and
international funds and closed-end --------------------------------------
funds give investors the ability to
create a portfolio that fits their
personal financial goals. For more INCOME PORTFOLIO
information, shareholders of the Fund --------------------------------------
Classes should contact their financial
adviser or call Delaware Group at
800-523-4640, and shareholders of the BALANCED PORTFOLIO
Institutional Class should contact --------------------------------------
Delaware Group at 800-828-5052.

INVESTMENT MANAGER GROWTH PORTFOLIO
Delaware Management Company, Inc. --------------------------------------
One Commerce Square
Philadelphia, PA 19103

NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
PART B
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING, STATEMENT OF
ACCOUNTING SERVICES ADDITIONAL INFORMATION
AND TRANSFER AGENT
Delaware Service Company, Inc. --------------------------------------
1818 Market Street
Philadelphia, PA 19103
DECEMBER 31, 1997
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP INFORMATION CONTAINED HEREIN
One Commerce Square IS SUBJECT TO COMPLETION OR AMENDMENT.
Philadelphia, PA 19103 A REGISTRATION STATEMENT RELATING TO
THESE SECURITIES HAS BEEN FILED WITH
INDEPENDENT AUDITORS THE SECURITIES AND EXCHANGE
Ernst & Young LLP COMMISSION. THESE SECURITIES MAY NOT
Two Commerce Square BE SOLD NOR MAY OFFERS TO BUY BE
Philadelphia, PA 19103 ACCEPTED PRIOR TO THE TIME THE
REGISTRATION STATEMENT BECOMES
CUSTODIAN EFFECTIVE. THIS PROSPECTUS SHALL NOT
The Chase Manhattan Bank CONSTITUTE AN OFFER TO SELL OR THE
4 Chase Metrotech Center SOLICITATION OF AN OFFER TO BUY NOR
Brooklyn, NY 11245 SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES
LAWS OF ANY SUCH STATE.

<PAGE>

DELAWARE
GROUP

- --------------------------------------------------------------------------------

PART B--STATEMENT OF ADDITIONAL INFORMATION
DECEMBER 31, 1997
- --------------------------------------------------------------------------------

DELAWARE GROUP FOUNDATIONS FUNDS

- --------------------------------------------------------------------------------

1818 Market Street
Philadelphia, PA 19103

- --------------------------------------------------------------------------------
For more information about the Institutional Classes: 800-828-5052

For Prospectus and Performance of Class A Shares, Class B Shares and
Class C Shares: Nationwide 800-523-4640

Information on Existing Accounts of Class A Shares, Class B Shares and
Class C Shares: (SHAREHOLDERS ONLY) Nationwide 800-523-1918

Dealer Services: (BROKER/DEALERS ONLY) Nationwide 800-362-7500
- --------------------------------------------------------------------------------

TABLE OF CONTENTS

- --------------------------------------------------------------------------------
Cover Page
- --------------------------------------------------------------------------------
Investment Objectives and Policies
- --------------------------------------------------------------------------------
Accounting and Tax Issues
- --------------------------------------------------------------------------------
Performance Information
- --------------------------------------------------------------------------------
Trading Practices and Brokerage
- --------------------------------------------------------------------------------
Purchasing Shares
- --------------------------------------------------------------------------------
Investment Plans
- --------------------------------------------------------------------------------
Determining Offering Price and Net Asset Value
- --------------------------------------------------------------------------------
Redemption and Repurchase
- --------------------------------------------------------------------------------
Dividends and Realized Securities Profits Distributions
- --------------------------------------------------------------------------------
Taxes
- --------------------------------------------------------------------------------
Asset Allocation Agreements
- --------------------------------------------------------------------------------
Officers and Trustees
- --------------------------------------------------------------------------------
Exchange Privilege
- --------------------------------------------------------------------------------
General Information
- --------------------------------------------------------------------------------
Appendix A--IRA Information
- --------------------------------------------------------------------------------
Financial Statements
- --------------------------------------------------------------------------------

-1-

<PAGE>

Delaware Group Foundation Funds (the "Trust") is a
professionally-managed mutual fund of the series type which currently offers
three series of shares: the Income Portfolio, the Balanced Portfolio and the
Growth Portfolio (individually, a "Portfolio" and collectively, the
"Portfolios").

Each Portfolio offers three retail classes: Class A Shares, Class B
Shares and Class C Shares (collectively referred to as the "Fund Classes").
Each Portfolio also offers an Institutional Class shares (collectively, the
"Institutional Classes").

Class B Shares, Class C Shares and Institutional Class shares of each
Portfolio may be purchased at a price equal to the next determined net asset
value per share. Class A Shares may be purchased at the public offering price,
which is equal to the next determined net asset value per share, plus a
front-end sales charge. Class A Shares are subject to a maximum front-end
sales charge of 4.75%, and annual 12b-1 Plan expenses that may not exceed
0.30% and have currently been fixed by the Board at 0.25%. Class B Shares are
subject to a contingent deferred sales charge ("CDSC") which may be imposed on
redemptions made within six years of purchase and annual 12b-1 Plan expenses
of up to 1% which are assessed against Class B Shares for approximately eight
years after purchase. See Automatic Conversion of Class B Shares under Classes
of Shares in the Prospectuses for the Fund Classes. Class C Shares are subject
to a CDSC which may be imposed on redemptions made within 12 months of
purchase and annual 12b-1 Plan expenses of up to 1%, which are assessed
against Class C Shares for the life of the investment. See Distribution and
Service under Asset Allocation Agreements.

This Statement of Additional Information ("Part B" of the
registration statement) supplements the information contained in the current
Prospectuses for the Portfolios dated December 31, 1997, as they may be
amended from time to time. Part B should be read in conjunction with the
respective class' Prospectus. Part B is not itself a prospectus but is, in its
entirety, incorporated by reference into each class' Prospectus. A Prospectus
for each class may be obtained by writing or calling your investment dealer or
by contacting the Trust's national distributor, Delaware Distributors, L.P.
(the "Distributor"), 1818 Market Street, Philadelphia, PA 19103.

All references to "shares" in this Part B refer to all classes of
shares of the Trust, except where noted. Capitalized terms not otherwise
defined herein should have the meanings ascribed to them in the Prospectus.

-2-

<PAGE>

INVESTMENT OBJECTIVES AND POLICIES

Investment Restrictions

The following restrictions are fundamental policies, which may not be
amended without approval of a majority of the outstanding voting securities of
the affected Portfolio, which is the lesser of more than 50% of the
outstanding voting securities or 67% of the voting securities of the affected
Portfolio present at a shareholder meeting if 50% or more of the voting
securities are present in person or represented by proxy. The percentage
limitations contained in the restrictions and policies set forth herein apply
at the time of purchase of securities.

1. Each such Portfolio will not invest more than 25% of its total
assets in any one industry (including investments in Underlying Funds that
concentrate in that industry) provided that there is no limitation with
respect to investments in obligations issued or guaranteed as to principal or
interest by the U.S. Government, its agencies or instrumentalities . For
purposes of this restriction, investments in the Underlying Funds will not be
deemed to be investments in "investment company" industry.

2. Each such Portfolio will not make loans other than by the purchase
of all or a portion of a publicly or privately distributed issue of bonds,
debentures or other debt securities of the types commonly offered publicly or
privately and purchased by financial institutions (including repurchase
agreements and loan participations), whether or not the purchase was made upon
the original issuance of the securities, and except that each Portfolio may
loan its assets (other than shares of the Underlying Funds) to qualified
broker/dealers or institutional investors.

3. Each such Portfolio will not engage in underwriting of securities
of other issuers, except that portfolio securities, including securities
purchased in private placements, may be acquired under circumstances where, if
sold, the Portfolio might be deemed to be an underwriter under the Securities
Act of 1933. No limit is placed on the proportion of the Portfolio's assets
which may be invested in such securities.

4. Each such Portfolio will not borrow money or issue senior
securities, except to the extent permitted by the 1940 Act or any rule or
order thereunder or interpretation thereof. Subject to the foregoing, each
Portfolio may engage in short sales, purchase securities on margin, and write
put and call options.

5. Each such Portfolio will not purchase or sell physical commodities
or physical commodity contracts, including physical commodity option or
futures contracts in a contract market or other futures market.

6. Purchase or sell real estate; provided that the Portfolio may
invest in securities secured by real estate or interests therein or issued by
companies which invest in real estate or interests therein.

In addition to the above fundamental investment restrictions, each
Portfolio has the following investment restrictions which may be amended or
changed without approval of shareholders.

1. No Portfolio will invest for the purpose of acquiring control of
any company. This policy will not prohibit acquisition of a controlling
interest in an Underlying Fund.

2. To the extent that a Portfolio invests in securities of other
investment companies, it will only do so in accordance with the provisions of
the Investment Company Act in effect at the time of the investment.

-3-

<PAGE>

3. No Portfolio will invest in interests in oil, gas and other
mineral leases or other mineral exploration or development programs.

4. No Portfolio will purchase securities on margin except short-term
credits that may be necessary for the clearance of purchases and sales of
securities. This restriction does not apply to the purchase of futures or
options contracts.

Investment Policies
The Portfolios will invest primarily in open-end investment companies
(mutual funds) that are members of the Delaware Group of Funds (individually,
an "Underlying Fund" and collectively, the "Underlying Funds") listed below .
In addition, if the Trust receives an exemptive order from the Securities and
Exchange Commission "(SEC"), the Portfolios may invest in the same kinds of
securities as those in which the Underlying Funds may invest and employ the
same investment strategies as any of the Underlying Funds, to the extent
consistent with each Portfolio's investment objective stated in the
Prospectuses.

The Underlying Funds include funds investing in U.S. and foreign
stocks, bonds, and money market instruments. The list of Underlying Funds set
forth below may change from time to time, and Underlying Funds may be added or
deleted upon the recommendation of the Manager without shareholder approval.

U.S. Equity
Aggressive Growth Fund Fixed Income
Blue Chip Fund Delchester Fund
Decatur Total Return Fund Global Bond Fund
DelCap Fund Limited-Term Government Fund
Devon Fund U.S. Government Fund
Small Cap Value Fund High-Yield Opportunities Fund
Trend Fund
U.S. Growth Fund Money Market
The Real Estate Investment Trust Delaware Cash Reserve
Portfolio

International Equity
Emerging Markets Fund
International Equity Fund
International Small Cap Fund
New Pacific Fund

-4-

<PAGE>

The following investment policies relate to the Underlying Funds,
consistent with each fund's investment objective as described in the
Prospectuses. In addition, if the Trust receives an exemptive order from the
SEC, each Portfolio may engage in these investment instruments and strategies
directly.

U.S. Government Securities
Securities issued or guaranteed by the U.S. government or its
agencies or instrumentalities ("Government Securities") in which the
Underlying Funds may invest include debt obligations of varying maturities
issued by the U.S. Treasury or issued or guaranteed by an agency or
instrumentality of the U.S. government, including the Federal Housing
Administration, Farmers Home Administration, Export-Import Bank of the United
States, Small Business Administration, Government National Mortgage
Association, General Services Administration, Central Bank for Cooperatives,
Federal Farm Credit Banks, Federal Home Loan Banks, Federal Home Loan Mortgage
Corporation, Federal Intermediate Credit Banks, Federal Land Banks, Federal
National Mortgage Association, Maritime Administration, Tennessee Valley
Authority, District of Columbia Armory Board, Student Loan Marketing
Association and Resolution Trust Corporation. Direct obligations of the United
States Treasury include a variety of securities that differ in their interest
rates, maturities and dates of issuance. Because the U.S. government is not
obligated by law to provide support to an instrumentality that it sponsors,
each Underlying Fund invests in obligations issued by an instrumentality of
the U.S. government only if its investment manager determines that the
instrumentality's credit risk does not make its securities unsuitable for
investment by an Underlying Fund.

Money Market Instruments
Money market instruments in which the Underlying Funds may invest
include U.S. government securities; certificates of deposit, time deposits and
bankers' acceptances issued by domestic banks (including their branches
located outside the U.S. and subsidiaries located in Canada), domestic
branches of foreign banks, savings and loan associations and similar
institutions; high grade commercial paper; and repurchase agreements with
respect to the foregoing types of instruments.

Certain types of money market instruments are described below.

U.S. Government Securities--Securities issued or guaranteed by the U.S.
government, including Treasury Bills, Notes and Bonds.

U.S. Government Agency Securities--Obligations issued or guaranteed by
agencies or instrumentalities of the U.S. government whether supported by the
full faith and credit of the U.S. Treasury or the credit of a particular agency
or instrumentality.

Bank Obligations--Certificates of deposit, bankers' acceptances and
other short-term obligations of U.S. commercial banks and their overseas
branches and foreign banks of comparable quality, provided each such bank
combined with its branches has total assets of at least one billion dollars.
Any obligations of foreign banks shall be denominated in U.S. dollars.
Obligations of foreign banks and obligations of overseas branches of U.S.
banks are subject to somewhat different regulations and risks than those of
U.S. domestic banks. In particular, a foreign country could impose exchange
controls which might delay the release of proceeds from that country. Such
deposits are not covered by the Federal Deposit Insurance Corporation. Because
of conflicting laws and regulations, an issuing bank could maintain that
liability for an investment is solely that of the overseas branch which could
expose the Underlying Fund to a greater risk of loss. The Underlying Funds
will only buy short-

-5-
<PAGE>

term instruments in nations where these risks are minimal. The Underlying Funds
will consider these factors along with other appropriate factors in making an
investment decision to acquire such obligations and will only acquire those
which, in the opinion of management, are of an investment quality comparable to
other debt securities bought by the Underlying Funds.

Commercial Paper--The Underlying Funds may invest in short-term
promissory notes issued by corporations which at the time of purchase are
rated P-1 and/or A-1. Commercial paper ratings P-1 by Moody's and A-1 by S&P
are the highest investment grade category.

Corporate Debt--The Underlying Funds may invest in corporate notes
and bonds rated A or above. Excerpts from Moody's Investors Service, Inc.
("Moody's") description of those categories of bond ratings: Aaa--judged to be
the best quality. They carry the smallest degree of investment risk;
Aa--judged to be of high quality by all standards; A--possess favorable
attributes and are considered "upper medium" grade obligations.

Rule 144A Securities
The Underlying Funds may invest in restricted securities, including
unregistered securities eligible for resale without registration pursuant to
Rule 144A ("Rule 144A Securities") under the 1933 Act. Rule 144A Securities
may be freely traded among qualified institutional investors without
registration under the 1933 Act.

Investing in Rule 144A Securities could have the effect of increasing
the level of an Underlying Fund's illiquidity to the extent that qualified
institutional buyers become, for a time, uninterested in purchasing these
securities. After the purchase of a Rule 144A Security, however, the directors
of the Underlying Fund and its investment manager will continue to monitor the
liquidity of that security to ensure that the Underlying Fund's holdings of
illiquid securities does not exceed its limit on investments in such
securities.

Repurchase Agreements
A repurchase agreement is a short-term investment by which the
purchaser acquires ownership of a debt security and the seller agrees to
repurchase the obligation at a future time and set price, thereby determining
the yield during the purchaser's holding period. Should an issuer of a
repurchase agreement fail to repurchase the underlying security, the loss to
the Underlying Funds, if any, would be the difference between the repurchase
price and the market value of the security. An Underlying Fund will limit its
investments in repurchase agreements to those which the respective investment
manager, under the guidelines of the directors of the Underlying Fund,
determines to present minimal credit risks and which are of high quality. In
addition, each Underlying Fund must have collateral of at least 100% of the
repurchase price, including the portion representing such Underlying Fund's
yield under such agreements which is monitored on a daily basis. While the
Underlying Funds are permitted to do so, they normally do not invest in
repurchase agreements, except to invest cash balances.

The funds in the Delaware Group have obtained an exemption from the
joint-transaction prohibitions of Section 17(d) of the 1940 Act to allow the
Delaware Group funds jointly to invest cash balances. The Underlying Funds may
invest cash balances in a joint repurchase agreement in accordance with the
terms of the Order and subject generally to the conditions described above.

Reverse Repurchase Agreements

-6-
<PAGE>

Certain Underlying Funds are authorized to enter into reverse
repurchase agreements. A reverse repurchase agreement is the sale of a
security by an Underlying Fund and its agreement to repurchase the security at
a specified time and price. An Underlying Fund will maintain in a segregated
account with the Custodian cash, cash equivalents or U.S. government
securities in an amount sufficient to cover its obligations under reverse
repurchase agreements with broker/dealers (but no collateral is required on
reverse repurchase agreements with banks). Under the 1940 Act, reverse
repurchase agreements may be considered borrowings by an Underlying Fund;
accordingly, an Underlying Fund will limit its investments in reverse
repurchase agreements, together with any other borrowings, to no more than
one-third of its total assets. The use of reverse repurchase agreements by an
Underlying Fund creates leverage which increases the Underlying Fund's
investment risk. If the income and gains on securities purchased with the
proceeds of reverse repurchase agreements exceed the costs of the agreements,
an Underlying Fund's earnings or net asset value will increase faster than
otherwise would be the case; conversely, if the income and gains fail to
exceed the costs, earnings or net asset value would decline faster than
otherwise would be the case.

Portfolio Loan Transactions
It is the understanding of the respective investment manager that the
staff of the SEC permits portfolio lending by registered investment companies
if certain conditions are met. These conditions are as follows: 1) each
transaction must have 100% collateral in the form of cash, short-term U.S.
government securities, or irrevocable letters of credit payable by banks
acceptable to an Underlying Fund involved from the borrower; 2) this
collateral must be valued daily and should the market value of the loaned
securities increase, the borrower must furnish additional collateral to the
Underlying Fund involved; 3) the Underlying Fund must be able to terminate the
loan after notice, at any time; 4) the Underlying Fund must receive reasonable
interest on any loan, and any dividends, interest or other distributions on
the lent securities, and any increase in the market value of such securities;
5) the Underlying Fund may pay reasonable custodian fees in connection with
the loan; and 6) the voting rights on the lent securities may pass to the
borrower; however, if the directors of the Underlying Funds know that a
material event will occur affecting an investment loan, they must either
terminate the loan in order to vote the proxy or enter into an alternative
arrangement with the borrower to enable the directors to vote the proxy.

The major risk to which an Underlying Fund would be exposed on a loan
transaction is the risk that the borrower would go bankrupt at a time when the
value of the security goes up. Therefore, the Underlying Fund will only
enter into loan arrangements after a review of all pertinent facts by the
respective investment manager, under the supervision of the 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. Credit worthiness will be monitored on an ongoing basis by
the respective investment manager.

High-Yield Securities
Among the possible risks of investing in high-yield securities are
the possibility of legislative and regulatory action and proposals. There are
a variety of legislative actions which have been taken or which are considered
from time to time by the United States Congress which could adversely affect
the market for high-yield securities. For example, Congressional legislation
limited the deductibility of interest paid on certain high-yield securities
used to finance corporate acquisitions. Also, Congressional legislation has,
with some exceptions, generally prohibited federally-insured savings and loan
institutions from investing in high-yield securities. Regulatory actions have
also affected the high-yield market. For example, many insurance companies
have restricted or eliminated their purchases of high-yield securities as a
result of, among other factors, actions taken by the National Association of
Insurance Commissioners. If similar legislative and

-7-
<PAGE>

regulatory actions are taken in the future, they could result in further
tightening of the secondary market for high-yield issues, could reduce the
number of new high-yield securities being issued and could make it more
difficult for an Underlying Fund to attain its investment objective.

-8-
<PAGE>

Investment Company Securities
Any investments that certain Underlying Funds make in either
closed-end or open-end investment companies will be limited by the 1940 Act,
and would involve an indirect payment of a portion of the expenses, including
advisory fees, of such other investment companies. Under the 1940 Act's
current limitations, an Underlying Fund may not (1) own more than 3% of the
voting stock of another investment company; (2) invest more than 5% of the
Underlying Fund's total assets in the shares of any one investment company;
nor (3) invest more than 10% of the Underlying Fund's total assets in shares
of other investment companies. If an Underlying Fund elects to limit its
investment in other investment companies to closed-end investment companies,
the 3% limitation described above is increased to 10%. These percentage
limitations also apply to and Underlying Fund's investments in unregistered
investment companies. The Underlying Funds may not acquire securities of
registered open-end investment companies or registered unit investment trusts
in reliance on sections 12(d)(1)(F) or (G) of the 1940 Act.

Unseasoned Companies
Certain Underlying Funds may invest in relatively new or unseasoned
companies which are in their early stages of development, or small companies
positioned in new and emerging industries where the opportunity for rapid
growth is expected to be above average. Securities of unseasoned companies
present greater risks than securities of larger, more established companies.
The companies in which an Underlying Fund may invest may have relatively small
revenues, limited product lines, and may have a small share of the market for
their products or services. Small companies may lack depth of management, they
may be unable to internally generate funds necessary for growth or potential
development or to generate such funds through external financing or favorable
terms, or they may be developing or marketing new products or services for
which markets are not yet established and may never become established. Due
these and other factors, small companies may suffer significant losses as well
as realize substantial growth, and investments in such companies tend to be
volatile and are therefore speculative.

Mortgage-Backed Securities
In addition to mortgage-backed securities issued or guaranteed by the
U.S. government, its agencies or instrumentalities, certain Underlying Funds
may also invest 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).

Stripped mortgage securities are usually structured with two classes
that receive different proportions of the interest and principal distributions
on a pool of mortgage assets. A common type of stripped mortgage security will
have one class receiving some of the interest and most of the principal from
the mortgage assets, while the other class will receive most of the interest
and the remainder of the principal. In the most extreme case, one class will
receive all of the interest (the "interest-only" class), while the other class
will receive all of

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<PAGE>

the principal (the "principal-only" class). The yield to maturity on an
interest-only class is extremely sensitive not only to changes in prevailing
interest rates but also to the rate of principal payments (including
prepayments) on the related underlying mortgage assets, and a rapid rate of
principal payments may have a material adverse effect on the Underlying Fund's
yield to maturity. If the underlying mortgage assets experience greater than
anticipated prepayments of principal, the Underlying Fund may fail to fully
recoup its initial investment in these securities even if the securities are
rated in the highest rating categories.

Although stripped mortgage securities are purchased and sold by
institutional investors through several investment banking firms acting as
brokers or dealers, these securities were only recently developed. As a
result, established trading markets have not yet been fully developed and,
accordingly, these securities are generally illiquid and to such extent,
together with any other illiquid investments, will not exceed its limit in
such securities.

CMOs and REMICs issued by private entities are not government
securities and are not directly guaranteed by any government agency. They are
secured by the underlying collateral of the private issuer. Certain Underlying
Funds 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.

Mortgage Dollar Rolls
Certain Underlying Funds may enter into mortgage "dollar rolls" in
which the Underlying Fund sells mortgage-backed securities for delivery in the
current month and simultaneously contracts to repurchase substantially similar
(same type, coupon and maturity) securities on a specified future date. Dollar
roll transactions consist of the sale by a Fund of mortgage-backed securities,
together with a commitment to purchase similar, but not necessarily identical,
securities at a future date. Any difference between the sale price and the
purchase price is netted against the interest income foregone on the
securities to arrive at an implied borrowing (reverse repurchase) rate.
Alternatively, the sale and purchase transactions which constitute the dollar
roll can be executed at the same price, with the Underlying Fund being paid a
fee as consideration for entering into the commitment to purchase. Dollar
rolls may be renewed prior to cash settlement and initially may involve only a
firm commitment agreement by the Underlying Fund to buy a security. If the
broker/dealer to whom the Underlying Fund sells the security becomes
insolvent, the Underlying Fund's right to purchase or repurchase the security
may be restricted; the value of the security may change adversely over the
term of the dollar roll; the security that the Underlying Fund is required to
repurchase may be worth less than the security that the Underlying Fund
originally held, and the return earned by the Underlying Fund with the
proceeds of a dollar roll may not exceed transaction costs. The Underlying
Fund will place U.S. government or other liquid, high quality assets in a
segregated account in an amount sufficient to cover its repurchase obligation.

Asset-Backed Securities
Certain Underlying Funds may invest a portion of its assets in
asset-backed securities. The rate of principal payment on asset-backed
securities generally depends on the rate of principal payments received on the
underlying assets. Such rate of payments may be affected by economic and
various other factors such as changes in interest rates or, in the case of
certain Underlying Funds, the concentration of collateral in a particular
geographic area. Therefore, the yield may be difficult to predict and actual
yield to maturity may be more or less than the anticipated yield to maturity.
The credit quality of most asset-backed securities depends

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<PAGE>

primarily on the credit quality of the assets underlying such securities, how
well the entities issuing the securities are insulated from the credit risk of
the originator or affiliated entities, and the amount of credit support
provided to the securities.

Asset-backed securities are often backed by a pool of assets
representing the obligations of a number of different parties. To lessen the
effect of failures by obligors on underlying assets to make payments, such
securities may contain elements of credit support. Such credit support falls
into two categories: (i) liquidity protection, and (ii) protection against
losses resulting from ultimate default by an obligor on the underlying assets.
Liquidity protection refers to the provision of advances, generally by the
entity administering the pool of assets, to ensure that the receipt of
payments due on the underlying pool is timely. Protection against losses
resulting from ultimate default enhances the likelihood of payments of the
obligations on at least some of the assets in the pool. Such protection may be
provided through guarantees, insurance policies or letters of credit obtained
by the issuer or sponsor from third parties, through various means of
structuring the transaction or through a combination of such approaches. The
Underlying Funds will not pay any additional fees for such credit support,
although the existence of credit support may increase the price of a security.

Examples of credit support arising out of the structure of the
transaction include "senior-subordinated securities" (multiple class
securities with one or more classes subordinate to other classes as to the
payment of principal thereof and interest thereon, with the result that
defaults on the underlying assets are borne first by the holders of the
subordinated class), creation of "reserve funds" (where cash or investments,
sometimes funded from a portion of the payments on the underlying assets, are
held in reserve against future losses) and "over collateralization" (where the
scheduled payments on, or the principal amount of, the underlying assets
exceeds that required to make payments of the securities and pay any servicing
or other fees). The degree of credit support provided for each issue is
generally based on historical information respecting the level of credit
information and respecting the level of credit risk associated with the
underlying assets. Delinquencies or losses in excess of those anticipated
could adversely affect the return on an investment in such issue.

Convertible Securities
Certain Underlying Funds may invest in convertible securities,
including corporate debentures, bonds, notes and preferred stocks that may be
converted into or exchanged for common stock. While providing a fixed-income
stream (generally higher in yield than the income derivable from a common
stock but lower than that afforded by a non-convertible debt security), a
convertible security also affords the investor an opportunity, through its
conversion feature, to participate in the capital appreciation of the common
stock into which it is convertible. As the market price of the underlying
common stock declines, convertible securities tend to trade increasingly on a
yield basis and so may not experience market declines to the same extent as
the underlying common stock. When the market price of the underlying common
stock increases, the price of a convertible security tends to rise as a
reflection of the value of the underlying common stock. To obtain such a
higher yield, an Underlying Fund may be required to pay for a convertible
security an amount in excess of the value of the underlying common stock.
Common stock acquired by an Underlying Fund upon conversion of a convertible
security will generally be held for so long as the respective manager
anticipates such stock will provide an Underlying Fund with opportunities
which are consistent with an Underlying Fund's investment objectives and
policies.

An Underlying Fund may invest not more than 5% of its assets in
convertible debentures that are rated below investment grade or are unrated
but are determined by its investment manager to be of comparable quality.
Investing in convertible debentures that are rated below investment grade or
unrated but of comparable quality entails certain risks, including the risk of
loss of principal, which may be greater than the risks involved

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<PAGE>

in investing in investment grade convertible debentures. Under rating agency
guidelines, lower rated securities and comparable unrated securities will
likely have some quality and protective characteristics that are outweighed by
large uncertainties or major risk exposures to adverse conditions.

An Underlying Fund may have difficulty disposing of such lower rated
convertible debentures because the trading market for such securities may be
thinner than the market for higher rated convertible debentures. To the extent
a secondary trading market for these securities does exist, it generally is
not as liquid as the secondary trading market for higher rated securities. The
lack of a liquid secondary market as well as adverse publicity with respect to
these securities, may have an adverse impact on market price and the
Underlying Fund's ability to dispose of particular issues in response to a
specific economic event such as a deterioration in the creditworthiness of the
issuer. The lack of a liquid secondary market for certain securities also may
make it more difficult for an Underlying Fund to obtain accurate market
quotations for purposes of pricing the Underlying Fund's portfolio and
calculating its net asset value. The market behavior of convertible securities
in lower rating categories is often more volatile than that of higher quality
securities. Lower quality convertible securities are judged by Moody's
Investors Service, Inc. ("Moody's") and Standard & Poor's Ratings Group
("S&P") to have speculative elements or characteristics; their future cannot
be considered as well assured and earnings and asset protection may be
moderate or poor in comparison to investment grade securities.

In addition, such lower quality securities face major ongoing
uncertainties or exposure to adverse business, financial or economic
conditions, which could lead to inadequate capacity to meet timely payments.
The market values of securities rated below investment grade tend to be more
sensitive to company specific developments and changes in economic conditions
than higher rated securities. Issuers of these securities are often highly
leveraged, so that their ability to service their debt obligations during an
economic downturn or during sustained periods of rising interest rates may be
impaired. In addition, such issuers may not have more traditional methods of
financing available to them, and may be unable to repay debt at maturity by
refinancing.

When-Issued and Delayed Delivery Securities
Certain Underlying Funds may purchase securities on a when-issued or
delayed delivery basis. In such transactions, instruments are purchased with
payment and delivery taking place in the future in order to secure what is
considered to be an advantageous yield or price at the time of the
transaction. Delivery of and payment for these securities may take as long as
a month or more after the date of the purchase commitment. An Underlying Fund
will maintain with its custodian a separate account with a segregated
portfolio of securities in an amount at least equal to these commitments. The
payment obligation and the interest rates that will be received are each fixed
at the time an Underlying Fund enters into the commitment and no interest
accrues to the Underlying Fund until settlement. Thus, it is possible that the
market value at the time of settlement could be higher or lower than the
purchase price if the general level of interest rates has changed.

Combined Transactions
Certain Underlying Funds may enter into multiple transactions,
including multiple options transactions, multiple futures transactions,
multiple currency transactions (including forward currency contracts) and
multiple interest rate transactions and any combination of futures, options,
currency and interest rate transactions ("component" transactions), instead of
a single transaction, as part of a single or combined strategy when, in the
opinion of the investment manager, it is in the best interests of the
Underlying Fund to do so. A combined transaction will usually contain elements
of risk that are present in each of its component transactions. Although
combined transactions are normally entered into based on the investment
manager's judgment that the combined strategies will reduce risk or otherwise
more effectively achieve the desired portfolio management

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<PAGE>

goal, it is possible that the combination will instead increase such risks or
hinder achievement of the portfolio management objective.

Swaps, Caps, Floors and Collars
Certain Underlying Funds may enter into interest rate, currency and
index swaps and the purchase or sale of related caps, floors and collars. The
Underlying Funds expect to enter into these transactions primarily to preserve
a return or spread on a particular investment or portion of its portfolio, to
protect against currency fluctuations, as a duration management technique or
to protect against any increase in the price of securities the Underlying Fund
anticipates purchasing at a later date. The Underlying Funds intend to use
these transactions as hedges and not speculative investments and will not sell
interest rate caps or floors where it does not own securities or other
instruments providing the income stream the Underlying Fund may be obligated
to pay. Interest rate swaps involve the exchange by the Underlying Fund with
another party of their respective commitments to pay or receive interest,
e.g., an exchange of floating rate payments for fixed rate payments with
respect to a nominal amount of principal. A currency swap is an agreement to
exchange cash flows on a notional amount of two or more currencies based on
the relative value differential among them and an index swap is an agreement
to swap cash flows on a notional amount based on changes in the values of the
reference indices. The purchase of a cap entitles the purchaser to receive
payments on a notional principal amount from the party selling such cap to the
extent that a specified index exceeds a predetermined interest rate or amount.
The purchase of a floor entitles the purchaser to receive payments on a
notional principal amount from the party selling such floor to the extent that
a specified index falls below a predetermined interest rate or amount. A
collar is a combination of a cap and a floor that preserves a certain return
within a predetermined range of interest rates or values.

An Underlying Fund will usually enter into swaps on a net basis,
i.e., the two payment streams are netted out in a cash settlement on the
payment date or dates specified in the instrument, with the Underlying Fund
receiving or paying, as the case may be, only the net amount of the two
payments. Inasmuch as these swaps, caps, floors and collars are entered into
for good faith hedging purposes, the investment managers and the Underlying
Funds believe such obligations do not constitute senior securities under the
1940 Act and, accordingly, will not treat them as being subject to its
borrowing restrictions. An Underlying Fund will not enter into any swap, cap,
floor or collar transaction unless, at the time of entering into such
transaction, the unsecured long-term debt of the counterparty, combined with
any credit enhancements, is rated at least A by S&P or Moody's or is
determined to be of equivalent credit quality by the investment manager. If
there is a default by the counterparty, the Underlying Fund may have
contractual remedies pursuant to the agreements related to the transaction.
The swap market has grown substantially in recent years with a large number of
banks and investment banking firms acting both as principals and as agent
utilizing standardized swap documentation. As a result, the swap market has
become relatively liquid. Caps, floors and collars are more recent innovations
for which standardized documentation has not yet been fully developed and,
accordingly, they are less liquid than swaps.

Eurodollar Instruments
Certain Underlying Funds may make investments in Eurodollar
instruments. Eurodollar instruments are U.S. dollar-denominated futures
contracts or options thereon which are linked to the London Interbank Offered
Rate ("LIBOR"), although foreign currency-denominated instruments are
available from time to time. Eurodollar futures contracts enable purchasers to
obtain a fixed rate for the lending of funds and sellers to obtain a fixed
rate for borrowings. An Underlying Fund might use Eurodollar futures contracts
and options thereon to hedge against changes in LIBOR, to which many interest
rate swaps and fixed-income instruments are linked.

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<PAGE>

"Roll" Transactions

Certain Underlying Funds may engage in "roll" transactions. A "roll"
transaction is the sale of securities together with a commitment (for which an
Underlying Fund may receive a fee) to purchase similar, but not identical,
securities at a future date. Under the 1940 Act, these transactions may be
considered borrowings by an Underlying Fund; accordingly, an Underlying Fund
will limit its use of these transactions, together with any other borrowings,
to no more than one-third of its total assets. An Underlying Fund will
segregate liquid assets such as cash, U.S. government securities or other high
grade debt obligations in an amount sufficient to meet their payment
obligations in these transactions. Although these transactions will not be
entered into for leveraging purposes, to the extent an Underlying Fund's
aggregate commitments under these transactions exceed its holdings of cash and
securities that do not fluctuate in value (such as short-term money market
instruments), the Underlying Fund temporarily will be in a leveraged position
(i.e., it will have an amount greater than its net assets subject to market
risk). Should the market value of an Underlying Fund's portfolio securities
decline while the Underlying Fund is in a leveraged position, greater
depreciation of its net assets would likely occur than were it not in such a
position. As an Underlying Fund's aggregate commitments under these
transactions increase, the opportunity for leverage similarly increases.

Variable and Floating Rate Notes
Variable rate master demand notes, in which certain Underlying Funds
may invest, are unsecured demand notes that permit the indebtedness thereunder
to vary and provide for periodic adjustments in the interest rate according to
the terms of the instrument. An Underlying Fund will not invest over 5% of its
assets in variable rate master demand notes. Because master demand notes are
direct lending arrangements between an Underlying Fund and the issuer, they
are not normally traded. Although there is no secondary market in the notes,
an Underlying Fund may demand payment of principal and accrued interest at any
time. While the notes are not typically rated by credit rating agencies,
issuers of variable amount master demand notes (which are normally
manufacturing, retail, financial, and other business concerns) must satisfy
the same criteria as set forth above for commercial paper. In determining
average weighted portfolio maturity, a variable amount master demand note will
be deemed to have a maturity equal to the period of time remaining until the
principal amount can be recovered from the issuer through demand.

A variable rate note is one whose terms provide for the adjustment of
its interest rate on set dates and which, upon such adjustment, can reasonably
be expected to have a market value that approximates its par value. A floating
rate note is one whose terms provide for the adjustment of its interest rate
whenever a specified interest rate changes and which, at any time, can
reasonably be expected to have a market value that approximates its par value.
Such notes are frequently not rated by credit rating agencies; however,
unrated variable and floating rate notes purchased by an Underlying Fund will
be determined by the Underlying Fund's investment manager under guidelines
established by the Board to be of comparable quality at the time of purchase
to rated instruments eligible for purchase under the Underlying Fund's
investment policies. In making such determinations, the investment manager
will consider the earning power, cash flow and other liquidity ratios of the
issuers of such notes (such issuers include financial, merchandising, bank
holding and other companies) and will continuously monitor their financial
condition. Although there may be no active secondary market with respect to a
particular variable or floating rate note purchased by an Underlying Fund, the
Underlying Fund may re-sell the note at any time to a third party. The absence
of such an active secondary market, however, could make it difficult for the
Underlying Fund to dispose of the variable or floating rate note involved in
the event the issuer of the note defaulted on its payment obligations, and the
Underlying Fund could, for this or other reasons, suffer a loss to the extent
of the default. Variable or floating rate notes may be secured by bank letters
of credit.

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<PAGE>

Variable and floating rate notes for which no readily available
market exists will be purchased in an amount which, together with securities
with legal or contractual restrictions on resale or for which no readily
available market exists (including repurchase agreements providing for
settlement more than seven days after notice), exceed 10% of the Underlying
Fund's total assets only if such notes are subject to a demand feature that
will permit the Underlying Fund to demand payment of the Principal within
seven days after demand by the Underlying Fund. If not rated, such instruments
must be found by the Underlying Fund's investment manager under guidelines
established by the Board of Directors, to be of comparable quality to
instruments that are rated high quality. A rating may be relied upon only if
it is provided by a nationally recognized statistical rating organization that
is not affiliated with the issuer or guarantor of the instruments. For a
description of the rating symbols of S&P and Moody's used in this paragraph,
see the Prospectuses. An Underlying Fund may also invest in Canadian
Commercial Paper which is commercial paper issued by a Canadian corporation or
a Canadian counterpart of a U.S. corporation and in Europaper which is U.S.
dollar denominated commercial paper of a foreign issuer.

Municipal Securities
Municipal Securities are issued to obtain funds for various public
purposes, including the construction of a wide range of public facilities such
as bridges, highways, roads, schools, water and sewer works, and other
utilities. Other public purposes for which Municipal Securities may be issued
include refunding outstanding obligations, obtaining funds for general
operating expenses and obtaining funds to lend to other public institutions
and facilities. In addition, certain debt obligations known as "private
activity bonds" may be issued by or on behalf of municipalities and public
authorities to obtain funds to provide certain water, sewage and solid waste
facilities, qualified residential rental projects, certain local electric, gas
and other heating or cooling facilities, qualified hazardous waste facilities,
high-speed intercity rail facilities, governmentally-owned airports, docks and
wharves and mass commuting facilities, certain qualified mortgages, student
loan and redevelopment bonds and bonds used for certain organizations exempt
from federal income taxation. Certain debt obligations known as "industrial
development bonds" under prior federal tax law may have been issued by or on
behalf of public authorities to obtain funds to provide certain
privately-operated housing facilities, sports facilities, industrial parks,
convention or trade show facilities, airport, mass transit, port or parking
facilities, air or water pollution control facilities, sewage or solid waste
disposal facilities, and certain facilities for water supply. Other private
activity bonds and industrial development bonds issued to finance the
construction, improvement, equipment or repair of privately-operated
industrial, distribution, research, or commercial facilities may also be
Municipal Securities, but the size of such issues is limited under current and
prior federal tax law.

Information about the financial condition of issuers of Municipal
Securities may be less available than about corporations with a class of
securities registered under the Securities Exchange Act of 1934.

Foreign Securities
Investors should recognize that investing in foreign issuers involves
certain considerations, including those set forth in the Prospectuses, which
are not typically associated with investing in United States issuers. Since
the stocks of foreign companies are frequently denominated in foreign
currencies, and since an Underlying Fund may temporarily hold uninvested
reserves in bank deposits in foreign currencies, an Underlying Fund will be
affected favorably or unfavorably by changes in currency rates and in exchange
control regulations, and may incur costs in connection with conversions
between various currencies. The investment policies of certain Underlying
Funds permit it to enter into forward foreign currency exchange contracts in
order to hedge the Underlying Fund's holdings and commitments against changes
in the level of future currency rates. Such contracts involve an obligation to
purchase or sell a specific currency at a future date at a price set at the
time of the contract.

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<PAGE>

There has been in the past, and there may be again in the future, an
interest equalization tax levied by the United States in connection with the
purchase of foreign securities such as those purchased by an Underlying Fund.
Payment of such interest equalization tax, if imposed, would reduce an
Underlying Fund's rate of return on its investment. Dividends paid by foreign
issuers may be subject to withholding and other foreign taxes which may
decrease the net return on such investments as compared to dividends paid to
an Underlying Fund by United States corporations. Special rules govern the
federal income tax treatment of certain transactions denominated in terms of a
currency other than the U.S. dollar or determined by reference to the value of
one or more currencies other than the U.S. dollar. The types of transactions
covered by the special rules generally include the following: (i) the
acquisition of, or becoming the obligor under, a bond or other debt instrument
(including, to the extent provided in Treasury Regulations, preferred stock);
(ii) the accruing of certain trade receivables and payables; and (iii) the
entering into or acquisition of any forward contract, futures contract, option
and similar financial instruments other than any "regulated futures contract"
or "nonequity option" marked to market. The disposition of a currency other
than the U.S. dollar by a U.S. taxpayer is also treated as a transaction
subject to the special currency rules. However, foreign currency-related
regulated futures contracts and nonequity options are generally not subject to
the special currency rules, if they are or would be treated as sold for their
fair market value at year-end under the marking to market rules applicable to
other futures contracts, unless an election is made to have such currency
rules apply. With respect to transactions covered by the special rules,
foreign currency gain or loss is calculated separately from any gain or loss
on the underlying transaction and is normally taxable as ordinary gain or
loss. A taxpayer may elect to treat as capital gain or loss foreign currency
gain or loss arising from certain identified forward contracts, futures
contracts and options that are capital assets in the hands of the taxpayer and
which are not part of a straddle. Certain transactions subject to the special
currency rules that are part of a "section 988 hedging transaction" (as
defined in the Internal Revenue Code of 1986, as amended (the "Code"), and the
Treasury Regulations) will be integrated and treated as a single transaction
or otherwise treated consistently for purposes of the Code. The income tax
effects of integrating and treating a transaction as a single transaction are
generally to create a synthetic debt instrument that is subject to the
original discount provisions. It is anticipated that some of the non-U.S.
dollar denominated investments and foreign currency contracts the Underlying
Fund may make or enter into will be subject to the special currency rules
described above.

Foreign Currency Transactions
Certain Underlying Funds may purchase or sell currencies and/or
engage in forward foreign currency transactions in order to expedite
settlement of portfolio transactions and to minimize currency value
fluctuations.

Forward foreign currency contracts are traded in the interbank market
conducted directly between currency traders (usually large commercial banks)
and their customers. A forward contract generally has no deposit requirement,
and no commissions are charged at any stage for trades. An Underlying Fund
will account for forward contracts by marking to market each day at daily
exchange rates.

When an Underlying Fund enters into a forward contract to sell, for a
fixed amount of U.S. dollars or other appropriate currency, the amount of
foreign currency approximating the value of some or all of a Fund's assets
denominated in such foreign currency, the Underlying Fund's Custodian Bank or
subcustodian will place cash or liquid high grade debt securities in a
separate account of the Underlying Fund in an amount not less than the value
of the Underlying Fund's total assets committed to the consummation of such
forward contracts. If the additional cash or securities placed in the separate
account declines, additional cash or securities will be placed in the account
on a daily basis so that the value of the account will equal the amount of an
Underlying Fund's commitments with respect to such contracts.

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<PAGE>

Depositary Receipts
Certain Underlying Funds may make foreign investments through the
purchase and sale of sponsored or unsponsored American Depositary Receipts
("ADRs") and European and Global Depositary Receipts ("Depositary Receipts").
ADRs are receipts typically issued by a U.S. bank or trust company, while
Depositary Receipts are issued by a foreign bank or trust company. ADRs and
Depositary Receipts evidence ownership of underlying securities issued by a
foreign corporation. "Sponsored" ADRs and Depositary Receipts are issued
jointly by the issuer of the underlying security and a depository, whereas
"unsponsored" ADRs and Depositary Receipts are issued without participation of
the issuer of the deposited security. Holders of unsponsored ADRs and
Depositary Receipts generally bear all the costs of such facilities and the
depository of an unsponsored facility frequently is under no obligation to
distribute shareholder communications received from the issuer of the
deposited security or to pass through voting rights to the holders of such
receipts in respect of the deposited securities. Therefore, there may not be a
correlation between information concerning the issuer of the security and the
market value of an unsponsored ADR or Depositary Receipt.

Options
Certain Underlying Funds may write call options on a covered basis
only, purchase call options, write secured put options and purchase put
options, and will not engage in option writing strategies for speculative
purposes.

Certain Underlying Funds may invest in options that are either listed
on U.S. or recognized foreign exchanges or traded over-the-counter. Certain
over-the-counter options may be illiquid. Thus, it may not be possible to
close options positions and this may have an adverse impact on an Underlying
Fund's ability to effectively hedge its securities.

Covered Call Writing -- Certain Underlying Funds may write covered
call options from time to time on such portion of its portfolio, without
limit, as the investment manager determines is appropriate in seeking to
obtain the Underlying Fund's investment objective. A call option gives the
purchaser of such option the right to buy, and the writer, in this case an
Underlying Fund, has the obligation to sell the underlying security at the
exercise price during the option period. The advantage to an Underlying Fund
of writing covered calls is that the Underlying Fund receives additional
income, in the form of a premium, which may offset any capital loss or decline
in market value of the security. However, if the security rises in value, the
Underlying Fund may not fully participate in the market appreciation.

During the option period, a covered call option writer may be
assigned an exercise notice by the broker/dealer through whom such call option
was sold requiring the writer to deliver the underlying security against
payment of the exercise price. This obligation is terminated upon the
expiration of the option period or at such earlier time in which the writer
effects a closing purchase transaction. A closing purchase transaction cannot
be effected with respect to an option once the option writer has received an
exercise notice for such option.

With respect to both options on actual portfolio securities owned by
an Underlying Fund and options on stock indices, an Underlying Fund may enter
into closing purchase transactions. A closing purchase transaction is one in
which an Underlying Fund, when obligated as a writer of an option, terminates
its obligation by purchasing an option of the same series as the option
previously written.

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<PAGE>

Closing purchase transactions will ordinarily be effected to realize
a profit on an outstanding call option, to prevent an underlying security from
being called, to permit the sale of the underlying security or to enable an
Underlying Fund to write another call option on the underlying security with
either a different exercise price or expiration date or both. An Underlying
Fund may realize a net gain or loss from a closing purchase transaction
depending upon whether the net amount of the original premium received on the
call option is more or less than the cost of effecting the closing purchase
transaction. Any loss incurred in a closing purchase transaction may be
partially or entirely offset by the premium received from a sale of a
different call option on the same underlying security. Such a loss may also be
wholly or partially offset by unrealized appreciation in the market value of
the underlying security. Conversely, a gain resulting from a closing purchase
transaction could be offset in whole or in part by a decline in the market
value of the underlying security.

If a call option expires unexercised, an Underlying Fund will realize
a short-term capital gain in the amount of the premium on the option, less the
commission paid. Such a gain, however, may be offset by depreciation in the
market value of the underlying security during the option period. If a call
option is exercised, an Underlying Fund will realize a gain or loss from the
sale of the underlying security equal to the difference between the cost of
the underlying security, and the proceeds of the sale of the security plus the
amount of the premium on the option, less the commission paid.

The market value of a call option generally reflects the market price
of an underlying security. Other principal factors affecting market value
include supply and demand, interest rates, the price volatility of the
underlying security and the time remaining until the expiration date.

An Underlying Fund will write call options only on a covered basis,
which means that Underlying Fund will own the underlying security subject to
the call option at all times during the option period. Unless a closing
purchase transaction is effected, the Underlying Fund would be required to
continue to hold a security which it might otherwise wish to sell, or deliver
a security it would want to hold. Options written by an Underlying Fund will
normally have expiration dates between one and nine months from the date
written. The exercise price of a call option may be below, equal to or above
the current market value of the underlying security at the time the option is
written.

Purchasing Call Options--Certain Underlying Funds may purchase call
options to the extent that premiums paid by the Underlying Fund do not
aggregate more than 2% of the Underlying Fund's total assets. When an
Underlying Fund purchases a call option, in return for a premium paid by an
Underlying Fund to the writer of the option, the Underlying Fund 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 of purchasing call options is that an
Underlying Fund may alter portfolio characteristics and modify portfolio
maturities without incurring the cost associated with portfolio transactions.

An Underlying Fund may, following the purchase of a call option,
liquidate its position by effecting a closing sale transaction. This is
accomplished by selling an option of the same series as the option previously
purchased. An Underlying Fund will realize a profit from a closing sale
transaction if the price received on the transaction is more than the premium
paid to purchase the original call option; an Underlying Fund will realize a
loss from a closing sale transaction if the price received on the transaction
is less than the premium paid to purchase the original call option.

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<PAGE>

Although an Underlying Fund will generally purchase only those call
options for which there appears to be an active secondary market, there is no
assurance that a liquid secondary market on an Exchange will exist for any
particular option, or at any particular time, and for some options no
secondary market on an Exchange may exist. In such event, it may not be
possible to effect closing transactions in particular options, with the result
that an Underlying Fund would have to exercise its options in order to realize
any profit and would incur brokerage commissions upon the exercise of such
options and upon the subsequent disposition of the underlying securities
acquired through the exercise of such options. Further, unless the price of
the underlying security changes sufficiently, a call option purchased by an
Underlying Fund may expire without any value to the Underlying Fund.

Writing Put Options--An Underlying Fund may also write put options on
a secured basis which means that the Underlying Fund will maintain in a
segregated account with its custodian, cash or U.S. government securities in
an amount not less than the exercise price of the option at all times during
the option period. The amount of cash or U.S. government securities held in
the segregated account will be adjusted on a daily basis to reflect changes in
the market value of the securities covered by the put option written by the
Underlying Fund. Secured put options will generally be written in
circumstances where the investment manager wishes to purchase the underlying
security for the Underlying Fund's portfolio at a price lower than the current
market price of the security. In such event, the Underlying Fund would write a
secured put option at an exercise price which, reduced by the premium received
on the option, reflects the lower price it is willing to pay.

Following the writing of a put option, the Underlying Fund may wish
to terminate the obligation to buy the security underlying the option by
effecting a closing purchase transaction. This is accomplished by buying an
option of the same series as the option previously written. The Underlying
Fund may not, however, effect such a closing transaction after it has been
notified of the exercise of the option.

Purchasing Put Options--Certain Underlying Funds may invest in put
options. An Underlying Fund will, at all times during which it holds a put
option, own the security covered by such option.

Certain Underlying Funds may purchase put options in order to protect
against a decline in the market value of the underlying security below the
exercise price less the premium paid for the option ("protective puts"). The
ability to purchase put options will allow an Underlying Fund to protect an
unrealized gain in an appreciated security in its portfolio without actually
selling the security. If the security does not drop in value, the Underlying
Fund will lose the value of the premium paid. An Underlying Fund may sell a
put option which it has previously purchased prior to the sale of the
securities underlying such option. Such sales will result in a net gain or
loss depending on whether the amount received on the sale is more or less than
the premium and other transaction costs paid on the put option which is sold.

An Underlying Fund may sell a put option purchased on individual
portfolio securities or stock indices. Additionally, an Underlying Fund may
enter into closing sale transactions. A closing sale transaction is one in
which an Underlying Fund, when it is the holder of an outstanding option,
liquidates its position by selling an option of the same series as the option
previously purchased.

Over-the-Counter Options and Illiquid Securities -- Certain
Underlying Funds may deal in over-the-counter ("OTC") options. The Underlying
Funds understand the position of the staff of the Securities and Exchange
Commission ("SEC") to be that purchased OTC options and the assets used as
"cover" for written OTC options are illiquid securities. Certain Underlying
Funds and their investment managers disagree with this position and have found
the dealers with which they engage in OTC options transactions generally
agreeable to

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<PAGE>

and capable of entering into closing transactions. The Underlying Funds have
adopted procedures for engaging in OTC options for the purpose of reducing any
potential adverse impact of such transactions upon the liquidity of the
portfolio.

As part of these procedures certain Underlying Funds will engage in
OTC options transactions only with primary dealers that have been specifically
approved by the Board and the investment managers believe that the approved
dealers should be agreeable and able to enter into closing transactions if
necessary and, therefore, present minimal credit risks to the Underlying Fund.
An Underlying Fund anticipates entering into written agreements with those
dealers to whom the Underlying Fund may sell OTC options, pursuant to which
the Underlying Fund would have the absolute right to repurchase the OTC
options from such dealers at any time at a price determined pursuant to a
formula set forth in certain no action letters published by the SEC staff. An
Underlying Fund will not engage in OTC options transactions if the amount
invested by the Underlying Fund in OTC options plus, with respect to OTC
options written by the Underlying Fund, the amounts required to be treated as
illiquid pursuant to the terms of such letters (and the value of the assets
used as cover with respect to OTC option sales which are not within the scope
of such letters), plus the amount invested by the Underlying Fund in illiquid
securities, would exceed 15% of the Underlying Fund's total assets. OTC
options on securities other than U.S. government securities may not be within
the scope of such letters and, accordingly, the amount invested by an
Underlying Fund in OTC options on such other securities and the value of the
assets used as cover with respect to OTC option sales regarding such non-U.S.
government securities will be treated as illiquid and subject to the
limitation on the Underlying Fund's net assets that may be invested in
illiquid securities.

Options on Foreign Currencies--Certain Underlying Funds may purchase
and write options on foreign currencies for hedging purposes in a manner
similar to that in which futures contracts on foreign currencies, or forward
contracts, will be utilized. For example, a decline in the dollar value of a
foreign currency in which portfolio securities are denominated will reduce the
dollar value of such securities, even if their value in the foreign currency
remains constant. In order to protect against such diminutions in the value of
portfolio securities, an Underlying Fund may purchase put options on the
foreign currency. If the value of the currency does decline, an Underlying
Fund will have the right to sell such currency for a fixed amount in dollars
and will thereby offset, in whole or in part, the adverse effect on its
portfolio which otherwise would have resulted.

Conversely, where a rise in the dollar value of a currency in which
securities to be acquired are denominated is projected, thereby increasing the
cost of such securities, an Underlying Fund may purchase call options thereon.
The purchase of such options could offset, at least partially, the effects of
the adverse movement in exchange rates. As in the case of other types of
options, however, the benefit to an Underlying Fund deriving from purchases of
foreign currency options will be reduced by the amount of the premium and
related transaction costs. In addition, where currency exchange rates do not
move in the direction or to the extent anticipated, an Underlying Fund could
sustain losses on transactions in foreign currency options which would require
it to forego a portion or all of the benefits of advantageous changes in such
rates.

An Underlying Fund may write options on foreign currencies for the
same types of hedging purposes. For example, where an Underlying Fund
anticipates a decline in the dollar value of foreign currency denominated
securities due to adverse fluctuations in exchange rates, it could, instead of
purchasing a put option, write a call option on the relevant currency. If the
expected decline occurs, the option will most likely not be exercised, and the
diminution in the value of portfolio securities will be offset by the amount
of the premium received.

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<PAGE>

Similarly, instead of purchasing a call option to hedge against an
anticipated increase in the dollar cost of securities to be acquired, an
Underlying Fund could write a put option on the relevant currency which, if
rates move in the manner projected, will expire unexercised and allow an
Underlying Fund to hedge such increased cost up to the amount of the premium.
As in the case of other types of options, however, the writing of a foreign
currency option will constitute only a partial hedge up to the amount of the
premium, and only if rates move in the expected direction. If this does not
occur, the option may be exercised and the Underlying Fund would be required
to purchase or sell the underlying currency at a loss which may not be offset
by the amount of the premium. Through the writing of options on foreign
currencies, an Underlying Fund also may be required to forego all or a portion
of the benefit which might otherwise have been obtained from favorable
movements in exchange rates.

Certain Underlying Funds intend to write covered call options on
foreign currencies. A call option written on a foreign currency by an
Underlying Fund is "covered" if the Underlying Fund owns the underlying
foreign currency covered by the call or has an absolute and immediate right to
acquire that foreign currency without additional cash consideration (or for
additional cash consideration held in a segregated account by the Custodian
Bank) upon conversion or exchange of other foreign currency held in its
portfolio. A call option is also covered if the Underlying Fund has a call on
the same foreign currency and in the same principal amount as the call written
where the exercise price of the call held (a) is equal to or less than the
exercise price of the call written, or (b) is greater than the exercise price
of the call written if the difference is maintained by the Underlying Fund in
cash, U.S. government securities or other high-grade liquid debt securities in
a segregated account with its Custodian Bank.

With respect to writing put options, at the time the put is written,
an Underlying Fund will establish a segregated account with its Custodian Bank
consisting of cash, U.S. government securities or other high-grade liquid debt
securities in an amount equal in value to the amount the Underlying Fund will
be required to pay upon exercise of the put. The account will be maintained
until the put is exercised, has expired, or the Underlying Fund has purchased
a closing put of the same series as the one previously written.

In order to comply with the securities laws of one state, an
Underlying Fund will not write put or call options if the aggregate value of
the securities underlying the calls or obligations underlying the puts
determined as of the date the options are sold exceed 25% of the Underlying
Fund's net assets. Should state laws change or an Underlying Fund receives a
waiver of their application for, the Underlying Funds reserve the right to
increase this percentage.

Options on Stock Indices--A stock index assigns relative values to
the common stocks included in the index with the index fluctuating with
changes in the market values of the underlying common stock.

Options on stock indices are similar to options on stocks but have
different delivery requirements. Stock options provide the right to take or
make delivery of the underlying stock at a specified price. A stock index
option gives the holder the right to receive a cash "exercise settlement
amount" equal to (i) the amount by which the fixed exercise price of the
option exceeds (in the case of a put) or is less than (in the case of a call)
the closing value of the underlying index on the date of exercise, multiplied
by (ii) a fixed "index multiplier." Receipt of this cash amount will depend
upon the closing level of the stock index upon which the option is based being
greater than (in the case of a call) or less than (in the case of a put) the
exercise price of the option. The amount of cash received will be equal to
such difference between the closing price of the index and exercise price of
the option expressed in dollars times a specified multiple. The writer of the
option is obligated, in return for the premium received, to make delivery of
this amount. Gain or loss to an Underlying Fund on

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<PAGE>

transactions in stock index options will depend on price movements in the
stock market generally (or in a particular industry or segment of the market)
rather than price movements of individual securities.

As with stock options, an Underlying Fund may offset its position in
stock index options prior to expiration by entering into a closing transaction
on an Exchange or it may let the option expire unexercised.

A stock index fluctuates with changes in the market values of the
stock so included. Some stock index options are based on a broad market index
such as the Standard & Poor's 500 ("S&P 500") or the New York Stock Exchange
Composite Index, or a narrower market index such as the Standard & Poor's 100
("S&P 100"). Indices are also based on an industry or market segment such as
the AMEX Oil and Gas Index or the Computer and Business Equipment Index.
Options on stock indices are currently traded on the following Exchanges among
others: The Chicago Board Options Exchange, New York Stock Exchange and
American Stock Exchange.

The effectiveness of purchasing or writing stock index options as a
hedging technique will depend upon the extent to which price movements in an
Underlying Fund's portfolio correlate with price movements of the stock index
selected. Because the value of an index option depends upon movements in the
level of the index rather than the price of a particular stock, whether an
Underlying Fund will realize a gain or loss from the purchase or writing of
options on an index depends upon movements in the level of stock prices in the
stock market generally or, in the case of certain indices, in an industry or
market segment, rather than movements in the price of a particular stock.
Since an Underlying Fund's portfolio will not duplicate the components of an
index, the correlation will not be exact. Consequently, an Underlying Fund
bears the risk that the prices of the securities being hedged will not move in
the same amount as the hedging instrument. It is also possible that there may
be a negative correlation between the index or other securities underlying the
hedging instrument and the hedged securities which would result in a loss on
both such securities and the hedging instrument. Accordingly, successful use
of options on stock indices will be subject to the investment manager's
ability to predict correctly movements in the direction of the stock market
generally or of a particular industry. This requires different skills and
techniques than predicting changes in the price of individual stocks.

Positions in stock index options may be closed out only on an
Exchange which provides a secondary market. There can be no assurance that a
liquid secondary market will exist for any particular stock index option.
Thus, it may not be possible to close such an option. The inability to close
options positions could have an adverse impact on an Underlying Fund's ability
to effectively hedge its securities. An Underlying Fund will enter into an
option position only if there appears to be a liquid secondary market for such
options.

The Underlying Funds will not engage in transactions in options on
stock indices for speculative purposes but only to protect appreciation
attained, to offset capital losses and to take advantage of the liquidity
available in the option markets.

Futures
Certain Underlying Funds may enter into contracts for the purchase or
sale for future delivery of securities or foreign currencies. While futures
contracts provide for the delivery of securities, deliveries usually do not
occur. Contracts are generally terminated by entering into an offsetting
transaction. When an Underlying Fund enters into a futures transaction, it
must deliver to the futures commission merchant selected by the Underlying
Fund an amount referred to as "initial margin." This amount is maintained by
the futures commission merchant in an account at the Underlying Fund's
Custodian Bank. Thereafter, a "variation margin" may be paid by an Underlying
Fund to, or drawn by the Underlying Fund from, such account in accordance

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<PAGE>

with controls set for such accounts, depending upon changes in the price of
the underlying securities subject to the futures contract.

In addition, when an Underlying Fund engages in futures transactions,
to the extent required by the SEC, it will maintain with its Custodian Bank,
assets in a segregated account to cover its obligations with respect to such
contracts, which assets will consist of cash, cash equivalents or high quality
debt securities from its portfolio in an amount equal to the difference
between the fluctuating market value of such futures contracts and the
aggregate value of the margin payments made by an Underlying Fund with respect
to such futures contracts.

Certain Underlying Funds may enter into such futures contracts to
protect against the adverse affects of fluctuations in interest or foreign
exchange rates without actually buying or selling the securities or foreign
currency. For example, if interest rates are expected to increase, an
Underlying Fund might enter into futures contracts for the sale of debt
securities. Such a sale would have much the same effect as selling an
equivalent value of the debt securities owned by an Underlying Fund. If
interest rates did increase, the value of the debt securities in the portfolio
would decline, but the value of the futures contracts to an Underlying Fund
would increase at approximately the same rate, thereby keeping the net asset
value of the Underlying Fund from declining as much as it otherwise would
have. Similarly, when it is expected that interest rates may decline, futures
contracts may be purchased to hedge in anticipation of subsequent purchases of
securities at higher prices. Since the fluctuations in the value of futures
contracts should be similar to those of debt securities, an Underlying Fund
could take advantage of the anticipated rise in value of debt securities
without actually buying them until the market had stabilized. At that time,
the futures contracts could be liquidated and the Underlying Fund could then
buy debt securities on the cash market.

With respect to options on futures contracts, when an Underlying Fund
is not fully invested, it may purchase a call option on a futures contract to
hedge against a market advance due to declining interest rates. The purchase
of a call option on a futures contract is similar in some respects to the
purchase of a call option on an individual security. Depending on the pricing
of the option compared to either the price of the futures contract upon which
it is based, or the price of the underlying debt securities, it may or may not
be less risky than ownership of the futures contract or underlying debt
securities. As with the purchase of futures contracts, when an Underlying Fund
is not fully invested, it may purchase a call option on a futures contract to
hedge against a market advance due to declining interest rates.

The writing of a call option on a futures contract constitutes a
partial hedge against the declining price of the security or foreign currency
which is deliverable upon exercise of the futures contract. If the futures
price at the expiration of the option is below the exercise price, an
Underlying Fund will retain the full amount of the option premium which
provides a partial hedge against any decline that may have occurred in the
Underlying Fund's portfolio holdings. The writing of a put option on a futures
contract constitutes a partial hedge against the increasing price of the
security or foreign currency which is deliverable upon exercise of the futures
contract. If the futures price at the expiration of the option is higher than
the exercise price, the Underlying Fund will retain the full amount of the
option premium which provides a partial hedge against any increase in the
price of securities which the Underlying Fund intends to purchase.

If a put or call option an Underlying Fund has written is exercised,
the Underlying Fund will incur a loss which will be reduced by the amount of
the premium it receives. Depending on the degree of correlation between
changes in the value of its portfolio securities and changes in the value of
its futures positions, an Underlying Fund's losses from existing options on
futures may, to some extent, be reduced or increased by

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<PAGE>

changes in the value of portfolio securities. The purchase of a put option on
a futures contract is similar in some respects to the purchase of protective
puts on portfolio securities. For example, an Underlying Fund will purchase a
put option on a futures contract to hedge the Underlying Fund's portfolio
against the risk of rising interest rates.

To the extent that interest rates move in an unexpected direction, an
Underlying Fund may not achieve the anticipated benefits of futures contracts
or options on futures contracts or may realize a loss. For example, if an
Underlying Fund is hedged against the possibility of an increase in interest
rates which would adversely affect the price of securities held in its
portfolio and interest rates decrease instead, the Underlying Fund will lose
part or all of the benefit of the increased value of its securities which it
has because it will have offsetting losses in its futures position. In
addition, in such situations, if the Underlying Fund had insufficient cash, it
may be required to sell securities from its portfolio to meet daily variation
margin requirements. Such sales of securities may, but will not necessarily,
be at increased prices which reflect the rising market. An Underlying Fund may
be required to sell securities at a time when it may be disadvantageous to do
so.

Further, with respect to options on futures contracts, an Underlying
Fund may seek to close out an option position by writing or buying an
offsetting position covering the same securities or contracts and have the
same exercise price and expiration date. The ability to establish and close
out positions on options will be subject to the maintenance of a liquid
secondary market, which cannot be assured.

Futures Contracts and Options on Futures Contracts
Certain Underlying Funds may enter into futures contracts on stocks
and stock indices, purchase and sell options on such futures, and enter into
closing transactions with respect to those activities. A futures contract may
be purchased and sold only on an exchange, known as a "contract market,"
designated by the Commodity Futures Trading Commission for the trading of such
contract, and only through a registered futures commission merchant which is a
member of such contract market. A commission must be paid on each completed
purchase and sale transaction.

When an Underlying Fund enters into a futures transaction, it must
deliver to the futures commission merchant selected by the Underlying Fund an
amount referred to as "initial margin." This amount is maintained by the
futures commission merchant in an account at the Underlying Fund's custodian
bank. Thereafter, a "variation margin" may be paid by the Underlying Fund to,
or drawn by the Underlying Fund from, such account in accordance with controls
set for such accounts, depending upon changes in the price of the underlying
securities subject to the futures contract.

Although futures contracts by their terms generally call for the
actual delivery or acquisition of underlying securities or the cash value of
the index, in most cases the contractual obligation is fulfilled before the
date of the contract without having to make or take such delivery. The
contractual obligation is offset by buying (or selling, as the case may be) on
a commodities exchange an identical futures contract calling for delivery in
the same month. Such a transaction, which is effected through a member of an
exchange, cancels the obligation to make or take, as the case may be, delivery
of the securities or cash value of the index underlying the contractual
obligations. At the time such transaction is effected, a final determination
of variation margin is made and any loss experienced by the Underlying Fund
must be paid to the contract market clearing house while any profit due to the
Underlying Fund must be delivered to it.

Positions taken in futures markets are not normally held to maturity,
but instead liquidated through offsetting transactions which may result in a
profit or a loss. While the Underlying Fund's futures contracts on

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<PAGE>

securities will usually be liquidated in this manner, the Underlying Fund may
instead make or take delivery of the underlying securities whenever it appears
economically advantageous to do so. The clearing house associated with the
market on which futures on the securities are traded guarantees that, if still
open, the sale or purchase will be performed on settlement date.

The Underlying Fund may enter into such futures contracts to protect
against the adverse affects of fluctuations in security prices or interest
rates without actually buying or selling the securities. For example, if
interest rates are expected to increase, the Underlying Fund might enter into
futures contracts for the sale of debt securities. Such a sale would have much
the same effect as selling an equivalent value of the debt securities in the
portfolio owned by the Underlying Fund. If interest rates did increase, the
value of the debt securities in the portfolio would decline, but the value of
the futures contracts to the Underlying Fund would increase at approximately
the same rate, thereby keeping the net asset value of the Underlying Fund from
declining as much as it otherwise would have. Similarly, when it is expected
that interest rates may decline, futures contracts may be purchased to hedge
in anticipation of subsequent purchases of securities at higher prices. Since
the fluctuations in the value of futures contracts should be similar to those
of debt securities, the Underlying Fund could take advantage of the
anticipated rise in value of debt securities without actually buying them
until the market had stabilized. At that time, the futures contracts could be
liquidated and the Underlying Fund could then buy debt securities on the cash
market.

With respect to options on futures contracts, when the Underlying
Fund is not fully invested, it may purchase a call option on a futures
contract to hedge against a market advance due to declining interest rates.
The purchase of a call option on a futures contract is similar in some
respects to the purchase of a call option on an individual security. Depending
on the pricing of the option compared to either the price of the futures
contract upon which it is based, or the price of the underlying debt
securities, it may or may not be less risky than ownership of the futures
contract or underlying debt securities.

The writing of a call option on a futures contract constitutes a
partial hedge against the declining price of the security which is deliverable
upon exercise of the futures contract. If the futures price at the expiration
of the option is below the exercise price, the Underlying Fund will retain the
full amount of the option premium which provides a partial hedge against any
decline that may have occurred in the Underlying Fund's portfolio holdings.
The writing of a put option on a futures contract constitutes a partial hedge
against the increasing price of the security which is deliverable upon
exercise of the futures contract. If the futures price at the expiration of
the option is higher than the exercise price, the Underlying Fund will retain
the full amount of the option premium which provides a partial hedge against
any increase in the price of securities which the Underlying Fund intends to
purchase.

Call and put options on stock index futures are similar to options on
securities except that, rather than the right to purchase or sell stock at a
specified price, options on a stock index future give the holder the right to
receive cash. Upon exercise of the option, the delivery of the futures
position by the writer of the option to the holder of the option will be
accompanied by delivery of the accumulated balance in the writer's futures
margin account which represents the amount by which the market price of the
futures contract, at exercise, exceeds, in the case of a call, or is less
than, in the case of a put, the exercise price of the futures contract. If an
option is exercised on the last trading day prior to the expiration date of
the option, the settlement will be made entirely in cash equal to the
difference between the exercise price of the option and the closing price of
the futures contract on the expiration date.

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<PAGE>

If a put or call option the Underlying Fund has written is exercised,
the Underlying Fund will incur a loss which will be reduced by the amount of
the premium it receives. Depending on the degree of correlation between
changes in the value of its portfolio securities and changes in the value of
its futures positions, the Underlying Fund's losses from existing options on
futures may, to some extent, be reduced or increased by changes in the value
of portfolio securities. The purchase of a put option on a futures contract is
similar in some respects to the purchase of protective puts on portfolio
securities. For example, the Underlying Fund will purchase a put option on a
futures contract to hedge the Underlying Fund's portfolio against the risk of
rising interest rates.

To the extent that interest rates move in an unexpected direction,
the Underlying Fund may not achieve the anticipated benefits of futures
contracts or options on futures contracts or may realize a loss. For example,
if the Underlying Fund is hedged against the possibility of an increase in
interest rates which would adversely affect the price of securities held in
its portfolio and interest rates decrease instead, the Underlying Fund will
lose part or all of the benefit of the increased value of its securities which
it has because it will have offsetting losses in its futures position. In
addition, in such situations, if the Underlying Fund had insufficient cash, it
may be required to sell securities from its portfolio to meet daily variation
margin requirements. Such sales of securities may, but will not necessarily,
be at increased prices which reflect the rising market. The Underlying Fund
may be required to sell securities at a time when it may be disadvantageous to
do so.

Further, with respect to options on futures contracts, the Underlying
Fund may seek to close out an option position by writing or buying an
offsetting position covering the same securities or contracts and have the
same exercise price and expiration date. The ability to establish and close
out positions on options will be subject to the maintenance of a liquid
secondary market, which cannot be assured.

Short Sales Against the Box
Whereas a short sale is the sale of a security an Underlying Fund
does not own, a short sale is "against the box" if at all times during which
the short position is open, the Underlying Fund owns at least an equal amount
of the securities or securities convertible into, or exchangeable without
further consideration for, securities of the same issue as the securities sold
short. Short sales against the box are typically used by sophisticated
investors to defer recognition of capital gains or losses.

Forward Foreign Currency Exchange Contracts
The Underlying Funds' dealings in forward contracts will be limited
to hedging involving either specific transactions or portfolio positions.
Transaction hedging is the purchase or sale of forward contracts with respect
to specific receivables or payables of an Underlying Fund generally arising in
connection with the purchase or sale of its portfolio securities and accruals
of interest or dividends receivable and fund expenses. Position hedging is the
sale of a foreign currency with respect to portfolio security positions
denominated or quoted in that currency. An Underlying Fund may not position
hedge with respect to a particular currency for an amount greater than the
aggregate market value (determined at the time of making any sale of a forward
contract) of securities held in its portfolio denominated or quoted in, or
currently convertible into, such currency.

When an Underlying Fund enters into a contract for the purchase or
sale of a security denominated in a foreign currency, or when an Underlying
Fund anticipates the receipt in a foreign currency of dividends or interest
payments on a security which it holds, the Underlying Fund may desire to "lock
in" the U.S. dollar price of the security or the U.S. dollar equivalent of
such dividend or interest payment as the case may be. By entering into a
forward contract for a fixed amount of dollars for the purchase or sale of the
amount of foreign currency involved in the underlying transactions, an
Underlying Fund will be able to protect itself against a

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<PAGE>

possible loss resulting from an adverse change in the relationship between the
U.S. dollar and the subject foreign currency during the period between the
date on which the security is purchased or sold, or on which the dividend or
interest payment is declared, and the date on which such payments are made or
received.

Additionally, when the investment adviser believes that the currency
of a particular foreign country may suffer a substantial decline against the
U.S. dollar, an Underlying Fund may enter into a forward contract for a fixed
amount of dollars, to sell the amount of foreign currency approximating the
value of some or all of the securities of the Underlying Fund denominated in
such foreign currency.

Certain Underlying Funds may use currency forward contracts to manage
currency risks and to facilitate transactions in foreign securities. The
following discussion summarizes the principal currency management strategies
involving forward contracts that could be used by these Funds.

In connection with purchases and sales of securities denominated in
foreign currencies, an Underlying Fund may enter into currency forward
contracts to fix a definite price for the purchase or sale in advance of the
trade's settlement date. This technique is sometimes referred to as a
"settlement hedge" or "transaction hedge." The investment manager expects to
enter into settlement hedges in the normal course of managing the Underlying
Funds' foreign investments. The Underlying Funds could also enter into forward
contracts to purchase or sell a foreign currency in anticipation of future
purchases or sales of securities denominated in foreign currency, even if the
specific investments have not yet been selected by the investment manager.

Certain Underlying Funds may also use forward contracts to hedge
against a decline in the value of existing investments denominated in foreign
currency. For example, if an Underlying Fund owned securities denominated in
pounds sterling, it could enter into a forward contract to sell pounds
sterling in return for U.S. dollars to hedge against possible declines in the
pound's value. Such a hedge (sometimes referred to as a "position hedge")
would tend to offset both positive and negative currency fluctuations, but
would not offset changes in security values caused by other factors. The
Underlying Fund could also hedge the position by selling another currency
expected to perform similarly to the pound sterling -- for example, by
entering into a forward contract to sell Deutschemarks or European Currency
Units in return for U.S. dollars. This type of hedge, sometimes referred to as
a "proxy hedge," could offer advantages in terms of cost, yield, or
efficiency, but generally will not hedge currency exposure as effectively as a
simple hedge into U.S. dollars. Proxy hedges may result in losses if the
currency used to hedge does not perform similarly to the currency in which the
hedged securities are denominated.

Under certain conditions, SEC guidelines require mutual funds to set
aside cash and appropriate liquid assets in a segregated custodian account to
cover currency forward contracts. As required by SEC guidelines, certain
Underlying Funds will segregate assets to cover currency forward contracts, if
any, whose purpose is essentially speculative. The Underlying Funds will not
segregate assets to cover forward contracts, including settlement hedges,
position hedges, and proxy hedges. Successful use of forward currency
contracts will depend on the investment manager's skill in analyzing and
predicting currency values. Forward contracts may substantially change an
Underlying Fund's investment exposure to changes in currency exchange rates,
and could result in losses to the Underlying Fund if currencies do not perform
as the investment manager anticipates. For example, if a currency's value rose
at a time when the investment manager had hedged an Underlying Fund by selling
that currency in exchange for dollars, the Underlying Fund would be unable to
participate in the currency's appreciation. If the investment manager hedges
currency exposure through proxy hedges, an Underlying Fund could realize
currency losses from the hedge and the security position at the same time if
the two currencies do not move in tandem. Similarly, if the investment manager
increases an Underlying

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<PAGE>

Fund's exposure to a foreign currency, and that currency's value declines, the
Underlying Fund will realize a loss. There is no assurance that the investment
manager's use of forward currency contracts will be advantageous to the
Underlying Funds or that it will hedge at an appropriate time.

Foreign Currency Conversion
Although foreign exchange dealers do not charge a fee for currency
conversion, they do realize a profit based on the difference (the "spread")
between prices at which they are buying and selling various currencies. Thus,
a dealer may offer to sell a foreign currency to an Underlying Fund at one
rate, while offering a lesser rate of exchange should the Underlying Fund
desire to resell that currency to the dealer.

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ACCOUNTING AND TAX ISSUES

When a Portfolio writes a call, or purchases a put option, an amount
equal to the premium received or paid by it is included in the section of the
Portfolio's assets and liabilities as an asset and as an equivalent liability.

In writing a call, the amount of the liability is subsequently
"marked to market" to reflect the current market value of the option written.
The current market value of a written option is the last sale price on the
principal Exchange on which such option is traded or, in the absence of a
sale, the mean between the last bid and asked prices. If an option which a
Portfolio has written expires on its stipulated expiration date, the Portfolio
reports a realized gain. If a Portfolio enters into a closing purchase
transaction with respect to an option which the Portfolio has written, the
Portfolio realizes a gain (or loss if the cost of the closing transaction
exceeds the premium received when the option was sold) without regard to any
unrealized gain or loss on the underlying security, and the liability related
to such option is extinguished. Any such gain or loss is a short-term capital
gain or loss for federal income tax purposes. If a call option which a
Portfolio has written is exercised, the Portfolio realizes a capital gain or
loss (long-term or short-term, depending on the holding period of the
underlying security) from the sale of the underlying security and the proceeds
from such sale are increased by the premium originally received.

The premium paid by a Portfolio for the purchase of a put option is
recorded in the section of the Portfolio's assets and liabilities as an
investment and subsequently adjusted daily to the current market value of the
option. For example, if the current market value of the option exceeds the
premium paid, the excess would be unrealized appreciation and, conversely, if
the premium exceeds the current market value, such excess would be unrealized
depreciation. The current market value of a purchased option is the last sale
price on the principal Exchange on which such option is traded or, in the
absence of a sale, the mean between the last bid and asked prices. If an
option which a Portfolio has purchased expires on the stipulated expiration
date, the Portfolio realizes a short-term or long-term capital loss for
federal income tax purposes in the amount of the cost of the option. If a
Portfolio sells the put option, it realizes a short-term or long-term capital
gain or loss, depending on whether the proceeds from the sale are greater or
less than the cost of the option. If a Portfolio exercises a put option, it
realizes a capital gain or loss (long-term or short-term, depending on the
holding period of the underlying security) from the sale of the underlying
security and the proceeds from such sale will be decreased by the premium
originally paid. However, since the purchase of a put option is treated as a
short sale for federal income tax purposes, the holding period of the
underlying security will be affected by such a purchase.

Options on Certain Stock Indices--Accounting for options on certain
stock indices will be in accordance with generally accepted accounting
principles. The amount of any realized gain or loss on closing out such a
position will result in a realized gain or loss for tax purposes. Such options
held by the Portfolio at the end of each fiscal year will be required to be
"marked to market" for federal income tax purposes. Sixty percent of any net
gain or loss recognized on such deemed sales or on any actual sales will be
treated as long-term capital gain or loss, and the remainder will be treated
as short-term capital gain or loss.

Other Tax Requirements--Each Portfolio intends to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"). As such, a Portfolio will not be subject to
federal income tax, or to any excise tax, to the extent its earnings are

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<PAGE>

distributed as provided in the Code and it satisfies other requirements
relating to the sources of its income and diversification of its assets.

In order to qualify as a regulated investment company for federal
income tax purposes, each Portfolio must meet certain specific requirements,
including:

(i) The Portfolio must maintain a diversified portfolio of
securities, wherein no security (other than U.S. government securities and
securities of other regulated investment companies) can exceed 25% of the
Portfolio's total assets, and, with respect to 50% of the Portfolio's total
assets, no investment (other than cash and cash items, U.S. government
securities and securities of other regulated investment companies) can exceed
5% of the Portfolio's total assets;

(ii) The Portfolio must derive at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, and gains from
the sale or disposition of stock and securities or foreign currencies, or
other income derived with respect to its business of investing in such stock,
securities, or currencies;

(iii) The Portfolio must distribute to its shareholders at least 90%
of its net investment income and net tax-exempt income for each of its fiscal
years, and

(iv) The Portfolio must realize less than 30% of its gross income for
each fiscal year from gains from the sale of securities and certain other
assets that have been held by the Portfolio for less than three months
("short-short income"). The Taxpayer Relief Act of 1997 (the "1997 Act")
repealed the 30% short-short income test for tax years of regulated investment
companies beginning after August 5, 1997; however, this rule may have
continuing effect in some states for purposes of classifying the Portfolio as
a regulated investment company.

The Code requires the Portfolios to distribute at least 98% of its
taxable ordinary income earned during the calendar year and 98% of its capital
gain net income earned during the 12 month period ending October 31 (in
addition to amounts from the prior year that were neither distributed nor
taxed to a Portfolio) to you by December 31 of each year in order to avoid
federal excise taxes. The Portfolios intend as a matter of policy to declare
and pay sufficient dividends in December or January (which are treated by you
as received in December) but does not guarantee and can give no assurances
that its distributions will be sufficient to eliminate all such taxes.

The straddle rules of Section 1092 may apply. Generally, the straddle
provisions require the deferral of losses to the extent of unrecognized gains
related to the offsetting positions in the straddle. Excess losses, if any,
can be recognized in the year of loss. Deferred losses will be carried forward
and recognized in the year that unrealized losses exceed unrealized gains.

The 1997 Act has also added new provisions for dealing with
transactions that are generally called "Constructive Sale Transactions." Under
these rules, the Portfolio must recognize gain (but not loss) on any
constructive sale of an appreciated financial position in stock, a partnership
interest or certain debt instruments. The Portfolio will generally be treated
as making a constructive sale when it: 1) enters into a short sale on the same
or substantially identical property; 2) enters into an offsetting notional
principal contract; or 3) enters into a futures or forward contract to deliver
the same or

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<PAGE>

substantially identical property. Other transactions (including certain
financial instruments called collars) will be treated as constructive sales as
provided in Treasury regulations to be published. There are also certain
exceptions that apply for transactions that are closed before the end of the
30th day after the close of the taxable year.

Investment in Foreign Currencies and Foreign Securities--The
Portfolios are authorized to invest certain limited amounts in foreign
securities. Such investments, if made, will have the following additional tax
consequences to each Portfolio:

Under the Code, gains or losses attributable to fluctuations in
foreign currency exchange rates which occur between the time a Portfolio
accrues income (including dividends), or accrues expenses which are
denominated in a foreign currency, and the time a Portfolio actually collects
such income or pays such expenses generally are treated as ordinary income or
loss. Similarly, on the disposition of debt securities denominated in a
foreign currency and on the disposition of certain options, futures, forward
contracts, gain or loss attributable to fluctuations in the value of foreign
currency between the date of acquisition of the security or contract and the
date of its disposition are also treated as ordinary gain or loss. These gains
or losses, referred to under the Code as "Section 988" gains or losses, may
increase or decrease the amount of a Portfolio's net investment company
taxable income, which, in turn, will affect the amount of income to be
distributed to you by a Portfolio.

If a Portfolio's Section 988 losses exceed a Portfolio's other net
investment company taxable income during a taxable year, a Portfolio generally
will not be able to make ordinary dividend distributions to you for that year,
or distributions made before the losses were realized will be recharacterized
as return of capital distributions of federal income tax purposes, rather than
as an ordinary dividend or capital gain distribution. If a distribution is
treated as a return of capital, your tax basis in your Portfolio shares will
be reduced by a like amount (to the extent of such basis), and any excess of
the distribution over your tax basis in your Portfolio shares will be treated
as capital gain to you.

The 1997 Act generally requires that foreign income be translated
into U.S. dollars at the average exchange rate for the tax year in which the
transactions are conducted. Certain exceptions apply to taxes paid more than
two years after the taxable year to which they relate. This new law may
require a Portfolio to track and record adjustments to foreign taxes paid on
foreign securities in which it invests. Under a Portfolio's current reporting
procedure, foreign security transactions are recorded generally at the time of
each transaction using the foreign currency spot rate available for the date
of each transaction. Under the new law, a Portfolio will be required to record
a fiscal year end (and at calendar year end for excise tax purposes) an
adjustment that reflects the difference between the spot rates recorded for
each transaction and the year-end average exchange rate for all of a
Portfolio's foreign securities transactions. There is a possibility that the
mutual fund industry will be given relief from this new provision, in which
case no year-end adjustments will be required.

The Portfolios may be subject to foreign withholding taxes on income
from certain of its foreign securities. If more than 50% of the total assets
of a Portfolio at the end of its fiscal year are invested in securities of
foreign corporations, a Portfolio may elect to pass-through to you your pro
rata share of foreign taxes paid by a Portfolio. If this election is made, you
will be: (i) required to include in your gross income your pro rata share of
foreign source income (including any foreign taxes paid by a Portfolio); and
(ii) entitled to either deduct your share of such foreign taxes in computing
your taxable income or to

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<PAGE>

claim a credit for such taxes against your U.S. income tax, subject to certain
limitations under the Code. You will be informed by a Portfolio at the end of
each calendar year regarding the availability of any such foreign tax credits
and the amount of foreign source income (including any foreign taxes paid by a
Portfolio). If a Portfolio elects to pass-through to you the foreign income
taxes that it has paid, you will be informed at the end of the calendar year
of the amount of foreign taxes paid and foreign source income that must be
included on your federal income tax return. If a Portfolio invests 50% or less
of its total assets in securities of foreign corporations, it will not be
entitled to pass-through to you your pro-rata shares of foreign taxes paid by
a Portfolio. In this case, these taxes will be taken as a deduction by a
Portfolio, and the income reported to you will be the net amount after these
deductions. The 1997 Act also simplifies the procedures by which investors in
funds that invest in foreign securities can claim tax credits on their
individual income tax returns for the foreign taxes paid by a Portfolio. These
provisions will allow investors who pay foreign taxes of $300 or less on a
single return or $600 or less on a joint return during any year (all of which
must be reported on IRS Form 1099-DIV from a Portfolio to the investor) to
claim a tax credit against their U.S. federal income tax for the amount of
foreign taxes paid by a Portfolio. This process will allow you, if you
qualify, to bypass the burdensome and detailed reporting requirements on the
foreign tax credit schedule (Form 1116) and report your foreign taxes paid
directly on page 2 of Form 1040. You should note that this simplified
procedure will not be available until calendar year 1998.

Investment in Passive Foreign Investment Company securities--The
Portfolios may invest in shares of foreign corporations which may be
classified under the Code as passive foreign investment companies ("PFICs").
In general, a foreign corporation is classified as a PFIC if at least one-half
of its assets constitute investment-type assets or 75% or more of its gross
income is investment-type income. If a Portfolio receives an "excess
distribution" with respect to PFIC stock, the Portfolio itself may be subject
to U.S. federal income tax on a portion of the distribution, whether or not
the corresponding income is distributed by a Portfolio to you. In general,
under the PFIC rules, an excess distribution is treated as having been
realized ratably over the period during which a Portfolio held the PFIC
shares. A Portfolio itself will be subject to tax on the portion, if any, of
an excess distribution that is so allocated to prior Portfolio taxable years,
and an interest factor will be added to the tax, as if the tax had been
payable in such prior taxable years. In this case, you would not be permitted
to claim a credit on your own tax return for the tax paid by a Portfolio.
Certain distributions from a PFIC as well as gain from the sale of PFIC shares
are treated as excess distributions. Excess distributions are characterized as
ordinary income even though, absent application of the PFIC rules, certain
distribution might have been classified as capital gain. This may have the
effect of increasing Portfolio distributions to you that are treated as
ordinary dividends rather than long-term capital gain dividends.

A Portfolio may be eligible to elect alternative tax treatment with
respect to PFIC shares. Under an election that currently is available in some
circumstances, a Portfolio generally would be required to include in its gross
income its share of the earnings of a PFIC on a current basis, regardless of
whether distributions are received from the PFIC during such period. If this
election were made, the special rules, discussed above, relating to the
taxation of excess distributions, would not apply. In addition, the 1997 Act
provides for another election that would involve marking-to-market the
Portfolio's PFIC shares at the end of each taxable year (and on certain other
dates as prescribed in the Code), with the result that unrealized gains would
be treated as though they were realized. The Portfolio would also be allowed
an ordinary deduction for the excess, if any, of the adjusted basis of its
investment in the PFIC stock over its fair market value at the end of the
taxable year. This deduction would be limited to the amount of any net
mark-to-market gains previously included with respect to that particular PFIC
security. If a

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Portfolio were to make this second PFIC election, tax at the Portfolio level
under the PFIC rules would generally be eliminated.

The application of the PFIC rules may affect, among other things, the
amount of tax payable by a Portfolio (if any), the amounts distributable to
you by a Portfolio, the time at which these distributions must be made, and
whether these distributions will be classified as ordinary income or capital
gain distributions to you.

You should be aware that it is not always possible at the time shares
of a foreign corporation are acquired to ascertain that the foreign
corporation is a PFIC, and that there is always a possibility that a foreign
corporation will become a PFIC after a Portfolio acquires shares in that
corporation. While a Portfolio will generally seek to avoid investing in PFIC
shares to avoid the tax consequences detailed above, there are no guarantees
that it will do so and it reserves the right to make such investments as a
matter of its fundamental investment policy.

Most foreign exchange gains are classified as ordinary income which
will be taxable to you as such when distributed. Similarly, you should be
aware that any foreign exchange losses realized by a Portfolio, including any
losses realized on the sale of foreign debt securities, are generally treated
as ordinary losses for federal income tax purposes. This treatment could
increase or reduce a Portfolio's income available for distribution to you, and
may cause some or all of a Portfolio's previously distributed income to be
classified as a return of capital.

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PERFORMANCE INFORMATION

From time to time, each Portfolio may state its Classes' total return
in advertisements and other types of literature. Any statement of total return
performance data for a Class will be accompanied by information on the average
annual compounded rate of return for that Class over, as relevant, the most
recent one-, five- and ten-year (or life-of-fund, if applicable) periods. Each
Portfolio may also advertise aggregate and average total return information of
its Classes over additional periods of time. In addition, each Portfolio may
include illustrations showing the power of compounding in advertisements and
other types of literature

The average annual total rate of return for each Class is based on a
hypothetical $1,000 investment that includes capital appreciation and
depreciation during the stated periods. The following formula will be used for
the actual computations:

n
P(1 + T) = ERV

Where: P = a hypothetical initial purchase order of $1,000 from
which, in the case of only Class A Shares, the
maximum front-end sales charge is deducted;

T = average annual total return;

n = number of years; and

ERV = redeemable value of the hypothetical $1,000
purchase at the end of the period after the
deduction of the applicable CDSC, if any, with
respect to Class B Shares and Class C Shares.

In presenting performance information for Class A Shares, the Limited
CDSC applicable to only certain redemptions of those shares will not be
deducted from any computation of total return. See the Prospectuses for the
Fund Classes for a description of the Limited CDSC and the limited instances
in which it applies. All references to a CDSC in this Performance Information
section will apply to Class B Shares or Class C Shares of the Portfolios.

Aggregate or cumulative total return is calculated in a similar
manner, except that the results are not annualized. Each calculation assumes
the maximum front-end sales charge, if any, is deducted from the initial
$1,000 investment at the time it is made with respect to Class A Shares and
that all distributions are reinvested at net asset value, and, with respect to
Class B Shares and Class C Shares, reflects the deduction of the CDSC that
would be applicable upon complete redemption of such shares. In addition, each
Portfolio may present total return information that does not reflect the
deduction of the maximum front-end sales charge or any applicable CDSC.

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Statistical and performance information and various indices compiled
and maintained by organizations such as the following may also be used in
preparing exhibits comparing certain industry trends and competitive mutual
fund performance to comparable activities and performances of the Portfolios
and in illustrating general financial planning principles. From time to time,
certain mutual fund performance ranking information, calculated and provided
by these organizations, may also be used in the promotion of sales of the
Portfolios. Any indices used are not managed for any investment goal, and a
direct investment in an index is not possible.

CDA Technologies, Inc., Lipper Analytical Services, Inc. and
Morningstar, Inc. are performance evaluation services that maintain
statistical performance databases, as reported by a diverse universe
of independently-managed mutual funds.

Ibbotson Associates, Inc. is a consulting firm that provides a
variety of historical data including total return, capital
appreciation and income on the stock market as well as other
investment asset classes, and inflation. With its permission, this
information will be used primarily for comparative purposes and to
illustrate general financial planning principles.

Interactive Data Corporation is a statistical access service that
maintains a database of various international industry indicators,
such as historical and current price/earning information, individual
equity and fixed-income price and return information.

Compustat Industrial Databases, a service of S&P, may also be used in
preparing performance and historical stock and bond market exhibits.
This firm maintains fundamental databases that provide financial,
statistical and market information covering more than 7,000
industrial and non-industrial companies.

Salomon Brothers and Lehman Brothers are statistical research firms
that maintain databases of international market, bond market,
corporate and government-issued securities of various maturities.
This information, as well as unmanaged indices compiled and
maintained by these firms, will be used in preparing comparative
illustrations. In addition, the performance of multiple indices
compiled and maintained by these firms may be combined to create a
blended performance result for comparative purposes. Generally, the
indices selected will be representative of the types of securities in
which the Portfolios may invest and the assumptions that were used in
calculating the blended performance will be described.

Current interest rate and yield information on government debt
obligations of various durations, as reported weekly by the Federal Reserve
(Bulletin H.15), may also be used. In addition, current rate information on
municipal debt obligations of various durations, as reported daily by The Bond
Buyer, may also be used. The Bond Buyer is published daily and is an
industry-accepted source for current municipal bond market information.

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From time to time, the Portfolios may quote actual total return
performance for each Class in advertising and other types of literature
compared to indices or averages of alternative financial products available to
prospective investors. For example, the performance comparisons may include
the average return of various bank instruments, some of which may carry
certain return guarantees, offered by leading banks and thrifts as monitored
by Bank Rate Monitor, and those of generally-accepted corporate bond and
government security price indices of various durations prepared by Lehman
Brothers and Salomon Brothers, Inc. These indices are not managed for any
investment goal. Comparative information on the Consumer Price Index may also
be included. The Consumer Price Index, as prepared by the U.S. Bureau of Labor
Statistics, is the most commonly used measure of inflation. It indicates the
cost fluctuations of a representative group of consumer goods. It does not
represent a return from an investment.

Total return performance for each Class of the Portfolios will
reflect the appreciation or depreciation of principal, reinvestment of income
and any capital gains distributions paid during any indicated period, and, in
the case of Class A Shares, the impact of the maximum front-end sales charge,
if any, paid on the illustrated investment amount, annualized. Performance of
Class A Shares may also be shown without reflecting the impact of any
front-end sales charge. The results will not reflect any income taxes, if
applicable, payable by shareholders on the reinvested distributions included
in the calculations. The performance of Class B Shares and Class C Shares will
be calculated both with the applicable CDSC included and excluded. The net
asset values of the Portfolios fluctuate so shares, when redeemed, may be
worth more or less than the original investment, and the Portfolios' results
should not be considered a guarantee of future performance.

Because every investor's goals and risk threshold are different, the
Distributor, as distributor for the Trust and other mutual funds in the
Delaware Group, will provide general information about investment alternatives
and scenarios that will allow investors to assess their personal goals. This
information will include general material about investing as well as materials
reinforcing various industry-accepted principles of prudent and responsible
personal financial planning. One typical way of addressing these issues is to
compare an individual's goals and the length of time the individual has to
attain these goals to his or her risk threshold. In addition, the Distributor
will provide information that discusses the Manager's overriding investment
philosophy and how that philosophy impacts the Portfolios', and other Delaware
Group funds', investment disciplines employed in seeking their objectives. The
Distributor may also from time to time cite general or specific information
about the institutional clients of the Manager, including the number of such
clients serviced by the Manager.

Dollar-Cost Averaging
For many people, deciding when to invest can be a difficult decision.
Security prices tend to move up and down over various market cycles and logic
says to invest when prices are low. However, even experts can't always pick
the highs and the lows. By using a strategy known as dollar-cost averaging,
you schedule your investments ahead of time. If you invest a set amount on a
regular basis, that money will always buy more shares when the price is low
and fewer when the price is high. You can choose to invest at any regular
interval--for example, monthly or quarterly--as long as you stick to your
regular schedule. Dollar-cost averaging looks simple and it is, but there are
important things to remember.

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<PAGE>

Dollar-cost averaging works best over longer time periods, and it
doesn't guarantee a profit or protect against losses in declining markets. If
you need to sell your investment when prices are low, you may not realize a
profit no matter what investment strategy you utilize. That's why dollar-cost
averaging can make sense for long-term goals. Since the potential success of a
dollar-cost averaging program depends on continuous investing, even through
periods of fluctuating prices, you should consider your dollar-cost averaging
program a long-term commitment and invest an amount you can afford and
probably won't need to withdraw. You also should consider your financial
ability to continue to purchase shares during periods of high fund share
prices. Delaware Group offers three services -- Automatic Investing Plan,
Direct Deposit Purchase Plan and the Wealth Builder Option -- that can help to
keep your regular investment program on track. See Investing by Electronic
Fund Transfer - Direct Deposit Purchase Plan and Automatic Investing Plan
under Investment Plans and Wealth Builder Option under Investment Plans for a
complete description of these services, including restrictions or limitations.

The example below illustrates how dollar-cost averaging can work. In
a fluctuating market, the average cost per share over a period of time will be
lower than the average price per share for the same time period.

Number
Investment Price Per of Shares
Amount Share Purchased

Month 1 $100 $10.00 10
Month 2 $100 $12.50 8
Month 3 $100 $ 5.00 20
Month 4 $100 $10.00 10
-----------------------------------------------------------------
$400 $37.50 48

Total Amount Invested: $400
Total Number of Shares Purchased: 48
Average Price Per Share: $9.38 ($37.50/4)
Average Cost Per Share: $8.33 ($400/48 shares)

This example is for illustration purposes only. It is not intended to
represent the actual performance of any stock or bond fund in the Delaware
Group of funds.

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TRADING PRACTICES AND BROKERAGE

Each Portfolio selects banks, brokers or dealers to execute
transactions for the purchase or sale of portfolio securities on the basis of
the Portfolio's judgment of the professional capability of such banks, brokers
or dealers to provide the service. The primary consideration is to have banks,
brokers or dealers execute transactions at best price and execution. Best
price and execution refers to many factors, including the price paid or
received for a security, the commission charged, the promptness and
reliability of execution, the confidentiality and placement accorded the order
and other factors affecting the overall benefit obtained by the account on the
transaction. In most instances, trades of fixed-income securities are made on
a net basis where the Portfolios either buy the securities directly from the
dealer or sell them to the dealer. In these instances, there is no direct
commission charged but there is a spread (the difference between the buy and
sell price) which is the equivalent of a commission. When a commission is
paid, the Portfolio involved pays reasonably competitive brokerage commission
rates based upon the professional knowledge of the Manager as to rates paid
and charged for similar transactions throughout the securities industry. In
some instances, a Portfolio pays a minimal share transaction cost when the
transaction presents no difficulty.

The Manager may allocate out of all commission business generated by
all of the funds and accounts under its management, brokerage business to
brokers or dealers who provide brokerage and research services. These services
include advice, either directly or through publications or writings, as to the
value of securities, the advisability of investing in, purchasing or selling
securities, and the availability of securities or purchasers or sellers of
securities; furnishing of analyses and reports concerning issuers, securities
or industries; providing information on economic factors and trends; assisting
in determining portfolio strategy; providing computer software and hardware
used in security analyses; and providing portfolio performance evaluation and
technical market analyses. Such services are used by the Manager in connection
with its investment decision-making processes with respect to one or more
funds and accounts managed by it, and may not be used, or used exclusively,
with respect to the fund or account generating the brokerage.

As provided in the Securities Exchange Act of 1934 (the "1934 Act")
and the Portfolios' Investment Management Agreements higher commissions are
permitted to be paid to broker/dealers who provide brokerage and research
services than to broker/dealers who do not provide such services if such
higher commissions are deemed reasonable in relation to the value of the
brokerage and research services provided. Although transactions are directed
to broker/dealers who provide such brokerage and research services, the
Portfolios believe that the commissions paid to such broker/dealers are not,
in general, higher than commissions that would be paid to broker/dealers not
providing such services and that such commissions are reasonable in relation
to the value of the brokerage and research services provided. In some
instances, services may be provided to the Manager which constitute in some
part brokerage and research services used by the Manager in connection with
its investment decision-making process and constitute in some part services
used by the Manager in connection with administrative or other functions not
related to its investment decision-making process. In such cases, the Manager
will make a good faith allocation of brokerage and research services and will
pay out of its own resources for services used by the Manager in connection
with administrative or other functions not related to its investment
decision-making process. In addition, so long as no fund is disadvantaged,
portfolio transactions which generate commissions or their equivalent are
allocated to broker/dealers who provide daily portfolio pricing services to
the Portfolios and to other funds in the Delaware Group. Subject to best price
and execution, commissions allocated to brokers providing such pricing
services may or may not be generated by the funds receiving the pricing
service.

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<PAGE>

The Manager may place a combined order for two or more accounts or
funds engaged in the purchase or sale of the same security if, in its
judgment, joint execution is in the best interest of each participant and will
result in best price and execution. Transactions involving commingled orders
are allocated in a manner deemed equitable to each account or fund. When a
combined order is executed in a series of transactions at different prices,
each account participating in the order may be allocated an average price
obtained from the executing broker. It is believed that the ability of the
accounts to participate in volume transactions will generally be beneficial to
the accounts and funds. Although it is recognized that, in some cases, the
joint execution of orders could adversely affect the price or volume of the
security that a particular account or fund may obtain, it is the opinion of
the Manager and the Trust's Board of Trustees that the advantages of combined
orders outweigh the possible disadvantages of separate transactions.

Consistent with the Conduct Rules of the National Association of
Securities Dealers, Inc. (the "NASD"), and subject to seeking best price and
execution, the Portfolios may place orders with broker/dealers that have
agreed to defray certain expenses of the funds in the Delaware Group of funds
such as custodian fees, and may, at the request of the Distributor, give
consideration to sales of shares of such funds as a factor in the selection of
brokers and dealers to execute portfolio transactions of the Portfolios.

Portfolio Turnover
The rate of portfolio turnover will not be a limiting factor when
portfolio changes are deemed appropriate. Given the Portfolios' investment
objectives, their annual portfolio turnover rates are not expected to exceed
100%. A turnover rate of 100% would occur, for example, if all the investments
held by a Portfolio at the beginning of the year were replaced by the end of
the year. The degree of portfolio activity may affect taxes payable by the
Portfolios' shareholders. To the extent a Portfolio realizes gains on
securities held for less than six months, such gains are taxable to the
shareholder or to the Portfolio at ordinary income tax rates. The turnover
rates also may be affected by cash requirements from redemptions and
repurchases of Portfolio shares.

The portfolio turnover rate of the Portfolio is calculated by
dividing the lesser of purchases or sales of portfolio securities for the
particular fiscal year by the monthly average of the value of the portfolio
securities owned by the Portfolio during the particular fiscal year, exclusive
of securities whose maturities at the time of acquisition are one year or
less.

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<PAGE>

PURCHASING SHARES

The Distributor serves as the national distributor for each
Portfolio's classes of shares - Class A Shares, Class B Shares, Class C Shares
and the Institutional Class - and has agreed to use its best efforts to sell
shares of each Portfolio. See the Prospectuses for additional information on
how to invest. Shares of the Portfolios are offered on a continuous basis, and
may be purchased through authorized investment dealers or directly by
contacting the Trust or the Distributor.

The minimum initial investment generally is $1,000 for Class A
Shares, Class B Shares and Class C Shares. Subsequent purchases of such
classes generally must be at least $100. The initial and subsequent minimum
investments for Class A Shares will be waived for purchases by officers,
directors and employees of any Delaware Group fund, the Manager or any of the
its affiliates if the purchases are made pursuant to a payroll deduction
program. Shares purchased pursuant to the Uniform Gifts to Minors Act or
Uniform Transfers to Minors Act and shares purchased in connection with an
Automatic Investing Plan are subject to a minimum initial purchase of $250 and
a minimum subsequent purchase of $25. Accounts opened under the Delaware Group
Asset Planner service are subject to a minimum initial investment of $2,000
per Asset Planner Strategy selected. There are no minimum purchase
requirements for the Portfolios' Institutional Classes, but certain
eligibility requirements must be satisfied.

Each purchase of Class B Shares is subject to a maximum purchase
limitation of $250,000. For Class C Shares, each purchase must be in an amount
that is less than $1,000,000. See Investment Plans for purchase limitations
applicable to retirement plans. The Trust will reject any purchase order for
more than $250,000 of Class B Shares and $1,000,000 or more of Class C Shares.
An investor may exceed these limitations by making cumulative purchases over a
period of time. An investor should keep in mind, however, that reduced
front-end sales charges apply to investments of $100,000 or more in Class A
Shares, and that Class A Shares are subject to lower annual 12b-1 Plan
expenses than Class B Shares and Class C Shares and generally are not subject
to a CDSC.

Selling dealers are responsible for transmitting orders promptly. The
Trust reserves the right to reject any order for the purchase of shares of
either Portfolio if in the opinion of management such rejection is in such
Portfolio's best interests.

The NASD has adopted Conduct Rules, as amended, relating to
investment company sales charges. The Trust and the Distributor intend to
operate in compliance with these rules.

Class A Shares are purchased at the offering price which reflects a
maximum front-end sales charge of 4.75%; however, lower front-end sales
charges apply for larger purchases. See the table below. Class A Shares are
also subject to annual 12b-1 Plan expenses.

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<PAGE>

Class B Shares are purchased at net asset value and are subject to a
CDSC of: (i) 4% if shares are redeemed within two years of purchase; (ii) 3%
if shares are redeemed during the third or fourth year following purchase;
(iii) 2% if shares are redeemed during the fifth year following purchase; and
(iv) 1% if shares are redeemed during the sixth year following purchase. Class
B Shares are also subject to annual 12b-1 Plan expenses which are higher than
those to which Class A Shares are subject and are assessed against Class B
Shares for approximately eight years after purchase. See Automatic Conversion
of Class B Shares under Classes of Shares in the Fund Classes' Prospectuses.

Class C Shares are purchased at net asset value and are subject to a
CDSC of 1% if shares are redeemed within 12 months following purchase. Class C
Shares are also subject to annual 12b-1 Plan expenses for the life of the
investment which are equal to those to which Class B Shares are subject.

Institutional Class shares are purchased at the net asset value per
share without the imposition of a front-end or contingent deferred sales
charge or 12b-1 Plan expenses. See Determining Offering Price and Net Asset
Value and Plans Under Rule 12b-1 for the Fund Classes in this Part B.

Class A Shares, Class B Shares, Class C Shares and Institutional
Class shares represent a proportionate interest in a Portfolio's assets and
will receive a proportionate interest in that Portfolio's income, before
application, as to Class A, Class B and Class C Shares, of any expenses, if
any, under a Portfolio's 12b-1 Plans.

Certificates representing shares purchased are not ordinarily issued
unless, in the case of Class A Shares or Institutional Class shares, a
shareholder submits a specific request. Certificates are not issued in the
case of Class B Shares or Class C Shares or in the case of any retirement plan
accounts including self-directed IRAs. However, purchases not involving the
issuance of certificates are confirmed to the investor and credited to the
shareholder's account on the books maintained by Delaware Service Company,
Inc. (the "Transfer Agent"). The investor will have the same rights of
ownership with respect to such shares as if certificates had been issued. An
investor that is permitted to obtain a certificate may receive a certificate
representing full share denominations purchased by sending a letter signed by
each owner of the account to the Transfer Agent requesting the certificate. No
charge is assessed by the Trust for any certificate issued. A shareholder may
be subject to fees for replacement of a lost or stolen certificate, under
certain conditions, including the cost of obtaining a bond covering the lost
or stolen certificate. Please contact a Portfolio for further information.
Investors who hold certificates representing any of their shares may only
redeem those shares by written request. The investor's certificate(s) must
accompany such request.

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<PAGE>

Alternative Purchase Arrangements
The alternative purchase arrangements of Class A, Class B and Class C
Shares of each Portfolio permit investors to choose the method of purchasing
shares that is most suitable for their needs given the amount of their
purchase, the length of time they expect to hold their shares and other
relevant circumstances. Investors should determine whether, given their
particular circumstances, it is more advantageous to purchase Class A Shares
of a Portfolio and incur a front-end sales charge and annual 12b-1 Plan
expenses of up to a maximum of 0.30% of the average daily net assets of Class
A Shares (currently, no more than 0.25% of the average daily net assets of
Class A Shares , pursuant to Board action) or to purchase either Class B or
Class C Shares of a Portfolio and have the entire initial purchase amount
invested in the Portfolio with the investment thereafter subject to a CDSC and
annual 12b-1 Plan expenses. Class B Shares are subject to a CDSC if the shares
are redeemed within six years of purchase, and Class C Shares are subject to a
CDSC if the shares are redeemed within 12 months of purchase. Class B and
Class C Shares are each subject to annual 12b-1 Plan expenses of up to a
maximum of 1% (0.25% of which are service fees to be paid to the Distributor,
dealers or others for providing personal service and/or maintaining
shareholder accounts) of average daily net assets of the respective Class.
Class B Shares will automatically convert to Class A Shares at the end of
approximately eight years after purchase and, thereafter, be subject to annual
12b-1 Plan expenses of up to a maximum of 0.30% of average daily net assets of
such shares. Unlike Class B Shares, Class C Shares do not convert to another
class.

Class A Shares
Purchases of $100,000 or more of Class A Shares at the offering price
carry reduced front-end sales charges as shown in the accompanying table, and
may include a series of purchases over a 13-month period under a Letter of
Intention signed by the purchaser. See Special Purchase Features -- Class A
Shares, below for more information on ways in which investors can avail
themselves of reduced front-end sales charges and other purchase features.

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<PAGE>

Income Portfolio
Balanced Portfolio
Growth Portfolio
Class A Shares
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------

Dealer's
Commission***
Front-End Sales Charge as % as % of
Offering Amount Offering
Amount of Purchase Price Invested** Price
- -------------------------------------------------------------------------------------------------------------------------------

Income Balanced Growth
Portfolio Portfolio Portfolio

<S> <C> <C> <C> <C> <C>
Less than $100,000 4.75% 4.94% 4.94% 4.94% 4.00%

$100,000 but under $250,000 3.75 3.88 3.88 3.88 3.00

$250,000 but under $500,000 2.50 2.59 2.59 2.59 2.00

$500,000 but under $1,000,000* 2.00 2.00 2.00 2.00 1.60
</TABLE>

* There is no front-end sales charge on purchases of $1,000,000 or more of
Class A Shares but, under certain limited circumstances, a 1% contingent
deferred sales charge may apply upon redemption of such shares. The
contingent deferred sales charge ("Limited CDSC") that may be applicable
arises only in the case of certain shares that were purchased at net asset
value and triggered the payment of a dealer's commission.

** Based upon an initial net asset value of $8.50 per share of the
respective Class A Shares.

*** Financial institutions or their affiliated brokers may receive an agency
transaction fee in the percentages set forth above.

- --------------------------------------------------------------------------------
A Portfolio must be notified when a sale takes place which would
qualify for the reduced front-end sales charge on the basis of
previous or current purchases. The reduced front-end sales charge
will be granted upon confirmation of the shareholder's holdings by
such Portfolio. Such reduced front-end sales charges are not
retroactive.

From time to time, upon written notice to all of its dealers, the
Distributor may hold special promotions for specified periods during
which the Distributor may reallow to dealers up to the full amount of
front- end sales charges shown above. Dealers who receive 90% or more
of the sales charge may be deemed to be underwriters under the
Securities Act of 1933 (the "1933 Act").

- --------------------------------------------------------------------------------

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<PAGE>

Certain dealers who enter into an agreement to provide extra training
and information on Delaware Group products and services and who increase sales
of Delaware Group funds may receive an additional commission of up to 0.15% of
the offering price in connection with sales of Class A Shares. Such dealers
must meet certain requirements in terms of organization and distribution
capabilities and their ability to increase sales. The Distributor should be
contacted for further information on these requirements as well as the basis
and circumstances upon which the additional commission will be paid.
Participating dealers may be deemed to have additional responsibilities under
the securities laws.

Dealer's Commission
For initial purchases of Class A Shares of $1,000,000 or more, a
dealer's commission may be paid by the Distributor to financial advisers
through whom such purchases are effected in accordance with the following
schedule:

Dealer's Commission
(as a percentage of
Amount of Purchase amount purchased)
------------------ -----------------

Up to $2 million 1.00%
Next $1 million up to $3 million 0.75
Next $2 million up to $5 million 0.50
Amount over $5 million 0.25

In determining a financial adviser's eligibility for the dealer's
commission, purchases of Class A Shares of other Delaware Group funds as to
which a Limited CDSC applies (see Contingent Deferred Sales Charge for Certain
Redemptions of Class A Shares Purchased at Net Asset Value under Redemption
and Exchange in the Fund Classes' Prospectuses) may be aggregated with those
of Class A Shares of a Portfolio. Financial advisers also may be eligible for
a dealer's commission in connection with certain purchases made under a Letter
of Intention or pursuant to an investor's Right of Accumulation. Financial
advisers should contact the Distributor concerning the applicability and
calculation of the dealer's commission in the case of combined purchases.

Contingent Deferred Sales Charge - Class B Shares and Class C Shares
Class B Shares and Class C Shares are purchased without a front-end
sales charge. Class B Shares redeemed within six years of purchase may be
subject to a CDSC at the rates set forth below, and Class C Shares redeemed
within 12 months of purchase may be subject to a CDSC of 1%. CDSCs are charged
as a percentage of the dollar amount subject to the CDSC. The charge will be
assessed on an amount equal to the lesser of the net asset value at the time
of purchase of the shares being redeemed or the net asset value of those
shares at the time of redemption. No CDSC will be imposed on increases in net
asset value above the initial purchase price, nor will a CDSC be assessed on
redemptions of shares acquired through reinvestment of dividends or capital
gains distributions. See Waiver of Contingent Deferred Sales Charge - Class B
and Class C Shares under Redemption and Exchange in the Prospectuses for the
Fund Classes for a list of the instances in which the CDSC is waived.

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<PAGE>

The following table sets forth the rates of the CDSC for Class B
Shares of each Portfolio:

Contingent Deferred
Sales Charge (as a
Percentage of
Dollar Amount
Year After Purchase Made Subject to Charge)
------------------------ ------------------

0-2 4%
3-4 3%
5 2%
6 1%
7 and thereafter None

During the seventh year after purchase and, thereafter, until converted
automatically into Class A Shares, Class B Shares, absent any applicable fee
waiver, will still be subject to the annual 12b-1 Plan expenses of up to 1% of
average daily net assets of those shares. At the end of approximately eight
years after purchase, the investor's Class B Shares will be automatically
converted into Class A Shares of the same Portfolio. See Automatic Conversion
of Class B Shares under Classes of Shares in the Fund Classes' Prospectuses.
Such conversion will constitute a tax-free exchange for federal income tax
purposes. See Taxes in the Prospectuses for the Fund Classes.

Plans Under Rule 12b-1 for the Fund Classes
Pursuant to Rule 12b-1 under the 1940 Act, the Trust has adopted a
separate plan for each of the Class A Shares, Class B Shares and Class C
Shares of each Portfolio (the "Plans"). Each Plan permits the relevant
Portfolio to pay for certain distribution, promotional and related expenses
involved in the marketing of only the class of shares to which the Plan
applies. The Plans do not apply to Institutional Classes of shares. Such
shares are not included in calculating the Plans' fees, and the Plans are not
used to assist in the distribution and marketing of shares of the
Institutional Classes. Shareholders of the Institutional Classes may not vote
on matters affecting the Plans.

The Plans permit a Portfolio, pursuant to its Distribution Agreement,
to pay out of the assets of Class A Shares, Class B Shares and Class C Shares
monthly fees to the Distributor for its services and expenses in distributing
and promoting sales of shares of such classes. These expenses include, among
other things, preparing and distributing advertisements, sales literature and
prospectuses and reports used for sales purposes, compensating sales and
marketing personnel, and paying distribution and maintenance fees to
securities brokers and dealers who enter into agreements with the Distributor.
The Plan expenses relating to Class B and Class C Shares are also used to pay
the Distributor for advancing the commission costs to dealers with respect to
the initial sale of such shares.

In addition, absent any applicable fee waiver, each Portfolio may
make payments out of the assets of Class A, Class B and Class C Shares
directly to other unaffiliated parties, such as banks, who either aid in the
distribution of shares of, or provide services to, such classes.

The maximum aggregate fee payable by a Portfolio under its Plans, and
the Portfolios' Distribution Agreements, is on an annual basis, up to 0.30% of
the Class A Shares' average daily net assets for the year, and up to 1% (0.25%
of which are service fees to be paid to the Distributor, dealers and others
for providing

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<PAGE>

personal service and/or maintaining shareholder accounts) of each of the Class
B Shares' and Class C Shares' average daily net assets for the year. The
Trust's Board of Trustees may reduce these amounts at any time.

Pursuant to Board action, the maximum aggregate fee payable by Class
A Shares 0.25%. While this describes the current basis for calculating the
fees which will be payable under the Class A Shares Plans, such Plans permit a
full 0.30% on all Class A Shares' assets to be paid at any time following
appropriate Board approval.

All of the distribution expenses incurred by the Distributor and
others, such as broker/dealers, in excess of the amount paid on behalf of
Class A, Class B and Class C Shares would be borne by such persons without any
reimbursement from such Fund Classes. Subject to seeking best price and
execution, a Portfolio may, from time to time, buy or sell portfolio
securities from or to firms which receive payments under the Plans.

From time to time, the Distributor may pay additional amounts from
its own resources to dealers for aid in distribution or for aid in providing
administrative services to shareholders.

The Plans and the Distribution Agreements, as amended, have all been
approved by the Board of Trustees of the Trust, including a majority of the
trustees who are not "interested persons" (as defined in the 1940 Act) of the
Trust and who have no direct or indirect financial interest in the Plans, by
vote cast in person at a meeting duly called for the purpose of voting on the
Plans and such Agreements. Continuation of the Plans and the Distribution
Agreements, as amended, must be approved annually by the Board of Trustees in
the same manner as specified above.

Each year, the trustees must determine whether continuation of the
Plans is in the best interest of shareholders of, respectively, Class A
Shares, Class B Shares and Class C Shares of each Portfolio and that there is
a reasonable likelihood of the Plan relating to a Fund Class providing a
benefit to that Class. The Plans and the Distribution Agreements, as amended,
may be terminated with respect to a Class at any time without penalty by a
majority of those trustees who are not "interested persons" or by a majority
vote of the outstanding voting securities of the relevant Fund Class. Any
amendment materially increasing the percentage payable under the Plans must
likewise be approved by a majority vote of the outstanding voting securities
of the relevant Fund Class, as well as by a majority vote of those trustees
who are not "interested persons." With respect to each Class A Shares' Plan,
any material increase in the maximum percentage payable thereunder must also
be approved by a majority of the outstanding voting securities of Class B of
the same Portfolio. Also, any other material amendment to the Plans must be
approved by a majority vote of the trustees including a majority of the
noninterested trustees of the Trust having no interest in the Plans. In
addition, in order for the Plans to remain effective, the selection and
nomination of trustees who are not "interested persons" of the Trust must be
effected by the directors who themselves are not "interested persons" and who
have no direct or indirect financial interest in the Plans. Persons authorized
to make payments under the Plans must provide written reports at least
quarterly to the Board of Trustees for their review.

Other Payments to Dealers -- Class A, Class B and Class C Shares
From time to time, at the discretion of the Distributor, all
registered broker/dealers whose aggregate sales of Fund Classes exceed certain
limits as set by the Distributor, may receive from the Distributor an
additional payment of up to 0.25% 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

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<PAGE>

may sell certain amounts of shares. The Distributor may also pay a portion of
the expense of preapproved dealer advertisements promoting the sale of
Delaware Group fund shares.

Special Purchase Features -- Class A Shares

Buying Class A Shares at Net Asset Value
Class A Shares may be purchased without a front-end sales charge
under the Dividend Reinvestment Plan and, under certain circumstances, the
Exchange Privilege and the 12-Month Reinvestment Privilege.

Current and former officers, trustees and employees of the Trust, any
other fund in the Delaware Group, the Manager, the Manager's affiliates, or
any of the Manager's affiliates that may in the future be created, legal
counsel to the funds and registered representatives and employees of
broker/dealers who have entered into Dealer's Agreements with the Distributor
may purchase Class A Shares of the Portfolios and any such class of shares of
any of the other funds in the Delaware Group, including any fund that may be
created, at the net asset value per share. Family members of such persons at
their direction, and any employee benefit plan established by any of the
foregoing funds, corporations, counsel or broker/dealers may also purchase
Class A Shares at net asset value. Class A Shares may also be purchased at net
asset value by current and former officers, directors and employees (and
members of their families) of the Dougherty Financial Group LLC. Purchases of
Class A Shares may also be made by clients of registered representatives of an
authorized investment dealer at net asset value within 12 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, contingent
deferred sales charge or other sales charge has been assessed. Purchases of
Class A Shares may also be made at net asset value by bank employees who
provide services in connection with agreements between the bank and
unaffiliated brokers or dealers concerning sales of shares of Delaware Group
funds. Officers, directors and key employees of institutional clients of the
Manager or any of its affiliates, may purchase Class A Shares at net asset
value. Moreover, purchases may be effected at net asset value for the benefit
of the clients of brokers, dealers and registered investment advisers
affiliated with a broker or dealer, if such broker, dealer or investment
adviser has entered into an agreement with the Distributor providing
specifically for the purchase of Class A Shares in connection with special
investment products, such as wrap accounts or similar fee based programs. Such
purchasers are required to sign a letter stating that the purchase is for
investment only and that the securities may not be resold except to the
issuer. Such purchasers may also be required to sign or deliver such other
documents as the Trust may reasonably require to establish eligibility for
purchase at net asset value.

Purchases of Class A Shares at net asset value may also be made by
the following: financial institutions investing for the account of their trust
customers when they are not eligible to purchase shares of the institutional
class of a Portfolio; and any group retirement plan (excluding defined benefit
pension plans), or such plans of the same employer, that (i) has in excess of
$500,000 of plan assets invested in Class A Shares of Delaware Group funds and
in any stable value product available through the Delaware Group, or (ii) is
sponsored by an employer that has at any point after May 1, 1997 more than 100
employees while such plan has held Class A Shares of a Delaware Group fund and
such employer has properly represented to DIRSI in writing that it has the
requisite number of employees and has received written confirmation back from
DIRSI Investments in Class A Shares made by plan level and/or participant
retirement accounts that are for the purpose of repaying a loan taken from
such accounts will be made at net asset value. Loan repayments made to a

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<PAGE>

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 Portfolios must be notified in advance that the trade qualifies
for purchase at net asset value.

Letter of Intention
The reduced front-end sales charges described above with respect to
Class A Shares are also applicable to the aggregate amount of purchases made
within a 13-month period pursuant to a written Letter of Intention provided by
the Distributor and signed by the purchaser, and not legally binding on the
signer or the Trust, which provides for the holding in escrow by the Transfer
Agent of 5% of the total amount of Class A Shares intended to be purchased
until such purchase is completed within the 13-month period. A Letter of
Intention may be dated to include shares purchased up to 90 days prior to the
date the Letter is signed. The 13-month period begins on the date of the
earliest purchase. If the intended investment is not completed, except as
noted below, the purchaser will be asked to pay an amount equal to the
difference between the front-end sales charge on Class A Shares purchased at
the reduced rate and the front-end sales charge otherwise applicable to the
total shares purchased. If such payment is not made within 20 days following
the expiration of the 13-month period, the Transfer Agent will surrender an
appropriate number of the escrowed shares for redemption in order to realize
the difference. Such purchasers may include the value (at offering price at
the level designated in their Letter of Intention) of all their shares of the
Portfolios and of any class of any of the other mutual funds in the Delaware
Group (except shares of any Delaware Group fund which do not carry a front-end
sales charge, CDSC or Limited CDSC, other than shares of Delaware Group
Premium Fund, Inc. beneficially owned in connection with the ownership of
variable insurance products, unless they were acquired through an exchange
from a Delaware Group fund which carried a front-end sales charge, CDSC or
Limited CDSC) previously purchased and still held as of the date of their
Letter of Intention toward the completion of such Letter.

Employers offering a Delaware Group retirement plan may also complete
a Letter of Intention to obtain a reduced front-end sales charge on
investments in Class A Shares made by the plan. The aggregate investment level
of the Letter of Intention will be determined and accepted by the Transfer
Agent at the point of plan establishment. The level and any reduction in
front-end sales charge will be based on actual plan participation and the
projected investments in Delaware Group funds that are offered with a
front-end sales charge, CDSC or Limited CDSC for a 13-month period. The
Transfer Agent reserves the right to adjust the signed Letter of Intention
based on this acceptance criteria. The 13-month period will begin on the date
this Letter of Intention is accepted by the Transfer Agent. If actual
investments exceed the anticipated level and equal an amount that would
qualify the plan for further discounts, any front-end sales charges will be
automatically adjusted. In the event this Letter of Intention is not fulfilled
within the 13-month period, the plan level will be adjusted (without
completing another Letter of Intention) and the employer will be billed for
the difference in front-end sales charges due, based on the plan's assets
under management at that time. Employers may also include the value (at
offering price at the level designated in their Letter of Intention) of all
their shares intended for purchase that are offered with a front-end sales
charge, CDSC or Limited CDSC of any class. Class B Shares and Class C Shares
of a Portfolio and other Delaware Group funds which offer corresponding
classes of shares may also be aggregated for this purpose.

Combined Purchases Privilege
In determining the availability of the reduced front-end sales charge
previously set forth with respect to Class A Shares, purchasers may combine
the total amount of any combination of Class A Shares, Class B Shares and/or
Class C Shares of the Portfolios, as well as shares of any other class of any
of the other Delaware Group funds (except shares of any Delaware Group fund
which do not carry a front-end sales charge, CDSC or

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<PAGE>

Limited CDSC, other than shares of Delaware Group Premium Fund, Inc.
beneficially owned in connection with the ownership of variable insurance
products, unless they were acquired through an exchange from a Delaware Group
fund which carried a front-end sales charge, CDSC or Limited CDSC). In
addition, assets held by investment advisory clients of the Manager or its
affiliates in a stable value account may be combined with other Delaware Group
fund holdings.

The privilege also extends to all purchases made at one time by an
individual; or an individual, his or her spouse and their children under 21;
or a trustee or other fiduciary of trust estates or fiduciary accounts for the
benefit of such family members (including certain employee benefit programs).

Right of Accumulation
In determining the availability of the reduced front-end sales charge
with respect to Class A Shares, purchasers may also combine any subsequent
purchases of Class A Shares, Class B Shares and Class C Shares of a Portfolio,
as well as shares of any other class of any of the other Delaware Group funds
which offer such classes (except shares of any Delaware Group fund which do
not carry a front-end sales charge, CDSC or Limited CDSC, other than shares of
Delaware Group Premium Fund, Inc. beneficially owned in connection with the
ownership of variable insurance products, unless they were acquired through an
exchange from a Delaware Group fund which carried a front-end sales charge,
CDSC or Limited CDSC). If, for example, any such purchaser has previously
purchased and still holds Class A Shares and/or shares of any other of the
classes described in the previous sentence with a value of $40,000 and
subsequently purchases $60,000 at offering price of additional shares of Class
A Shares, the charge applicable to the $60,000 purchase would currently be
3.75%. For the purpose of this calculation, the shares presently held shall be
valued at the public offering price that would have been in effect were the
shares purchased simultaneously with the current purchase. Investors should
refer to the table of sales charges for Class A Shares to determine the
applicability of the Right of Accumulation to their particular circumstances.

12-Month Reinvestment Privilege
Holders of Class A Shares of a Portfolio (and of the Institutional
Classes holding shares which were acquired through an exchange from one of the
other mutual funds in the Delaware Group offered with a front-end sales
charge) who redeem such shares have one year from the date of redemption to
reinvest all or part of their redemption proceeds in Class A Shares of that
Portfolio or in Class A Shares of any of the other funds in the Delaware
Group, subject to applicable eligibility and minimum purchase requirements, in
states where shares of such other funds may be sold, at net asset value
without the payment of a front-end sales charge. This privilege does not
extend to Class A Shares where the redemption of the shares triggered the
payment of a Limited CDSC. Persons investing redemption proceeds from direct
investments in mutual funds in the Delaware Group offered without a front-end
sales charge will be required to pay the applicable sales charge when
purchasing Class A Shares. The reinvestment privilege does not extend to a
redemption of either Class B Shares or Class C Shares.

Any such reinvestment cannot exceed the redemption proceeds (plus any
amount necessary to purchase a full share). The reinvestment will be made at
the net asset value next determined after receipt of remittance. A redemption
and reinvestment could have income tax consequences. It is recommended that a
tax adviser be consulted with respect to such transactions. Any reinvestment
directed to a fund in which the investor does not then have an account will be
treated like all other initial purchases of a fund's shares. Consequently, an
investor should obtain and read carefully the prospectus for the fund in which
the investment is intended to be made before investing or sending money. The
prospectus contains more complete information about the fund, including
charges and expenses.

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Investors should consult their financial advisers or the Transfer
Agent, which also serves as the Portfolios' shareholder servicing agent, about
the applicability of the Limited CDSC (see Contingent Deferred Sales Charge
for Certain Redemptions of Class A Shares Purchased at Net Asset Value under
Redemption and Exchange in the Fund Classes' Prospectuses) in connection with
the features described above.

Group Investment Plans
Group Investment Plans that are not eligible to purchase shares of
the Institutional Classes may also benefit from the reduced front-end sales
charges for investments in Class A Shares set forth in the table on page
_____, based on total plan assets. If a company has more than one plan
investing in the Delaware Group of funds, then the total amount invested in
all plans would be used in determining the applicable front-end sales charge
reduction upon each purchase, both initial and subsequent, upon notification
to the Portfolio in which the investment is being made at the time of each
such purchase. Employees participating in such Group Investment Plans may also
combine the investments made in their plan account when determining the
applicable front-end sales charge on purchases to non-retirement Delaware
Group investment accounts if they so notify the Portfolio in connection with
each purchase. See Retirement Plans for the Fund Classes under Investment
Plans for information about Retirement Plans.

The Institutional Classes
The Institutional Class of each Portfolio is available for purchase
only by: (a) retirement plans introduced by persons not associated with
brokers or dealers that are primarily engaged in the retail securities
business and rollover individual retirement accounts from such plans; (b)
tax-exempt employee benefit plans of the Manager, or its affiliates and
securities dealer firms with a selling agreement with the Distributor; (c)
institutional advisory accounts of the Manager, or its affiliates and those
having client relationships with Delaware Investment Advisers, a division of
the Manager, or its affiliates and their corporate sponsors, as well as
subsidiaries and related employee benefit plans and rollover individual
retirement accounts from such institutional advisory accounts; (d) a bank,
trust company and similar financial institution investing for its own account
or for the account of its trust customers for whom such financial institution
is exercising investment discretion in purchasing shares of the Class, except
where the investment is part of a program that requires payment to the
financial institution of a Rule 12b-1 Plan fee; 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.

Shares of the Institutional Classes are available for purchase at net
asset value, without the imposition of a front-end or contingent deferred
sales charge and are not subject to Rule 12b-1 expenses.

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INVESTMENT PLANS

Reinvestment Plan/Open Account
Unless otherwise designated by shareholders in writing, dividends
from net investment income and distributions from realized securities profits,
if any, will be automatically reinvested in additional shares of the
respective Fund Classes in which an investor has an account (based on the net
asset value in effect on the reinvestment date) and will be credited to the
shareholder's account on that date. All dividends and distributions of the
Institutional Classes of each Portfolio are reinvested in the accounts of the
holders of such shares (based on the net asset value in effect on the
reinvestment date). A confirmation of each distribution from realized
securities profits, if any, will be mailed to shareholders in the first
quarter of the fiscal year.

Under the Reinvestment Plan/Open Account, shareholders may purchase
and add full and fractional shares to their plan accounts at any time either
through their investment dealers or by sending a check or money order to the
specific Portfolio and class in which shares are being purchased. Such
purchases, which must meet the minimum subsequent purchase requirements set
forth in the Prospectuses and this Part B, are made, for Class A Shares at the
public offering price, and for Class B Shares, Class C Shares and
Institutional Class shares at the net asset value, at the end of the day of
receipt. A reinvestment plan may be terminated at any time. This plan does not
assure a profit nor protect against depreciation in a declining market.

Reinvestment of Dividends in Other Delaware Group Funds
Subject to applicable eligibility and minimum initial purchase
requirements and the limitations set forth below, holders of Class A, Class B
and Class C Shares may automatically reinvest dividends and/or distributions
in any of the mutual funds in the Delaware Group, including the Portfolios, in
states where their shares may be sold. Such investments will be at net asset
value at the close of business on the reinvestment date without any front-end
sales charge or service fee. The shareholder must notify the Transfer Agent in
writing and must have established an account in the fund into which the
dividends and/or distributions are to be invested. Any reinvestment directed
to a fund in which the investor does not then have an account will be treated
like all other initial purchases of a fund's shares. Consequently, an investor
should obtain and read carefully the prospectus for the fund in which the
investment is intended to be made before investing or sending money. The
prospectus contains more complete information about the fund, including
charges and expenses. See also Additional Methods of Adding to Your Investment
- - Dividend Reinvestment Plan under How to Buy Shares in the Prospectuses for
the Fund Classes.

Subject to the following limitations, dividends and/or distributions
from other funds in the Delaware Group may be invested in shares of the
Portfolios, provided an account has been established. Dividends from Class A
Shares may not be directed to Class B Shares or Class C Shares. Dividends from
Class B Shares may only be directed to other Class B Shares and dividends from
Class C Shares may only be directed to other Class C Shares.

Capital gains and/or dividend distributions to participants in the
following retirement plans are automatically reinvested into the same Delaware
Group fund in which their investments are held: SAR/SEP, SEP/IRA, SIMPLE IRA,
SIMPLE 401(k), Profit Sharing and Money Purchase Pension Plans, 401(k) Defined
Contribution Plans or 403(b)(7) or 457 Deferred Compensation Plans.

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<PAGE>

Investing by Electronic Fund Transfer
Direct Deposit Purchase Plan -- Investors may arrange for a Portfolio
to accept for investment in Class A, Class B or Class C Shares, through an
agent bank, preauthorized government or private recurring payments. This
method of investment assures the timely credit to the shareholder's account of
payments such as social security, veterans' pension or compensation benefits,
federal salaries, Railroad Retirement benefits, private payroll checks,
dividends, and disability or pension fund benefits. It also eliminates lost,
stolen and delayed checks.

Automatic Investing Plan -- Shareholders of Class A, Class B and
Class C Shares may make automatic investments by authorizing, in advance,
monthly payments directly from their checking account for deposit into their
Portfolio account. This type of investment will be handled in either of the
following ways. (1) If the shareholder's bank is a member of the National
Automated Clearing House Association ("NACHA"), the amount of the investment
will be electronically deducted from his or her account by Electronic Fund
Transfer ("EFT"). The shareholder's checking account will reflect a debit each
month at a specified date although no check is required to initiate the
transaction. (2) If the shareholder's bank is not a member of NACHA,
deductions will be made by preauthorized checks, known as Depository Transfer
Checks. Should the shareholder's bank become a member of NACHA in the future,
his or her investments would be handled electronically through EFT.

* * *

Initial investments under the Direct Deposit Purchase Plan and the
Automatic Investing Plan must be for $250 or more and subsequent investments
under such Plans must be for $25 or more. An investor wishing to take
advantage of either service must complete an authorization form. Either
service can be discontinued by the shareholder at any time without penalty by
giving written notice.

Payments to a Portfolio from the federal government or its agencies
on behalf of a shareholder may be credited to the shareholder's account after
such payments should have been terminated by reason of death or otherwise. Any
such payments are subject to reclamation by the federal government or its
agencies. Similarly, under certain circumstances, investments from private
sources may be subject to reclamation by the transmitting bank. In the event
of a reclamation, a Portfolio may liquidate sufficient shares from a
shareholder's account to reimburse the government or the private source. In
the event there are insufficient shares in the shareholder's account, the
shareholder is expected to reimburse the Portfolio.

Direct Deposit Purchases by Mail
Shareholders may authorize a third party, such as a bank or employer,
to make investments directly to their Portfolio accounts. A Portfolio will
accept these investments, such as bank-by-phone, annuity payments and payroll
allotments, by mail directly from the third party. Investors should contact
their employers or financial institutions who in turn should contact the Trust
for proper instructions.

Wealth Builder Option
Shareholders can use the Wealth Builder Option to invest in the Fund
Classes through regular liquidations of shares in their accounts in other
mutual funds in the Delaware Group. Shareholders of the Fund

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<PAGE>

Classes may elect to invest in one or more of the other mutual funds in the
Delaware Group through the Wealth Builder Option. See Wealth Builder Option
and Redemption and Exchange in the Prospectuses for the Fund Classes.

Under this automatic exchange program, shareholders can authorize
regular monthly investments (minimum of $100 per fund) to be liquidated from
their account and invested automatically into other mutual funds in the
Delaware Group, subject to the conditions and limitations set forth in the
Fund Classes' Prospectuses. The investment will be made on the 20th day of
each month (or, if the fund selected is not open that day, the next business
day) at the public offering price or net asset value, as applicable, of the
fund selected on the date of investment. No investment will be made for any
month if the value of the shareholder's account is less than the amount
specified for investment.

Periodic investment through the Wealth Builder Option does not insure
profits or protect against losses in a declining market. The price of the fund
into which investments are made could fluctuate. Since this program involves
continuous investment regardless of such fluctuating value, investors
selecting this option should consider their financial ability to continue to
participate in the program through periods of low fund share prices. This
program involves automatic exchanges between two or more fund accounts and is
treated as a purchase of shares of the fund into which investments are made
through the program. See Exchange Privilege for a brief summary of the tax
consequences of exchanges. Shareholders can terminate their participation in
Wealth Builder at any time by written notice to the fund from which exchanges
are made.

Delaware Group Asset Planner
To invest in Delaware Group funds using the Delaware Group Asset
Planner asset allocation service, you should complete a Delaware Group Asset
Planner Account Registration Form, which is available only from a financial
adviser or investment dealer. Effective September 1, 1997, the Delaware Group
Asset Planner Service is only available to financial advisers or investment
dealers who have previously used this service. The Delaware Group Asset
Planner service offers a choice of four predesigned asset allocation
strategies (each with a different risk/reward profile) in predetermined
percentages in Delaware Group funds. With the help of a financial adviser, you
may also design a customized asset allocation strategy.

The sales charge on an investment through the Asset Planner service
is determined by the individual sales charges of the underlying funds and
their percentage allocation in the selected Strategy. Exchanges from existing
Delaware Group accounts into the Asset Planner service may be made at net
asset value under the circumstances described under Investing by Exchange in
the Prospectus. Also see Buying Class A Shares at Net Asset Value under
Classes of Shares. The minimum initial investment per Strategy is $2,000;
subsequent investments must be at least $100. Individual fund minimums do not
apply to investments made using the Asset Planner service. Class A, Class B
and Class C Shares are available through the Asset Planner service. Generally,
only shares within the same class may be used within the same Strategy.
However, Class A Shares of the Portfolio and of other funds in the Delaware
Group may be used in the same Strategy with consultant class shares that are
offered by certain other Delaware Group funds.

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<PAGE>

An annual maintenance fee, currently $35 per Strategy, is due at the
time of initial investment and by September 30 of each subsequent year. The
fee, payable to Delaware Service Company, Inc. to defray extra costs
associated with administering the Asset Planner service, will be deducted
automatically from one of the funds within your Asset Planner account if not
paid by September 30. However, effective November 1, 1996, the annual
maintenance fee is waived until further notice. Investors who utilize the
Asset Planner for an IRA will continue to pay an annual IRA fee of $15 per
Social Security number.

Investors will receive a customized quarterly Strategy Report
summarizing all Delaware Group Asset Planner investment performance and
account activity during the prior period. Confirmation statements will be sent
following all transactions other than those involving a reinvestment of
distributions.

Certain shareholder services are not available to investors using the
Asset Planner service, due to its special design. These include Delaphone,
Checkwriting, Wealth Builder Option and Letter of Intention. Systematic
Withdrawal Plans are available after the account has been open for two years.

Retirement Plans for the Fund Classes
An investment in either Portfolio may be suitable for tax-deferred
retirement plans. Delaware Group offers a full spectrum of qualified and
non-qualified retirement plans , including the 401(k) deferred compensation
plan, Individual Retirement Account ("IRA"), and the new Roth IRA. See
Appendix A for additional information on IRAs.

The CDSC may be waived on certain redemptions of Class B Shares and
Class C Shares. See Waiver of Contingent Deferred Sales Charge - Class B and
Class C Shares under Redemption and Exchange in the Prospectuses for the Fund
Classes for a list of the instances in which the CDSC is waived.

Purchases of Class B Shares are subject to a maximum purchase
limitation of $250,000 for retirement plans. Purchases of Class C Shares must
be in an amount that is less than $1,000,000 for such plans. The maximum
purchase limitations apply only to the initial purchase of shares by the
retirement plan.

Minimum investment limitations generally applicable to other
investors do not apply to retirement plans, other than Individual Retirement
Accounts for which there is a minimum initial purchase of $250, and a minimum
subsequent purchase of $25, regardless of which class is selected. Retirement
plans may be subject to plan establishment fees, annual maintenance fees
and/or other administrative or trustee fees. Fees are based upon the number of
participants in the plan as well as the services selected. Additional
information about fees is included in retirement plan materials. Fees are
quoted upon request. Annual maintenance fees may be shared by Delaware
Management Trust Company, the Transfer Agent, other affiliates of the Manager
and others that provide services to such plans.

Certain shareholder investment services available to non-retirement
plan shareholders may not be available to retirement plan shareholders.
Certain retirement plans may qualify to purchase shares of the Institutional
Classes. See The Institutional Classes, above. For additional information on
any of the plans and Delaware's retirement services, call the Shareholder
Service Center telephone number.

It is advisable for an investor considering any one of the retirement
plans described below to consult with an attorney, accountant or a qualified
retirement plan consultant. For further details, including applications for
any of these plans, contact your investment dealer or the Distributor.

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<PAGE>

Taxable distributions from the retirement plans may be subject to
withholding.

Please contact your investment dealer or the Distributor for the
special application forms required for the plans .

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DETERMINING OFFERING PRICE AND NET ASSET VALUE

Orders for purchases of Class A Shares are effected at the offering
price next calculated by the Portfolio in which shares are being purchased
after receipt of the order by the Portfolio or its agent. Orders for purchases
of Class B Shares, Class C Shares and the Institutional Classes are effected
at the net asset value per share next calculated after receipt of the order by
the Portfolio in which shares are being purchased or its agent. Selling
dealers have the responsibility of transmitting orders promptly.

The offering price for Class A Shares consists of the net asset value
per share plus any applicable sales charges. Offering price and net asset
value are computed as of the close of regular trading on the New York Stock
Exchange (ordinarily, 4 p.m., Eastern time) on days when the Exchange is open.
The New York Stock Exchange is scheduled to be open Monday through Friday
throughout the year except for New Year's Day, Martin Luther King, Jr.'s
Birthday, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving and Christmas. When the New York Stock Exchange is closed,
the Portfolios will generally be closed, pricing calculations will not be made
and purchase and redemption orders will not be processed.

An example showing how to calculate the net asset value per share
and, in the case of Class A Shares, the offering price per share, will be
included in each Portfolio's financial statements which will be incorporated
by reference into Part B.

Each Portfolio's net asset value per share is computed by adding the
value of all the securities and other assets in the portfolio, deducting any
liabilities and dividing by the number of shares outstanding. Expenses and
fees are accrued daily. In determining a Portfolio's total net assets,
portfolio securities listed or traded on a national securities exchange,
except for bonds, are valued at the last sale price on the exchange upon which
such securities are primarily traded. Securities not traded on a particular
day, over-the-counter securities and government and agency securities are
valued at the mean value between bid and asked prices. Money market
instruments having a maturity of less than 60 days are valued at amortized
cost. Debt securities (other than short-term obligations) are valued on the
basis of valuations provided by a pricing service when such prices are
believed to reflect the fair value of such securities. Foreign currencies and
the prices of foreign securities denominated in foreign currencies are
translated to U.S. Dollars based on rates in effect as of 12 p.m., Eastern
time. Use of a pricing service has been approved by the Board of Trustees.
Prices provided by a pricing service take into account appropriate factors
such as institutional trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data. If no quotations are available, all other securities and assets are
valued at fair value as determined in good faith and in a method approved by
the Board of Trustees.

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REDEMPTION AND REPURCHASE

Any shareholder may require a Portfolio to redeem shares by sending a
written request, signed by the record owner or owners exactly as the shares
are registered, to the Portfolio at 1818 Market Street, Philadelphia, PA
19103. In addition, certain expedited redemption methods described below are
available when stock certificates have not been issued. Certificates are
issued for Class A Shares and Institutional Class shares only if a shareholder
specifically requests them. Certificates are not issued for Class B Shares or
Class C Shares. If stock certificates have been issued for shares being
redeemed, they must accompany the written request. For redemptions of $50,000
or less paid to the shareholder at the address of record, the request must be
signed by all owners of the shares or the investment dealer of record, but a
signature guarantee is not required. When the redemption is for more than
$50,000, or if payment is made to someone else or to another address,
signatures of all record owners are required and a signature guarantee may be
required. Each signature guarantee must be supplied by an eligible guarantor
institution. Each Portfolio reserves the right to reject a signature guarantee
supplied by an eligible institution based on its creditworthiness. The
Portfolios may request further documentation from corporations, retirement
plans, executors, administrators, trustees or guardians.

In addition to redemption of Portfolio shares, the Distributor,
acting as agent of the Portfolios, offers to repurchase Portfolio shares from
broker/dealers acting on behalf of shareholders. The redemption or repurchase
price, which may be more or less than the shareholder's cost, is the net asset
value per share next determined after receipt of the request in good order by
the respective Portfolio or its agent, subject to any applicable CDSC or
Limited CDSC. This is computed and effective at the time the offering price
and net asset value are determined. See Determining Offering Price and Net
Asset Value. The Portfolios and the Distributor end their business days at 5
p.m., Eastern time. This offer is discretionary and may be completely
withdrawn without further notice by the Distributor.

Orders for the repurchase of Portfolio shares which are submitted to
the Distributor prior to the close of its business day will be executed at the
net asset value per share computed that day (subject to the applicable CDSC or
Limited CDSC), if the repurchase order was received by the broker/dealer from
the shareholder prior to the time the offering price and net asset value are
determined on such day. The selling dealer has the responsibility of
transmitting orders to the Distributor promptly. Such repurchase is then
settled as an ordinary transaction with the broker/dealer (who may make a
charge to the shareholder for this service) delivering the shares repurchased.

Certain redemptions of Class A Shares purchased at net asset value
may result in the imposition of a Limited CDSC. See Contingent Deferred Sales
Charge for Certain Redemptions of Class A Shares Purchased at Net Asset Value
under Redemption and Exchange in the Prospectuses for the Fund Classes. Class
B Shares are subject to a CDSC of: (i) 4% if shares are redeemed within two
years of purchase; (ii) 3% if shares are redeemed during the third or fourth
year following purchase; (iii) 2% if shares are redeemed during the fifth year
following purchase; and (iv) 1% if shares are redeemed during the sixth year
following purchase. Class C Shares are subject to a CDSC of 1% if shares are
redeemed within 12 months following purchase. See Contingent Deferred Sales
Charge - Class B Shares and Class C Shares under Classes of Shares in the
Prospectuses for the Fund Classes. Except for the applicable CDSC or Limited
CDSC and, with respect to the expedited payment by wire described below for
which, in the case of the Fund Classes, there is currently a $7.50 bank wiring
cost, neither the Portfolios nor the Portfolios' Distributor charges a fee for
redemptions or repurchases, but such fees could be charged at any time in the
future.

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Payment for shares redeemed will ordinarily be mailed the next
business day, but in no case later than seven days, after receipt of a
redemption request in good order; provided, however, that each commitment to
mail or wire redemption proceeds by a certain time, as described below, is
modified by the qualifications described in the next paragraph.

Each Portfolio will process written or telephone redemption requests
to the extent that the purchase orders for the shares being redeemed have
already settled. A Portfolio will honor redemption requests as to shares for
which a check was tendered as payment, but a Portfolio will not mail or wire
the proceeds until it is reasonably satisfied that the check has cleared. This
potential delay can be avoided by making investments by wiring Federal Funds.

If a shareholder has been credited with a purchase by a check which
is subsequently returned unpaid for insufficient funds or for any other
reason, the Portfolio involved will automatically redeem from the
shareholder's account the shares purchased by the check plus any dividends
earned thereon. Shareholders may be responsible for any losses to the
Portfolio or to the Distributor.

In case of a suspension of the determination of the net asset value
because the New York Stock Exchange is closed for other than weekends or
holidays, or trading thereon is restricted or an emergency exists as a result
of which disposal by a Portfolio of securities owned by it is not reasonably
practical, or it is not reasonably practical for a Portfolio fairly to value
its assets, or in the event that the SEC has provided for such suspension for
the protection of shareholders, a Portfolio may postpone payment or suspend
the right of redemption or repurchase. In such case, the shareholder may
withdraw the request for redemption or leave it standing as a request for
redemption at the net asset value next determined after the suspension has
been terminated.

Payment for shares redeemed or repurchased may be made either in cash
or kind, or partly in cash and partly in kind. Any portfolio securities paid
or distributed in kind would be valued as described in Determining Offering
Price and Net Asset Value. Subsequent sale by an investor receiving a
distribution in kind could result in the payment of brokerage commissions.
However, the Trust has elected to be governed by Rule 18f-1 under the
Investment Company Act of 1940 pursuant to which each Portfolio is obligated
to redeem shares solely in cash up to the lesser of $250,000 or 1% of the net
asset value of such Portfolio during any 90-day period for any one
shareholder.

The value of a Portfolio's investments is subject to changing market
prices. Thus, a shareholder reselling shares to a Portfolio may sustain either
a gain or loss, depending upon the price paid and the price received for such
shares.

Small Accounts
Before a Portfolio involuntarily redeems shares from an account that,
under the circumstances listed in the relevant Prospectus, has remained below
the minimum amounts required by the Portfolio's Prospectuses and sends the
proceeds to the shareholder, the shareholder will be notified in writing that
the value of the shares in the account is less than the minimum required and
will be allowed 60 days from the date of notice to make an additional
investment to meet the required minimum. See The Conditions of Your Purchase
under How to Buy Shares in the Prospectuses. Any redemption in an inactive
account established with a minimum investment

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<PAGE>

may trigger mandatory redemption. No CDSC or Limited CDSC will apply to the
redemptions described in this paragraph.

* * *

Each Portfolio has made available certain redemption privileges, as
described below. The Portfolios reserve the right to suspend or terminate
these expedited payment procedures upon 60 days' written notice to
shareholders.

Expedited Telephone Redemptions
Shareholders of the Fund Classes or their investment dealers of
record wishing to redeem any amount of shares of $50,000 or less for which
certificates have not been issued may call the Shareholder Service Center at
800-523-1918 or, in the case of shareholders of the Institutional Classes,
their Client Services Representative at 800-828-5052 prior to the time the
offering price and net asset value are determined, as noted above, and have
the proceeds mailed to them at the address of record. Checks payable to the
shareholder(s) of record will normally be mailed the next business day, but no
later than seven days, after the receipt of the redemption request. This
option is only available to individual, joint and individual fiduciary-type
accounts.

In addition, redemption proceeds of $1,000 or more can be transferred
to your predesignated bank account by wire or by check by calling the phone
numbers listed above. An authorization form must have been completed by the
shareholder and filed with the relevant Portfolio before the request is
received. Payment will be made by wire or check to the bank account designated
on the authorization form as follows:

1. Payment by Wire: Request that Federal Funds be wired to the bank account
designated on the authorization form. Redemption proceeds will normally be
wired on the next business day following receipt of the redemption request.
There is a $7.50 wiring fee (subject to change) charged by CoreStates Bank,
N.A. which will be deducted from the withdrawal proceeds each time the
shareholder requests a redemption from Class A Shares, Class B Shares and
Class C Shares. If the proceeds are wired to the shareholder's account at a
bank which is not a member of the Federal Reserve System, there could be a
delay in the crediting of the funds to the shareholder's bank account.

2. Payment by Check: Request a check be mailed to the bank account designated
on the authorization form. Redemption proceeds will normally be mailed the
next business day, but no later than seven days, from the date of the
telephone request. This procedure will take longer than the Payment by Wire
option (1 above) because of the extra time necessary for the mailing and
clearing of the check after the bank receives it.

Redemption Requirements: In order to change the name of the bank and
the account number it will be necessary to send a written request to the
relevant Portfolio and a signature guarantee may be required. Each signature
guarantee must be supplied by an eligible guarantor institution. The
Portfolios reserve the right to reject a signature guarantee supplied by an
eligible institution based on its creditworthiness.

To reduce the shareholder's risk of attempted fraudulent use of the
telephone redemption procedure, payment will be made only to the bank account
designated on the authorization form.

If expedited payment under these procedures could adversely affect a
Portfolio, the Portfolio may take up to seven days to pay the shareholder.

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Neither the Portfolios nor the Portfolios' Transfer Agent is
responsible for any shareholder loss incurred in acting upon written or
telephone instructions for redemption or exchange of Portfolio shares which
are reasonably believed to be genuine. With respect to such telephone
transactions, each Portfolio 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, such Portfolio or the
Transfer Agent may be liable for any losses due to unauthorized or fraudulent
transactions. Telephone instructions received by shareholders of the Fund
Classes are generally tape recorded. A written confirmation will be provided
for all purchase, exchange and redemption transactions initiated by telephone.

Systematic Withdrawal Plans
Shareholders of Class A, Class B and Class C Shares of who own or
purchase $5,000 or more of shares at the offering price, or net asset value,
as applicable, for which certificates have not been issued may establish a
Systematic Withdrawal Plan for monthly withdrawals of $25 or more, or
quarterly withdrawals of $75 or more, although the Portfolios do not recommend
any specific amount of withdrawal. This $5,000 minimum does not apply for a
Portfolio's prototype retirement plans. Shares purchased with the initial
investment and through reinvestment of cash dividends and realized securities
profits distributions will be credited to the shareholder's account and
sufficient full and fractional shares will be redeemed at the net asset value
calculated on the third business day preceding the mailing date.

Checks are dated either the 1st or the 15th of the month, as selected
by the shareholder (unless such date falls on a holiday or a weekend), and are
normally mailed within two business days. Both ordinary income dividends and
realized securities profits distributions will be automatically reinvested in
additional shares of the class at net asset value. This plan is not
recommended for all investors and should be started only after careful
consideration of its operation and effect upon the investor's savings and
investment program. To the extent that withdrawal payments from the plan
exceed any dividends and/or realized securities profits distributions paid on
shares held under the plan, the withdrawal payments will represent a return of
capital and the share balance may, in time, be depleted, particularly in a
declining market.

The sale of shares for withdrawal payments constitutes a taxable
event and a shareholder may incur a capital gain or loss for federal income
tax purposes. This gain or loss may be long-term or short-term depending on
the holding period for the specific shares liquidated. Premature withdrawals
from retirement plans may have adverse tax consequences.

Withdrawals under this plan made concurrently with the purchases of
additional shares may be disadvantageous to the shareholder. Purchases of
Class A Shares through a periodic investment program in a fund managed by the
Manager must be terminated before a Systematic Withdrawal Plan with respect to
such shares can take effect, except if the shareholder is a participant in one
of our retirement plans or is investing in Delaware Group funds which do not
carry a sales charge. Redemptions of Class A Shares pursuant to a Systematic
Withdrawal Plan may be subject to a Limited CDSC if the purchase was made at
net asset value and a dealer's commission has been paid on that purchase.
Redemptions of Class B Shares or Class C Shares pursuant to a Systematic
Withdrawal Plan may be subject to a CDSC, unless the annual amount selected to
be withdrawn is less than 12% of the account balance on the date that the
Systematic Withdrawal Plan was established. See Waiver of Contingent Deferred
Sales Charge - Class B and Class C Shares and Waiver of Limited Contingent
Deferred Sales Charge - Class A Shares under Redemption and Exchange in the
Prospectuses for the Fund Classes. Shareholders should consult their financial
advisers to determine whether a Systematic Withdrawal Plan would be suitable
for them.

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<PAGE>

An investor wishing to start a Systematic Withdrawal Plan must
complete an authorization form. If the recipient of Systematic Withdrawal Plan
payments is other than the registered shareholder, the shareholder's signature
on this authorization must be guaranteed. Each signature guarantee must be
supplied by an eligible guarantor institution. The Portfolios reserve the
right to reject a signature guarantee supplied by an eligible institution
based on its creditworthiness. This plan may be terminated by the shareholder
or the Transfer Agent at any time by giving written notice.

The Systematic Withdrawal Plan is not available for the Institutional
Classes.

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<PAGE>

DIVIDENDS AND REALIZED SECURITIES PROFITS DISTRIBUTIONS

Each Class of shares of a Portfolio will share proportionately in the
investment income and expenses of that Portfolio, except that Class A Shares,
Class B Shares and Class C Shares alone will incur distribution fees under
their respective 12b-1 Plans.

Dividends are automatically reinvested in additional shares of the
same Class of the respective Portfolio at net asset value, unless, in the case
of shareholders of the Fund Classes, an election to receive dividends in cash
has been made. Payment by check of cash dividends will ordinarily be mailed
within three business days after the payable date. Dividend payments of $1.00
or less will be automatically reinvested, notwithstanding a shareholder's
election to receive dividends in cash. If such a shareholder's dividends
increase to greater than $1.00, the shareholder would have to file a new
election in order to begin receiving dividends in cash again. If a shareholder
redeems an entire account, all dividends accrued to the time of the withdrawal
will be paid by separate check at the end of that particular monthly dividend
period, consistent with the payment and mailing schedule described above. Any
check in payment of dividends or other distributions which cannot be delivered
by the United States Post Office or which remains uncashed for a period of
more than one year may be reinvested in the shareholder's account at the
then-current net asset value and the dividend option may be changed from cash
to reinvest. A Portfolio may deduct from a shareholder's account the costs of
the Portfolio's effort to locate a shareholder if a shareholder's mail is
returned by the United States Post Office or the Portfolio is otherwise unable
to locate the shareholder or verify the shareholder's mailing address. These
costs may include a percentage of the account when a search company charges a
percentage fee in exchange for their location services.

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<PAGE>

TAXES

Dividends from investment income and short-term capital gains
distributions are treated by shareholders as ordinary income for federal
income tax purposes. Distributions of long-term capital gains, if any, are
taxable to shareholders as long-term capital gains, regardless of the length
of time an investor has held such shares, and these gains are currently taxed
at long-term capital gain rates described below. The tax status of dividends
and distributions paid to shareholders will not be affected by whether they
are paid in cash or in additional shares. Persons not subject to tax will not
be required to pay taxes on distributions. Each Portfolio is treated as a
single tax entity and capital gains for each Portfolio will be calculated
separately.

Under the Taxpayer Relief act of 1997 (the "1997 Act"), a Portfolio
is required to track its sales of portfolio securities and to report its
capital gain distributions to you according to the following categories of
holding periods:

"Pre-Act long-term capital gains": securities sold by a Portfolio
before May 7, 1997, that were held for more than 12 months. These
gains will be taxable to individual investors at a maximum rate of
28%.

"Mid-term capital gains" or "28 percent rate gain": securities sold
by a Portfolio after July 28, 1997 that were held more than one year
but not more than 18 months. These gains will be taxable to
individual investors at a maximum rate of 28%.

"1997 Act long-term capital gains" or "20 percent rate gain":
securities sold between May 7, 1997 and July 28, 1997 that were
held for more than 12 months, and securities sold by the Portfolio
after July 28, 1997 that were held for more than 18 months.
These gains will be taxable to individual investors at a maximum rate
of 20% for investors in the 28% or higher federal income tax
brackets, and at a maximum rate of 10% for investors in the 15%
federal income tax bracket.

"Qualified 5-year gains": For individuals in the 15% bracket,
qualified 5-year gains are net gains on securities held for more than
5 years which are sold after December 31, 2000. For individual who
are subject to tax at higher rate brackets, qualified 5-year gains
are net gains on securities which are purchased after December 31,
2000 and are held for more than 5 years. Taxpayers subject to tax at
a higher rate brackets may also make an election for shares held on
January 1, 2001 to recognize gain on their shares in order to qualify
such shares as qualified 5-year property. These gains will be taxable
to individual investors at a maximum rate of 18% for investors in the
28% or higher federal income tax brackets, and at a maximum rate of
8% for investors in the 15% federal income tax bracket.

A portion of each Portfolio's dividends may qualify for the
dividends-received deduction for corporations provided in the federal income
tax law. The portion of dividends paid by a Portfolio that so qualifies will
be designated each year in a notice mailed to a Portfolio's shareholders,
and cannot exceed the gross amount of dividends received by a Portfolio from
domestic (U.S.) corporations that would have qualified for the
dividends-received deduction in the hands of a Portfolio if the Portfolio
was a regular

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<PAGE>

corporation. The availability of the dividends-received deduction is subject
to certain holding period and debt financing restrictions imposed under the
Code on the corporation claiming the deduction. Under the 1997 Act, the amount
that a Portfolio may designate as eligible for the dividends-received
deduction will be reduced or eliminated if the shares on which the dividends
earned by a Portfolio were debt-financed or held by a Portfolio for less than
a 46-day period during a 90-day period beginning 45 days before the
ex-dividend date and ending 45 days after the ex-dividend date. Similarly, if
your Portfolio shares are debt-financed or held by you for less than a 46-day
period during a 90-day period beginning 45 days before the ex-dividend date
and ending 45 days after the ex-dividend date, then the dividends-received
deduction for Portfolio dividends on your shares may also be reduced or
eliminated. Even if designated as dividends eligible for the
dividends-received deduction, all dividends (including any deducted portion)
must be included in your alternative minimum taxable income calculation.

Shareholders will be notified annually by the Trust as to the federal
income tax status of dividends and distributions paid by their Portfolio.

In addition to the federal taxes described above, shareholders may or
may not be subject to various state and local taxes . Because shareholders'
state and local taxes may be different than the federal taxes described above,
shareholders should consult their own tax advisers.

See also Other Tax Requirements under Accounting and Tax Issues in
this Part B.

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<PAGE>

ASSET ALLOCATION AGREEMENTS

The Manager, located at One Commerce Square, Philadelphia, PA 19103,
furnishes investment management services to the Portfolios, subject to the
supervision and direction of the Trust's Board of Trustees.

The Asset Allocation Agreement for each Portfolio is dated December 18,
1997 and was approved by the initial shareholder on ____________. Each Agreement
has an initial term of two years and may be renewed each year only so long as
such renewal and continuance are specifically approved at least annually by
the Board of Trustees or by vote of a majority of the outstanding voting
securities of the Portfolio to which the Agreement relates, and only if the
terms and the renewal thereof have been approved by the vote of a majority of
the trustees of the Trust who are not parties thereto or interested persons of
any such party, cast in person at a meeting called for the purpose of voting
on such approval. Each Agreement is terminable without penalty on 60 days'
notice by the trustees of the Trust or by the Manager. Each Agreement will
terminate automatically in the event of its assignment.

The Manager is paid an annual Asset Allocation Fee equal to 0.25%
(currently waived to 0.10%) of average daily net assets of each of the
Portfolios.

Except for those expenses borne by the Manager under the Asset
Allocation Agreements and the Distributor under the Distribution Agreements,
the Portfolios are responsible for all of their own expenses. Among others,
these include a Portfolio's proportionate share of rent and certain other
administrative expenses; the investment management fees; transfer and dividend
disbursing agent fees and costs; custodian expenses; federal and state
securities registration fees; proxy costs; and the costs of preparing
prospectuses and reports sent to shareholders. The ratios for Class A Shares,
Class B Shares and Class C Shares reflect the impact of their respective 12b-1
Plans.

The Manager has elected voluntarily to waive that portion, if any, of
the annual Asset Allocation Fees payable by the Portfolios and to pay the
Portfolios' expenses to the extent necessary to ensure that the "Total
Operating Expenses" of the Portfolios do not exceed 1.20% (exclusive of taxes,
interest, brokerage commissions, extraordinary expenses and applicable 12b-1
expenses) during the commencement of the public offering of the Portfolios
through June 30, 1998.

Distribution and Service
The Distributor, Delaware Distributors, L.P. (which formerly
conducted business as Delaware Distributors, Inc.), located at 1818 Market
Street, Philadelphia, PA 19103, serves as the national distributor of each
Portfolio's shares under separate Distribution Agreements. The Distributor is
an affiliate of the Manager and bears all of the costs of promotion and
distribution, except for payments by each Portfolio on behalf of its Class A
Shares, Class B Shares and Class C Shares under the 12b-1 Plan for each such
class.

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<PAGE>

The Transfer Agent, Delaware Service Company, Inc., another affiliate
of the Manager located at 1818 Market Street, Philadelphia, PA 19103, serves
as the Portfolios' shareholder servicing, dividend disbursing and transfer
agent pursuant to a Shareholders Services Agreement. The Transfer Agent also
provides accounting services to the Portfolios pursuant to the terms of a
separate Fund Accounting Agreement. The Transfer Agent is also an indirect,
wholly owned subsidiary of Delaware Management Holdings, Inc.

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<PAGE>

OFFICERS AND TRUSTEES

The business and affairs of the Trust are managed under the direction
of its Board of Trustees.

DMH Corp., Delvoy, Inc., Delaware Management Company, Inc., Delaware
Distributors, L.P., Delaware Distributors, Inc., Delaware Service Company,
Inc., Delaware Management Trust Company, Delaware International Holdings Ltd.,
Founders Holdings, Inc., Delaware International Advisers Ltd., Delaware
Capital Management, Inc. and Delaware Investment & Retirement Services, Inc.
are direct or indirect, wholly owned subsidiaries of Delaware Management
Holdings, Inc. ("DMH"). On April 3, 1995, a merger between DMH and a wholly
owned subsidiary of Lincoln National Corporation ("Lincoln National") was
completed. DMH and the Manager are now indirect, wholly owned subsidiaries,
and subject to the ultimate control, of Lincoln National. Lincoln National,
with headquarters in Fort Wayne, Indiana, is a diversified organization with
operations in many aspects of the financial services industry, including
insurance and investment management.

Certain officers and trustees of the Trust hold identical positions
in each of the other funds in the Delaware Group. Trustees and principal
officers of the Trust are noted below along with their ages and their business
experience for the past five years. Unless otherwise noted, the address of
each officer and trustee is One Commerce Square, Philadelphia, PA 19103.

*Wayne A. Stork (60)
Chairman and Trustee and/or Director of the Trust and each of the
other 33 investment companies in the Delaware Group, Delaware
Management Holdings, Inc. and Delaware Capital Management, Inc.
Chairman, President, Chief Executive Officer and Director of DMH
Corp., Delaware Distributors, Inc. and Founders Holdings, Inc.
Chairman, President, Chief Executive Officer, Chief Investment Officer
and Director of Delaware Management Company, Inc.
Chairman, Chief Executive Officer and Director of Delaware
International Advisers Ltd. and Delaware International
Holdings Ltd.
Chairman of Delaware Distributors, L.P.
Director of Delaware Service Company, Inc. and Delaware Investment &
Retirement Services, Inc.
Chief Executive Officer of Delvoy, Inc.
During the past five years, Mr. Stork has served in various executive
capacities at different times within the Delaware organization.

- --------------------
*Trustee affiliated with the Trust's investment manager and considered an
"interested person" as defined in the 1940 Act.

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<PAGE>

*Jeffrey J. Nick (44)
President, Chief Executive Officer, Trustee and/or Director of the
Trust and each of the 33 other investment companies in the
Delaware Group.
President, Chief Executive Officer and Director of Delaware Management
Holdings, Inc.
President, Chief Executive Officer and Director of Lincoln National
Investment Companies, Inc.
President of Lincoln Funds Corporation.
From 1992 to 1996, Mr. Nick was Managing Director of Lincoln
National UK plc and from 1989 to 1992, he was Senior Vice
President responsible for corporate planning and
development for Lincoln National Corporation.

Richard G. Unruh, Jr. (58)
Executive Vice President of the Trust (upon effectiveness of the
initial Registration Statement), each of the other 33
investment companies in the Delaware Group, Delaware
Management Holdings, Inc. and Delaware Capital Management,
Inc.
Executive Vice President and Director of Delaware Management Company,
Inc.
Director of Delaware International Advisers Ltd.
During the past five years, Mr. Unruh has served in various
executive capacities at different times within the Delaware
organization.
Paul E. Suckow (50)
Executive Vice President/Chief Investment Officer, Fixed Income of
the Trust (upon effectiveness of the initial Registration
Statement), each of the other 33 investment companies in the
Delaware Group, Delaware Management Company, Inc. and
Delaware Management Holdings, Inc.
Executive Vice President and Director of Founders Holdings, Inc.
Executive Vice President of Delaware Capital Management, Inc.
Director of Founders CBO Corporation.
Director of HYPPCO Finance Company Ltd.
Before returning to the Delaware Group in 1993, Mr. Suckow was
Executive Vice President and Director of Fixed Income for
Oppenheimer Management Corporation, New York, NY from 1985
to 1992. Prior to that, Mr. Suckow was a fixed-income
portfolio manager for the Delaware Group.

Walter P. Babich (70)
Trustee and/or Director of the Trust (upon effectiveness of the
initial Registration Statement) and each of the other 33
investment companies in the Delaware Group.
460 North Gulph Road, King of Prussia, PA 19406.
Board Chairman, Citadel Constructors, Inc.
From 1986 to 1988, Mr. Babich was a partner of Irwin & Leighton
and from 1988 to 1991, he was a partner of I&L Investors.

- --------------------
*Trustee affiliated with the Trust's investment manager and considered an
"interested person" as defined in the 1940 Act.

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<PAGE>

Anthony D. Knerr (59)
Trustee and/or Director of the Trust (upon effectiveness of the
initial Registration Statement) and each of the other 33 investment
companies in the Delaware Group.
500 Fifth Avenue, New York, NY 10110.
Founder and Managing Director, Anthony Knerr & Associates.
From 1982 to 1988, Mr. Knerr was Executive Vice President/Finance and
Treasurer of Columbia University, New York. From 1987 to 1989, he
was also a lecturer in English at the University. In addition,
Mr. Knerr was Chairman of The Publishing Group, Inc., New York,
from 1988 to 1990. Mr. Knerr founded The Publishing Group, Inc.
in 1988.

Ann R. Leven (57)
Trustee and/or Director of the Trust (upon effectiveness of the
initial Registration Statement) and each of the other 33 investment
companies in the Delaware Group.
785 Park Avenue, New York, NY 10021.
Treasurer, National Gallery of Art.
From 1984 to 1990, Ms. Leven was Treasurer and Chief Fiscal
Officer of the Smithsonian Institution, Washington, DC, and from
1975 to 1992, she was Adjunct Professor of Columbia Business
School.

W. Thacher Longstreth (77)
Trustee and/or Director of the Trust (upon effectiveness of the
initial Registration Statement) and each of the other 33 investment
companies in the Delaware Group.
City Hall, Philadelphia, PA 19107.
Philadelphia City Councilman.

Thomas F. Madison (61)
Trustee and/or Director of the Trust (upon effectiveness of the
initial Registration Statement) and each of the other 33 investment
companies in the Delaware Group.
President and Chief Executive Officer, MLM Partners, Inc.
200 South Fifth Street, Suite 2100, Minneapolis, Minnesota 55402.
Mr. Madison has also been Chairman of the Board of Communications
Holdings, Inc. since 1996.
From February to September 1994, Mr. Madison served as Vice
Chairman--Office of the CEO of The Minnesota Mutual Life Insurance
Company and from 1988 to 1993, he was President of U.S. WEST
Communications--Markets.

Charles E. Peck (72)
Trustee and/or Director of the Trust (upon effectiveness of the
initial Registration Statement) and each of the other 32 investment
companies in the Delaware Group.
P.O. Box 1102, Columbia, MD 21044.
Secretary/Treasurer, Enterprise Homes, Inc.
From 1981 to 1990, Mr. Peck was Chairman and Chief Executive
Officer of The Ryland Group, Inc., Columbia, MD .

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<PAGE>

*David K. Downes (57)
Executive Vice President/Chief Operating Officer/Chief Financial
Officer of the Trust and of each of the other 33 investment
companies in the Delaware Group, Delaware Management Holdings,
Inc, Founders CBO Corporation, Delaware Capital Management,
Inc. and Delaware Distributors, L.P.
Executive Vice President, Chief Operating Officer, Chief Financial
Officer and Director of Delaware Management Company, Inc.,
DMH Corp., Delaware Distributors, Inc., Founders
Holdings, Inc. and Delvoy, Inc.
President/Chief Executive Officer/Chief Financial Officer and Director
Company, Inc.
President/Chief Operating Officer/Chief Financial Officer and Director
of Delaware International of Delaware Service Holdings, Inc.
Vice President of Lincoln Funds Corporation.
Chairman, Chief Executive Officer and Director of Delaware Investment
& Retirement Services, Inc.
Chairman and Director of Delaware Management Trust Company .
Director of Delaware International Advisers Ltd.
Before joining the Delaware Group in 1992, Mr. Downes was
Chief Administrative Officer, Chief Financial Officer and
Treasurer of Equitable Capital Management Corporation, New
York, from December 1985 through August 1992, Executive Vice
President from December 1985 through March 1992, and Vice
Chairman from March 1992 through August 1992.

*George M. Chamberlain, Jr. (50)
Senior Vice President, Secretary and General Counsel of the Trust and
of each of the other 33 investment companies in the Delaware
Group, Delaware Distributors, L.P. and Delaware
Management Holdings, Inc.
Senior Vice President, Secretary, General Counsel and Director of DMH
Corp., Delaware Management Company, Inc., Delaware
Distributors, Inc., Delaware Service Company, Inc., Founders
Holdings, Inc., Delaware Investment & Retirement Services,
Inc. , Delaware Capital Management, Inc. and Delvoy, Inc.
Executive Vice President, Secretary, General Counsel and Director of
Delaware Management Trust Company.
Senior Vice President and Director of Delaware International
Holdings Ltd.
Director of Delaware International Advisers Ltd.
Secretary of Lincoln Funds Corporation.
Attorney.
During the past five years, Mr. Chamberlain has served in various
capacities at different times within the Delaware
organization.

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<PAGE>

Joseph H. Hastings (48)
Senior Vice President/Corporate Controller of the Trust (upon
effectiveness of the initial Registration Statement), each
of the other 33 investment companies in the Delaware Group
and Founders Holdings, Inc.
Senior Vice President/Corporate Controller/Treasurer of Delaware
Management Holdings, Inc., DMH Corp., Delaware Management
Company, Inc., Delaware Distributors, L.P., Delaware
Distributors, Inc., Delaware Service Company, Inc., Delaware
Capital Management, Inc. and Delaware International Holdings
Ltd.
Senior Vice President/Controller and Treasurer of Delvoy, Inc.
Chief Financial Officer/Treasurer of Delaware Investment & Retirement
Services, Inc.
Executive Vice President/Chief Financial Officer/Treasurer of Delaware
Management Trust Company.
Senior Vice President/Assistant Treasurer of Founders CBO Corporation.
Treasurer of Lincoln Funds Corporation.
1818 Market Street, Philadelphia, PA 19103.
Before joining the Delaware Group in 1992, Mr. Hastings was Chief
Financial Officer for Prudential Residential Services, L.P.,
New York, NY from 1989 to 1992. Prior to that, Mr. Hastings
served as Controller and Treasurer for Fine Homes
International, L.P., Stamford, CT from 1987 to 1989.

Michael P. Bishof (35)
Senior Vice President/Treasurer of the Trust (upon effectiveness of
the initial Registration Statement), each of the other 33 investment
companies in the Delaware Group, Delaware Distributors, Inc.
and Founders Holdings, Inc.
Senior Vice President/Investment Accounting of Delaware Management
Company, Inc. and Delaware Service Company, Inc.
Senior Vice President and Treasurer/Manager , Investment Accounting
of Delaware Distributors, L.P.
Senior Vice President and Manager of Investment Accounting of Delaware
International Holdings Ltd.
Assistant Treasurer of Founders CBO Corporation.
Before joining the Delaware Group in 1995, Mr. Bishof was a Vice
President for Bankers Trust, New York, NY from 1994 to 1995,
a Vice President for CS First Boston Investment Management,
New York, NY from 1993 to 1994 and an Assistant Vice
President for Equitable Capital Management Corporation, New
York, NY from 1987 to 1993.

Paul J. Dokas (38)
Vice President/Portfolio Manager of the Trust.
Before joining the Delaware Group in 1997, Mr. Dokas was a Director
of Trust Investments for Bell Atlantic Corporation in Philadelphia,
where he held various positions from 1985
to 1997.

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<PAGE>

The following is a compensation table listing for each director
entitled to receive compensation, the aggregate compensation expected to be
received from the Trust during its fiscal year and the total compensation
expected to be received from all Delaware Group funds during the Trust's
fiscal year and an estimate of annual benefits to be received upon retirement
under the Delaware Group Retirement Plan for Directors/Trustees as of
December 31, 1997.

Pension or Total
Aggregate Retirement Estimated Compensation
Compensation Benefits Annual from all 34
expected to be Accrued Benefits Delaware
received from as Part Upon Group Investment
the Trust of the Trust Retirement Companies
Name
<S> <C> <C> <C> <C>
W. Thacher Longstreth $1,174 None $38,500 $60,000
Ann R. Leven $1,176 None $38,500 $66,000
Walter P. Babich $1,175 None $38,500 $65,000
Anthony D. Knerr $1,175 None $38,500 $65,000
Charles E. Peck $1,174 None $38,500 $60,000
Thomas F. Madison $1,174 None $38,500 $60,000

</TABLE>

* Under the terms of the Delaware Group Retirement Plan for
Directors/Trustees, each disinterested director who, at the time of his or
her retirement from the Board, has attained the age of 70 and served on the
Board for at least five continuous years, is entitled to receive payments
from each fund in the Delaware Group for a period equal to the lesser of
the number of years that such person served as a director or the remainder
of such person's life. The amount of such payments will be equal, on an
annual basis, to the amount of the annual retainer that is paid to
directors of each fund at the time of such person's retirement. If an
eligible director retired as of December 31, 1997, he or she would be =
entitled to annual payments totaling $38,500, in the aggregate, from all of
the funds in the Delaware Group, based on the number of funds in the
Delaware Group as of that date.

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EXCHANGE PRIVILEGE

The exchange privileges available for shareholders of the Classes and
for shareholders of classes of other funds in the Delaware Group are set forth
in the relevant prospectuses for such classes. The following supplements that
information. The Funds may modify, terminate or suspend the exchange privilege
upon 60 days' notice to shareholders.

All exchanges involve a purchase of shares of the fund into which the
exchange is made. As with any purchase, an investor should obtain and
carefully read that fund's prospectus before buying shares in an exchange. The
prospectus contains more complete information about the fund, including
charges and expenses. A shareholder requesting an exchange will be sent a
current prospectus and an authorization form for any of the other mutual funds
in the Delaware Group. Exchange instructions must be signed by the record
owner(s) exactly as the shares are registered.

An exchange constitutes, for tax purposes, the sale of one fund and
the purchase of another. The sale may involve either a capital gain or loss to
the shareholder for federal income tax purposes.

In addition, investment advisers and dealers may make exchanges
between funds in the Delaware Group on behalf of their clients by telephone or
other expedited means. This service may be discontinued or revised at any time
by the Transfer Agent. Such exchange requests may be rejected if it is
determined that a particular request or the total requests at any time could
have an adverse effect on any of the funds. Requests for expedited exchanges
may be submitted with a properly completed exchange authorization form, as
described above.

Telephone Exchange Privilege
Shareholders owning shares for which certificates have not been
issued or their investment dealers of record may exchange shares by telephone
for shares in other mutual funds in the Delaware Group. This service is
automatically provided unless the relevant Portfolio receives written notice
from the shareholder to the contrary.

Shareholders or their investment dealers of record may contact the
Shareholder Service Center at 800-523-1918 or, in the case of shareholders of
the Institutional Classes, their Client Services Representative at
800-828-5052, to effect an exchange. The shareholder's current Portfolio
account number must be identified, as well as the registration of the account,
the share or dollar amount to be exchanged and the fund into which the
exchange is to be made. Requests received on any day after the time the
offering price and net asset value are determined will be processed the
following day. See Determining Offering Price and Net Asset Value. Any new
account established through the exchange will automatically carry the same
registration, shareholder information and dividend option as the account from
which the shares were exchanged. The exchange requirements of the fund into
which the exchange is being made, such as sales charges, eligibility and
investment minimums, must be met. (See the prospectus of the fund desired or
inquire by calling the Transfer Agent or, as relevant, your Client Services
Representative.) Certain funds are not available for retirement plans.

The telephone exchange privilege is intended as a convenience to
shareholders and is not intended to be a vehicle to speculate on short-term
swings in the securities market through frequent transactions in and out of
the funds in the Delaware Group. Telephone exchanges may be subject to
limitations as to amounts or frequency. The Transfer Agent and the Portfolios
reserve the right to record exchange instructions received by telephone and to
reject exchange requests at any time in the future.

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<PAGE>

As described in the Portfolios' Prospectuses, neither the Portfolios
nor the Transfer Agent is responsible for any shareholder loss incurred in
acting upon written or telephone instructions for redemption or exchange of
Portfolio shares which are reasonably believed to be genuine.

Right to Refuse Timing Accounts
With regard to accounts that are administered by market timing
services ("Timing Firms") to purchase or redeem shares based on changing
economic and market conditions ("Timing Accounts"), each Portfolio will refuse
any new timing arrangements, as well as any new purchases (as opposed to
exchanges) in Delaware Group funds from Timing Firms. Each Portfolio reserves
the right to temporarily or permanently terminate the exchange privilege or
reject any specific purchase order for any person whose transactions seem to
follow a timing pattern who: (i) makes an exchange request out of the
Portfolio within two weeks of an earlier exchange request out of the
Portfolio, or (ii) makes more than two exchanges out of the Portfolio per
calendar quarter, or (iii) exchanges shares equal in value to at least $5
million, or more than 1/4 of 1% of the Portfolio's net assets. Accounts under
common ownership or control, including accounts administered so as to redeem
or purchase shares based upon certain predetermined market indicators, will be
aggregated for purposes of the exchange limits.

Restrictions on Timed Exchanges
Timing Accounts operating under existing timing agreements may only
execute exchanges between the following eight Delaware Group funds: (1)
Decatur Income Fund, (2) Decatur Total Return Fund, (3) Delaware Fund, (4)
Limited-Term Government Fund, (5) Tax-Free USA Fund, (6) Delaware Cash
Reserve, (7) Delchester Fund and (8) Tax-Free Pennsylvania Fund. No other
Delaware Group funds are available for timed exchanges. Assets redeemed or
exchanged out of Timing Accounts in Delaware Group funds not listed above may
not be reinvested back into that Timing Account. Each Portfolio reserves the
right to apply these same restrictions to the account(s) of any person whose
transactions seem to follow a timing pattern (as described above).

Each Portfolio also reserves the right to refuse the purchase side of
an exchange request by any Timing Account, person, or group if, in the
Manager's judgment, the Portfolio would be unable to invest effectively in
accordance with its investment objectives and policies, or would otherwise
potentially be adversely affected. A shareholder's purchase exchanges may be
restricted or refused if a Portfolio receives or anticipates simultaneous
orders affecting significant portions of the Portfolio's assets. In
particular, a pattern of exchanges that coincide with a "market timing"
strategy may be disruptive to a Portfolio and therefore may be refused.

Except as noted above, only shareholders and their authorized brokers
of record will be permitted to make exchanges or redemptions.

* * *

Following is a summary of the investment objectives of the other
Delaware Group funds:

Delaware Fund seeks long-term growth by a balance of capital
appreciation, income and preservation of capital. It uses a dividend-oriented
valuation strategy to select securities issued by established companies that
are believed to demonstrate potential for income and capital growth. Devon
Fund seeks current income and capital appreciation by investing primarily in
income-producing common stocks, with a focus on common stocks the Manager
believes have the potential for above average dividend increases over time.

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Trend Fund seeks long-term growth by investing in common stocks
issued by emerging growth companies exhibiting strong capital appreciation
potential.

Small Cap Value Fund seeks capital appreciation by investing
primarily in common stocks whose market values appear low relative to their
underlying value or future potential.

DelCap Fund seeks long-term capital growth by investing in common
stocks and securities convertible into common stocks of companies that have a
demonstrated history of growth and have the potential to support continued
growth.

Decatur Income Fund seeks the highest possible current income by
investing primarily in common stocks that provide the potential for income and
capital appreciation without undue risk to principal. Decatur Total Return
Fund seeks long-term growth by investing primarily in securities that provide
the potential for income and capital appreciation without undue risk to
principal. Blue Chip Fund seeks to achieve long-term capital appreciation.
Current income is a secondary objective. It seeks to achieve these objectives
by investing primarily in equity securities and any securities that are
convertible into equity securities. Quantum Fund seeks to achieve long-term
capital appreciation. It seeks to achieve this objective by investing
primarily in equity securities of medium- to large-sized companies expected to
grow over time that meet the Fund's "Social Criteria" strategy.

U.S. Government Fund seeks high current income by investing primarily
in long-term debt obligations issued or guaranteed by the U.S. government, its
agencies or instrumentalities.

Delchester Fund seeks as high a current income as possible by
investing principally in high yield, high risk corporate bonds, and also in
U.S. government securities and commercial paper. Strategic Income Fund seeks
to provide investors with high current income and total return by using a
multi-sector investment approach, investing principally in three sectors of
the fixed-income securities markets: high yield, higher risk securities,
investment grade fixed-income securities and foreign government and other
foreign fixed-income securities.

Limited-Term Government Fund seeks high, stable income by investing
primarily in a portfolio of short- and intermediate-term securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities and
instruments secured by such securities. U.S. Government Money Fund seeks
maximum current income with preservation of principal and maintenance of
liquidity by investing only in short-term securities issued or guaranteed as
to principal and interest by the U.S. government, its agencies or
instrumentalities, and repurchase agreements collateralized by such
securities, while maintaining a stable net asset value.

Delaware Cash Reserve seeks the highest level of income consistent
with the preservation of capital and liquidity through investments in
short-term money market instruments, while maintaining a stable net asset
value.

REIT Fund seeks to achieve maximum long-term total return with
capital appreciation as a secondary objective. It seeks to achieve its
objectives by investing in securities of companies primarily engaged in the
real estate industry.

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Tax-Free USA Fund seeks high current income exempt from federal
income tax by investing in municipal bonds of geographically-diverse issuers.
Tax-Free Insured Fund invests in these same types of securities but with an
emphasis on municipal bonds protected by insurance guaranteeing principal and
interest are paid when due. Tax-Free USA Intermediate Fund seeks a high level
of current interest income exempt from federal income tax, consistent with the
preservation of capital by investing primarily in municipal bonds.

Tax-Free Money Fund seeks high current income, exempt from federal
income tax, by investing in short-term municipal obligations, while
maintaining a stable net asset value.

Tax-Free Pennsylvania Fund seeks a high level of current interest
income exempt from federal and, to the extent possible, certain Pennsylvania
state and local taxes, consistent with the preservation of capital. Tax-Free
New Jersey Fund seeks a high level of current interest income exempt from
federal income tax and New Jersey state and local taxes, consistent with
preservation of capital. Tax-Free Ohio Fund seeks a high level of current
interest income exempt from federal income tax and Ohio state and local taxes,
consistent with preservation of capital.

International Equity Fund seeks to achieve long-term growth without
undue risk to principal by investing primarily in international securities
that provide the potential for capital appreciation and income. Global Bond
Fund seeks to achieve current income consistent with the preservation of
principal by investing primarily in global fixed-income securities that may
also provide the potential for capital appreciation. Global Assets Fund seeks
to achieve long-term total return by investing in global securities which will
provide higher current income than a portfolio comprised exclusively of equity
securities, along with the potential for capital growth. Emerging Markets Fund
seeks long-term capital appreciation by investing primarily in equity
securities of issuers located or operating in emerging countries.

U.S. Growth Fund seeks to maximize capital appreciation by
investing in companies of all sizes which have low dividend yields, strong
balance sheets and high expected earnings growth rates relative to their
industry. Overseas Equity Fund seeks to maximize total return (capital
appreciation and income), principally through investments in an
internationally diversified portfolio of equity securities. New Pacific Fund
seeks long-term capital appreciation by investing primarily in companies which
are domiciled in or have their principal business activities in the Pacific
Basin.

Delaware Group Premium Fund, Inc. offers 15 funds available
exclusively as funding vehicles for certain insurance company separate
accounts. Decatur Total Return Series seeks the highest possible total rate of
return by selecting issues that exhibit the potential for capital appreciation
while providing higher than average dividend income. Delchester Series seeks
as high a current income as possible by investing in rated and unrated
corporate bonds, U.S. government securities and commercial paper. Capital
Reserves Series seeks a high stable level of current income while minimizing
fluctuations in principal by investing in a diversified portfolio of short-
and intermediate-term securities. Cash Reserve Series seeks the highest level
of income consistent with preservation of capital and liquidity through
investments in short-term money market instruments. DelCap Series seeks
long-term capital appreciation by investing its assets in a diversified
portfolio of securities exhibiting the potential for significant growth.
Delaware Series seeks a balance of capital appreciation, income and
preservation of capital. It uses a dividend-oriented valuation strategy to
select securities issued by established companies that are believed to
demonstrate potential for income and capital growth. International Equity
Series seeks long-term growth without undue risk to principal by investing
primarily in equity securities of foreign issuers that provide the potential
for capital appreciation and income. Value Series seeks capital appreciation
by investing in small- to mid-cap common stocks whose market values

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appear low relative to their underlying value or future earnings and growth
potential. Emphasis will also be placed on securities of companies that may be
temporarily out of favor or whose value is not yet recognized by the market.
Trend Series seeks long-term capital appreciation by investing primarily in
small-cap common stocks and convertible securities of emerging and other
growth-oriented companies. These securities will have been judged to be
responsive to changes in the market place and to have fundamental
characteristics to support growth. Income is not an objective. Global Bond
Series seeks to achieve current income consistent with the preservation of
principal by investing primarily in global fixed-income securities that may
also provide the potential for capital appreciation. Strategic Income Series
seeks high current income and total return by using a multi-sector investment
approach, investing primarily in three sectors of the fixed-income securities
markets: high-yield, higher risk securities; investment grade fixed-income
securities; and foreign government and other foreign fixed-income securities.
Devon Series seeks current income and capital appreciation by investing
primarily in income-producing common stocks, with a focus on common stocks
that the investment manager believes have the potential for above-average
dividend increases over time. Emerging Markets Series seeks to achieve
long-term capital appreciation by investing primarily in equity securities of
issuers located or operating in emerging countries. Convertible Securities
Series seeks a high level of total return on its assets through a combination
of capital appreciation and current income by investing primarily in
convertible securities. Quantum Series seeks to achieve long-term capital
appreciation by investing primarily in equity securities of medium to
large-sized companies expected to grow over time that meet the Series' "Social
Criteria" strategy.

Delaware-Voyageur US Government Securities Fund seeks to provide a
high level of current income consistent with the prudent investment risk by
investing in U.S. Treasury bills, notes, bonds, and other obligations issued
or unconditionally guaranteed by the full faith and credit of the U.S.
Treasury, and repurchase agreements fully secured by such obligations.

Delaware-Voyageur Tax-Free Arizona Insured Fund seeks to provide a
high level of current income exempt from federal income tax and the Arizona
personal income tax, consistent with the preservation of capital.
Delaware-Voyageur Minnesota Insured Fund seeks to provide a high level of
current income exempt from federal income tax and the Minnesota personal
income tax, consistent with the preservation of capital.

Delaware-Voyageur Tax-Free Minnesota Intermediate Fund seeks to
provide a high level of current income exempt from federal income tax and the
Minnesota personal income tax, consistent with preservation of capital. The
Fund seeks to reduce market risk by maintaining an average weighted maturity
from five to ten years.

Delaware-Voyageur Tax-Free California Insured Fund seeks to provide a
high level of current income exempt from federal income tax and the California
personal income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free Florida Insured Fund seeks to provide a high level
of current income exempt from federal income tax, consistent with the
preservation of capital. The Fund will seek to select investments that will
enable its shares to be exempt from the Florida intangible personal property
tax. Delaware-Voyageur Tax-Free Florida Fund seeks to provide a high level of
current income exempt from federal income tax, consistent with the
preservation of capital. The Fund will seek to select investments that will
enable its shares to be exempt from the Florida intangible personal property
tax. Delaware-Voyageur Tax-Free Kansas Fund seeks to provide a high level of
current income exempt from federal income tax, the Kansas personal income tax
and the Kansas Intangible personal property tax, consistent with the
preservation of capital. Delaware-Voyageur Tax-Free Missouri Insured Fund
seeks to provide a high level of current income exempt from federal income tax
and the Missouri personal income tax, consistent with the preservation

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of capital. Delaware-Voyageur Tax-Free New Mexico Fund seeks to provide a high
level of current income exempt from federal income tax and the New Mexico
personal income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free Oregon Insured Fund seeks to provide a high level
of current income exempt from federal income tax and the Oregon personal
income tax, consistent with the preservation of capital. Delaware-Voyageur
Tax-Free Utah Fund seeks to provide a high level of current income exempt from
federal income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free Washington Insured Fund seeks to provide a high
level of current income exempt from federal income tax, consistent with the
preservation of capital.

Delaware-Voyageur Tax-Free Florida Intermediate Fund seeks to provide
a high level of current income exempt from federal income tax, consistent with
the preservation of capital. The Fund will seek to select investments that
will enable its shares to be exempt from the Florida intangible personal
property tax. The Fund seeks to reduce market risk by maintaining an average
weighted maturity from five to ten years.

Delaware-Voyageur Tax-Free Arizona Fund seeks to provide a high level
of current income exempt from federal income tax and the Arizona personal
income tax, consistent with the preservation of capital. Delaware-Voyageur
Tax-Free California Fund seeks to provide a high level of current income
exempt from federal income tax and the California personal income tax,
consistent with the preservation of capital. Delaware-Voyageur Tax-Free Iowa
Fund seeks to provide a high level of current income exempt from federal
income tax and the Iowa personal income tax, consistent with the preservation
of capital. Delaware-Voyageur Tax-Free Idaho Fund seeks to provide a high
level of current income exempt from federal income tax and the Idaho personal
income tax, consistent with the preservation of capital. Delaware-Voyageur
Minnesota High Yield Municipal Bond Fund seeks to provide a high level of
current income exempt from federal income tax and the Minnesota personal
income tax primarily through investment in medium and lower grade municipal
obligations. National High Yield Municipal Fund seeks to provide a high level
of income exempt from federal income tax, primarily through investment in
medium and lower grade municipal obligations. Delaware-Voyageur Tax-Free New
York Fund seeks to provide a high level of current income exempt from federal
income tax and the personal income tax of the state of New York and the city
of New York, consistent with the preservation of capital. Delaware-Voyageur
Tax-Free Wisconsin Fund seeks to provide a high level of current income exempt
from federal income tax and the Wisconsin personal income tax, consistent with
the preservation of capital.

Delaware-Voyageur Tax-Free Colorado Fund seeks to provide a high
level of current income exempt from federal income tax and the Colorado
personal income tax, consistent with the preservation of capital.

Aggressive Growth Fund seeks long-term capital appreciation, which
the Fund attempts to achieve by investing primarily in equity securities
believed to have the potential for high earnings growth. Although the Fund, in
seeking its objective, may receive current income from dividends and interest,
income is only an incidental consideration in the selection of the Fund's
investments. Growth Stock Fund has an objective of long-term capital
appreciation. The Fund seeks to achieve its objective from equity securities
diversified among individual companies and industries. Tax-Efficient Equity
Fund seeks to obtain for taxable investors a high total return on an after-tax
basis. The Fund will attempt to achieve this objective by seeking to provide a
high long-term after-tax total return through managing its portfolio in a
manner that will defer the realization of accrued capital gains and minimize
dividend income.

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Delaware-Voyageur Tax-Free Minnesota Fund seeks to provide a high
level of current income exempt from federal income tax and the Minnesota
personal income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free North Dakota Fund seeks to provide a high level of
current income exempt from federal income tax and the North Dakota personal
income tax, consistent with the preservation of capital.

For more complete information about any of the Delaware Group funds,
including charges and expenses, you can obtain a prospectus from the
Distributor. Read it carefully before you invest or forward funds.

Each of the summaries above is qualified in its entirety by the
information contained in each fund's prospectus(es).

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GENERAL INFORMATION

The Manager is the investment manager of the Portfolios. The Manager
also provides investment management services to certain of the other funds in
the Delaware Group. The Manager, through a separate division, also manages
private investment accounts. While investment decisions of the Portfolios are
made independently from those of the other funds and accounts, investment
decisions for such other funds and accounts may be made at the same time as
investment decisions for the Portfolios.

The Manager, or Delaware International Advisers Ltd., also manages
the investment options for Delaware Medallion[sm] III Variable Annuity.
Medallion is issued by Allmerica Financial Life Insurance and Annuity Company
(First Allmerica Financial Life Insurance Company in New York and Hawaii).
Delaware Medallion offers 15 different investment series ranging from domestic
equity funds, international equity and bond funds and domestic fixed income
funds. Each investment series available through Medallion utilizes an
investment strategy and discipline the same as or similar to one of the
Delaware Group mutual funds available outside the annuity. See Delaware Group
Premium Fund, Inc., above.

Access persons and advisory persons of the Delaware Group of funds,
as those terms are defined in SEC Rule 17j-1 under the 1940 Act, who provide
services to the Manager or its affiliates, are permitted to engage in personal
securities transactions subject to the exceptions set forth in Rule 17j-1 and
the following general restrictions and procedures: (1) certain blackout
periods apply to personal securities transactions of those persons; (2)
transactions must receive advance clearance and must be completed on the same
day as the clearance is received; (3) certain persons are prohibited from
investing in initial public offerings of securities and other restrictions
apply to investments in private placements of securities; (4) opening
positions may only be closed-out at a profit after a 60-day holding period has
elapsed; and (5) the Compliance Officer must be informed periodically of all
securities transactions and duplicate copies of brokerage confirmations and
account statements must be supplied to the Compliance Officer.

The Distributor acts as national distributor for each Portfolio and
for the other mutual funds in the Delaware Group.

The Transfer Agent, an affiliate of the Manager, acts as shareholder
servicing, dividend disbursing and transfer agent for the Trust and for the
other mutual funds in the Delaware Group. The Transfer Agent is paid a fee by
the Portfolios for providing these services consisting of an annual per
account charge, in each case, of $11.00 plus, in each case, transaction
charges for particular services according to a schedule. Compensation is fixed
each year and approved by the Board of Trustees, including a majority of the
disinterested trustees. The Transfer Agent also provides accounting services
to the Portfolios. Those services include performing all functions related to
calculating each Portfolio's net asset value and providing all financial
reporting services, regulatory compliance testing and other related accounting
services. For its services, the Transfer Agent is paid a fee based on total
assets of all funds in the Delaware Group for which it provides such
accounting services. Such fee is equal to 0.25% multiplied by the total amount
of assets in the complex for which the Transfer Agent furnishes accounting
services, where such aggregate complex assets are $10 billion or less, and
0.20% of assets if such aggregate complex assets exceed $10 billion. The fees
are charged to each fund, including the Portfolios, on an aggregate pro-rata
basis. The asset-based fee payable to the Transfer Agent is subject to a
minimum fee calculated by determining the total number of investment
portfolios and associated classes.

The Manager and its affiliates own the names "Delaware Group" and
"Foundation Funds." Under certain circumstances, including the termination of
the Trust's advisory relationships with the Manager or its

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distribution relationships with the Distributor, the Manager and its
affiliates could cause the Trust to delete the words "Delaware Group" and
"Foundation Funds" from the Trust's name.

The Chase Manhattan Bank ("Chase"), 4 Chase Metrotech Center,
Brooklyn, NY 11245 is custodian of each Fund's securities and cash. As
custodian for a Portfolio, Chase maintains a separate account or accounts for
the Portfolio; receives, holds and releases portfolio securities on account of
the Fund; receives and disburses money on behalf of the Portfolio; and
collects and receives income and other payments and distributions on account
of the Portfolio's portfolio securities.

Shareholder and Trustee Liability
The Declaration of Trust provides that the trustees will not be
liable for errors of judgment or mistakes of fact or law, but nothing in the
Declaration of Trust protects a trustee against any liability to which he
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.

Capitalization
The Trust currently offers three portfolios of shares. Each Portfolio
currently offers four classes of shares and has a present unlimited authorized
number of shares of beneficial interest with no par value allocated to each
Class. All shares have equal voting rights, except as noted below, no
preemptive rights, are fully transferable and, when issued, are fully paid and
nonassessable.

Class A Shares, Class B Shares, Class C Shares and Institutional
Class represent a proportionate interest in the assets of each Portfolio of
the Trust and have the same voting and other rights and preferences, except
that shares of Institutional Classes may not vote on matters affecting the
Portfolios' Distribution Plans under Rule 12b-1. Similarly, as a general
matter, shareholders of Class A Shares, Class B Shares and Class C Shares may
vote only on matters affecting the 12b-1 Plan that relates to the class of
shares that they hold. However, shareholders of Class B Shares must be given a
vote on any material increase in the 12b-1 fees payable by Class A Shares
under the Plans for the Portfolios. General expenses of each Portfolio will be
allocated on a pro-rata basis to the Classes according to asset size, except
that expenses of the 12b-1 Plans of Class A, Class B and Class C Shares will
be allocated solely to those classes.

Noncumulative Voting
The Trust's shares have noncumulative voting rights which means that
the holders of more than 50% of the shares of the Trust voting for the
election of trustees can elect all the trustees if they choose to do so, and,
in such event, the holders of the remaining shares will not be able to elect
any trustees.

This Part B does not include all of the information contained in the
Registration Statement which is on file with the SEC.

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APPENDIX A--IRA INFORMATION

An individual can contribute up to $2,000 to his or her IRA each
year. Contributions may or may not be deductible depending upon the taxpayers
adjusted gross income and whether the taxpayer or his or her spouse is an
active participant in an employer-sponsored retirement plan. Even if a
taxpayer (or his or her spouse) is an active participant in an
employer-sponsored retirement plan, the full $2,000 deduction is still
available if the taxpayer's adjusted gross income is below $25,000 ($40,000
for taxpayers filing joint returns). A partial deduction is allowed for
married couples with incomes between $40,000 and $50,000, and for single
individuals with incomes between $25,000 and $35,000. No deductions are
available for contributions to IRAs by taxpayers whose adjusted gross income
before IRA deductions exceeds $50,000 ($35,000 for singles) and who are active
participants in an employer-sponsored retirement plan. Taxpayers who were not
allowed deductions on IRA contributions still can make nondeductible IRA
contributions of as much as $2,000 for each working spouse ($2,250 for
one-income couples for years prior to 1997), and defer taxes on interest or
other earnings from the IRAs. Special rules apply for determining the
deductibility of contributions made by married individuals filing separate
returns.

Effective for tax years beginning after 1996, one-income couples can
contribute up to $2,000 to each spouse's IRA provided the combined
compensation of both spouses is at least equal to the total contributions for
both spouses. If the working spouse is an active participant in an
employer-sponsored retirement plan and earns over $40,000, the maximum
deduction limit is reduced in the same way that the limit is reduced for
contributions to a non-spousal IRA.

As illustrated in the following tables, maintaining an IRA remains a
valuable opportunity.

For many, an IRA will continue to offer both an up-front tax break
with its tax deduction each year and the real benefit that comes with
tax-deferred compounding. For others, losing the tax deduction will impact
their taxable income status each year. Over the long term, however, being able
to defer taxes on earnings still provides an impressive investment
opportunity--a way to have money grow faster due to tax-deferred compounding.

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Even if your IRA contribution is no longer deductible, the benefits
of saving on a tax-deferred basis can be substantial. The following tables
illustrate the benefits of tax-deferred versus taxable compounding. Each
reflects a constant 10% rate of return, compounded annually, with the
reinvestment of all proceeds. The tables do not take into account any sales
charges or fees. Of course, earnings accumulated in your IRA will be subject
to tax upon withdrawal. If you choose a mutual fund with a fluctuating net
asset value, your bottom line at retirement could be lower or it could
also be much higher.

$2,000 Invested Annually Assuming a 10% Annualized Return

15% Tax Bracket Single -- $0 - $24,650
---------------
Joint -- $0 - $41,200

How Much How Much You
Cumulative You Have Have With
End of Investment Without Full IRA
Year Amount IRA Deduction

1 $ 2,000 $ 1,844 $ 2,200
5 10,000 10,929 13,431
10 20,000 27,363 35,062
15 30,000 52,074 69,899
20 40,000 89,231 126,005
25 50,000 145,103 216,364
30 60,000 229,114 361,887
35 70,000 355,438 596,254
40 80,000 545,386 973,704

[Without IRA--investment of $1,700 ($2,000 less 15%) earning 8.5% (10% less
15%)]

28% Tax Bracket Single -- $24,651 - $59,750
---------------
Joint -- $41,201 - $99,600

How Much How Much You Have
Cumulative You Have With Full IRA
End of Investment Without No
Year Amount IRA Deduction Deduction
1 $ 2,000 $ 1,544 $ 1,584 $ 2,200
5 10,000 8,913 9,670 13,431
10 20,000 21,531 25,245 35,062
15 30,000 39,394 50,328 69,899
20 40,000 64,683 90,724 126,005
25 50,000 100,485 155,782 216,364
30 60,000 151,171 260,559 361,887
35 70,000 222,927 429,303 596,254
40 80,000 324,512 701,067 973,704

[Without IRA--investment of $1,440 ($2,000 less 28%) earning 7.2% (10% less
28%)]
[With IRA--No Deduction--investment of $1,440 ($2,000 less 28%) earning 10%]

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31% Tax Bracket Single -- $59,751 - $124,650
---------------
Joint -- $99,601 - $151,750

How Much How Much You Have
Cumulative You Have With Full IRA
End of Investment Without No
Year Amount IRA Deduction Deduction
1 $ 2,000 $ 1,475 $ 1,518 $ 2,200
5 10,000 8,467 9,268 13,431
10 20,000 20,286 24,193 35,062
15 30,000 36,787 48,231 69,899
20 40,000 59,821 86,943 126,005
25 50,000 91,978 149,291 216,364
30 60,000 136,868 249,702 361,887
35 70,000 199,536 411,415 596,254
40 80,000 287,021 671,855 973,704

[Without IRA--investment of $1,380 ($2,000 less 31%) earning 6.9% (10% less
31%)]
[With IRA--No Deduction--investment of $1,380 ($2,000 less 31%) earning 10%]

36% Tax Bracket* Single -- $124,651 - $271,050
----------------
Joint -- $151,751 - $271,050

How Much How Much You Have
Cumulative You Have With Full IRA
End of Investment Without No
Year Amount IRA Deduction Deduction
1 $ 2,000 $ 1,362 $ 1,408 $ 2,200
5 10,000 7,739 8,596 13,431
10 20,000 18,292 22,440 35,062
15 30,000 32,683 44,736 69,899
20 40,000 52,308 80,643 126,005
25 50,000 79,069 138,473 216,364
30 60,000 115,562 231,608 361,887
35 70,000 165,327 381,602 596,254
40 80,000 233,190 623,170 973,704

[Without IRA--investment of $1,280 ($2,000 less 36%) earning 6.4% (10% less
36%)]
With IRA--No Deduction--investment of $1,280 ($2,000 less 36%) earning 10%]

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39.6% Tax Bracket* Single -- over $271,050
------------------
Joint -- over $271,050

How Much How Much You Have
Cumulative You Have With Full IRA
End of Investment Without No
Year Amount IRA Deduction Deduction
1 $ 2,000 $ 1,281 $ 1,329 $ 2,200
5 10,000 7,227 8,112 13,431
10 20,000 16,916 21,178 35,062
15 30,000 29,907 42,219 69,899
20 40,000 47,324 76,107 126,005
25 50,000 70,677 130,684 216,364
30 60,000 101,986 218,580 361,887
35 70,000 143,965 360,137 596,254
40 80,000 200,249 588,117 973,704

[Without IRA--investment of $1,208 ($2,000 less 39.6%) earning 6.04% (10% less
39.6%)]
[With IRA--No Deduction--investment of $1,208 ($2,000 less 39.6%) earning 10%]

- --------------------
* For tax years beginning after 1992, a 36% tax rate applies to all
taxable income in excess of the maximum dollar amounts subject to the
31% tax rate. In addition, a 10% surtax (not applicable to capital
gains) applies to certain high-income taxpayers. It is computed by
applying a 39.6% rate to taxable income in excess of $271,050. The
above tables do not reflect the personal exemption phaseout nor the
limitations of itemized deductions that may apply.

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THE VALUE OF STARTING YOUR IRA EARLY

The following illustrates how much more you would have contributing
$2,000 each January--the earliest opportunity--compared to contributing on
April 15th of the following year--the latest, for each tax year.

After 5 years $3,528 more
10 years $6,113
20 years $17,228
30 years $47,295

Compounded returns for the longest period of time is the key. The
above illustration assumes a 10% rate of return and the reinvestment of all
proceeds.

THE POWER OF TAX-DEFERRED COMPOUNDING
Over time, tax-deferred investing has the potential to double your
investment earnings. The following examples are based on a $2000 invested
on January 1 each year and assumes an 8% fixed rate of return, with no
fluctuation in the value of principal. The figures do not reflect the impact
of any fees or sales charges. These figures are for illustration only and are
not intended to represent any future investment results.

Accumulated Value
Over 10 years Tax Bracket
$26, 403 39.6%
$26,881 36%
$27,516 31%
$27,905 28%
$31,828 Tax-deferred

Over 20 years
$69,544 39.6%
$71, 986 36%
$75,540 31%
$77,767 28%
$102,476 Tax-deferred

Over 40 years
$254,528 39.6%
$274,662 36%
$305,626 31%
$326,046 28%
$607,355 Tax-deferred

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FINANCIAL STATEMENTS

Ernst & Young LLP will serve as the independent auditors for the
Trust and, in its capacity as such, will audit the annual financial statements
of each of the Portfolios.

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PART C

Other Information

Item 24. Financial Statements and Exhibits

(a) Financial Statements:

Part A - N/A

Part B - N/A

(b) Exhibits:

(1) Declaration of Trust.

(a) Declaration of Trust incorporated
into this filing by reference to
the initial registration
statement on Form N-1A filed on
October 24, 1997.

(2) By-Laws.

(a) By-Laws incorporated into
this filing by reference to
the initial registration
statement on Form N-1A filed on
October 24, 1997.

(3) Voting Trust Agreement. Inapplicable.

(4) Copies of All Instruments Defining the
Rights of Holders.

(a) Declaration of Trust. Declaration
of Trust (October 1997)
incorporated into this filing by
reference to the initial
registration statement on Form
N-1A filed on October 24, 1997.

(b) By-Laws. By-Laws incorporated
into this filing by reference to
the initial registration
statement on Form N-1A filed on
October 24, 1997.

(5) Asset Allocation Agreement.

(a) Executed Asset Allocation
Agreement (December 18, 1997)
between Delaware Management
Company, Inc. and the Registrant
on behalf of the Balanced
Portfolio attached as Exhibit.

(b) Executed Asset Allocation
Agreement (December 18, 1997)
between Delaware Management
Company, Inc. and the Registrant
on behalf of the Growth Portfolio
attached as Exhibit.

(c) Executed Asset Allocation
Agreement (December 18, 1997)
between Delaware Management
Company, Inc. and the Registrant
on behalf of the Income Portfolio
attached as Exhibit.

<PAGE>

PART C - Other Information
(Continued)

(6) (a) Distribution Agreement. Executed
Distribution Agreement (December
18, 1997) between Delaware
Distributors, L.P. and the
Registrant on behalf of the
Balanced Portfolio attached as
Exhibit.

(b) Executed Distribution Agreement
(December 18, 1997) between
Delaware Distributors, L.P. and
the Registrant on behalf of the
Growth Portfolio attached as
Exhibit.

(c) Executed Distribution Agreement
(December 18, 1997) between
Delaware Distributors, L.P. and
the Registrant on behalf of the
Income Portfolio attached as
Exhibit.

(d) Administration and Service
Agreement. Form of Administration
and Service Agreement (as amended
November 1995) (Module)
incorporated into this filing by
reference to the initial
registration statement on Form N-1A
filed on October 24, 1997.

(e) Dealer's Agreement. Dealer's
Agreement (as amended November
1995)(Module) incorporated into
this filing by reference to the
initial registration statement on
Form N-1A filed on October 24,
1997.

(f) Mutual Fund Agreement for the
Delaware Group of Funds (as
amended November 1995) (Module)
incorporated into this filing by
reference to the initial
registration statement on Form
N-1A filed on October 24, 1997.

(7) Bonus, Profit Sharing, Pension Contracts.

(a) Amended and Restated Profit Sharing Plan
(November 17, 1994) (Module) incorporated
into this filing by reference to the
initial registration statement on Form
N-1A filed on October 24, 1997.

(b) Amendment to Profit Sharing Plan (December
21, 1995) (Module) incorporated into this
filing by reference to the initial
registration statement on Form N-1A filed
on October 24, 1997.

(8) Custodian Agreement.

(a) Custodian Agreement (Module) with The
Chase Manhattan Bank incorporated into
this filing by reference to the initial
registration statement on Form N-1A filed
on October 24, 1997

(9) Other Material Contracts.

(a) Executed Shareholders Services Agreement
(December 18, 1997) between Delaware
Service Company, Inc. and the Registrant
on behalf of each Portfolio attached as
Exhibit.
<PAGE>

(b) Executed Fund Accounting Agreement
(Module) (August 19, 1996) with Delaware
Service Company, Inc. incorporated into
this filing by reference to the initial
registration statement on Form N-1A filed
on October 24, 1997.

<PAGE>

PART C - Other Information
(Continued)

(i) Executed Amendment No. 8 to
Schedule A of the Fund Accounting
Agreement attached as Exhibit.

(10) Opinion of Counsel. Attached as Exhibit.

(11) Consent of Auditors. Inapplicable.

(12-14) Inapplicable.

(15) Plans under Rule 12b-1.

(a) Executed Plan under Rule 12b-1 for Class A
of Balanced Portfolio attached as Exhibit.

(b) Executed Plan under Rule 12b-1 for Class B
of Balanced Portfolio attached as Exhibit.

(d) Executed Plan under Rule 12b-1 for Class A
of Growth Portfolio attached as Exhibit.

(e) Executed Plan under Rule 12b-1 for Class B
of Growth Portfolio attached as Exhibit.

(f) Executed Plan under Rule 12b-1 for Class C
of Growth Portfolio attached as Exhibit.

(g) Executed Plan under Rule 12b-1 for Class A
of Income Portfolio attached as Exhibit.

(h) Executed Plan under Rule 12b-1 for Class B
of Income Portfolio attached as Exhibit.

(i) Executed Plan under Rule 12b-1 for Class C
of Income Portfolio attached as Exhibit.

(16) Schedules of Computation for each Performance
Quotation. Inapplicable.

(17) Financial Data Schedules. Inapplicable.

(18) Plan Under Rule 18f-3. Incorporated into this
filing by reference to the initial registration
statement on Form N-1A filed on October 24,
1997.

(a) Amended Appendix A to Plan under Rule 18f-3
attached as Exhibit.

(19) Other: Trustees' Power of Attorney. Attached as
Exhibit.

Item 25. Persons Controlled by or under Common Control with Registrant.
None.

Item 26. Number of Holders of Securities. None.

Item 27. Indemnification. Incorporated into this filing by reference to
the initial registration statement on Form N-1A filed on
October 24, 1997.

<PAGE>

PART C - Other Information
(Continued)

Item 28. Business and Other Connections of Investment Adviser.

Delaware Management Company, Inc. (the "Manager") serves as
investment manager to the Registrant and also serves as investment manager or
sub-adviser to certain of the other funds in the Delaware Group (Delaware
Group Equity Funds I, Inc., Delaware Group Equity Funds II, Inc., Delaware
Group Equity Funds III, Inc., Delaware Group Equity Funds IV, Inc., Delaware
Group Equity Funds V, Inc., Delaware Group Income Funds, Inc., Delaware Group
Government Fund, Inc., Delaware Group Limited-Term Government Funds, Inc.,
Delaware Group Cash Reserve, Inc., Delaware Group Tax-Free Fund, Inc.,
Delaware Group State Tax-Free Income Trust, Delaware Group Tax-Free Money
Fund, Inc., Delaware Group Premium Fund, Inc., Delaware Group Global &
International Funds, Inc., Delaware Pooled Trust, Inc., Delaware Group Adviser
Funds, Inc., Delaware Group Dividend and Income Fund, Inc., Delaware Group
Global Dividend and Income Fund, Inc., Voyageur Tax-Free Funds, Inc., Voyageur
Intermediate Tax-Free Funds, Inc., Voyageur Insured Funds, Inc., Voyageur
Funds, Inc., Voyageur Investment Trust, Voyageur Investment Trust II, Voyageur
Mutual Funds, Inc., Voyageur Mutual Funds II, Inc., Voyageur Mutual Funds III,
Inc., Voyageur Arizona Municipal Income Fund, Inc., Voyageur Colorado Insured
Municipal Income Fund, Inc., Voyageur Florida Insured Municipal Income Fund,
Voyageur Minnesota Municipal Fund, Inc., Voyageur Minnesota Municipal Fund II,
Inc. and Voyageur Minnesota Municipal Fund III, Inc.) and provides investment
advisory services to institutional accounts, primarily retirement plans and
endowment funds. In addition, certain directors of the Manager also serve as
directors/trustees of the other Delaware Group funds, and certain officers are
also officers of these other funds. A company owned by the Manager's parent
company acts as principal underwriter to the mutual funds in the Delaware
Group (see Item 29 below) and another such company acts as the shareholder
services, dividend disbursing, accounting servicing and transfer agent for all
of the mutual funds in the Delaware Group.

<PAGE>

PART C - Other Information
(Continued)

The following persons serving as directors or officers of
the Manager have held the following positions during the past two years:

Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------ -------------------------------------------------

Wayne A. Stork Chairman of the Board, President, Chief
Executive Officer, Chief Investment Officer and
Director of Delaware Management Company, Inc.;
Chairman of the Board, President, Chief
Executive Officer and Director of DMH Corp.,
Delaware Distributors, Inc. and Founders
Holdings, Inc.; Chairman, Chief Executive
Officer and Director of Delaware International
Holdings Ltd. and Delaware International
Advisers Ltd.; Chairman of the Board and
Director of the Registrant, each of the other
funds in the Delaware Group, Delaware Management
Holdings, Inc., and Delaware Capital Management,
Inc.; Chairman of Delaware Distributors, L.P.;
President and Chief Executive Officer of Delvoy,
Inc.; and Director of Delaware Service Company,
Inc. and Delaware Investment & Retirement
Services, Inc.

Richard G. Unruh, Jr. Executive Vice President and Director of
Delaware Management Company, Inc.; Executive
Vice President of the Registrant, each of the
other funds in the Delaware Group, Delaware
Management Holdings, Inc. and Delaware Capital
Management, Inc; and Director of Delaware
International Advisers Ltd.

Board of Directors, Chairman of Finance
Committee, Keystone Insurance Company since
1989, 2040 Market Street, Philadelphia, PA;
Board of Directors, Chairman of Finance
Committee, AAA Mid Atlantic, Inc. since 1989,
2040 Market Street, Philadelphia, PA; Board of
Directors, Metron, Inc. since 1995, 11911
Freedom Drive, Reston, VA

Paul E. Suckow Executive Vice President/Chief Investment
Officer, Fixed Income of Delaware Management
Company, Inc., the Registrant, each of the other
funds in the Delaware Group and Delaware
Management Holdings, Inc.; Executive Vice
President and Director of Founders Holdings,
Inc.; Executive Vice President of Delaware
Capital Management, Inc.; and Director of
Founders CBO Corporation

Director, HYPPCO Finance Company Ltd.

* Business address of each is 1818 Market Street, Philadelphia, PA 19103.

<PAGE>

PART C - Other Information
(Continued)

David K. Downes Executive Vice President, Chief Operating
Officer, Chief Financial Officer and Director of
Delaware Management Company, Inc., DMH Corp,
Delaware Distributors, Inc., Founders Holdings,
Inc. and Delvoy, Inc.; Executive Vice President,
Chief Operating Officer and Chief Financial
Officer of the Registrant and each of the other
funds in the Delaware Group, Delaware Management
Holdings, Inc., Founders CBO Corporation,
Delaware Capital Management, Inc. and Delaware
Distributors, L.P.; President, Chief Executive
Officer, Chief Financial Officer and Director of
Delaware Service Company, Inc.; President, Chief
Operating Officer, Chief Financial Officer and
Director of Delaware International Holdings
Ltd.; Chairman, Chief Executive Officer and
Director of Delaware Investment & Retirement
Services, Inc.; Chairman and Director of
Delaware Management Trust Company; Director of
Delaware International Advisers Ltd.; and Vice
President of Lincoln Funds Corporation

Chief Executive Officer and Director of
Forewarn, Inc. since 1993, 8 Clayton Place,
Newtown Square, PA

George M. Chamberlain, Jr. Senior Vice President, General Counsel,
Secretary and Director of Delaware Management
Company, Inc., DMH Corp., Delaware Distributors,
Inc., Delaware Service Company, Inc., Founders
Holdings, Inc., Delaware Capital Management,
Inc., Delaware Investment & Retirement Services,
Inc. and Delvoy, Inc.; Senior Vice President,
Secretary and General Counsel of the Registrant,
each of the other funds in the Delaware Group,
Delaware Distributors, L.P. and Delaware
Management Holdings, Inc.; Senior Vice President
and Director of Delaware International Holdings
Ltd.; Executive Vice President, Secretary,
General Counsel and Director of Delaware
Management Trust Company; Director of Delaware
International Advisers Ltd.; Secretary of
Lincoln Funds Corporation

*Business address of each is 1818 Market Street, Philadelphia, PA 19103.

<PAGE>

PART C - Other Information
(Continued)

Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------ -------------------------------------------------

Richard J. Flannery Senior Vice President/Corporate and
International Affairs of the Registrant, each of
the other funds in the Delaware Group, Delaware
Management Holdings, Inc., DMH Corp., Delaware
Management Company, Inc., Delaware Distributors,
Inc., Delaware Distributors, L.P., Delaware
Management Trust Company, Delaware Capital
Management, Inc., Delaware Service Company, Inc.
and Delaware Investment & Retirement Services,
Inc.; Executive Vice President/Corporate &
International Affairs and Director of Delaware
International Holdings Ltd.; Senior Vice
President/ Corporate and International Affairs
and Director of Founders Holdings, Inc. and
Delvoy, Inc.; Senior Vice President of Founders
CBO Corporation; and Director of Delaware
International Advisers Ltd.

Director, HYPPCO Finance Company Ltd.

Limited Partner of Stonewall Links, L.P. since
1991, Bulltown Rd., Elverton, PA; Director and
Member of Executive Committee of Stonewall
Links, Inc. since 1991, Bulltown Rd., Elverton,
PA

Michael P. Bishof Senior Vice President and Treasurer of the
Registrant, each of the other funds in the
Delaware Group and Founders Holdings, Inc.;
Senior Vice President/Investment Accounting of
Delaware Management Company, Inc. and Delaware
Service Company, Inc.; Senior Vice President and
Treasurer/ Manager, Investment Accounting of
Delaware Distributors, L.P.; Assistant Treasurer
of Founders CBO Corporation; and Senior Vice
President and Manager of Investment Accounting
of Delaware International Holdings Ltd.

* Business address of each is 1818 Market Street, Philadelphia, PA 19103.

<PAGE>

PART C - Other Information
(Continued)

Joseph H. Hastings Senior Vice President/Corporate Controller and
Treasurer of Delaware Management Holdings, Inc.,
DMH Corp., Delaware Management Company, Inc.,
Delaware Distributors, Inc., Delaware Capital
Management, Inc., Delaware Distributors, L.P.,
Delaware Service Company, Inc., Delaware
International Holdings Ltd. and Delvoy, Inc.;
Senior Vice President/Corporate Controller of
the Registrant, each of the other funds in the
Delaware Group and Founders Holdings, Inc.;
Executive Vice President, Chief Financial
Officer and Treasurer of Delaware Management
Trust Company; Chief Financial Officer and
Treasurer of Delaware Investment & Retirement
Services, Inc.; Senior Vice President/Assistant
Treasurer of Founders CBO Corporation; and
Treasurer of Lincoln Funds Corporation.

Michael T. Taggart Senior Vice President/Facilities Management and
Administrative Services of Delaware Management
Company, Inc.

Douglas L. Anderson Senior Vice President/Operations of Delaware
Management Company, Inc., Delaware Investment
and Retirement Services, Inc. and Delaware
Service Company, Inc.; Senior Vice President/
Operations and Director of Delaware Management
Trust Company

James L. Shields Senior Vice President/Chief Information Officer
of Delaware Management Company, Inc., Delaware
Service Company, Inc. and Delaware Investment &
Retirement Services, Inc.

Eric E. Miller Vice President, Assistant Secretary and Deputy
General Counsel of the Registrant and each of
the other funds in the Delaware Group, Delaware
Management Company, Inc., Delaware Management
Holdings, Inc., DMH Corp., Delaware
Distributors, L.P., Delaware Distributors Inc.,
Delaware Service Company, Inc., Delaware
Management Trust Company, Founders Holdings,
Inc., Delaware Capital Management, Inc. and
Delaware Investment & Retirement Services, Inc.;
and Vice President and Assistant Secretary of
Delvoy, Inc.

* Business address of each is 1818 Market Street, Philadelphia, PA 19103.

<PAGE>

PART C - Other Information
(Continued)

Richelle S. Maestro Vice President and Assistant Secretary of
Delaware Management Company, Inc., the
Registrant, each of the other funds in the
Delaware Group, Delaware Management Holdings,
Inc., Delaware Distributors, L.P., Delaware
Distributors, Inc., Delaware Service Company,
Inc., DMH Corp., Delaware Management Trust
Company, Delaware Capital Management, Inc.,
Delaware Investment & Retirement Services, Inc.,
Founders Holdings, Inc. and Delvoy, Inc.; Vice
President and Secretary of Delaware
International Holdings Ltd.; and Secretary of
Founders CBO Corporation;

Partner of Tri-R Associates since 1989, 10001
Sandmeyer Lane, Philadelphia, PA

Richard Salus\1 Vice President/Assistant Controller of Delaware
Management Company, Inc. and Delaware Management
Trust Company

Bruce A. Ulmer Vice President/Director of LNC Internal Audit of
Delaware Management Company, Inc., the Registrant,
each of the other funds in the Delaware Group,
Delaware Management Holdings, Inc., DMH Corp.,
Delaware Management Trust Company and Delaware
Investment & Retirement Services, Inc.; Vice
President/Director of Internal Audit of Delvoy,
Inc.

Steven T. Lampe Vice President/Taxation of Delaware Management
Company, Inc., the Registrant, each of the other
funds in the Delaware Group, Delaware Management
Holdings, Inc., DMH Corp., Delaware
Distributors, L.P., Delaware Distributors, Inc.,
Delaware Service Company, Inc., Delaware
Management Trust Company, Founders Holdings,
Inc., Founders CBO Corporation, Delaware Capital
Management, Inc., Delaware Investment &
Retirement Services, Inc. and Delvoy, Inc.

Christopher Adams Vice President/Strategic Planning of Delaware
Management Company, Inc. and Delaware Service
Company, Inc.

Susan L. Hanson Vice President/Strategic Planning of Delaware
Management Company, Inc. and Delaware Service
Company, Inc.

* Business address of each is 1818 Market Street, Philadelphia, PA 19103.

<PAGE>

PART C - Other Information
(Continued)

Dennis J. Mara\4 Vice President/Acquisitions of Delaware
Management Company, Inc.

Scott Metzger Vice President/Business Development of Delaware
Management Company, Inc. and Delaware Service
Company, Inc.

Lisa O. Brinkley Vice President/Compliance of Delaware Management
Company, Inc., the Registrant, each of the other
funds in the Delaware Group, DMH Corp., Delaware
Distributors, L.P., Delaware Distributors, Inc.,
Delaware Service Company, Inc., Delaware
Management Trust Company, Delaware Capital
Management, Inc. and Delaware Investment &
Retirement Services, Inc.; Vice President of
Delvoy, Inc.

Rosemary E. Milner Vice President/Legal Registrations of Delaware
Management Company, Inc., the Registrant, each
of the other funds in the Delaware Group,
Delaware Distributors, L.P. and Delaware
Distributors, Inc.

Mary Ellen Carrozza Vice President/Client Services of Delaware
Management Company, Inc. and the Registrant

Gerald T. Nichols Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., each of the
tax-exempt funds, the fixed income funds and the
closed-end funds in the Delaware Group; Vice
President of Founders Holdings, Inc.; and
Treasurer, Assistant Secretary and Director of
Founders CBO Corporation

Paul A. Matlack Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., each of the
tax-exempt funds, the fixed income funds and the
closed-end funds in the Delaware Group; Vice
President of Founders Holdings, Inc.; and
President and Director of Founders CBO
Corporation.

Gary A. Reed Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., each of the
tax-exempt funds and the fixed income funds in
the Delaware Group and Delaware Capital
Management, Inc.

* Business address of each is 1818 Market Street, Philadelphia, PA 19103.

<PAGE>

PART C - Other Information
(Continued)

Patrick P. Coyne Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., each of the
tax-exempt funds and the fixed income funds in
the Delaware Group and Delaware Capital
Management, Inc.

Roger A. Early Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., each of the
tax-exempt funds and the fixed income funds in
the Delaware Group

Mitchell L. Conery\3 Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., and each of
the tax-exempt and fixed income funds in the
Delaware Group

George H. Burwell Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc. and each of
the equity funds in the Delaware Group

John B. Fields Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc. and each of
the equity funds in the Delaware Group and
Delaware Capital Management, Inc.

Gerald S. Frey\4 Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc. and each of
the equity funds in the Delaware Group

Christopher Beck\5 Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc. and each of
the equity funds in the Delaware Group

Elizabeth H. Howell\6 Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc. and the
Delaware-Voyageur Tax-Free Minnesota
Intermediate, Delaware-Voyageur Minnesota
Insured, Delaware-Voyageur Tax-Free Minnesota,
Delaware-Voyageur Tax-Free Idaho,
Delaware-Voyageur Tax-Free Kansas,
Delaware-Voyageur Tax-Free Missouri,
Delaware-Voyageur Tax-Free Oregon,
Delaware-Voyageur Tax-Free Washington,
Delaware-Voyageur Tax-Free Iowa and
Delaware-Voyageur Tax-Free Wisconsin Funds.

* Business address of each is 1818 Market Street, Philadelphia, PA 19103.

<PAGE>

PART C - Other Information
(Continued)

Andrew M. McCullagh\7 Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc. and the
Delaware-Voyageur Tax-Free Arizona Insured,
Delaware-Voyageur Tax-Free Arizona,
Delaware-Voyageur Tax-Free California Insured,
Delaware-Voyageur Tax-Free Colorado,
Delaware-Voyageur Tax-Free New Mexico,
Delaware-Voyageur Tax-Free North Dakota and
Delaware-Voyageur Tax-Free Utah Funds.

Babak Zenouzi Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc. and each of
the equity funds and the closed-end funds in the
Delaware Group

Paul Grillo Vice President/Portfolio Manager of Delaware
Management Company, Inc. and each of the
tax-exempt and fixed income funds in the
Delaware Group

Marshall T. Bassett Vice President/Portfolio Manager of Delaware
Management Company, Inc. and each of the equity
funds in the Delaware Group.

John Heffern Vice President/Portfolio Manager of Delaware
Management Company, Inc. and each of the equity
funds in the Delaware Group.

1 SENIOR MANAGER, Ernst & Young LLP prior to December 1996.
2 CORPORATE CONTROLLER, IIS prior to July 1997 and DIRECTOR, FINANCIAL
PLANNING, Decision One prior to March 1996.
3 INVESTMENT OFFICER, Travelers Insurance prior to January 1997.
4 SENIOR DIRECTOR, Morgan Grenfell Capital Management prior to June 1996.
5 SENIOR PORTFOLIO MANAGER, Pitcairn Trust Company prior to May 1997.
6 SENIOR PORTFOLIO MANAGER, Voyageur Fund Managers, Inc. prior to May 1997.
7 SENIOR VICE PRESIDENT, SENIOR PORTFOLIO MANAGER, Voyageur Asset
Management LLC prior to May 1997.

*Business address of each is 1818 Market Street, Philadelphia, PA 19103.

<PAGE>

PART C - Other Information
(Continued)

Item 29. Principal Underwriters.

(a) Delaware Distributors, L.P. serves as
principal underwriter for all the mutual
funds in the Delaware Group.

(b) Information with respect to each director,
officer or partner of principal
underwriter:

<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------ ---------------- ---------------

<S> <C> <C>
Delaware Distributors, Inc. General Partner None

Delaware Management
Company, Inc. Limited Partner Investment Manager

Delaware Capital
Management, Inc. Limited Partner None

Wayne A. Stork Chairman Chairman/ President/
Chief Executive Officer/Chief
Investment Officer

Bruce D. Barton President and Chief Executive None
Officer

David K. Downes Executive Vice President, Executive Vice
Chief Operating Officer President/Chief
and Chief Financial Officer Operating Officer/
Chief Financial Officer

George M. Chamberlain, Jr. Senior Vice President/Secretary/ Senior Vice President/
General Counsel Secretary/General Counsel

Terrence P. Cunningham Senior Vice President/ Financial None
Institutions

Thomas E. Sawyer Senior Vice President/ None
National Sales Director

Dana B. Hall Senior Vice President/ None
Key Accounts
</TABLE>

* Business address of each is 1818 Market Street, Philadelphia, PA 19103.

<PAGE>

PART C - Other Information
(Continued)

<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------ ---------------- ---------------

Mac McAuliffe Senior Vice President/Sales None
Manager, Western Division

William F. Hostler Senior Vice President/ None
Marketing Services

J. Chris Meyer Senior Vice President/ None
Director Product Management

Stephen H. Slack Senior Vice President/Wholesaler None

William M. Kimbrough Senior Vice President/Wholesaler None

Daniel J. Brooks Senior Vice President/Wholesaler None

Richard J. Flannery Senior Vice President/Corporate Senior Vice President/
and International Affairs Corporate and
International Affairs

Bradley L. Kolstoe Senior Vice President/Western None
Division Sales Manager

Henry W. Orvin Senior Vice President/Eastern None
Division Sales Manager - Wire/
Regional Channel

Michael P. Bishof Senior Vice President and Treasurer/ Senior Vice
Manager, Investment Accounting President/Treasurer

Eric E. Miller Vice President/Assistant Secretary/ Vice President/
Deputy General Counsel Assistant Secretary/
Deputy General Counsel
</TABLE>

* Business address of each is 1818 Market Street, Philadelphia, PA 19103.

<PAGE>

PART C - Other Information
(Continued)

<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------ ---------------- ---------------

<S> <C> <C>
Richelle S. Maestro Vice President/ Vice President/
Assistant Secretary Assistant Secretary

Steven T. Lampe Vice President/Taxation Vice President/Taxation

Joseph H. Hastings Vice President/Corporate Senior Vice President/
Controller & Treasurer Corporate Controller

Lisa O. Brinkley Vice President/Compliance Vice President/
Compliance

Rosemary E. Milner Vice President/Legal Registrations Vice President/Legal
Registrations

Daniel H. Carlson Vice President/Strategic Marketing None

Diane M. Anderson Vice President/Plan Record Keeping None
and Administration

Anthony J. Scalia Vice President/Defined Contribution None
Sales, SW Territory

Courtney S. West Vice President/Defined Contribution None
Sales, NE Territory

Denise F. Guerriere Vice President/Client Services None

Gordon E. Searles Vice President/Client Services None

Julia R. Vander Els Vice President/Participant Services None
</TABLE>

* Business address of each is 1818 Market Street, Philadelphia, PA 19103.

<PAGE>

PART C - Other Information
(Continued)

<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------ ---------------- ---------------

Jerome J. Alrutz Vice President/Retail Sales None

Joanne A. Mettenheimer Vice President/New Business None
Development

Scott Metzger Vice President/Business Development None

Stephen C. Hall Vice President/Institutional Sales None

Gregory J. McMillan Vice President/ National Accounts None

Christopher H. Price Vice President/Manager, None
Insurance

Stephen J. DeAngelis Vice President/Product None
Development

Zina DeVassal Vice President/Financial Institutions None

Andrew W. Whitaker Vice President/Financial Institutions None

Jesse Emery Vice President/ Marketing None
Communications

Darryl S. Grayson Vice President, Broker/Dealer None
Internal Sales

Susan T. Friestedt Vice President/Client Service None

Dinah J. Huntoon Vice President/Product None
Manager Equity

Soohee Lee Vice President/Fixed Income None
Product Management

Michael J. Woods Vice President/ UIT Product None
Management

Ellen M. Krott Vice President/Marketing None
</TABLE>

* Business address of each is 1818 Market Street, Philadelphia, PA 19103.

<PAGE>

PART C - Other Information
(Continued)

<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------ ---------------- ---------------

<S> <C> <C>
Dale L. Kurtz Vice President/Marketing Support None

Holly W. Reimel Vice President/Manager, Key Accounts None

David P. Anderson Vice President/Wholesaler None

Lee D. Beck Vice President/Wholesaler None

Gabriella Bercze Vice President/Wholesaler None

Terrence L. Bussard Vice President/Wholesaler None

William S. Carroll Vice President/Wholesaler None

William L. Castetter Vice President/Wholesaler None

Thomas J. Chadie Vice President/Wholesaler None

Thomas C. Gallagher Vice President/Wholesaler None

Douglas R. Glennon Vice President/Wholesaler None

Ronald A. Haimowitz Vice President/Wholesaler None

Christopher L. Johnston Vice President/Wholesaler None

Michael P. Jordan Vice President/Wholesaler None

Jeffrey A. Keinert Vice President/Wholesaler None

Thomas P. Kennett Vice President/ Wholesaler None

Debbie A. Marler Vice President/Wholesaler None

Nathan W. Medin Vice President/Wholesaler None

Roger J. Miller Vice President/Wholesaler None

Patrick L. Murphy Vice President/Wholesaler None
</TABLE>

* Business address of each is 1818 Market Street, Philadelphia, PA 19103.

<PAGE>

PART C - Other Information
(Continued)

<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------ ---------------- ---------------

<S> <C> <C>
Stephen C. Nell Vice President/Wholesaler None

Julia A. Nye Vice President/Wholesaler None

Joseph T. Owczarek Vice President/Wholesaler None

Mary Ellen Pernice-Fadden Vice President/Wholesaler None

Mark A. Pletts Vice President/Wholesaler None

Philip G. Rickards Vice President/Wholesaler None

Laura E. Roman Vice President/Wholesaler None

Linda Schulz Vice President/Wholesaler None

Edward B. Sheridan Vice President/Wholesaler None

Robert E. Stansbury Vice President/Wholesaler None

Julia A. Stanton Vice President/Wholesaler None

Larry D. Stone Vice President/Wholesaler None

Edward J. Wagner Vice President/Wholesaler None

Wayne W. Wagner Vice President/Wholesaler None

John A. Wells Vice President/Marketing Technology None

Scott Whitehouse Vice President/Wholesaler None

Frank C. Tonnemaker Vice President None
</TABLE>

* Business address of each is 1818 Market Street, Philadelphia, PA 19103.

<PAGE>

PART C - Other Information
(Continued)

Item 30. Location of Accounts and Records.

All accounts and records are maintained in
Philadelphia at 1818 Market Street, Philadelphia,
PA 19103 or One Commerce Square, Philadelphia, PA
19103.

Item 31. Management Services. None.

Item 32. Undertakings.

(a) The Registrant hereby undertakes to file
an amendment to the Registration Statement
with certified financial statements
showing the initial capital received
before accepting subscriptions from any
persons in excess of 25 if Registrant
proposes to raise its initial capital
pursuant to Section 14(a)(3) of the 1940
Act.

(b) The Registrant hereby undertakes to file
a post-effective amendment, using
financial statements which need not be
certified, within four to six months
from the initial public offering of
shares of the Income Portfolio, the
Balanced Portfolio and the Growth
Portfolio.

(c) The Registrant hereby undertakes to
furnish each person to whom a prospectus
is delivered with a copy of the
Registrant's annual report to
shareholders, upon request and without
charge.

(d) The Registrant hereby undertakes to
promptly call a meeting of shareholders
for the purpose of voting upon the
question of removal of any trustee when
requested in writing to do so by the
record holders of not less than 10% of
the outstanding shares.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, this Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in this City of Philadelphia and Commonwealth of Pennsylvania on
this 18th day of December, 1997.

DELAWARE GROUP FOUNDATION FUNDS

By /s/ Wayne A. Stork
--------------------
Wayne A. Stork
Chairman

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated:

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----

<S> <C> <C>
/s/Wayne A. Stork Chairman of the Board and Trustee December 18, 1997
- -------------------------------
Wayne A. Stork
Executive Vice President/Chief Operating
Officer/Chief Financial Officer and Trustee
(Principal Financial Officer and
/s/David K. Downes Principal Accounting Officer) December 18, 1997
- -------------------------------
David K. Downes

/s/Walter P. Babich Trustee December 18, 1997
- -------------------------------
Walter P. Babich

/s/Anthony D. Knerr Trustee December 18, 1997
- -------------------------------
Anthony D. Knerr

/s/Ann R. Leven Trustee December 18, 1997
- -------------------------------
Ann R. Leven

/s/W. Thacher Longstreth Trustee December 18, 1997
- -------------------------------
W. Thacher Longstreth

/s/Thomas F. Madison Trustee December 18, 1997
- -------------------------------
Thomas F. Madison

/s/Jeffrey J. Nick Trustee December 18, 1997
- -------------------------------
Jeffrey J. Nick

/s/Charles E. Peck Trustee December 18, 1997
- -------------------------------
Charles E. Peck
</TABLE>

<PAGE>

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Exhibits

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

<PAGE>

INDEX TO EXHIBITS

Exhibit No. Exhibit

EX-99.B5A Executed Asset Allocation Agreement on behalf of Balanced
Portfolio

EX-99.B5B Executed Asset Allocation Agreement on behalf of Growth
Portfolio

EX-99.B5C Executed Asset Allocation Agreement on behalf of Income
Portfolio

EX-99.B6A Executed Distribution Agreement on behalf of Balanced
Portfolio

EX-99.B6B Executed Distribution Agreement on behalf of Growth
Portfolio

EX-99.B6C Executed Distribution Agreement on behalf of Income
Portfolio

EX-99.B9A Executed Shareholders Services Agreement

EX-99.B9BI Executed Amendment No. 8 to Schedule A of the Fund
Accounting Agreement

EX-99.B10 Opinion of Counsel

EX-99.B15A Executed Plan under Rule 12b-1 for Class A of Balanced
Portfolio

EX-99.B15B Executed Plan under Rule 12b-1 for Class B of Balanced
Portfolio

EX-99.B15C Executed Plan under Rule 12b-1 for Class C of Balanced
Portfolio

EX-99.B15D Executed Plan under Rule 12b-1 for Class A of Growth
Portfolio

EX-99.B15E Executed Plan under Rule 12b-1 for Class B of Growth
Portfolio

EX-99.B15F Executed Plan under Rule 12b-1 for Class C of Growth
Portfolio

EX-99.B15G Executed Plan under Rule 12b-1 for Class A of Income
Portfolio

EX-99.B15H Executed Plan under Rule 12b-1 for Class B of Income
Portfolio

EX-99.B15I Executed Plan under Rule 12b-1 for Class C of Income
Portfolio

EX-99.B18A Amended Appendix A to Plan under Rule 18f-3

EX-99.B19 Power of Attorney

<PAGE>

EX-99.B5A
EXHIBIT 5A

DELAWARE GROUP FOUNDATION FUNDS

FOUNDATION BALANCED PORTFOLIO

ASSET ALLOCATION AGREEMENT

AGREEMENT, made by and between DELAWARE GROUP FOUNDATION FUNDS (the
"Fund"), a Delaware business trust, for the Foundation Balanced Portfolio (the
"Series"), and DELAWARE MANAGEMENT COMPANY, INC. (the "Investment Manager"), a
Delaware corporation.
W I T N E S S E T H:
WHEREAS, the Fund has been organized and operates as an investment
company registered under the Investment Company Act of 1940 and engages in the
business of investing and reinvesting its assets in securities; and
WHEREAS, the Investment Manager is a registered Investment Adviser
under the Investment Advisers Act of 1940 and engages in the business of
providing investment management services.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and each of the parties hereto intending to be legally bound, it is
agreed as follows:
1. The Fund hereby employs the Investment Manager to manage the
investment and reinvestment of the Series' assets and to administer its affairs,
subject to the direction of the Board and officers of the Fund for the period
and on the terms hereinafter set forth. The Investment Manager hereby accepts
such employment and agrees during such period to render the services and assume
the obligations herein set forth for the compensation herein provided. The
Investment Manager shall, for all purposes herein, be deemed to be an
independent contractor, and shall, unless otherwise expressly provided and
authorized, have no authority to act for or represent the Fund in any way, or in
any way be deemed an agent of the Fund. The Investment Manager shall regularly
make decisions as to what securities to purchase and sell on behalf of the
Series, shall effect the purchase and sale of investments in furtherance of the
Series' objectives and

-1-

<PAGE>

policies, and shall furnish the Board of Trustees of the Fund with such
information and reports regarding the Series' investments as the Investment
Manager deems appropriate or as the Trustees of the Fund may reasonably request.
2. The Fund shall conduct its own business and affairs and shall bear
the expenses and salaries necessary and incidental thereto including, but not in
limitation of the foregoing, the costs incurred in: the maintenance of its
corporate existence; the maintenance of its own books, records and procedures;
dealing with its own shareholders; the payment of dividends; transfer of stock,
including issuance, redemption and repurchase of shares; preparation of share
certificates; reports and notices to shareholders; calling and holding of
shareholders' meetings; miscellaneous office expenses; brokerage commissions;
custodian fees; legal and accounting fees; taxes; and federal and state
registration fees. The Series shall bear all of its own organizational costs.
Directors, officers and employees of the Investment Manager
may be directors, officers and employees of the funds of which Delaware
Management Company, Inc. is Investment Manager. Directors, officers and
employees of the Investment Manager who are directors, officers and/or employees
of the funds shall not receive any compensation from the funds for acting in
such dual capacity.
In the conduct of the respective businesses of the parties
hereto and in the performance of this Agreement, the Fund and Investment Manager
may share facilities common to each, with appropriate proration of expenses
between them.
3. (a) The Fund shall place and execute its own orders for the purchase
and sale of domestic portfolio securities with broker/dealers. Subject to the
primary objective of obtaining the best available prices and execution, the Fund
will place orders for the purchase and sale of portfolio securities with such
broker/dealers selected from among those designated from time to time by the
Investment Manager, who provide statistical, factual and financial information
and services to the Fund, to the Investment Manager, or to any other fund for
which the Investment Manager provides investment advisory services

-2-

<PAGE>

and/or with broker/dealers who sell shares of the Fund or who sell shares of any
other fund for which the Investment Manager provides investment advisory
services. Broker/dealers who sell shares of the funds of which Delaware
Management Company, Inc. or Delaware International Advisers Ltd. is investment
manager, shall only receive orders for the purchase or sale of portfolio
securities to the extent that the placing of such orders is in compliance with
the Rules of the Securities and Exchange Commission and the National Association
of Securities Dealers, Inc.
(b) Notwithstanding the provisions of subparagraph (a) above
and subject to such policies and procedures as may be adopted by the Board of
Trustees and officers of the Fund, the Investment Manager may ask the Fund, and
the Fund may agree, to pay a member of an exchange, broker or dealer an amount
of commission for effecting a securities transaction in excess of the amount of
commission another member of an exchange, broker or dealer would have charged
for effecting that transaction, in such instances where it, and the Investment
Manager, have determined in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such member, broker or dealer, viewed in terms of either that
particular transaction or the Investment Manager's overall responsibilities with
respect to the Fund and to other funds or other advisory accounts for which the
Investment Manager exercises investment discretion.
4. As compensation for the services to be rendered to the Fund by the
Investment Manager under the provisions of this Agreement, the Fund shall pay to
the Investment Manager monthly from the Series' assets a fee at an annual rate
of 0.25% of the Series' average daily net assets.
If this Agreement is terminated prior to the end of any
calendar month, the management fee shall be prorated for the portion of any
month in which this Agreement is in effect according to the proportion which the
number of calendar days during which the Agreement is in effect bears to the
number of calendar days in the month, and shall be payable within 10 days after
the date of termination.

-3-

<PAGE>

5. The Investment Manager may, at its expense, select and contract with
one or more registered investment advisers (the "Sub-Adviser") for the Fund to
perform some or all of the services for the Series for which it is responsible
under this Agreement. Notwithstanding Paragraph 3 hereof, such Sub-Adviser may
be responsible for executing orders for the purchase and sale of foreign
portfolio securities. The Investment Manager will compensate any Sub-Adviser for
its services to the Fund. The Investment Manager may terminate the services of
any Sub-Adviser at any time in its sole discretion, and shall at such time
assume the responsibilities of such Sub-Adviser unless and until a successor
Sub-Adviser is selected.
6. The services to be rendered by the Investment Manager to the Fund
under the provisions of this Agreement are not to be deemed to be exclusive, and
the Investment Manager shall be free to render similar or different services to
others so long as its ability to render the services provided for in this
Agreement shall not be impaired thereby.
7. The Investment Manager, its directors, officers, employees, agents
and shareholders may engage in other businesses, may render investment advisory
services to other investment companies, or to any other corporation,
association, firm or individual, and may render underwriting services to the
Fund or to any other investment company, corporation, association, firm or
individual.
8. In the absence of willful misfeasance, bad faith, gross negligence,
or a reckless disregard of the performance of duties of the Investment Manager
to the Fund, the Investment Manager shall not be subject to liabilities to the
Fund or to any shareholder of the Fund for any action or omission in the course
of, or connected with, rendering services hereunder or for any losses that may
be sustained in the purchase, holding or sale of any security, or otherwise.
9. This Agreement shall be executed and become effective as of the date
written below. It shall continue in effect for a period of two years from such
date and may be renewed thereafter only so long as such renewal and continuance
is specifically approved at least annually by the Board of Trustees of the Fund
or by vote of a majority of the outstanding voting securities of the Series and
only if the terms and the

-4-

<PAGE>

renewal hereof have been approved by the vote of a majority of the Trustees of
the Fund who are not parties hereto or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such approval.
Notwithstanding the foregoing, this Agreement may be terminated by the Fund at
any time, without the payment of a penalty, on sixty days' written notice to the
Investment Manager of the Fund's intention to do so, pursuant to action by the
Board of Trustees of the Fund or pursuant to vote of a majority of the
outstanding voting securities of the Series. The Investment Manager may
terminate this Agreement at any time, without the payment of penalty, on sixty
days' written notice to the Fund of its intention to do so. Upon termination of
this Agreement, the obligations of all the parties hereunder shall cease and
terminate as of the date of such termination, except for any obligation to
respond for a breach of this Agreement committed prior to such termination, and
except for the obligation of the Fund to pay to the Investment Manager the fee
provided in paragraph 4 hereof, prorated to the date of termination. This
Agreement shall automatically terminate in the event of its assignment.
10. This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.
11. For the purposes of this Agreement, the terms "vote of a majority
of the outstanding voting securities;" "interested persons;" and "assignment"
shall have the meanings defined in the Investment Company Act of 1940.

-5-

<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this
Agreement by having it signed by their duly authorized officers as of the 18th
day of December, 1997.

DELAWARE GROUP FOUNDATION FUNDS
for the FOUNDATION BALANCED PORTFOLIO

By: /s/ David K. Downes
Name: David K. Downes
Title: Executive Vice President, Chief Operating
Officer and Chief Financial Officer

Attest: /s/ Michael D. Mabry
Name: Michael D. Mabry
Title: Assistant Vice President, Assistant Secretary
and Senior Counsel

DELAWARE MANAGEMENT COMPANY, INC.

By: /s/ Wayne A. Stork
Name: Wayne A. Stork
Title: Chairman, President, Chief Executive Officer
and Chief Investment Officer

Attest: /s/ Michael D. Mabry
Name: Michael D. Mabry
Title: Assistant Vice President, Assistant Secretary
and Senior Counsel

-6-

EX-99.B5B
EXHIBIT 5B

DELAWARE GROUP FOUNDATION FUNDS

FOUNDATION GROWTH PORTFOLIO

ASSET ALLOCATION AGREEMENT

AGREEMENT, made by and between DELAWARE GROUP FOUNDATION FUNDS (the
"Fund"), a Delaware business trust, for the Foundation Growth Portfolio (the
"Series"), and DELAWARE MANAGEMENT COMPANY, INC. (the "Investment Manager"), a
Delaware corporation.
W I T N E S S E T H:
WHEREAS, the Fund has been organized and operates as an investment
company registered under the Investment Company Act of 1940 and engages in the
business of investing and reinvesting its assets in securities; and
WHEREAS, the Investment Manager is a registered Investment Adviser
under the Investment Advisers Act of 1940 and engages in the business of
providing investment management services.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and each of the parties hereto intending to be legally bound, it is
agreed as follows:
1. The Fund hereby employs the Investment Manager to manage the
investment and reinvestment of the Series' assets and to administer its affairs,
subject to the direction of the Board and officers of the Fund for the period
and on the terms hereinafter set forth. The Investment Manager hereby accepts
such employment and agrees during such period to render the services and assume
the obligations herein set forth for the compensation herein provided. The
Investment Manager shall, for all purposes herein, be deemed to be an
independent contractor, and shall, unless otherwise expressly provided and
authorized, have no authority to act for or represent the Fund in any way, or in
any way be deemed an agent of the Fund. The Investment Manager shall regularly
make decisions as to what securities to purchase and sell on behalf

-1-

<PAGE>

of the Series, shall effect the purchase and sale of investments in furtherance
of the Series' objectives and policies, and shall furnish the Board of Trustees
of the Fund with such information and reports regarding the Series' investments
as the Investment Manager deems appropriate or as the Trustees of the Fund may
reasonably request.
2. The Fund shall conduct its own business and affairs and shall bear
the expenses and salaries necessary and incidental thereto including, but not in
limitation of the foregoing, the costs incurred in: the maintenance of its
corporate existence; the maintenance of its own books, records and procedures;
dealing with its own shareholders; the payment of dividends; transfer of stock,
including issuance, redemption and repurchase of shares; preparation of share
certificates; reports and notices to shareholders; calling and holding of
shareholders' meetings; miscellaneous office expenses; brokerage commissions;
custodian fees; legal and accounting fees; taxes; and federal and state
registration fees. The Series shall bear all of its own organizational costs.
Directors, officers and employees of the Investment Manager
may be directors, officers and employees of the funds of which Delaware
Management Company, Inc. is Investment Manager. Directors, officers and
employees of the Investment Manager who are directors, officers and/or employees
of the funds shall not receive any compensation from the funds for acting in
such dual capacity.
In the conduct of the respective businesses of the parties
hereto and in the performance of this Agreement, the Fund and Investment Manager
may share facilities common to each, with appropriate proration of expenses
between them.
3. (a) The Fund shall place and execute its own orders for the purchase
and sale of domestic portfolio securities with broker/dealers. Subject to the
primary objective of obtaining the best available prices and execution, the Fund
will place orders for the purchase and sale of portfolio securities with such
broker/dealers selected from among those designated from time to time by the
Investment Manager, who provide statistical, factual and financial information
and services to the Fund, to the Investment

-2-

<PAGE>

Manager, or to any other fund for which the Investment Manager provides
investment advisory services and/or with broker/dealers who sell shares of the
Fund or who sell shares of any other fund for which the Investment Manager
provides investment advisory services. Broker/dealers who sell shares of the
funds of which Delaware Management Company, Inc. or Delaware International
Advisers Ltd. is investment manager, shall only receive orders for the purchase
or sale of portfolio securities to the extent that the placing of such orders is
in compliance with the Rules of the Securities and Exchange Commission and the
National Association of Securities Dealers, Inc.
(b) Notwithstanding the provisions of subparagraph (a) above
and subject to such policies and procedures as may be adopted by the Board of
Trustees and officers of the Fund, the Investment Manager may ask the Fund, and
the Fund may agree, to pay a member of an exchange, broker or dealer an amount
of commission for effecting a securities transaction in excess of the amount of
commission another member of an exchange, broker or dealer would have charged
for effecting that transaction, in such instances where it, and the Investment
Manager, have determined in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such member, broker or dealer, viewed in terms of either that
particular transaction or the Investment Manager's overall responsibilities with
respect to the Fund and to other funds or other advisory accounts for which the
Investment Manager exercises investment discretion.
4. As compensation for the services to be rendered to the Fund by the
Investment Manager under the provisions of this Agreement, the Fund shall pay to
the Investment Manager monthly from the Series' assets a fee at an annual rate
of 0.25% of the Series' average daily net assets.
If this Agreement is terminated prior to the end of any
calendar month, the management fee shall be prorated for the portion of any
month in which this Agreement is in effect according to the proportion which the
number of calendar days during which the Agreement is in effect bears to the
number of calendar days in the month, and shall be payable within 10 days after
the date of termination.

-3-

<PAGE>

-4-

<PAGE>

-5-

<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this
Agreement by having it signed by their duly authorized officers as of the 18th
day of December, 1997.

DELAWARE GROUP FOUNDATION FUNDS
for the FOUNDATION GROWTH PORTFOLIO

By: /s/ David K. Downes
--------------------------------------------------
Name: David K. Downes
Title: Executive Vice President, Chief Operating
Officer and Chief Financial Officer

Attest: /s/ Michael D. Mabry
- ----------------------------------
Name: Michael D. Mabry
Title: Assistant Vice President, Assistant Secretary
and Senior Counsel

DELAWARE MANAGEMENT COMPANY, INC.

By: /s/ Wayne A. Stork
--------------------------------------------------
Name: Wayne A. Stork
Title: Chairman, President, Chief Executive Officer
and Chief Investment Officer

Attest: /s/ Michael D. Mabry
- ----------------------------------
Name: Michael D. Mabry
Title: Assistant Vice President, Assistant Secretary
and Senior Counsel

-6-

<PAGE>

EX-99.B5C
EXHIBIT 5C

DELAWARE GROUP FOUNDATION FUNDS

FOUNDATION INCOME PORTFOLIO

ASSET ALLOCATION AGREEMENT

AGREEMENT, made by and between DELAWARE GROUP FOUNDATION FUNDS (the
"Fund"), a Delaware business trust, for the Foundation Income Portfolio (the
"Series"), and DELAWARE MANAGEMENT COMPANY, INC. (the "Investment Manager"), a
Delaware corporation.

W I T N E S S E T H:

WHEREAS, the Fund has been organized and operates as an investment
company registered under the Investment Company Act of 1940 and engages in the
business of investing and reinvesting its assets in securities; and

WHEREAS, the Investment Manager is a registered Investment Adviser
under the Investment Advisers Act of 1940 and engages in the business of
providing investment management services.

NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and each of the parties hereto intending to be legally bound, it is
agreed as follows:

1. The Fund hereby employs the Investment Manager to manage the
investment and reinvestment of the Series' assets and to administer its affairs,
subject to the direction of the Board and officers of the Fund for the period
and on the terms hereinafter set forth. The Investment Manager hereby accepts
such employment and agrees during such period to render the services and assume
the obligations herein set forth for the compensation herein provided. The
Investment Manager shall, for all purposes herein, be deemed to be an
independent contractor, and shall, unless otherwise expressly provided and
authorized, have no authority to act for or represent the Fund in any way, or in
any way be deemed an agent of the Fund. The Investment Manager shall regularly
make decisions as to what securities to purchase and sell on behalf of the
Series, shall effect the purchase and sale of investments in furtherance of the
Series' objectives and

<PAGE>

2. The Fund shall conduct its own business and affairs and shall bear
the expenses and salaries necessary and incidental thereto including, but not in
limitation of the foregoing, the costs incurred in: the maintenance of its
corporate existence; the maintenance of its own books, records and procedures;
dealing with its own shareholders; the payment of dividends; transfer of stock,
including issuance, redemption and repurchase of shares; preparation of share
certificates; reports and notices to shareholders; calling and holding of
shareholders' meetings; miscellaneous office expenses; brokerage commissions;
custodian fees; legal and accounting fees; taxes; and federal and state
registration fees. The Series shall bear all of its own organizational costs.

Directors, officers and employees of the Investment Manager
may be directors, officers and employees of the funds of which Delaware
Management Company, Inc. is Investment Manager. Directors, officers and
employees of the Investment Manager who are directors, officers and/or employees
of the funds shall not receive any compensation from the funds for acting in
such dual capacity.

In the conduct of the respective businesses of the parties
hereto and in the performance of this Agreement, the Fund and Investment Manager
may share facilities common to each, with appropriate proration of expenses
between them.

3. (a) The Fund shall place and execute its own orders for the purchase
and sale of domestic portfolio securities with broker/dealers. Subject to the
primary objective of obtaining the best available prices and execution, the Fund
will place orders for the purchase and sale of portfolio securities with such
broker/dealers selected from among those designated from time to time by the
Investment Manager, who provide statistical, factual and financial information
and services to the Fund, to the Investment Manager, or to any other fund for
which the Investment Manager provides investment advisory services

-2-

<PAGE>

(b) Notwithstanding the provisions of subparagraph (a) above
and subject to such policies and procedures as may be adopted by the Board of
Trustees and officers of the Fund, the Investment Manager may ask the Fund, and
the Fund may agree, to pay a member of an exchange, broker or dealer an amount
of commission for effecting a securities transaction in excess of the amount of
commission another member of an exchange, broker or dealer would have charged
for effecting that transaction, in such instances where it, and the Investment
Manager, have determined in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such member, broker or dealer, viewed in terms of either that
particular transaction or the Investment Manager's overall responsibilities with
respect to the Fund and to other funds or other advisory accounts for which the
Investment Manager exercises investment discretion.

4. As compensation for the services to be rendered to the Fund by the
Investment Manager under the provisions of this Agreement, the Fund shall pay to
the Investment Manager monthly from the Series' assets a fee at an annual rate
of 0.25% of the Series' average daily net assets.

If this Agreement is terminated prior to the end of any
calendar month, the management fee shall be prorated for the portion of any
month in which this Agreement is in effect according to the proportion which the
number of calendar days during which the Agreement is in effect bears to the
number of calendar days in the month, and shall be payable within 10 days after
the date of termination.

-3-

<PAGE>

6. The services to be rendered by the Investment Manager to the Fund
under the provisions of this Agreement are not to be deemed to be exclusive, and
the Investment Manager shall be free to render similar or different services to
others so long as its ability to render the services provided for in this
Agreement shall not be impaired thereby.

7. The Investment Manager, its directors, officers, employees, agents
and shareholders may engage in other businesses, may render investment advisory
services to other investment companies, or to any other corporation,
association, firm or individual, and may render underwriting services to the
Fund or to any other investment company, corporation, association, firm or
individual.

8. In the absence of willful misfeasance, bad faith, gross negligence,
or a reckless disregard of the performance of duties of the Investment Manager
to the Fund, the Investment Manager shall not be subject to liabilities to the
Fund or to any shareholder of the Fund for any action or omission in the course
of, or connected with, rendering services hereunder or for any losses that may
be sustained in the purchase, holding or sale of any security, or otherwise.

9. This Agreement shall be executed and become effective as of the date
written below. It shall continue in effect for a period of two years from such
date and may be renewed thereafter only so long as such renewal and continuance
is specifically approved at least annually by the Board of Trustees of the Fund
or by vote of a majority of the outstanding voting securities of the Series and
only if the terms and the

-4-

<PAGE>

10. This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.

11. For the purposes of this Agreement, the terms "vote of a majority
of the outstanding voting securities;" "interested persons;" and "assignment"
shall have the meanings defined in the Investment Company Act of 1940.

-5-

<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this
Agreement by having it signed by their duly authorized officers as of the 18th
day of December, 1997.

DELAWARE GROUP FOUNDATION FUNDS
for the FOUNDATION INCOME PORTFOLIO

By: /s/ David K. Downes
------------------------------------------------
Name: David K. Downes
Title: Executive Vice President, Chief Operating
Officer and Chief Financial Officer

Attest: /s/ Michael D. Mabry
----------------------------------------------
Name: Michael D. Mabry
Title: Assistant Vice President, Assistant Secretary
and Senior Counsel

DELAWARE MANAGEMENT COMPANY, INC.

By: /s/ Wayne A. Stork
------------------------------------------------
Name: Wayne A. Stork
Title: Chairman, President, Chief Executive Officer
and Chief Investment Officer

Attest: /s/ Michael D. Mabry
----------------------------------------------
Name: Michael D. Mabry
Title: Assistant Vice President, Assistant Secretary
and Senior Counsel

-6-

<PAGE>

EX-99.B6A
EXHIBIT 6A

DELAWARE GROUP FOUNDATION FUND

FOUNDATION BALANCED PORTFOLIO

DISTRIBUTION AGREEMENT

Distribution Agreement (the "Agreement") made as of this 18th day of
December, 1997 by and between DELAWARE GROUP FOUNDATION FUNDS, a Delaware
business trust (the "Fund"), for the Foundation Balanced Portfolio (the
"Series"), and DELAWARE DISTRIBUTORS, L.P. (the "Distributor"), a Delaware
limited partnership.

WITNESSETH

WHEREAS, the Fund is an investment company regulated by
Federal and State regulatory bodies, and

WHEREAS, the Distributor is engaged in the business of
promoting the distribution of the securities of investment companies and, in
connection therewith and acting solely as agent for such investment companies
and not as principal, advertising, promoting, offering and selling their
securities to the public, and

WHEREAS, the Fund desires to enter into an agreement with the
Distributor on behalf of the Series, pursuant to which the Distributor shall
serve as the national distributor of the Series' Foundation Balanced Portfolio A
Class ("Class A Shares"), Foundation Balanced Portfolio B Class ("Class B
Shares"), Foundation Balanced Portfolio C Class ("Class C Shares"), and
Foundation Balanced Portfolio Institutional Class ("Institutional Class
Shares"), which Series and classes may do business under these or such other
names as the Board of Trustees may designate from time to time, on the terms and
conditions set forth below,

<PAGE>

NOW, THEREFORE, the parties hereto, intending to be legally
bound hereby, agree as follows:

1. The Fund hereby engages the Distributor to promote the distribution of
the Series' shares and, in connection therewith and as agent for the
Fund and not as principal, to advertise, promote, offer and sell the
Series' shares to the public.

2. (a) The Distributor agrees to serve as distributor of the
Series' shares and, as agent for the Fund and not as
principal, to advertise, promote and use its best efforts to
sell the Series' shares wherever their sale is legal, either
through dealers or otherwise, in such places and in such
manner, not inconsistent with the law and the provisions of
this Agreement and the Fund's Registration Statement under the
Securities Act of 1933, including the Prospectuses contained
therein, and the Statement of Additional Information contained
therein as may be mutually determined by the Fund and the
Distributor from time to time.

(b) For the Institutional Class Shares, the Distributor will bear
all costs of financing any activity which is primarily
intended to result in the sale of that class of shares,
including, but not necessarily limited to, advertising,
compensation of underwriters, dealers and sales personnel, the
printing and mailing of sales literature and distribution of
that class of shares.

(c) For its services as agent for the Class A Shares, Class B
Shares, and Class C Shares, the Distributor shall be entitled
to compensation on each sale or redemption, as appropriate, of
shares of such classes equal to any front-end or deferred
sales charge described in the Prospectus from time to time and
may allow concessions to dealers in such amounts and on such
terms as are therein set forth.

(d) For the Class A Shares, Class B Shares, and Class C Shares,
the Fund shall, in addition, compensate the Distributor for
its services as provided in the Distribution Plan as adopted

-2-

<PAGE>

on behalf of the Class A Shares, Class B Shares, and Class C
Shares, respectively, pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (the "Plans"), copies of which
as presently in force are attached hereto as, respectively,
Exhibit "A," "B," and "C."

3. (a) The Fund agrees to make available for sale by the Fund
through the Distributor all or such part of the authorized but
unissued shares of the Series as the Distributor shall require
from time to time, and except as provided in Paragraph 3(b)
hereof, the Fund will not sell Series' shares other than
through the efforts of the Distributor.

(b) The Fund reserves the right from time to time (1) to sell and
issue shares other than for cash; (2) to issue shares in
exchange for substantially all of the assets of any
corporation or trust, or in exchange of shares of any
corporation or trust; (3) to pay stock dividends to its
shareholders, or to pay dividends in cash or stock at the
option of its stockholders, or to sell stock to existing
stockholders to the extent of dividends payable from time to
time in cash, or to split up or combine its outstanding shares
of common stock; (4) to offer shares for cash to its
stockholders as a whole, by the use of transferable rights or
otherwise, and to sell and issue shares pursuant to such
offers; and (5) to act as its own distributor in any
jurisdiction in which the Distributor is not registered as a
broker-dealer.

4. The Fund warrants the following:

(a) The Fund is, or will be, a properly registered investment
company, and any and all Series' shares which it will sell
through the Distributor are, or will be, properly registered
with the Securities and Exchange Commission ("SEC").

(b) The provisions of this Agreement do not violate the terms of
any instrument by which the Fund is bound, nor do they violate
any law or regulation of any body having jurisdiction over the
Fund or its property.

-3-

<PAGE>

5. (a) The Fund will supply to the Distributor a conformed copy
of the Registration Statement, all amendments thereto, all
exhibits, and each Prospectus and Statement of Additional
Information.

(b) The Fund will register or qualify the Series' shares for sale
in such states as is deemed desirable.

(1) will give and continue to give such financial
statements and other information as may be required
by the SEC or the proper public bodies of the states
in which the Series' shares may be qualified;

(2) from time to time, will furnish to the Distributor as
soon as reasonably practicable true copies of its
periodic reports to stockholders;

(3) will promptly advise the Distributor in person or by
telephone or telegraph, and promptly confirm such
advice in writing, (a) when any amendment or
supplement to the Registration Statement becomes
effective, (b) of any request by the SEC for
amendments or supplements to the Registration
Statement or the Prospectuses or for additional
information, and (c) of the issuance by the SEC of
any Stop Order suspending the effectiveness of the
Registration Statement, or the initiation of any
proceedings for that purpose;

(4) if at any time the SEC shall issue any Stop Order
suspending the effectiveness of the Registration
Statement, will make every reasonable effort to
obtain the lifting of such order at the earliest
possible moment;

(5) will from time to time, use its best effort to keep a
sufficient supply of Series' shares authorized, any
increases being subject to the approval of
shareholders as may be required;

(6) before filing any further amendment to the
Registration Statement or to any Prospectus, will
furnish to the Distributor copies of the proposed
amendment and will not, at any time, whether before
or after the effective date of the Registration
Statement, file any amendment to the Registration
Statement or supplement to any Prospectus of which
the Distributor shall not previously have been
advised or to which the Distributor shall reasonably
object (based upon the accuracy or completeness
thereof) in writing;

(7) will continue to make available to its stockholders
(and forward copies to the Distributor) of such
periodic, interim and any other reports as are now,
or as hereafter may be, required by the provisions of
the Investment Company Act of 1940; and

-4-

<PAGE>

(8) will, for the purpose of computing the offering price
of Series' shares, advise the Distributor within one
hour after the close of the New York Stock Exchange
(or as soon as practicable thereafter) on each
business day upon which the New York Stock Exchange
may be open of the net asset value per share of the
Series' shares of common stock outstanding,
determined in accordance with any applicable
provisions of law and the provisions of the Articles
of Incorporation, as amended, of the Fund as of the
close of business on such business day. In the event
that prices are to be calculated more than once
daily, the Fund will promptly advise the Distributor
of the time of each calculation and the price
computed at each such time.

6. The Distributor agrees to submit to the Fund, prior to its use, the
form of all sales literature proposed to be generally disseminated by
or for the Distributor, all advertisements proposed to be used by the
Distributor, all sales literature or advertisements prepared by or for
the Distributor for such dissemination or for use by others in
connection with the sale of the Series' shares, and the form of
dealers' sales contract the Distributor intends to use in connection
with sales of the Series' shares. The Distributor also agrees that the
Distributor will submit such sales literature and advertisements to the
NASD, SEC or other regulatory agency as from time to time may be
appropriate, considering practices then current in the industry. The
Distributor agrees not to use such form of dealers' sales contract or
to use or to permit others to use such sales literature or
advertisements without the written consent of the Fund if any
regulatory agency expresses objection thereto or if the Fund delivers
to the Distributor a written objection thereto.

7. The purchase price of each share sold hereunder shall be the offering
price per share mutually agreed upon by the parties hereto, and as
described in the Fund's Prospectuses, as amended from time to time,
determined in accordance with any applicable provision of law, the
provisions of its Articles of Incorporation and the Conduct Rules of
the National Association of Securities Dealers, Inc.

8. The responsibility of the Distributor hereunder shall be limited to the
promotion of sales of Series' shares. The Distributor shall undertake
to promote such sales solely as agent of the Fund,

-5-

<PAGE>

and shall not purchase or sell such shares as principal. Orders for
Series' shares and payment for such orders shall be directed to the
Fund's agent, Delaware Service Company, Inc. for acceptance on behalf
of the Fund. The Distributor is not empowered to approve orders for
sales of Series' shares or accept payment for such orders. Sales of
Series' shares shall be deemed to be made when and where accepted by
Delaware Service Company, Inc. on behalf of the Fund.

9. With respect to the apportionment of costs between the Fund and the
Distributor of activities with which both are concerned, the following
will apply:

(a) The Fund and the Distributor will cooperate in preparing the
Registration Statements, the Prospectuses, the Statement of
Additional Information, and all amendments, supplements and
replacements thereto. The Fund will pay all costs incurred in
the preparation of the Fund's Registration Statement,
including typesetting, the costs incurred in printing and
mailing Prospectuses and Annual, Semi-Annual and other
financial reports to its own shareholders and fees and
expenses of counsel and accountants.

(b) The Distributor will pay the costs incurred in printing and
mailing copies of Prospectuses to prospective investors.

(c) The Distributor will pay advertising and promotional expenses,
including the costs of literature sent to prospective
investors.

(d) The Fund will pay the costs and fees incurred in registering
or qualifying the Series' shares with the various states and
with the SEC.

(e) The Distributor will pay the costs of any additional copies of
Fund financial and other reports and other Fund literature
supplied to the Distributor by the Fund for sales promotion
purposes.

10. The Distributor may engage in other business, provided such other
business does not interfere with the performance by the Distributor of
its obligations under this Agreement.

-6-

<PAGE>

11. The Fund agrees to indemnify, defend and hold harmless from the assets
of the Series the Distributor and each person, if any, who controls the
Distributor within the meaning of Section 15 of the Securities Act of
1933, from and against any and all losses, damages, or liabilities to
which, jointly or severally, the Distributor or such controlling person
may become subject, insofar as the losses, damages or liabilities arise
out of the performance of its duties hereunder except that the Fund
shall not be liable for indemnification of the Distributor or any
controlling person thereof for any liability to the Fund or its
security holders to which they would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance
of their duties under this Agreement.

12. Copies of financial reports, Registration Statements and Prospectuses,
as well as demands, notices, requests, consents, waivers, and other
communications in writing which it may be necessary or desirable for
either party to deliver or furnish to the other will be duly delivered
or furnished, if delivered to such party at its address shown below
during regular business hours, or if sent to that party by registered
mail or by prepaid telegram filed with an office or with an agent of
Western Union or another nationally recognized telegraph service, in
all cases within the time or times herein prescribed, addressed to the
recipient at 1818 Market Street, Philadelphia, Pennsylvania 19103, or
at such other address as the Fund or the Distributor may designate in
writing and furnish to the other.

13. This Agreement shall not be assigned, as that term is defined in the
Investment Company Act of 1940, by the Distributor and shall terminate
automatically in the event of its attempted assignment by the
Distributor. This Agreement shall not be assigned by the Fund without
the written consent of the Distributor signed by its duly authorized
officers and delivered to the Fund. Except as specifically provided in
the indemnification provision contained in Paragraph 11 herein, this
Agreement and all conditions and provisions hereof are for the sole and
exclusive

-7-

<PAGE>

benefit of the parties hereto and their legal successors and no express
or implied provision of this Agreement is intended or shall be
construed to give any person other than the parties hereto and their
legal successors any legal or equitable right, remedy or claim under or
in respect of this Agreement or any provisions herein contained.

14. (a) This Agreement shall remain in force for a period of two
years from the date hereof and from year to year thereafter,
but only so long as such continuance is specifically approved
at least annually by the Board of Trustees or by vote of a
majority of the outstanding voting securities of the Series
and only if the terms and the renewal thereof have been
approved by the vote of a majority of the Trustees of the Fund
who are not parties hereto or interested persons of any such
party, cast in person at a meeting called for the purpose of
voting on such approval.

(b) The Distributor may terminate this Agreement on written notice
to the Fund at any time in case the effectiveness of the
Registration Statement shall be suspended, or in case Stop
Order proceedings are initiated by the SEC in respect of the
Registration Statement and such proceedings are not withdrawn
or terminated within thirty days. The Distributor may also
terminate this Agreement at any time by giving the Fund
written notice of its intention to terminate the Agreement at
the expiration of three months from the date of delivery of
such written notice of intention to the Fund.

(c) The Fund may terminate this Agreement at any time on at least
thirty days prior written notice to the Distributor (1) if
proceedings are commenced by the Distributor or any of its
partners for the Distributor's liquidation or dissolution or
the winding up of the Distributor's affairs; (2) if a receiver
or trustee of the Distributor or any of its property is
appointed and such appointment is not vacated within thirty
days thereafter; (3) if, due to any action by or before any
court or any federal or state commission, regulatory body, or

-8-

<PAGE>

administrative agency or other governmental body, the
Distributor shall be prevented from selling securities in the
United States or because of any action or conduct on the
Distributor's part, sales of the shares are not qualified for
sale. The Fund may also terminate this Agreement at any time
upon prior written notice to the Distributor of its intention
to so terminate at the expiration of three months from the
date of the delivery of such written notice to the
Distributor.

15. The validity, interpretation and construction of this Agreement, and of
each part hereof, will be governed by the laws of the Commonwealth of
Pennsylvania.

16. In the event any provision of this Agreement is determined to be void
or unenforceable, such determination shall not affect the remainder of
the Agreement, which shall continue to be in force.

DELAWARE DISTRIBUTORS, L.P.

By: DELAWARE DISTRIBUTORS, INC.,
General Partner

Attest: /s/ Michael D. Mabry By: /s/ Bruce D. Barton
- -------------------------------- ----------------------------
Name: Michael D. Mabry Name: Bruce D. Barton
Title: Assistant Vice President, Title: President and Chief
Assistant Secretary Executive Officer
and Senior Counsel

DELAWARE GROUP FOUNDATION FUNDS, for
the Foundation Balanced Portfolio

Attest: /s/ Michael D. Mabry By: /s/ Wayne A. Stork
- -------------------------------- ----------------------------
Name: Michael D. Mabry Name: Wayne A. Stork
Title: Assistant Vice President, Title: Chairman
Assistant Secretary
and Senior Counsel

-9-

<PAGE>

EXHIBIT A

DISTRIBUTION PLAN

DELAWARE GROUP FOUNDATION FUND

FOUNDATION BALANCED PORTFOLIO

FOUNDATION BALANCED PORTFOLIO A CLASS

The following Distribution Plan (the "Plan") has been adopted
pursuant to Rule l2b-l under the Investment Company Act of l940 (the "Act") by
Delaware Group Foundation Fund (the "Fund"), for the Foundation Balanced
Portfolio series (the "Series") on behalf of the Foundation Balanced Portfolio A
Class ("Class"), which Fund, Series and Class may do business under these or
such other names as the Board of Trustees of the Fund may designate from time to
time. The Plan has been approved by a majority of the Board of Trustees,
including a majority of the Trustees who are not interested persons of the Fund
and who have no direct or indirect financial interest in the operation of the
Plan or in any agreements related thereto ("non-interested Trustees"), cast in
person at a meeting called for the purpose of voting on such Plan. Such approval
by the Trustees included a determination that in the exercise of reasonable
business judgment and in light of their fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Series and shareholders of the Class.

The Fund is a Delaware business trust organized under the laws
of the State of Delaware, is authorized to issue different series and classes of
securities and is an open-end management investment company registered under the
Act. Delaware Management Company, Inc. serves as the Series' investment adviser
and manager pursuant to an Investment Management Agreement. Delaware Service
Company, Inc. serves as the Series' shareholder servicing, dividend disbursing
and transfer agent. Delaware Distributors, L.P. (the "Distributor") is the
principal underwriter and national distributor for the Series' shares, including

A-1

<PAGE>

shares of the Class, pursuant to the Distribution Agreement between the
Distributor and the Fund on behalf of the Series ("Distribution Agreement").

The Plan provides that:

2. (a) The Distributor shall use the monies paid to it
pursuant to paragraph l above to furnish, or cause or encourage others to
furnish, services and incentives in connection with the promotion, offering and
sale of Class shares and, where suitable and appropriate, the retention of Class
shares by shareholders.

(b) The Service Providers shall use the monies paid
respectively to them to reimburse themselves for the actual costs they have
incurred in confirming that their customers have received the Prospectus and
Statement of Additional Information, if applicable, and as a fee for (l)
assisting such customers in maintaining proper records with the Fund, (2)
answering questions relating to their respective accounts, and (3) aiding in
maintaining the investment of their respective customers in the Class.

3. The Distributor shall report to the Fund at least monthly
on the amount and the use of the monies paid to it under the Plan. The Service
Providers shall inform the Fund monthly and in writing of the amounts each
claims under the Plan; both the Distributor and the Service Providers shall
furnish the Board of Trustees of the Fund with such other information as the
Board may reasonably request in connection with the payments made under the Plan
and the use thereof by the Distributor and the Service Providers,

A-2

<PAGE>

respectively, in order to enable the Board to make an informed determination of
the amount of the Fund's payments and whether the Plan should be continued.

4. The officers of the Fund shall furnish to the Board of
Trustees of the Fund, for their review, on a quarterly basis, a written report
of the amounts expended under the Plan and the purposes for which such
expenditures were made.

5. This Plan shall take effect at such time as the Distributor
shall notify the Fund in writing of the commencement of the Plan (the
"Commencement Date"); thereafter, the Plan shall continue in effect for a period
of more than one year from the Commencement Date only so long as such
continuance is specifically approved at least annually by a vote of the Board of
Trustees of the Fund, and of the non-interested Trustees, cast in person at a
meeting called for the purpose of voting on such Plan.

6. (a) The Plan may be terminated at any time by vote of a
majority of the non-interested Trustees or by vote of a majority of the
outstanding voting securities of the Class.

(b) The Plan may not be amended to increase materially the
amount to be spent for distribution pursuant to paragraph l hereof without
approval by the shareholders of the Class.

7. All material amendments to this Plan shall be approved by
the non-interested Trustees in the manner described in paragraph 5 above.

8. So long as the Plan is in effect, the selection and
nomination of the Fund's non-interested Trustees shall be committed to the
discretion of such non-interested Trustees.

9. The definitions contained in Sections 2(a)(19) and 2(a)(42)
of the Act shall govern the meaning of "interested person(s)" and "vote of a
majority of the outstanding voting securities," respectively, for the purposes
of this Plan.

This Plan shall take effect on the Commencement Date, as
previously defined.

December 18, 1997

A-3

<PAGE>

EXHIBIT B
DISTRIBUTION PLAN

DELAWARE GROUP FOUNDATION FUNDS

FOUNDATION BALANCED PORTFOLIO

FOUNDATION BALANCED PORTFOLIO B CLASS

The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Group Foundation Funds (the "Fund"), for the Foundation Balanced Portfolio
series (the "Series") on behalf of the Foundation Balanced Portfolio Fund B
Class (the "Class"), which Fund, Series and Class may do business under these or
such other names as the Board of Trustees of the Fund may designate from time to
time. The Plan has been approved by a majority of the Board of Trustees,
including a majority of the Trustees who are not interested persons of the Fund
and who have no direct or indirect financial interest in the operation of the
Plan or in any agreements related thereto ("non-interested Trustees"), cast in
person at a meeting called for the purpose of voting on such Plan. Such approval
by the Trustees included a determination that in the exercise of reasonable
business judgment and in light of their fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Series and shareholders of the Class.

B-1

<PAGE>

shares of the Class, pursuant to the Distribution Agreement between the
Distributor and the Fund on behalf of the Series ("Distribution Agreement").

The Plan provides that:

1. (a) The Fund shall pay to the Distributor a monthly fee not to
exceed 0.75% (3/4 of 1%) per annum of the Series' average daily net assets
represented by shares of the Class as may be determined by the Fund's Board of
Trustees from time to time.

(b) In addition to the amounts described in (a) above, the
Fund shall pay (i) to the Distributor for payment to dealers or others, or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
Series' average daily net assets represented by shares of the Class, as a
service fee pursuant to dealer or servicing agreements.

2. (a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for,
among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation related to sales and marketing personnel, and holding special
promotions. In addition, such fees may be used to pay for advancing the
commission costs to dealers with respect to the sale of Class shares.

(b) The monies to be paid pursuant to paragraph 1(b) above
shall be used to pay dealers or others for, among other things, furnishing
personal services and maintaining shareholder accounts, which services include
confirming that customers have received the Prospectus and Statement of
Additional Information, if applicable; assisting such customers in maintaining
proper records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.

B-2

<PAGE>

monthly and in writing of the amounts paid under paragraph 1(b) above; both the
Distributor and any others receiving fees under the Plan shall furnish the Board
of Trustees of the Fund with such other information as the Board may reasonably
request in connection with the payments made under the Plan and the use thereof
by the Distributor and others in order to enable the Board to make an informed
determination of the amount of the Fund's payments and whether the Plan should
be continued.

4. The officers of the Fund shall furnish to the Board of Trustees of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.

5. This Plan shall take effect at such time as the Distributor shall
notify the Fund of the commencement of the Plan (the "Commencement Date");
thereafter, the Plan shall continue in effect for a period of more than one year
from the Commencement Date only so long as such continuance is specifically
approved at least annually by a vote of the Board of Trustees of the Fund, and
of the non-interested Trustees, cast in person at a meeting called for the
purpose of voting on such Plan.

6. (a) The Plan may be terminated at any time by vote of a majority of
the non-interested Trustees or by vote of a majority of the outstanding voting
securities of the Class.

(b) The Plan may not be amended to increase materially the
amount to be spent for distribution pursuant to paragraph 1 hereof without
approval by the shareholders of the Class.

7. All material amendments to this Plan shall be approved by the
non-interested Trustees in the manner described in paragraph 5 above.

8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Trustees shall be committed to the discretion of such
non-interested Trustees.

9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
of the outstanding voting securities," respectively, for the purposes of this
Plan.

B-3

<PAGE>

This Plan shall take effect on the Commencement Date, as previously
defined.

December 18, 1997

B-4

<PAGE>

EXHIBIT C

DISTRIBUTION PLAN

DELAWARE GROUP FOUNDATION FUNDS

FOUNDATION BALANCED PORTFOLIO

FOUNDATION BALANCED PORTFOLIO C CLASS

The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Group Foundation Funds (the "Fund"), for the Foundation Balanced Portfolio
series (the "Series) on behalf of the Foundation Balanced Portfolio C Class (the
"Class"), which Fund, Series and Class may do business under these or such other
names as the Board of Trustees of the Fund may designate from time to time. The
Plan has been approved by a majority of the Board of Trustees, including a
majority of the Trustees who are not interested persons of the Fund and who have
no direct or indirect financial interest in the operation of the Plan or in any
agreements related thereto ("non-interested Trustees"), cast in person at a
meeting called for the purpose of voting on such Plan. Such approval by the
Trustees included a determination that in the exercise of reasonable business
judgment and in light of their fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Series and shareholders of the Class.

C-1

<PAGE>

shares of the Class, pursuant to the Distribution Agreement between the
Distributor and the Fund on behalf of the Series ("Distribution Agreement").

The Plan provides that:

1.(a) The Fund shall pay to the Distributor a monthly fee not to exceed
0.75% (3/4 of 1%) per annum of the Series' average daily net assets represented
by shares of the Class as may be determined by the Fund's Board of Trustees from
time to time.

(b) In addition to the amounts described in paragraph 1(a) above, the
Fund shall pay: (i) to the Distributor for payment to dealers or others or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
Series' average daily net assets represented by shares of the Class, as a
service fee pursuant to dealer or servicing agreements.

2.(a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for,
among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation related to sales and marketing personnel, and holding special
promotions. In addition, such fees may be used to pay for advancing the
commission costs to dealers with respect to the sale of Class shares.

(b) The monies to be paid pursuant to paragraph 1(b) above shall be
used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include confirming
that customers have received the Prospectus and Statement of Additional
Information, if applicable; assisting such customers in maintaining proper
records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.

C-2

<PAGE>

and in writing of the amounts paid under paragraph 1(b) above; both the
Distributor and any others receiving fees under the Plan shall furnish the Board
of Trustees of the Fund with such other information as the Board may reasonably
request in connection with the payments made under the Plan and the use thereof
by the Distributor and others in order to enable the Board to make an informed
determination of the amount of the Fund's payments and whether the Plan should
be continued.

4. The officers of the Fund shall furnish to the Board of Trustees of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.

6.(a) The Plan may be terminated at any time by vote of a majority of
the non-interested Trustees or by vote of a majority of the outstanding voting
securities of the Class.

(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph 1 hereof without approval by the
shareholders of the Class.

7. All material amendments to this Plan shall be approved by the
non-interested Trustees in the manner described in paragraph 5 above.

8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Trustees shall be committed to the discretion of such
non-interested Trustees.

9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
of the outstanding voting securities," respectively, for the purposes of this
Plan.

C-3

<PAGE>

This Plan shall take effect on the Commencement Date, as previously
defined.

December 18, 1997

C-4

<PAGE>
EX-99.B6B
EXHIBIT 6B

DELAWARE GROUP FOUNDATION FUNDS
FOUNDATION GROWTH PORTFOLIO
DISTRIBUTION AGREEMENT

Distribution Agreement (the "Agreement") made as of this 18th day of
December, 1997 by and between DELAWARE GROUP FOUNDATION FUNDS, a Delaware
business trust (the "Fund"), for the Foundation Growth Portfolio series (the
"Series"), and DELAWARE DISTRIBUTORS, L.P. (the "Distributor"), a Delaware
limited partnership.

WITNESSETH

WHEREAS, the Fund is an investment company regulated by
Federal and State regulatory bodies, and

WHEREAS, the Fund desires to enter into an agreement with the
Distributor on behalf of the Series, pursuant to which the Distributor shall
serve as the national distributor of the Series' Foundation Growth Portfolio A
Class ("Class A Shares"), Foundation Growth Portfolio B Class ("Class B
Shares"), Foundation Growth Portfolio C Class ("Class C Shares"), and Foundation
Growth Portfolio Institutional Class ("Institutional Class Shares"), which
Series and classes may do business under these or such other names as the Board
of Trustees may designate from time to time, on the terms and conditions set
forth below,

NOW, THEREFORE, the parties hereto, intending to be legally
bound hereby, agree as follows:
<PAGE>

1. The Fund hereby engages the Distributor to promote the distribution of the
Series' shares and, in connection therewith and as agent for the Fund and
not as principal, to advertise, promote, offer and sell the Series' shares
to the public.

2. (a) The Distributor agrees to serve as distributor of the Series' shares
and, as agent for the Fund and not as principal, to advertise, promote
and use its best efforts to sell the Series' shares wherever their sale
is legal, either through dealers or otherwise, in such places and in
such manner, not inconsistent with the law and the provisions of this
Agreement and the Fund's Registration Statement under the Securities
Act of 1933, including the Prospectuses contained therein, and the
Statement of Additional Information contained therein as may be
mutually determined by the Fund and the Distributor from time to time.

(b) For the Institutional Class Shares, the Distributor will bear all costs
of financing any activity which is primarily intended to result in the
sale of that class of shares, including, but not necessarily limited
to, advertising, compensation of underwriters, dealers and sales
personnel, the printing and mailing of sales literature and
distribution of that class of shares.

(c) For its services as agent for the Class A Shares, Class B Shares, and
Class C Shares, the Distributor shall be entitled to compensation on
each sale or redemption, as appropriate, of shares of such classes
equal to any front-end or deferred sales charge described in the
Prospectus from time to time and may allow concessions to dealers in
such amounts and on such terms as are therein set forth.

(d) For the Class A Shares, Class B Shares, and Class C Shares, the Fund
shall, in addition, compensate the Distributor for its services as
provided in the Distribution Plan as adopted on behalf of the Class A
Shares, Class B Shares, and Class C Shares, respectively, pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "Plans"),
copies

-2-
<PAGE>

of which as presently in force are attached hereto as, respectively,
Exhibit "A," "B," and "C."

3. (a) The Fund agrees to make available for sale by the Fund through the
Distributor all or such part of the authorized but unissued shares of
the Series as the Distributor shall require from time to time, and
except as provided in Paragraph 3(b) hereof, the Fund will not sell
Series' shares other than through the efforts of the Distributor.

(b) The Fund reserves the right from time to time (1) to sell and issue
shares other than for cash; (2) to issue shares in exchange for
substantially all of the assets of any corporation or trust, or in
exchange of shares of any corporation or trust; (3) to pay stock
dividends to its shareholders, or to pay dividends in cash or stock at
the option of its stockholders, or to sell stock to existing
stockholders to the extent of dividends payable from time to time in
cash, or to split up or combine its outstanding shares of common stock;
(4) to offer shares for cash to its stockholders as a whole, by the use
of transferable rights or otherwise, and to sell and issue shares
pursuant to such offers; and (5) to act as its own distributor in any
jurisdiction in which the Distributor is not registered as a
broker-dealer.

4. The Fund warrants the following:

(a) The Fund is, or will be, a properly registered investment company, and
any and all Series' shares which it will sell through the Distributor
are, or will be, properly registered with the Securities and Exchange
Commission ("SEC").

(b) The provisions of this Agreement do not violate the terms of any
instrument by which the Fund is bound, nor do they violate any law or
regulation of any body having jurisdiction over the Fund or its
property.

-3-

<PAGE>

5. (a) The Fund will supply to the Distributor a conformed copy of the
Registration Statement, all amendments thereto, all exhibits, and each
Prospectus and Statement of Additional Information.

(b) The Fund will register or qualify the Series' shares for sale in such
states as is deemed desirable.

(1) will give and continue to give such financial statements and
other information as may be required by the SEC or the proper
public bodies of the states in which the Series' shares may be
qualified;

(2) from time to time, will furnish to the Distributor as soon as
reasonably practicable true copies of its periodic reports to
stockholders;

(3) will promptly advise the Distributor in person or by telephone
or telegraph, and promptly confirm such advice in writing, (a)
when any amendment or supplement to the Registration Statement
becomes effective, (b) of any request by the SEC for
amendments or supplements to the Registration Statement or the
Prospectuses or for additional information, and (c) of the
issuance by the SEC of any Stop Order suspending the
effectiveness of the Registration Statement, or the initiation
of any proceedings for that purpose;

(4) if at any time the SEC shall issue any Stop Order suspending
the effectiveness of the Registration Statement, will make
every reasonable effort to obtain the lifting of such order at
the earliest possible moment;

(5) will from time to time, use its best effort to keep a
sufficient supply of Series' shares authorized, any increases
being subject to the approval of shareholders as may be
required;

(6) before filing any further amendment to the Registration
Statement or to any Prospectus, will furnish to the
Distributor copies of the proposed amendment and will not, at
any time, whether before or after the effective date of the
Registration Statement, file any amendment to the Registration
Statement or supplement to any Prospectus of which the
Distributor shall not previously have been advised or to which
the Distributor shall reasonably object (based upon the
accuracy or completeness thereof) in writing;

(7) will continue to make available to its stockholders (and
forward copies to the Distributor) of such periodic, interim
and any other reports as are now, or as hereafter may be,
required by the provisions of the Investment Company Act of
1940; and

-4-

<PAGE>

(8) will, for the purpose of computing the offering price of
Series' shares, advise the Distributor within one hour after
the close of the New York Stock Exchange (or as soon as
practicable thereafter) on each business day upon which the
New York Stock Exchange may be open of the net asset value per
share of the Series' shares of common stock outstanding,
determined in accordance with any applicable provisions of law
and the provisions of the Articles of Incorporation, as
amended, of the Fund as of the close of business on such
business day. In the event that prices are to be calculated
more than once daily, the Fund will promptly advise the
Distributor of the time of each calculation and the price
computed at each such time.

8. The responsibility of the Distributor hereunder shall be limited to the
promotion of sales of Series' shares. The Distributor shall undertake
to promote such sales solely as agent of the Fund,

-5-

<PAGE>

9. With respect to the apportionment of costs between the Fund and the
Distributor of activities with which both are concerned, the following
will apply:

(b) The Distributor will pay the costs incurred in printing and
mailing copies of Prospectuses to prospective investors.

(c) The Distributor will pay advertising and promotional expenses,
including the costs of literature sent to prospective
investors.

(d) The Fund will pay the costs and fees incurred in registering
or qualifying the Series' shares with the various states and
with the SEC.

(e) The Distributor will pay the costs of any additional copies of
Fund financial and other reports and other Fund literature
supplied to the Distributor by the Fund for sales promotion
purposes.

10. The Distributor may engage in other business, provided such other
business does not interfere with the performance by the Distributor of
its obligations under this Agreement.

-6-

<PAGE>

-7-

<PAGE>

-8-

<PAGE>

-9-

<PAGE>

15. The validity, interpretation and construction of this Agreement, and of
each part hereof, will be governed by the laws of the Commonwealth of
Pennsylvania.

16. In the event any provision of this Agreement is determined to be void
or unenforceable, such determination shall not affect the remainder of
the Agreement, which shall continue to be in force.

<S> <C> <C>
DELAWARE DISTRIBUTORS, L.P.

By: DELAWARE DISTRIBUTORS, INC.,
General Partner

Attest: /s/ Michael D. Mabry By: /s/Bruce D. Barton
--------------------------------------------- -------------------------------------
Name: Michael D. Mabry Name: Bruce D. Barton
Title: Assistant Vice President, Assistant Secretary Title: President and Chief Executive Officer
and Senior Counsel

DELAWARE GROUP FOUNDATION
FUNDS, for the Foundation Growth Portfolio

Attest: /s/ Michael D. Mabry By: /s/ Wayne A. Stork
--------------------------------------------- --------------------------------------
Name: Michael D. Mabry Name: Wayne A. Stork
Title: Assistant Vice President, Assistant Secretary Title: Chairman
and Senior Counsel

</TABLE>

-10-

<PAGE>

EXHIBIT A

DISTRIBUTION PLAN
DELAWARE GROUP FOUNDATION FUNDS
FOUNDATION GROWTH PORTFOLIO
FOUNDATION GROWTH PORTFOLIO A CLASS

The following Distribution Plan (the "Plan") has been adopted
pursuant to Rule l2b-l under the Investment Company Act of 1940 (the "Act") by
Delaware Group Foundation Funds (the "Fund"), for the Foundation Growth
Portfolio series (the "Series") on behalf of the Foundation Growth Portfolio A
Class ("Class"), which Fund, Series and Class may do business under these or
such other names as the Board of Trustees of the Fund may designate from time to
time. The Plan has been approved by a majority of the Board of Trustees,
including a majority of the Trustees who are not interested persons of the Fund
and who have no direct or indirect financial interest in the operation of the
Plan or in any agreements related thereto ("non-interested Trustees"), cast in
person at a meeting called for the purpose of voting on such Plan. Such approval
by the Trustees included a determination that in the exercise of reasonable
business judgment and in light of their fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Series and shareholders of the Class.

A-1

<PAGE>

shares of the Class, pursuant to the Distribution Agreement between the
Distributor and the Fund on behalf of the Series ("Distribution Agreement").

The Plan provides that:

A-2

<PAGE>

respectively, in order to enable the Board to make an informed determination of
the amount of the Fund's payments and whether the Plan should be continued.

6. (a) The Plan may be terminated at any time by vote of a
majority of the non-interested Trustees or by vote of a majority of the
outstanding voting securities of the Class.

(b) The Plan may not be amended to increase materially the
amount to be spent for distribution pursuant to paragraph l hereof without
approval by the shareholders of the Class.

7. All material amendments to this Plan shall be approved by
the non-interested Trustees in the manner described in paragraph 5 above.

8. So long as the Plan is in effect, the selection and
nomination of the Fund's non-interested Trustees shall be committed to the
discretion of such non-interested Trustees.

This Plan shall take effect on the Commencement Date, as
previously defined.

December 18, 1997

A-3

<PAGE>

EXHIBIT B
DISTRIBUTION PLAN
DELAWARE GROUP FOUNDATION FUNDS
FOUNDATION GROWTH PORTFOLIO
FOUNDATION GROWTH PORTFOLIO B CLASS

The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Group Foundation Funds(the "Fund"), for the Foundation Growth Portfolio series
(the "Series") on behalf of the Foundation Growth Portfolio B Class (the
"Class"), which Fund, Series and Class may do business under these or such other
names as the Board of Trustees of the Fund may designate from time to time. The
Plan has been approved by a majority of the Board of Trustees, including a
majority of the Trustees who are not interested persons of the Fund and who have
no direct or indirect financial interest in the operation of the Plan or in any
agreements related thereto ("non-interested Trustees"), cast in person at a
meeting called for the purpose of voting on such Plan. Such approval by the
Trustees included a determination that in the exercise of reasonable business
judgment and in light of their fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Series and shareholders of the Class.

The Fund is a Delaware business trust organized under the laws of the
State of Delaware, is authorized to issue different series and classes of
securities and is an open-end management investment company registered under the
Act. Delaware Management Company, Inc. serves as the Series' investment adviser
and manager pursuant to an Investment Management Agreement. Delaware Service
Company, Inc. serves as the Series' shareholder servicing, dividend disbursing
and transfer agent. Delaware Distributors, L.P. (the "Distributor") is the
principal underwriter and national distributor for the Series' shares, including

B-1

<PAGE>

shares of the Class, pursuant to the Distribution Agreement between the
Distributor and the Fund on behalf of the Series ("Distribution Agreement").

The Plan provides that:

(b) In addition to the amounts described in (a) above, the Fund
shall pay (i) to the Distributor for payment to dealers or others, or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
Series' average daily net assets represented by shares of the Class, as a
service fee pursuant to dealer or servicing agreements.

(b) The monies to be paid pursuant to paragraph 1(b) above shall be
used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include confirming
that customers have received the Prospectus and Statement of Additional
Information, if applicable; assisting such customers in maintaining proper
records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.

B-2

<PAGE>

4. The officers of the Fund shall furnish to the Board of Trustees of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.

6. (a) The Plan may be terminated at any time by vote of a majority of
the non-interested Trustees or by vote of a majority of the outstanding voting
securities of the Class.

(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph 1 hereof without approval by the
shareholders of the Class.

7. All material amendments to this Plan shall be approved by the
non-interested Trustees in the manner described in paragraph 5 above.

8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Trustees shall be committed to the discretion of such
non-interested Trustees.

9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
of the outstanding voting securities," respectively, for the purposes of this
Plan.

B-3

<PAGE>

This Plan shall take effect on the Commencement Date, as previously
defined.

December 18, 1997

B-4

<PAGE>

EXHIBIT C

DISTRIBUTION PLAN
DELAWARE GROUP FOUNDATION FUNDS
FOUNDATION GROWTH PORTFOLIO
FOUNDATION GROWTH PORTFOLIO C CLASS

The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Group Foundation Funds (the "Fund"), for the Foundation Growth Portfolio series
(the "Series) on behalf of the Foundation Growth Portfolio C Class (the
"Class"), which Fund, Series and Class may do business under these or such other
names as the Board of Trustees of the Fund may designate from time to time. The
Plan has been approved by a majority of the Board of Trustees, including a
majority of the Trustees who are not interested persons of the Fund and who have
no direct or indirect financial interest in the operation of the Plan or in any
agreements related thereto ("non-interested Trustees"), cast in person at a
meeting called for the purpose of voting on such Plan. Such approval by the
Trustees included a determination that in the exercise of reasonable business
judgment and in light of their fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Series and shareholders of the Class.

The Fund is a Delaware business trust organized under the laws of the
State of Delaware, is authorized to issue different series and classes of
securities and is an open-end management investment company registered under the
Act. Delaware Management Company, Inc. serves as the Series' investment adviser
and manager pursuant to an Investment Management Agreement. Delaware Service
Company, Inc. serves as the Series' shareholder servicing, dividend disbursing
and transfer agent. Delaware Distributors, L.P. (the "Distributor") is the
principal underwriter and national distributor for the Series' shares, including

C-1

<PAGE>

shares of the Class, pursuant to the Distribution Agreement between the
Distributor and the Fund on behalf of the Series ("Distribution Agreement").

The Plan provides that:

1.(a) The Fund shall pay to the Distributor a monthly fee not to exceed
0.75% (3/4 of 1%) per annum of the Series' average daily net assets represented
by shares of the Class as may be determined by the Fund's Board of Trustees from
time to time.

2.(a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for,
among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation related to sales and marketing personnel, and holding special
promotions. In addition, such fees may be used to pay for advancing the
commission costs to dealers with respect to the sale of Class shares.

(b) The monies to be paid pursuant to paragraph 1(b) above shall be
used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include confirming
that customers have received the Prospectus and Statement of Additional
Information, if applicable; assisting such customers in maintaining proper
records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.

C-2

<PAGE>

4. The officers of the Fund shall furnish to the Board of Trustees of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.

6.(a) The Plan may be terminated at any time by vote of a majority of
the non-interested Trustees or by vote of a majority of the outstanding voting
securities of the Class.

(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph 1 hereof without approval by the
shareholders of the Class.

7. All material amendments to this Plan shall be approved by the
non-interested Trustees in the manner described in paragraph 5 above.

8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Trustees shall be committed to the discretion of such
non-interested Trustees.

9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
of the outstanding voting securities," respectively, for the purposes of this
Plan.

C-3

<PAGE>

This Plan shall take effect on the Commencement Date, as previously
defined.

December 18, 1997

C-4

<PAGE>
EX-99.B6C
EXHIBIT 6C

DELAWARE GROUP FOUNDATION FUNDS

FOUNDATION INCOME PORTFOLIO

DISTRIBUTION AGREEMENT

Distribution Agreement (the "Agreement") made as of this 18th day of
December, 1997 by and between DELAWARE GROUP FOUNDATION FUNDS, a Delaware
business trust, (the "Fund"), for the Foundation Income Portfolio series (the
"Series"), and DELAWARE DISTRIBUTORS, L.P. (the "Distributor"), a Delaware
limited partnership.

WITNESSETH

WHEREAS, the Fund is an investment company regulated by
Federal and State regulatory bodies, and

WHEREAS, the Fund desires to enter into an agreement with the
Distributor on behalf of the Series, pursuant to which the Distributor shall
serve as the national distributor of the Series' Foundation Income Portfolio A
Class ("Class A Shares"), Foundation Income Portfolio B Class ("Class B
Shares"), Foundation Income Portfolio C Class ("Class C Shares"), and Foundation
Income Portfolio Institutional Class ("Institutional Class Shares"), which
Series and classes may do business under these or such other names as the Board
of Trustees may designate from time to time, on the terms and conditions set
forth below,

NOW, THEREFORE, the parties hereto, intending to be legally
bound hereby, agree as follows:

<PAGE>

(d) For the Class A Shares, Class B Shares, and Class C Shares,
the Fund shall, in addition, compensate the Distributor for
its services as provided in the Distribution Plan as adopted
on behalf of the Class A Shares, Class B Shares, and Class C
Shares, respectively, pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (the "Plans"), copies

-2-

<PAGE>

of which as presently in force are attached hereto as,
respectively, Exhibit "A," "B," and "C."

4. The Fund warrants the following:

-3-

<PAGE>

5. (a) The Fund will supply to the Distributor a conformed copy
of the Registration Statement, all amendments thereto, all
exhibits, and each Prospectus and Statement of Additional
Information.

(b) The Fund will register or qualify the Series' shares for sale
in such states as is deemed desirable.

(2) from time to time, will furnish to the Distributor as
soon as reasonably practicable true copies of its
periodic reports to stockholders;

(5) will from time to time, use its best effort to keep a
sufficient supply of Series' shares authorized, any
increases being subject to the approval of
shareholders as may be required;

-4-

<PAGE>

8. The responsibility of the Distributor hereunder shall be limited to the
promotion of sales of Series' shares. The Distributor shall undertake
to promote such sales solely as agent of the Fund,

-5-

<PAGE>

9. With respect to the apportionment of costs between the Fund and the
Distributor of activities with which both are concerned, the following
will apply:

(b) The Distributor will pay the costs incurred in printing and
mailing copies of Prospectuses to prospective investors.

(c) The Distributor will pay advertising and promotional expenses,
including the costs of literature sent to prospective
investors.

(d) The Fund will pay the costs and fees incurred in registering
or qualifying the Series' shares with the various states and
with the SEC.

(e) The Distributor will pay the costs of any additional copies of
Fund financial and other reports and other Fund literature
supplied to the Distributor by the Fund for sales promotion
purposes.

10. The Distributor may engage in other business, provided such other
business does not interfere with the performance by the Distributor of
its obligations under this Agreement.

-6-

<PAGE>

-7-

<PAGE>

14. (a) This Agreement shall remain in force for a period of two
years from the date hereof and from year to year thereafter,
but only so long as such continuance is specifically
approvedat least annually by the Board of Trustees or by vote
of a majority of the outstanding voting securities of the
Series and only if the terms and the renewal thereof have been
approved by the vote of a majority of the Trustees of the Fund
who are not parties hereto or interested persons of any such
party, cast in person at a meeting called for the purpose of
voting on such approval.

-8-

<PAGE>

-9-

<PAGE>

15. The validity, interpretation and construction of this Agreement, and of
each part hereof, will be governed by the laws of the Commonwealth of
Pennsylvania.

16. In the event any provision of this Agreement is determined to be void
or unenforceable, such determination shall not affect the remainder of
the Agreement, which shall continue to be in force.

DELAWARE DISTRIBUTORS, L.P.

By: DELAWARE DISTRIBUTORS, INC.,

General Partner

Attest: /s/ Michael D. Mabry By: /s/ Bruce D. Barton
-------------------------- -----------------------------
Name: Michael D. Mabry Name: Bruce D. Barton
Title: Assistant Vice President, Title: President and Chief
Assistant Secretary Executive Officer
and Senior Counsel

DELAWARE GROUP FOUNDATION

FUNDS, for the Foundation Income
Portfolio

Attest: /s/ Michael D. Mabry By: /s/ Wayne A. Stork
-------------------------- -----------------------------
Name: Michael D. Mabry Name: Wayne A. Stork
Title: Assistant Vice President, Title: Chairman
Assistant Secretary
and Senior Counsel

-10-

<PAGE>

EXHIBIT A

DISTRIBUTION PLAN

DELAWARE GROUP FOUNDATION FUNDS

FOUNDATION INCOME PORTFOLIO

FOUNDATION INCOME PORTFOLIO A CLASS

The following Distribution Plan (the "Plan") has been adopted
pursuant to Rule l2b-l under the Investment Company Act of l940 (the "Act") by
Delaware Group Foundation Funds (the "Fund"), for the Foundation Income
Portfolio series (the "Series") on behalf of the Foundation Income Portfolio A
Class ("Class"), which Fund, Series and Class may do business under these or
such other names as the Board of Trustees of the Fund may designate from time to
time. The Plan has been approved by a majority of the Board of Trustees,
including a majority of the Trustees who are not interested persons of the Fund
and who have no direct or indirect financial interest in the operation of the
Plan or in any agreements related thereto ("non-interested Trustees"), cast in
person at a meeting called for the purpose of voting on such Plan. Such approval
by the Trustees included a determination that in the exercise of reasonable
business judgment and in light of their fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Series and shareholders of the Class.

A-1

<PAGE>

shares of the Class, pursuant to the Distribution Agreement between the
Distributor and the Fund on behalf of the Series ("Distribution Agreement").

The Plan provides that:

A-2

<PAGE>

respectively, in order to enable the Board to make an informed determination of
the amount of the Fund's payments and whether the Plan should be continued.

6. (a) The Plan may be terminated at any time by vote of a
majority of the non-interested Trustees or by vote of a majority of the
outstanding voting securities of the Class.

(b) The Plan may not be amended to increase materially the
amount to be spent for distribution pursuant to paragraph l hereof without
approval by the shareholders of the Class.

7. All material amendments to this Plan shall be approved by
the non-interested

Trustees in the manner described in paragraph 5 above.

8. So long as the Plan is in effect, the selection and
nomination of the Fund's non-interested Trustees shall be committed to the
discretion of such non-interested Trustees.

This Plan shall take effect on the Commencement Date, as
previously defined.

December 18, 1997

A-3

<PAGE>

EXHIBIT B

DISTRIBUTION PLAN

DELAWARE GROUP FOUNDATION FUNDS

FOUNDATION INCOME PORTFOLIO

FOUNDATION INCOME PORTFOLIO B CLASS

The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Group Foundation Funds (the "Fund"), for the Foundation Income Portfolio series
(the "Series") on behalf of the Foundation Income Portfolio B Class (the
"Class"), which Fund, Series and Class may do business under these or such other
names as the Board of Trustees of the Fund may designate from time to time. The
Plan has been approved by a majority of the Board of Trustees, including a
majority of the Trustees who are not interested persons of the Fund and who have
no direct or indirect financial interest in the operation of the Plan or in any
agreements related thereto ("non-interested Trustees"), cast in person at a
meeting called for the purpose of voting on such Plan. Such approval by the
Trustees included a determination that in the exercise of reasonable business
judgment and in light of their fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Series and shareholders of the Class.

The Fund is a Delaware business trust organized under the laws of the
State of Delaware, is authorized to issue different series and classes of
securities and is an open-end management investment company registered under the
Act. Delaware Management Company, Inc. serves as the Series' investment adviser
and manager pursuant to an Investment Management Agreement. Delaware Service
Company, Inc. serves as the Series' shareholder servicing, dividend disbursing
and transfer agent. Delaware Distributors, L.P. (the "Distributor") is the
principal underwriter and national distributor for the Series' shares, including

B-1

<PAGE>

shares of the Class, pursuant to the Distribution Agreement between the
Distributor and the Fund on behalf of the Series ("Distribution Agreement").

The Plan provides that:

(b) In addition to the amounts described in (a) above, the Fund
shall pay (i) to the Distributor for payment to dealers or others, or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
Series' average daily net assets represented by shares of the Class, as a
service fee pursuant to dealer or servicing agreements.

(b) The monies to be paid pursuant to paragraph 1(b) above shall be
used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include confirming
that customers have received the Prospectus and Statement of Additional
Information, if applicable; assisting such customers in maintaining proper
records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.

B-2

<PAGE>

4. The officers of the Fund shall furnish to the Board of Trustees of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.

6. (a) The Plan may be terminated at any time by vote of a majority of
the non-interested Trustees or by vote of a majority of the outstanding voting
securities of the Class.

(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph 1 hereof without approval by the
shareholders of the Class.

7. All material amendments to this Plan shall be approved by the
non-interested Trustees in the manner described in paragraph 5 above.

8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Trustees shall be committed to the discretion of such
non-interested Trustees.

9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
of the outstanding voting securities," respectively, for the purposes of this
Plan.

B-3

<PAGE>

This Plan shall take effect on the Commencement Date, as previously
defined. December 18, 1997

B-4

<PAGE>

EXHIBIT C

DISTRIBUTION PLAN

DELAWARE GROUP FOUNDATION FUNDS

FOUNDATION INCOME PORTFOLIO

FOUNDATION INCOME PORTFOLIO C CLASS

The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Group Foundation Funds (the "Fund"), for the Foundation Income Portfolio series
(the "Series) on behalf of the Foundation Income Portfolio C Class (the
"Class"), which Fund, Series and Class may do business under these or such other
names as the Board of Trustees of the Fund may designate from time to time. The
Plan has been approved by a majority of the Board of Trustees, including a
majority of the Trustees who are not interested persons of the Fund and who have
no direct or indirect financial interest in the operation of the Plan or in any
agreements related thereto ("non-interested Trustees"), cast in person at a
meeting called for the purpose of voting on such Plan. Such approval by the
Trustees included a determination that in the exercise of reasonable business
judgment and in light of their fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Series and shareholders of the Class.

The Fund is a Delaware business trust organized under the laws of
the State of Delaware, is authorized to issue different series and classes of
securities and is an open-end management investment company registered under the
Act. Delaware Management Company, Inc. serves as the Series' investment adviser
and manager pursuant to an Investment Management Agreement. Delaware Service
Company, Inc. serves as the Series' shareholder servicing, dividend disbursing
and transfer agent. Delaware Distributors, L.P. (the "Distributor") is the
principal underwriter and national distributor for the Series' shares, including

C-1

<PAGE>

shares of the Class, pursuant to the Distribution Agreement between the
Distributor and the Fund on behalf of the Series ("Distribution Agreement").

The Plan provides that:

1.(a) The Fund shall pay to the Distributor a monthly fee not to exceed
0.75% (3/4 of 1%) per annum of the Series' average daily net assets represented
by shares of the Class as may be determined by the Fund's Board of Trustees from
time to time.

2.(a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for,
among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation related to sales and marketing personnel, and holding special
promotions. In addition, such fees may be used to pay for advancing the
commission costs to dealers with respect to the sale of Class shares.

(b) The monies to be paid pursuant to paragraph 1(b) above shall be
used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include confirming
that customers have received the Prospectus and Statement of Additional
Information, if applicable; assisting such customers in maintaining proper
records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.

C-2

<PAGE>

4. The officers of the Fund shall furnish to the Board of Trustees of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.

6.(a) The Plan may be terminated at any time by vote of a majority of
the non-interested Trustees or by vote of a majority of the outstanding voting
securities of the Class.

(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph 1 hereof without approval by the
shareholders of the Class.

7. All material amendments to this Plan shall be approved by the
non-interested Trustees in the manner described in paragraph 5 above.

8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Trustees shall be committed to the discretion of such
non-interested Trustees.

9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
of the outstanding voting securities," respectively, for the purposes of this
Plan.

C-3

<PAGE>

This Plan shall take effect on the Commencement Date, as previously
defined.

December 18, 1997

C-4

<PAGE>
EX-99.B9A
EXHIBIT 9A

DELAWARE GROUP FOUNDATION FUNDS
SHAREHOLDERS SERVICES AGREEMENT

THIS AGREEMENT, made as of this 18th day of December, 1997 by and
between DELAWARE GROUP FOUNDATION FUNDS (the "Fund"), a Delaware business trust,
for the Foundation Income Portfolio, Foundation Balanced Portfolio and
Foundation Growth Portfolio series (collectively "the Series"), and DELAWARE
SERVICE COMPANY, INC. ("DSC"), a Delaware Corporation, each having its principal
office and place of business at 1818 Market Street, Philadelphia, Pennsylvania
19103.

W I T N E S S E T H:

WHEREAS, the Investment Management Agreements between the Fund and
Delaware Management Company, Inc. provide that the Fund shall conduct its own
business and affairs and shall bear the expenses and salaries necessary and
incidental thereto including, but not in limitation of the foregoing, the costs
incurred in: the maintenance of its corporate existence; the maintenance of its
own books, records and procedures; dealing with its own shareholders; the
payment of dividends; transfers of stock, including issuance and redemption of
shares; reports and notices to stockholders; calling and holding of stockholder
meetings; miscellaneous office expenses; brokerage commissions; legal and
accounting fees; taxes; and federal and state registration fees; and

WHEREAS, the Fund and DSC desire to have a written agreement concerning
the performance of the foregoing services and providing compensation therefor.

NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth, and intending legally to be bound, it is agreed:

<PAGE>

I. APPOINTMENT AS AGENT

1.1 The Fund hereby appoints DSC Shareholder Services Agent for the
Series to provide as agent for the Fund services as Transfer Agent, Dividend
Disbursing Agent and Shareholder Servicing Agent and DSC hereby accepts such
appointment and agrees to provide the Fund, as its agent, the services described
herein.

1.2 The Fund shall pay DSC and DSC shall accept, for the services
provided hereunder, the compensation provided for in Section VIII hereof. The
Fund also shall reimburse DSC for expenses incurred or advanced by it for the
Fund in connection with its services hereunder.

II. DOCUMENTATION

2.1 The Fund represents that it has provided or made available to DSC
(or has given DSC an opportunity to examine) copies of, and DSC represents that
it has received from the Fund (or is otherwise familiar with), the following
documents:

(a) The Articles of Incorporation or other documents
evidencing the Fund's form of organization and any current amendments or
supplements thereto.

(b) The By-Laws of the Fund;

(c) Any resolution or other action of the Fund or the Board of
Trustees of the Fund establishing or affecting the rights, privileges or other
status of each class or series of shares of the Fund, including those relating
to the Series or altering or abolishing each such class or series;

(d) A certified copy of a resolution of the Board of Trustees
of the Fund appointing DSC as Shareholder Services Agent for the Series and
authorizing the execution of this Agreement;

(e) The forms of share certificates of the Series in the forms
approved by the Board of Trustees of the Fund;

(f) A copy of the Fund's currently effective Prospectuses and
Statement of Additional Information under the Securities Act of 1933, if
effective;

<PAGE>

(g) Copies of all account application forms and other
documents relating to stockholder accounts in the Series;

(h) Copies of documents relating to Plans of the Fund for the
purchase, sale or repurchase of its shares, including periodic payment or
withdrawal plans, reinvestment plans or retirement plans;

(i) Any opinion of counsel to the Fund relating to the
authorization and validity of the shares of the Series issued or proposed to be
issued under the law of the State of the Fund's organization, including the
status thereof under any applicable securities laws;

(j) A certified copy of any resolution of the Board of
Trustees of the Fund authorizing any person to give instructions to DSC under
this Agreement (with a specimen signature of such person if not already
provided), setting forth the scope of such authority; and

(k) Any amendment, revocation or other documents altering,
adding, qualifying or repealing any document or authority called for under this
Section 2.1.

2.2 The Fund and DSC may consult as to forms or documents that may be
required in performing services hereunder.

2.3 The Fund shall provide or make available to DSC a certified copy of
any resolution of the stockholders or the Board of Trustees of the Fund
providing for a dividend, capital gains distribution, distribution of capital,
stock dividend, stock split or other similar action affecting the authorization
or issuance of shares of the Fund or the payment of dividends.

2.4 In the case of any recapitalization or other capital adjustment
requiring a change in the form of stock certificates or the books recording the
same, the Fund shall deliver or make available to DSC:

(a) A certified copy of any document authorizing or effecting
such change;

(b) Written instructions from an authorized officer
implementing such change; and

<PAGE>

2.5 The Fund warrants the following:

(a) The Fund is, or will be, a properly registered investment
company under the Investment Company Act of 1940 and any and all Series' shares
which it issues will be properly registered and lawfully issued under applicable
federal and state laws.

(b) The provisions of this contract do not violate the terms
of any instrument by which the Fund is bound; nor do they violate any law or
regulation of any body having jurisdiction over the Fund or its property.

2.6 DSC warrants the following:

(a) DSC is and will be properly registered as a transfer agent
under the Securities and Exchange Act of 1934 and is duly authorized to serve,
and may lawfully serve as such.

(b) The provisions of this contract do not violate the terms
of any instrument by which DSC is bound; nor do they violate any law or
regulation of any body having jurisdiction over DSC or its property.

III. STOCK CERTIFICATES

3.1 The Fund shall furnish or authorize DSC to obtain, at the Fund's
expense, a sufficient supply of blank stock certificates for the Series, and
from time to time will replenish such supply upon the request of DSC. The Fund
agrees to indemnify and exonerate, save and hold DSC harmless, from and against
any and all claims or demands that may be asserted against DSC concerning the
genuineness of any stock certificate supplied to DSC pursuant to this Section.

3.2 DSC shall safeguard, and shall account to the Fund, upon its demand
for, all such stock certificates: (a) as issued, showing to whom issued, or (b)
as unissued, establishing the safekeeping, cancellation or destruction thereof.

<PAGE>

3.3 The Fund shall promptly inform DSC in writing of any change in the
officers authorized to sign stock certificates or in the form thereof. If an
officer whose manual or facsimile signature is affixed to any blank share
certificate shall die, resign or be removed prior to the issuance of such
certificate, DSC may nevertheless issue such certificate notwithstanding such
death, resignation or removal, and the Fund shall with respect thereto promptly
provide to DSC any approval, adoption or ratification as may be required by DSC.

IV. TRANSFER AGENT

4.1 As Transfer Agent for the Fund, DSC shall issue, redeem and
transfer shares of the Series, and, in connection therewith but not in
limitation thereof, it shall:

(a) Upon receipt of authority to issue shares, determine the
total shares to be issued and issue such shares by crediting shares to accounts
created and maintained in the registration forms provided; as applicable,
prepare, issue and deliver stock certificates.

(b) Upon proper transfer authorization, transfer shares by
debiting transferor-stockholder accounts and crediting such shares to accounts
created and/or maintained for transferee-stockholders; if applicable, issue
and/or cancel stock certificates.

(c) Upon proper redemption authorization, determine the total
shares redeemed and to be redeemed; determine the total redemption payments made
and to be made; redeem shares by debiting stockholder accounts; as applicable
receive and cancel stock certificates for shares redeemed; and remit or cause to
be remitted the redemption proceeds to stockholders.

(d) Create and maintain accounts; reconcile and control cash
due and paid, shares issued and to be issued, cash remitted and to be remitted
and shares debited and credited to accounts; provide such notices, instructions
or authorizations as the Fund may require.

<PAGE>

4.2 DSC shall not be required to issue, transfer or redeem Series'
shares upon receipt of DSC from the Fund, or from any federal or state
regulatory agency or authority, written notice that the issuance, transfer or
redemption of Series' shares has been suspended or discontinued.

V. DIVIDEND DISBURSING AGENT

5.1 As Dividend Disbursing Agent for the Series, DSC shall disburse and
cause to be disbursed to stockholders of each Series dividends, capital gains
distributions or any payments from other sources as directed by the Fund. In
connection therewith, but not in the limitation thereof, DSC shall:

(a) Calculate the total disbursement due and payable and the
disbursement to each stockholder as to shares owned, in accordance with the
Fund's authorization.

(b) Calculate the total disbursements for each stockholder, as
aforesaid, to be disbursed in cash; prepare and mail checks therefor.

(c) Calculate the total disbursement for each stockholder of
each Series, as aforesaid, for which Series' shares are to be issued and
authorized and instruct the issuance of Series' shares therefor in accordance
with Section IV hereof.

(d) Prepare and mail or deliver such forms and notices
pertaining to disbursements as required by federal or state authority.

(e) Create and maintain records, reconcile and control
disbursements to be made and made, both as to cash and shares, as aforesaid;
provide such notices, instruction or authorization as the Fund may require.

5.2 DSC shall not be required to make any disbursement upon the receipt
of DSC from the Fund, or from any federal or state agency or authority, written
notice that such disbursement shall not be made.

<PAGE>

VI. SHAREHOLDER SERVICING AGENT

6.1 As Shareholder Servicing Agent for the Series, DSC shall provide
those services ancillary to, but in implementation of, the services provided
under Sections I through V hereof, and those generally defined and accepted as
shareholder services. In connection therewith, but not in limitation thereof,
DSC shall:

(a) Except where instructed in writing by the Fund not to do
so, and where in compliance with applicable law, accept orders on behalf of the
Fund; receive and process investments and applications; remit to the Fund or its
custodian payments for shares acquired and to be issued; and direct the issuance
of shares in accordance with Section IV hereof.

(b) Receive, record and respond to communications of
stockholders and their agents.

(c) As instructed by the Fund, prepare and mail stockholder
account information, mail Series stockholder reports and Series prospectuses.

(d) Prepare and mail proxies and material for Fund stockholder
meetings, receive and process proxies from stockholders, and deliver such
proxies as directed by the Fund.

(e) Administer investment plans offered by the Fund to
investors and stockholders of each Series, including retirement plans, including
activities not otherwise provided in Section I through V of this Agreement.

VII. PERFORMANCE OF DUTIES

7.1 The parties hereto intend that Series stockholders and their
stockholdings shall be confidential, and any information relating thereto shall
be released by DSC only to those persons or authorities who DSC has reason to
believe are authorized to receive such information; or, as instructed by the
Fund.

<PAGE>

7.2 DSC may, in performing this Agreement, require the Fund or the
Fund's distributor to provide it with an adequate number of copies of
prospectuses, reports or other documents required to be furnished to investors
or stockholders.

7.3 DSC may request or receive instructions from the Fund and may, at
the Fund's expense, consult with counsel for the Fund or its own counsel with
respect to any matter arising in connection with the performance of its duties
hereunder, and shall not be liable for any action taken or omitted by it in good
faith in accordance with such instructions or opinions of counsel.

7.4 DSC shall maintain reasonable insurance coverage for errors and
omissions and reasonable bond coverage for fraud.

7.5 Upon notice thereof to the Fund, DSC may employ others to provide
services to DSC in its performance of this Agreement.

7.6 Personnel and facilities of DSC used to perform services hereunder
may be used to perform similar services to other funds of the Delaware Group and
to others, and may be used to perform other services for the Fund, the other
funds of the Delaware Group and others.

7.7 DSC shall provide its services as transfer agent hereunder in
accordance with Section 17 of the Securities Exchange Act of 1934, and the rules
and regulations thereunder. Further, the parties intend that the processes,
procedures, safeguards and controls employed should be those generally applied
and accepted for the type services provided hereunder by other institutions
providing the same or similar services, and, those which should provide
efficient, safe and economical services so as to promote promptness and accuracy
and to maintain the integrity of the Fund's records.

7.8 The Fund and DSC may, from time to time, set forth in writing
Guidelines For Selective Procedures to be applicable to the services hereunder.

<PAGE>

VIII. COMPENSATION

8.1 The Fund and DSC acknowledge that because DSC has common ownership
and close management ties with the Fund's investment advisor and the Fund's
distributor and serves the other funds of the Delaware Group (DSC having been
originally established to provide the services hereunder for the funds of the
Delaware Group), advantages and benefits to the Fund in the employment of DSC
hereunder can be available which may not generally be available to it from
others providing similar services.

8.2 The Fund and DSC further acknowledge that the compensation by the
Fund to DSC is intended to induce DSC to provide services under this Agreement
of a nature and quality which the Board of Trustees of the Fund, including a
majority who are not parties to this Agreement or interested person of the
parties hereto, has determined after due consideration to be necessary for the
conduct of the business of the Fund, in the best interests of the Fund, the
Series and their stockholders.

8.3 Compensation by the Fund to DSC hereunder shall be determined in
accordance with Schedule A hereto as it shall be amended from time to time as
provided for herein and which is incorporated herein as a part hereof.

8.4 Compensation as provided in Schedule A shall be reviewed and
approved in the manner set forth in Section 10.1 hereof by the Board of Trustees
of the Fund at least annually and may be reviewed and approved more frequently
at the request of either party. The Board may request, and DSC shall provide,
such information as the Board may reasonably require to evaluate the basis of
and approve the compensation.

IX. STANDARD OF CARE

9.1 The Fund acknowledges that DSC shall not be liable for, and in the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of the performance of its duties under this Agreement, agrees to
indemnify DSC against, any claim or deficiency arising from the performance of
DSC's duties hereunder, including DSC's costs, counsel fees and expenses
incurred in investigation or defending any such claim or any administrative or
other proceeding, and acknowledges that any risk of loss or damage

<PAGE>

arising from the conduct of the Fund's affairs in accordance herewith or in
accordance with Guidelines or instructions given hereunder, shall be borne by
the Fund.

X. CONTRACTUAL STATUS

10.1 This Agreement shall be executed and become effective on the date
first written above if approved by a vote of the Board of Trustees of the Fund,
including an affirmative vote of a majority of the non-interested members of the
Board, cast in person at a meeting called for the purpose of voting on such
approval. It shall continue in effect for an indeterminate period, and is
subject to termination on sixty (60) days notice by either party unless earlier
terminated or amended by agreement among the parties. Compensation under this
Agreement shall require approval by a majority vote of the Board of Trustees of
the Fund, including an affirmative vote of the majority of the non-interested
members of the Board cast in person at a meeting called for the purpose of
voting on such approval.

<PAGE>

10.2 This Agreement may not be assigned without the approval of the
Fund.

10.3 This Agreement shall be governed by the laws of the Commonwealth
of Pennsylvania.

DELAWARE SERVICE COMPANY, INC.

By: /s/ David K. Downes
---------------------------------
Name: David K. Downes
Title: President, Chief Executive
Officer and
Chief Financial Officer

Attest: /s/ Michael D. Mabry
----------------------------
Name: Michael D. Mabry
Title: Assistant Vice President,
Assistant Secretary
and Senior Counsel

DELAWARE GROUP FOUNDATION FUNDS

for the Foundation Income Portfolio,
Foundation Balanced Portfolio and
the Foundation Growth Portfolio

By: /s/ Wayne A. Stork
---------------------------------
Name: Wayne A. Stork
Title: Chairman

Attest: /s/ Michael D. Mabry
----------------------------
Name: Michael D. Mabry
Title: Assistant Vice President,
Assistant Secretary
and Senior Counsel

<PAGE>

SCHEDULE A

DELAWARE GROUP FOUNDATION FUNDS

(THE "FUND")

SHAREHOLDERS SERVICES AGREEMENT

COMPENSATION SCHEDULE

1. Delaware Service Company, Inc. ("DSC") will determine and report to the Fund,
at least annually, the compensation for services to be provided to the Fund
for DSC's forthcoming fiscal year or period.

2. In determining such compensation, DSC will fix and report a fee to be charged
per account and/or transaction, as may be applicable, for services provided.
DSC will bill, and the Fund will pay, such compensation monthly.

3. For the period commencing on January 1, 1997, the charge will consist of two
charges for all the Funds in the Delaware Group, except the Delaware Group
Premium Fund, Inc. and the Delaware Pooled Trust, Inc. (other than with
respect to The Real Estate Investment Trust Portfolio effective October 14,
1997), an annual charge and a per transaction charge for each account on the
transfer agent's records and each account on an automated retirement
processing system. These charges are as follows:

A. ANNUAL CHARGE

Daily Dividend Funds $11.00 Per Annum
Other Funds $5.50 Per Annum

Merrill Lynch - Omnibus Accounts*

Regular Accounts $11.00/$16.00 Per Annum
Accounts with a Contingent

Deferred Sales Charge $14.00/$19.00 Per Annum

Networked Accounts $3.00 - 6.00 Per Annum

*Until January 1, 1998, the annual charge for funds currently added to the
Merrill Lynch systems prior to July 1, 1997 will be $11.00 and $14.00,
respectively. Thereafter, the annual charge for those funds will be $16.00 and
$19.00, respectively. The annual charge for funds added to the Merrill Lynch
system on or after July 1, 1997 will be $16.00/19.00, respectively.

<PAGE>

SCHEDULE A

DELAWARE GROUP FOUNDATION FUNDS
(THE "FUND")

SHAREHOLDERS SERVICES AGREEMENT

COMPENSATION SCHEDULE
CONTINUED

B. TRANSACTION CHARGE

Transaction Charge
----------- ------

1. Dividend Payment $0.25

2. New Account $6.00

3. Purchase:

a. Wire $8.00
b. Automated $1.50
c. Other $2.60

4. Transfer $8.00

5. Certificate Issuance $4.00

6. Liquidations

a. Wires $12.25
b. Drafts $0.75
c. Money Market Regular $4.50
d. Other Regular $4.50

7. Exchanges

a. Dividend Exchanges $3.00
b. Other $10.00

<PAGE>

4. For the period commencing January 1, 1997, DSC's compensation for providing
services to the Delaware Group Premium Fund, Inc. (the "Premium Fund") will
be $50,000 annually. DSC will bill, and the Premium Fund will pay, such
compensation monthly, allocated among the current Series of the Premium Fund
based on the relative percentage of assets of each Series at the time of
billing and adjusted appropriately to reflect the length of time a particular
Series is in operation during any billing period.

5. For the period commencing January 1, 1997, DSC's compensation for providing
services to the Portfolios (other than The Real Estate Investment Trust
Portfolio effective October 14, 1997) of Delaware Pooled Trust, Inc. (the
"Trust") will be $25,000 annually. DSC will bill, and the Trust will pay,
such compensation monthly allocated among the current Portfolios (other than
The Real Estate Investment Trust Portfolio) of the Trust based on the
relative percentage of assets of each Portfolio at the time of billing and
adjusted appropriately to reflect the length of time a particular Portfolio
is in operation during any billing period.

<PAGE>
EX-99.B9BI
EXHIBIT 9(b)(i)
AMENDMENT NO. 8
to
SCHEDULE A
of
DELAWARE GROUP OF FUNDS*
FUND ACCOUNTING AGREEMENT

Delaware Group Adviser Funds, Inc.
Corporate Income Fund (liquidated September 19, 1997)
Enterprise Fund (liquidated September 19, 1997)
Federal Bond Fund (liquidated September 19, 1997)
New Pacific Fund
U.S. Growth Fund
Overseas Equity Fund (formerly World Growth Fund)

Delaware Group Cash Reserve, Inc.

Delaware Group Equity Funds I, Inc. (formerly Delaware)
Delaware Fund
Devon Fund

Delaware Group Equity Funds II, Inc. (formerly Decatur)
Blue Chip Fund (New)
Decatur Income Fund
Decatur Total Return Fund
Quantum Fund (New)

Delaware Group Equity Funds III, Inc. (formerly Trend)
Trend Fund

Delaware Group Equity Funds IV, Inc. (formerly DelCap)
Capital Appreciation Fund (New)
DelCap Fund

Delaware Group Equity Funds V, Inc. (formerly Value)
Small Cap Value Fund (formerly Value Fund)
Retirement Income Fund (New)

- ------------------
*Except as otherwise noted, all Portfolios included on this Schedule A
are Existing Portfolios for purposes of the compensation described on Schedule B
to that Fund Accounting Agreement between Delaware Service Company, Inc. and the
Delaware Group of Funds dated as of August 19, 1996 ("Agreement"). All
portfolios added to this Schedule A by amendment executed by a Company on behalf
of such Portfolio hereof shall be a New Portfolio for purposes of Schedule B to
the Agreement.

<PAGE>

Delaware Group Foundation Funds (New)
Balanced Portfolio (New)
Growth Portfolio (New)
Income Portfolio (New)

Delaware Group Government Fund, Inc.
Government Income Series (U.S. Government Fund )

Delaware Group Global & International Funds, Inc.
Emerging Markets Fund (New)
Global Assets Fund
Global Bond Fund
International Equity Fund
Global Equity Fund (New)
International Small Cap Fund (New)

Delaware Group Income Funds, Inc. (formerly Delchester)
Delchester Fund
High-Yield Opportunities Fund (New)
Strategic Income Fund (New)

Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund
U. S. Government Money Fund

Delaware Pooled Trust, Inc.
The Aggressive Growth Portfolio
The Large-Cap Value Equity Portfolio
(formerly The Defensive Equity Portfolio)
The Small/Mid-Cap Value Equity Portfolio (New)
(formerly The Defensive Equity Small/Mid-Cap Portfolio)
The Defensive Equity Utility Portfolio (deregistered January 14, 1997)
The Emerging Markets Portfolio (New)
The Intermediate Fixed Income Portfolio
(formerly The Fixed Income Portfolio)
The Global Fixed Income Portfolio
The High-Yield Bond Portfolio (New)
The International Equity Portfolio
The International Fixed Income Portfolio (New)
The Labor Select International Equity Portfolio
The Limited-Term Maturity Portfolio (New)
The Real Estate Investment Trust Portfolio
The Global Equity Portfolio (New)
The Real Estate Investment Trust Portfolio II (New)
The Diversified Core Fixed Income Portfolio (New)
The Aggregate Fixed Income Portfolio (New)

2
<PAGE>

Delaware Group Premium Fund, Inc.
Capital Reserves Series
Cash Reserve Series
Convertible Securities Series (New)
Decatur Total Return Series
Delaware Series
Delchester Series
Devon Series (New)
Emerging Markets Series (New)
DelCap Series
Global Bond Series (New)
International Equity Series
Quantum Series (New)
Strategic Income Series (New)
Trend Series
Value Series

Delaware Group Tax-Free Fund, Inc.
Tax-Free Insured Fund
Tax-Free USA Fund
Tax-Free USA Intermediate Fund

Delaware Group Tax-Free Money Fund, Inc.

Delaware Group State Tax-Free Income Trust (formerly DMCT Tax-Free Income
Trust-Pennsylvania)
Tax-Free Pennsylvania Fund
Tax-Free New Jersey Fund (New)
Tax-Free Ohio Fund (New)

Voyageur Funds, Inc.
Voyageur U.S. Government Securities Fund (New)

Voyageur Insured Funds, Inc.
Arizona Insured Tax Free Fund (New)
Colorado Insured Fund (New)
Minnesota Insured Fund (New)
National Insured Tax Free Fund (New)

Voyageur Intermediate Tax Free Funds, Inc.
Arizona Limited Term Tax Free Fund (New)
California Limited Term Tax Free Fund (New)
Colorado Limited Term Tax Free Fund (New)
Minnesota Limited Term Tax Free Fund (New)
National Limited Term Tax Free Fund (New)

3
3
<PAGE>

Voyageur Investment Trust
California Insured Tax Free Fund (New)
Florida Insured Tax Free Fund (New)
Florida Tax Free Fund (New)
Kansas Tax Free Fund (New)
Missouri Insured Tax Free Fund (New)
New Mexico Tax Free Fund (New)
Oregon Insured Tax Free Fund (New)
Utah Tax Free Fund (New)
Washington Insured Tax Free Fund (New)

Voyageur Investment Trust II
Florida Limited Term Tax Free Fund (New)

Voyageur Mutual Funds, Inc.
Arizona Tax Free Fund (New)
California Tax Free Fund (New)
Iowa Tax Free Fund (New)
Idaho Tax Free Fund (New)
Minnesota High Yield Municipal Bond Fund (New)
National High Yield Municipal Bond Fund (New)
National Tax Free Fund (New)
New York Tax Free Fund (New)
Wisconsin Tax Free Fund (New)

Voyageur Mutual Funds II, Inc.
Colorado Tax Free Fund (New)

Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund (New)
Growth Stock Fund (New)
International Equity Fund (New)
Tax Efficient Equity Fund (New)

Voyageur Tax Free Funds, Inc.
Minnesota Tax Free Fund (New)
North Dakota Tax Free Fund (New)

4
<PAGE>

Dated as of December , 1997

DELAWARE SERVICE COMPANY, INC.

By: /S/ David K. Downes
-------------------------------------------------------------------
David K. Downes
President, Chief Executive Officer and Chief Financial Officer

DELAWARE GROUP ADVISER FUNDS, INC.
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE GROUP EQUITY FUNDS II, INC.
DELAWARE GROUP EQUITY FUNDS III, INC.
DELAWARE GROUP EQUITY FUNDS IV, INC.
DELAWARE GROUP EQUITY FUNDS V, INC.
DELAWARE GROUP FOUNDATION FUNDS, INC.
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
DELAWARE GROUP INCOME FUNDS, INC.
DELAWARE GROUP LIMITED-TERM GOVERNMENT FUNDS, INC.
DELAWARE POOLED TRUST, INC.
DELAWARE GROUP PREMIUM FUND, INC.
DELAWARE GROUP STATE TAX-FREE INCOME TRUST
DELAWARE GROUP TAX-FREE FUND, INC.
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
VOYAGEUR FUNDS, INC.
VOYAGEUR INSURED FUNDS, INC.
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
VOYAGEUR INVESTMENT TRUST
VOYAGEUR INVESTMENT TRUST II
VOYAGEUR MUTUAL FUNDS, INC.
VOYAGEUR MUTUAL FUNDS II, INC.
VOYAGEUR MUTUAL FUNDS III, INC.

By: /s/ Wayne A. Stork
----------------------
Wayne A. Stork
Chairman

<PAGE>

EX-99.B10
EXHIBIT 10
- ------------------------------------
STRADLEY, RONON, STEVENS & YOUNG, LLP
A T T O R N E Y S

2600 One Commerce Square
Philadelphia, Pennsylvania 19103-7098
(215) 564-8000
Fax: (215) 564-8120
<TABLE>
<CAPTION>
<S> <C> <C> <C>

Andrew B. Young Brent S. Gorey John C. Hook Robert D. Carmignani
S. Gordon Elkins Harry J.J. O'Neill James E. Oneill, III M. Alicia Davis
Daniel S. Knight Williams S. Pilling, III Brian S. Vargo Kevin P. Kundra
Fred C. Aldridge, Jr. Stephen R. Harris Alan R. Gedrich William E. Mahoney, Jr.
George S. Forde, Jr. Todd C. Vanett Daniel T. Fitch Nancy Livers Margolis
Henry G. Hager Arnold S. Block Merrill R. Steiner Joseph J. McHale
Herbert G. Keene, Jr. Edwin R. Boynton Jonathan F. Bloom Tycho H.E. Stahl***
Mark H. Plafker Linda Ann Galante Craig Russell Blackman Danielle Banks
C. Clark Hodgson, Jr. Dean M. Schwartz Joann L. Drust Michael P. Bonner
John F. Dougherty, Jr. Stephen C. Baker Mary B. Matterer* Rene S. Cabral-Daniels
Stephen W. Kline, P.C. David C. Franceski, Jr. Timothy J. Campbell Michael V. Farrell
Bennett G. Picker Sandra A. Girifalco Chistopher E. Cummings Lisa M. King
David S. Hope James F. Podheiser Thomas G. Harris Andrea S. Lawrence
John P. O'Dea Gary P. Scharmett Robert F. Hecht Vanessa L. Carnes
Andre L. Dennis Zachary P. Alexander John F. Licari Alison T. Fiala
David R. Landrey John J. Murphy, III William P. Zimmerman Mark A. Hershey
Lane Taylor, Jr. Ellen Rosen Rogoff Ann Marie Janus Michael P. O'Hare
Thomas J. Renehan, Jr. Audrey C. Talley Timothy P. Lennon Eric D. Schoenborn
William R. Sasso Jeffrey A. Lutsky Dorothy M. Allison Patricia Casperson
Richard K. Herrmann* Paul A. Patterson Joseph D. Cronin Kimberly A. Hendrix
William G. Scarborough Ann Cuddy Roda Nicholas Deenis Davis H. Joseph
James M. Papada, III Samuel J. Arena, Jr. Lisa A. Duda Jennifer R. Beecroft
James R. Beam Joseph V. Del Raso Marianne Johnston Matthew MacG. Bennett
Steven M. Felsenstein David M. Lockwood Douglas J. McGill Michael D. O'Mara
John J. Hunter Gregory J. Nowak Michael J. Miller Russell J. Ressler
David E. Beavers Steven A. Scolari Stephen B. Nolan Melissa Lennon Walsh
David F. Scranton Keven R. Boyle Marc A. Polk
Lee A. Rosengard Keith R. Dutill Bryant Robinson III**
Jane Landes Foster Bruse G. Leto Mary F. Anderson
</TABLE>

*LICENSED IN DELAWARE ONLY
**LICENSED IN WASHINGTON DC, ONLY
***LICENSED IN NEW YORK ONLY
Direct Dial: (215) 564-8115

December 15, 1997

Delaware Group Foundation Funds
1818 Market Street
Philadelphia, PA 19103

Re: Legality of Shares
------------------

Ladies and Gentlemen:

We have examined the Certificate of Trust, the Agreement
and Declaration of Trust and the Bylaws (together, the
"Governing Documents") of Delaware Group Foundation Funds

Marlvern, Pennsylvania Wilmington, Delaware Cherry Hill, New Jersey
- --------------------------------------------------------------------------------
A Pennsylvania Limited Partnership

<PAGE>

Delaware Group Foundation Funds
December 15, 1997
Page 2

(the "Company"), a business trust organized under the laws of the state of
Delaware on October 24, 1997. We have also examined the Company's Notification
of Registration of Form N-8A filed under the Investment Company Act of 1940 (as
amended, the "1940 Act") and the Company's initial Registration Statement filed
under both the 1940 Act and the Securities Act of 1933 (as amended, the "1933
Act"), as well as other and other proceedings of the Company and items we deem
material to this opinion.

The Company is authorized by its Governing Documents to issue an
unlimited number of shares of beneficial interest without par value. The
Governing Documents also authorize the Board of Trustees to divide the shares
into separate series and to further divide the series into separate classes.

The Company's filing with the U.S. Securities and Exchange Commission
of its Registration Statement under the 1933 Act will register an indefinite
number of shares of its beneficial interest pursuant to the provisions of Rule
24f-2 under the 1940 Act. You have further advised us that each year hereafter
the Company will timely file a Notice pursuant to Rule 24f-2 perfecting the
registration of the shares of beneficial interest sold by the Company during
each fiscal year.

You have also informed us that the shares of beneficial interest of the
Company will be sold in accordance with the Company's usual method of
distributing its registered shares of beneficial interest, under which
prospectuses are made available for delivery to offerees and purchasers of such
shares in accordance with Section 5(b) of the 1933 Act.

Based upon the foregoing information and examination, it is our opinion
that the Company is a valid and subsisting business trust under the laws of the
State of Delaware, and that the shares of beneficial interest of the Company
when issued for the consideration set by the Board of Trustees pursuant to the
Governing Documents, and subject to compliance with Rule 24f-2, will be legally
outstanding, fully-paid, and non-assessable shares of beneficial interest of the
Company and the holders of such shares will have all

<PAGE>

Delaware Group Foundation Funds
December 15, 1997
Page 3

the rights provided for with respect to such holding by the Governing Documents
and the laws of the State of Delaware.

We hereby consent to the filing of this opinion with the U.S.
Securities and Exchange Commission as an exhibit to the Company's Registration
Statement under the 1933 Act, and to any reference to us in such Registration
Statement as legal counsel who have passed upon the legality of the offering of
the Company's shares of beneficial interest. We also consent to the filing of
this opinion with the securities regulatory agencies of any states or other
jurisdictions in which shares of the Company are offered for sale.

Very truly yours,

STRADLEY, RONON, STEVEN, & YOUNG, LLP

By: /s/ Bruce G. Leto
-------------------------------------
Bruce G. Leto, a partner

BGL/cdj
235899.1

cc: George M. Chamberlain, Jr., Esq.
Eric E. Miller, Esq.
Michael D. Mabry, Esq.
Michael P. O'Hare, Esq.

<PAGE>

EX-99.B15A
EXHIBIT 15A

DISTRIBUTION PLAN
DELAWARE GROUP FOUNDATION FUND
FOUNDATION BALANCED PORTFOLIO
FOUNDATION BALANCED PORTFOLIO A CLASS

The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule l2b-l under the Investment Company Act of l940 (the "Act") by Delaware
Group Foundation Fund (the "Fund"), for the Foundation Balanced Portfolio series
(the "Series") on behalf of the Foundation Balanced Portfolio A Class ("Class"),
which Fund, Series and Class may do business under these or such other names as
the Board of Trustees of the Fund may designate from time to time. The Plan has
been approved by a majority of the Board of Trustees, including a majority of
the Trustees who are not interested persons of the Fund and who have no direct
or indirect financial interest in the operation of the Plan or in any agreements
related thereto ("non-interested Trustees"), cast in person at a meeting called
for the purpose of voting on such Plan. Such approval by the Trustees included a
determination that in the exercise of reasonable business judgment and in light
of their fiduciary duties, there is a reasonable likelihood that the Plan will
benefit the Series and shareholders of the Class.

The Fund is a Delaware business trust organized under the laws of the
State of Delaware, is authorized to issue different series and classes of
securities and is an open-end management investment company registered under the
Act. Delaware Management Company, Inc. serves as the Series' investment adviser
and manager pursuant to an Investment Management Agreement. Delaware Service
Company, Inc. serves as the Series' shareholder servicing, dividend disbursing
and transfer agent. Delaware Distributors, L.P. (the "Distributor") is the
principal underwriter and national distributor for the Series' shares, including
shares of the Class, pursuant to the Distribution Agreement between the
Distributor and the Fund on behalf

<PAGE>

of the Series ("Distribution Agreement").

The Plan provides that:

2. (a) The Distributor shall use the monies paid to it pursuant to
paragraph l above to furnish, or cause or encourage others to furnish, services
and incentives in connection with the promotion, offering and sale of Class
shares and, where suitable and appropriate, the retention of Class shares by
shareholders.

(b) The Service Providers shall use the monies paid respectively to
them to reimburse themselves for the actual costs they have incurred in
confirming that their customers have received the Prospectus and Statement of
Additional Information, if applicable, and as a fee for (l) assisting such
customers in maintaining proper records with the Fund, (2) answering questions
relating to their respective accounts, and (3) aiding in maintaining the
investment of their respective customers in the Class.

3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under the Plan. The Service
Providers shall inform the Fund monthly and in writing of the amounts each
claims under the Plan; both the Distributor and the Service Providers shall
furnish the Board of Trustees of the Fund with such other information as the
Board may reasonably request in connection with the payments made under the Plan
and the use thereof by the Distributor and the Service Providers, respectively,
in order to enable the Board to make an informed determination of the amount of
the Fund's payments and whether the Plan should be continued.

4. The officers of the Fund shall furnish to the Board of Trustees of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.

<PAGE>

5. This Plan shall take effect at such time as the Distributor shall
notify the Fund in writing of the commencement of the Plan (the "Commencement
Date"); thereafter, the Plan shall continue in effect for a period of more than
one year from the Commencement Date only so long as such continuance is
specifically approved at least annually by a vote of the Board of Trustees of
the Fund, and of the non-interested Trustees, cast in person at a meeting
called for the purpose of voting on such Plan.

6. (a) The Plan may be terminated at any time by vote of a majority of
the non-interested Trustees or by vote of a majority of the outstanding voting
securities of the Class.

(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph l hereof without approval by the
shareholders of the Class.

7. All material amendments to this Plan shall be approved by the
non-interested Trustees in the manner described in paragraph 5 above.

8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Trustees shall be committed to the discretion of such
non-interested Trustees.

9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
of the outstanding voting securities," respectively, for the purposes of this
Plan.

This Plan shall take effect on the Commencement Date, as previously
defined.

December 18, 1997

<PAGE>

EX-99.B15B
EXHIBIT 15B

DISTRIBUTION PLAN
DELAWARE GROUP FOUNDATION FUNDS
FOUNDATION BALANCED PORTFOLIO
FOUNDATION BALANCED PORTFOLIO B CLASS

The Fund is a Delaware business trust organized under the laws of the
State of Delaware, is authorized to issue different series and classes of
securities and is an open-end management investment company registered under the
Act. Delaware Management Company, Inc. serves as the Series' investment adviser
and manager pursuant to an Investment Management Agreement. Delaware Service
Company, Inc. serves as the Series' shareholder servicing, dividend disbursing
and transfer agent. Delaware Distributors, L.P. (the "Distributor") is the
principal underwriter and national distributor for the Series' shares, including
shares of the Class, pursuant to the Distribution Agreement between the
Distributor and the Fund on behalf

<PAGE>

of the Series ("Distribution Agreement").

The Plan provides that:

(b) In addition to the amounts described in (a) above, the Fund
shall pay (i) to the Distributor for payment to dealers or others, or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
Series' average daily net assets represented by shares of the Class, as a
service fee pursuant to dealer or servicing agreements.

(b) The monies to be paid pursuant to paragraph 1(b) above shall be
used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include confirming
that customers have received the Prospectus and Statement of Additional
Information, if applicable; assisting such customers in maintaining proper
records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.

<PAGE>

the Board may reasonably request in connection with the payments made under the
Plan and the use thereof by the Distributor and others in order to enable the
Board to make an informed determination of the amount of the Fund's payments and
whether the Plan should be continued.

4. The officers of the Fund shall furnish to the Board of Trustees of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.

6. (a) The Plan may be terminated at any time by vote of a majority of
the non-interested Trustees or by vote of a majority of the outstanding voting
securities of the Class.

(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph 1 hereof without approval by the
shareholders of the Class.

7. All material amendments to this Plan shall be approved by the
non-interested Trustees in the manner described in paragraph 5 above.

8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Trustees shall be committed to the discretion of such
non-interested Trustees.

9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
of the outstanding voting securities," respectively, for the purposes of this
Plan.

This Plan shall take effect on the Commencement Date, as previously
defined. December 18, 1997

<PAGE>

EX-99.B15C
EXHIBIT 15C

DISTRIBUTION PLAN
DELAWARE GROUP FOUNDATION FUNDS
FOUNDATION BALANCED PORTFOLIO
FOUNDATION BALANCED PORTFOLIO C CLASS

The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Group Foundation Funds (the "Fund"), for the Foundation Balanced Portfolio
series (the "Series) on behalf of the Foundation Balanced Portfolio C Class (the
"Class"), which Fund, Series and Class may do business under these or such other
names as the Board of Trustees of the Fund may designate from time to time. The
Plan has been approved by a majority of the Board of Trustees, including a
majority of the Trustees who are not interested persons of the Fund and who have
no direct or indirect financial interest in the operation of the Plan or in any
agreements related thereto ("non-interested Trustees"), cast in person at a
meeting called for the purpose of voting on such Plan. Such approval by the
Trustees included a determination that in the exercise of reasonable business
judgment and in light of their fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Series and shareholders of the Class.

The Fund is a Delaware business trust organized under the laws of the
State of Delaware, is authorized to issue different series and classes of
securities and is an open-end management investment company registered under the
Act. Delaware Management Company, Inc. serves as the Series' investment adviser
and manager pursuant to an Investment Management Agreement. Delaware Service
Company, Inc. serves as the Series' shareholder servicing, dividend disbursing
and transfer agent. Delaware Distributors, L.P. (the "Distributor") is the
principal underwriter and national distributor for the Series' shares, including
shares of the Class, pursuant to the Distribution Agreement between the
Distributor and the Fund on behalf

<PAGE>

of the Series ("Distribution Agreement").

The Plan provides that:

1.(a) The Fund shall pay to the Distributor a monthly fee not to exceed
0.75% (3/4 of 1%) per annum of the Series' average daily net assets represented
by shares of the Class as may be determined by the Fund's Board of Trustees from
time to time.

2.(a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for,
among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation related to sales and marketing personnel, and holding special
promotions. In addition, such fees may be used to pay for advancing the
commission costs to dealers with respect to the sale of Class shares.

(b) The monies to be paid pursuant to paragraph 1(b) above shall be
used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include confirming
that customers have received the Prospectus and Statement of Additional
Information, if applicable; assisting such customers in maintaining proper
records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.

<PAGE>

fees under the Plan shall furnish the Board of Trustees of the Fund with such
other information as the Board may reasonably request in connection with the
payments made under the Plan and the use thereof by the Distributor and others
in order to enable the Board to make an informed determination of the amount of
the Fund's payments and whether the Plan should be continued.

4. The officers of the Fund shall furnish to the Board of Trustees of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.

6.(a) The Plan may be terminated at any time by vote of a majority of
the non-interested Trustees or by vote of a majority of the outstanding voting
securities of the Class.

(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph 1 hereof without approval by the
shareholders of the Class.

7. All material amendments to this Plan shall be approved by the
non-interested Trustees in the manner described in paragraph 5 above.

8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Trustees shall be committed to the discretion of such
non-interested Trustees.

9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
of the outstanding voting securities," respectively, for the purposes of this
Plan.

This Plan shall take effect on the Commencement Date, as previously
defined.

December 18, 1997

<PAGE>

DISTRIBUTION PLAN
DELAWARE GROUP FOUNDATION FUNDS
FOUNDATION GROWTH PORTFOLIO
FOUNDATION GROWTH PORTFOLIO A CLASS

<PAGE>

The Plan provides that:

l. The Fund shall pay to the Distributor a monthly fee not to
exceed 0.30% (3/10 of l%) per annum of the Series' average daily net assets
represented by shares of the Class (the "Maximum Amount") as may be determined
by the Fund's Board of Trustees from time to time. Such monthly fee shall be
reduced by the aggregate sums paid by the Fund on behalf of the Series to
persons other than broker- dealers (the "Service Providers") who may, pursuant
to servicing agreements, provide to the Series services in the Series' marketing
of shares of the Class.
2. (a) The Distributor shall use the monies paid to it
pursuant to paragraph l above to furnish, or cause or encourage others to
furnish, services and incentives in connection with the promotion, offering and
sale of Class shares and, where suitable and appropriate, the retention of Class
shares by shareholders.
(b) The Service Providers shall use the monies paid
respectively to them to reimburse themselves for the actual costs they have
incurred in confirming that their customers have received the Prospectus and
Statement of Additional Information, if applicable, and as a fee for (l)
assisting such customers in maintaining proper records with the Fund, (2)
answering questions relating to their respective accounts, and (3) aiding in
maintaining the investment of their respective customers in the Class.
3. The Distributor shall report to the Fund at least monthly
on the amount and the use of the monies paid to it under the Plan. The Service
Providers shall inform the Fund monthly and in writing of the amounts each
claims under the Plan; both the Distributor and the Service Providers shall
furnish the Board of Trustees of the Fund with such other information as the
Board may reasonably request in connection with the payments made under the Plan
and the use thereof by the Distributor and the Service Providers, respectively,
in order to enable the Board to make an informed determination of the amount of
the Fund's payments and whether the Plan should be continued.
4. The officers of the Fund shall furnish to the Board of
Trustees of the Fund, for their review, on a quarterly basis, a written report
of the amounts expended under the Plan and the purposes for which such
expenditures were made.

<PAGE>
5. This Plan shall take effect at such time as the Distributor
shall notify the Fund in writing of the commencement of the Plan (the
"Commencement Date"); thereafter, the Plan shall continue in effect for a period
of more than one year from the Commencement Date only so long as such
continuance is specifically approved at least annually by a vote of the Board of
Trustees of the Fund, and of the non-interested Trustees, cast in person at a
meeting called for the purpose of voting on such Plan.
6. (a) The Plan may be terminated at any time by vote of a
majority of the non-interested Trustees or by vote of a majority of the
outstanding voting securities of the Class. (b) The Plan may not be amended to
increase materially the amount to be spent for distribution pursuant to
paragraph l hereof without approval by the shareholders of the Class.
7. All material amendments to this Plan shall be approved by
the non-interested Trustees in the manner described in paragraph 5 above.
8. So long as the Plan is in effect, the selection and
nomination of the Fund's non-interested Trustees shall be committed to the
discretion of such non-interested Trustees.
9. The definitions contained in Sections 2(a)(19) and 2(a)(42)
of the Act shall govern the meaning of "interested person(s)" and "vote of a
majority of the outstanding voting securities," respectively, for the purposes
of this Plan.
This Plan shall take effect on the Commencement Date, as
previously defined.

December 18, 1997

<PAGE>

EX-99.B15E
EXHIBIT 15E

DISTRIBUTION PLAN
DELAWARE GROUP FOUNDATION FUNDS
FOUNDATION GROWTH PORTFOLIO
FOUNDATION GROWTH PORTFOLIO B CLASS

The following Distribution Plan (the "Plan") has been adopted
pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by
Delaware Group Foundation Funds(the "Fund"), for the Foundation Growth Portfolio
series (the "Series") on behalf of the Foundation Growth Portfolio B Class (the
"Class"), which Fund, Series and Class may do business under these or such other
names as the Board of Trustees of the Fund may designate from time to time. The
Plan has been approved by a majority of the Board of Trustees, including a
majority of the Trustees who are not interested persons of the Fund and who have
no direct or indirect financial interest in the operation of the Plan or in any
agreements related thereto ("non-interested Trustees"), cast in person at a
meeting called for the purpose of voting on such Plan. Such approval by the
Trustees included a determination that in the exercise of reasonable business
judgment and in light of their fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Series and shareholders of the Class.

The Plan provides that:

<PAGE>
1. (a) The Fund shall pay to the Distributor a monthly fee not
to exceed 0.75% (3/4 of 1%) per annum of the Series' average daily net assets
represented by shares of the Class as may be determined by the Fund's Board of
Trustees from time to time.

2. (a) The Distributor shall use the monies paid to it
pursuant to paragraph 1(a) above to assist in the distribution and promotion of
shares of the Class. Payments made to the Distributor under the Plan may be used
for, among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation related to sales and marketing personnel, and holding special
promotions. In addition, such fees may be used to pay for advancing the
commission costs to dealers with respect to the sale of Class shares.

3. The Distributor shall report to the Fund at least monthly
on the amount and the use of the monies paid to it under paragraph 1(a) above.
In addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
any others receiving fees under the Plan shall furnish the Board of Trustees of
the Fund with such other information as the Board may reasonably request in
connection with the payments made under the Plan and the use thereof by the
Distributor and others in order to enable the Board to make an informed
determination of the amount of the Fund's payments and whether the Plan should
be continued.

<PAGE>

5. This Plan shall take effect at such time as the Distributor
shall notify the Fund of the commencement of the Plan (the "Commencement Date");
thereafter, the Plan shall continue in effect for a period of more than one year
from the Commencement Date only so long as such continuance is specifically
approved at least annually by a vote of the Board of Trustees of the Fund, and
of the non-interested Trustees, cast in person at a meeting called for the
purpose of voting on such Plan.

6. (a) The Plan may be terminated at any time by vote of a
majority of the non-interested Trustees or by vote of a majority of the
outstanding voting securities of the Class. (b) The Plan may not be amended to
increase materially the amount to be spent for distribution pursuant to
paragraph 1 hereof without approval by the shareholders of the Class.

7. All material amendments to this Plan shall be approved by
the non-interested Trustees in the manner described in paragraph 5 above.

8. So long as the Plan is in effect, the selection and
nomination of the Fund's non-interested Trustees shall be committed to the
discretion of such non-interested Trustees.

This Plan shall take effect on the Commencement Date, as
previously defined.

December 18, 1997

<PAGE>

EX-99.B15F
EXHIBIT 15F

DISTRIBUTION PLAN

DELAWARE GROUP FOUNDATION FUNDS

FOUNDATION GROWTH PORTFOLIO

FOUNDATION GROWTH PORTFOLIO C CLASS

The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Group Foundation Funds (the "Fund"), for the Foundation Growth Portfolio series
(the "Series) on behalf of the Foundation Growth Portfolio C Class (the
"Class"), which Fund, Series and Class may do business under these or such other
names as the Board of Trustees of the Fund may designate from time to time. The
Plan has been approved by a majority of the Board of Trustees, including a
majority of the Trustees who are not interested persons of the Fund and who have
no direct or indirect financial interest in the operation of the Plan or in any
agreements related thereto ("non-interested Trustees"), cast in person at a
meeting called for the purpose of voting on such Plan. Such approval by the
Trustees included a determination that in the exercise of reasonable business
judgment and in light of their fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Series and shareholders of the Class.

<PAGE>

The Plan provides that:

1.(a) The Fund shall pay to the Distributor a monthly fee not to exceed
0.75% (3/4 of 1%) per annum of the Series' average daily net assets represented
by shares of the Class as may be determined by the Fund's Board of Trustees from
time to time.

2.(a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for,
among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation related to sales and marketing personnel, and holding special
promotions. In addition, such fees may be used to pay for advancing the
commission costs to dealers with respect to the sale of Class shares.

(b) The monies to be paid pursuant to paragraph 1(b) above shall be
used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include confirming
that customers have received the Prospectus and Statement of Additional
Information, if applicable; assisting such customers in maintaining proper
records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.

3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under paragraph 1(a) above. In
addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
any others receiving fees under the Plan shall furnish the Board of Trustees of
the Fund with such other information as the Board may reasonably request in
connection with the payments made under the Plan and the use thereof by the

<PAGE>

Distributor and others in order to enable the Board to make an informed
determination of the amount of the Fund's payments and whether the Plan should
be continued.

4. The officers of the Fund shall furnish to the Board of Trustees of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.

6.(a) The Plan may be terminated at any time by vote of a majority of
the non-interested Trustees or by vote of a majority of the outstanding voting
securities of the Class.
(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph 1 hereof without approval by the
shareholders of the Class.

7. All material amendments to this Plan shall be approved by the
non-interested Trustees in the manner described in paragraph 5 above.

8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Trustees shall be committed to the discretion of such
non-interested Trustees.

9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
of the outstanding voting securities," respectively, for the purposes of this
Plan.

This Plan shall take effect on the Commencement Date, as previously
defined.

December 18, 1997

<PAGE>

EX-99.B15G
EXHIBIT 15G

DISTRIBUTION PLAN

DELAWARE GROUP FOUNDATION FUNDS

FOUNDATION INCOME PORTFOLIO

FOUNDATION INCOME PORTFOLIO A CLASS

<PAGE>

The Plan provides that:

<PAGE>

5. This Plan shall take effect at such time as the Distributor
shall notify the Fund in writing of the commencement of the Plan (the
"Commencement Date"); thereafter, the Plan shall continue in effect for a period
of more than one year from the Commencement Date only so long as such
continuance is specifically approved at least annually by a vote of the Board of
Trustees of the Fund, and of the non- interested Trustees, cast in person at a
meeting called for the purpose of voting on such Plan.

6. (a) The Plan may be terminated at any time by vote of a
majority of the non-interested Trustees or by vote of a majority of the
outstanding voting securities of the Class.

(b) The Plan may not be amended to increase materially the
amount to be spent for distribution pursuant to paragraph l hereof without
approval by the shareholders of the Class.

7. All material amendments to this Plan shall be approved by
the non-interested Trustees in the manner described in paragraph 5 above.

8. So long as the Plan is in effect, the selection and
nomination of the Fund's non-interested Trustees shall be committed to the
discretion of such non-interested Trustees.

This Plan shall take effect on the Commencement Date, as
previously defined.

December 18, 1997

<PAGE>

EX-99.B15H
EXHIBIT 15H

DISTRIBUTION PLAN

DELAWARE GROUP FOUNDATION FUNDS

FOUNDATION INCOME PORTFOLIO

FOUNDATION INCOME PORTFOLIO B CLASS

The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Group Foundation Funds (the "Fund"), for the Foundation Income Portfolio series
(the "Series") on behalf of the Foundation Income Portfolio B Class (the
"Class"), which Fund, Series and Class may do business under these or such other
names as the Board of Trustees of the Fund may designate from time to time. The
Plan has been approved by a majority of the Board of Trustees, including a
majority of the Trustees who are not interested persons of the Fund and who have
no direct or indirect financial interest in the operation of the Plan or in any
agreements related thereto ("non-interested Trustees"), cast in person at a
meeting called for the purpose of voting on such Plan. Such approval by the
Trustees included a determination that in the exercise of reasonable business
judgment and in light of their fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Series and shareholders of the Class.

The Fund is a Delaware business trust organized under the laws of the
State of Delaware, is authorized to issue different series and classes of
securities and is an open-end management investment company registered under the
Act. Delaware Management Company, Inc. serves as the Series' investment adviser
and manager pursuant to an Investment Management Agreement. Delaware Service
Company, Inc. serves as the Series' shareholder servicing, dividend disbursing
and transfer agent. Delaware Distributors, L.P. (the "Distributor") is the
principal underwriter and national distributor for the Series' shares, including
shares of the Class, pursuant to the Distribution Agreement between the
Distributor and the Fund on behalf of the Series ("Distribution Agreement").

<PAGE>

The Plan provides that:

3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under paragraph 1(a) above. In
addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
any others receiving fees under the Plan shall furnish the Board of Trustees of
the Fund with such other information as the Board may reasonably request in
connection with the payments made under the Plan and the use thereof

<PAGE>

by the Distributor and others in order to enable the Board to make an informed
determination of the amount of the Fund's payments and whether the Plan should
be continued.

4. The officers of the Fund shall furnish to the Board of Trustees of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.

6. (a) The Plan may be terminated at any time by vote of a majority of
the non-interested Trustees or by vote of a majority of the outstanding voting
securities of the Class.

(b) The Plan may not be amended to increase materially the
amount to be spent for distribution pursuant to paragraph 1 hereof without
approval by the shareholders of the Class.

7. All material amendments to this Plan shall be approved by the
non-interested Trustees in the manner described in paragraph 5 above.

8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Trustees shall be committed to the discretion of such
non-interested Trustees.

9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
of the outstanding voting securities," respectively, for the purposes of this
Plan.

This Plan shall take effect on the Commencement Date, as previously
defined. December 18, 1997

<PAGE>
EX-99.B15I
EXHIBIT 15I

DISTRIBUTION PLAN

DELAWARE GROUP FOUNDATION FUNDS

FOUNDATION INCOME PORTFOLIO

FOUNDATION INCOME PORTFOLIO C CLASS

The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Group Foundation Funds (the "Fund"), for the Foundation Income Portfolio series
(the "Series) on behalf of the Foundation Income Portfolio C Class (the
"Class"), which Fund, Series and Class may do business under these or such other
names as the Board of Trustees of the Fund may designate from time to time. The
Plan has been approved by a majority of the Board of Trustees, including a
majority of the Trustees who are not interested persons of the Fund and who have
no direct or indirect financial interest in the operation of the Plan or in any
agreements related thereto ("non-interested Trustees"), cast in person at a
meeting called for the purpose of voting on such Plan. Such approval by the
Trustees included a determination that in the exercise of reasonable business
judgment and in light of their fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Series and shareholders of the Class.

The Fund is a Delaware business trust organized under the laws of the
State of Delaware, is authorized to issue different series and classes of
securities and is an open-end management investment company registered under the
Act. Delaware Management Company, Inc. serves as the Series' investment adviser
and manager pursuant to an Investment Management Agreement. Delaware Service
Company, Inc. serves as the Series' shareholder servicing, dividend disbursing
and transfer agent. Delaware Distributors, L.P. (the "Distributor") is the
principal underwriter and national distributor for the Series' shares, including
shares of the Class, pursuant to the Distribution Agreement between the
Distributor and the Fund on behalf

<PAGE>

of the Series ("Distribution Agreement").

The Plan provides that:

1.(a) The Fund shall pay to the Distributor a monthly fee not to exceed
0.75% (3/4 of 1%) per annum of the Series' average daily net assets represented
by shares of the Class as may be determined by the Fund's Board of Trustees from
time to time.

2.(a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for,
among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation related to sales and marketing personnel, and holding special
promotions. In addition, such fees may be used to pay for advancing the
commission costs to dealers with respect to the sale of Class shares.

(b) The monies to be paid pursuant to paragraph 1(b) above shall be
used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include confirming
that customers have received the Prospectus and Statement of Additional
Information, if applicable; assisting such customers in maintaining proper
records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.

<PAGE>

4. The officers of the Fund shall furnish to the Board of Trustees of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.

6.(a) The Plan may be terminated at any time by vote of a majority of
the non-interested Trustees or by vote of a majority of the outstanding voting
securities of the Class.

(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph 1 hereof without approval by the
shareholders of the Class.

7. All material amendments to this Plan shall be approved by the
non-interested Trustees in the manner described in paragraph 5 above.

8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Trustees shall be committed to the discretion of such
non-interested Trustees.

9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
of the outstanding voting securities," respectively, for the purposes of this
Plan.

This Plan shall take effect on the Commencement Date, as previously
defined.

December 18, 1997

<PAGE>

EX-99.B18A
EXHIBIT 18A

APPENDIX A

(As revised December 18, 1997)

List of Funds and Their Classes

1. Delaware Group Equity Funds I, Inc.

Delaware Fund

Delaware Fund A Class
Delaware Fund B Class
Delaware Fund C Class
Delaware Fund Institutional Class

Devon Fund

Devon Fund A Class
Devon Fund B Class
Devon Fund C Class
Devon Fund Institutional Class

2. Delaware Group Equity Funds II, Inc.

Decatur Income Fund

Decatur Income Fund A Class
Decatur Income Fund B Class
Decatur Income Fund C Class
Decatur Income Fund Institutional Class

Decatur Total Return Fund

Decatur Total Return Fund A Class
Decatur Total Return Fund B Class
Decatur Total Return Fund C Class
Decatur Total Return Fund Institutional Class

Blue Chip Fund (Added February 24, 1997)

Blue Chip Fund A Class
Blue Chip Fund B Class
Blue Chip Fund C Class
Blue Chip Fund Institutional Class

Quantum Fund (Added February 24, 1997)

Quantum Fund A Class

<PAGE>

Quantum Fund B Class
Quantum Fund C Class
Quantum Fund Institutional Class

3. Delaware Group Equity Funds III, Inc. (Formerly Trend)

Trend Fund

Trend Fund A Class
Trend Fund B Class
Trend Fund C Class
Trend Fund Institutional Class

4. Delaware Group Equity Funds IV, Inc.

DelCap Fund

DelCap Fund A Class
DelCap Fund B Class
DelCap Fund C Class
DelCap Fund Institutional Class

Capital Appreciation Fund (Added November 29, 1996)

Capital Appreciation Fund A Class
Capital Appreciation Fund B Class
Capital Appreciation Fund C Class
Capital Appreciation Fund Institutional Class

5. Delaware Group Equity Funds V, Inc. (Formerly Value)

Small Cap Value Fund (Formerly Value Fund)

Small Cap Value Fund A Class
Small Cap Value Fund B Class
Small Cap Value Fund C Class
Small Cap Value Fund Institutional Class

Retirement Income Fund (Added November 29, 1996)

Retirement Income Fund A Class
Retirement Income Fund B Class
Retirement Income Fund C Class
Retirement Income Fund Institutional Class

<PAGE>

6. Delaware Group Global & International Funds, Inc.

International Equity Series

International Equity Fund A Class
International Equity Fund B Class
International Equity Fund C Class
International Equity Fund Institutional Class

Global Bond Series

Global Bond Fund A Class
Global Bond Fund B Class
Global Bond Fund C Class
Global Bond Fund Institutional Class

Global Assets Series

Global Assets Fund A Class
Global Assets Fund B Class
Global Assets Fund C Class
Global Assets Fund Institutional Class

Emerging Markets Series (Added May 1, 1996)

Emerging Markets Fund A Class
Emerging Markets Fund B Class
Emerging Markets Fund C Class
Emerging Markets Fund Institutional Class

7. Delaware Group Income Funds, Inc.

Strategic Income Fund (Added September 30, 1996)

Strategic Income Fund A Class
Strategic Income Fund B Class
Strategic Income Fund C Class
Strategic Income Fund Institutional Class

8. Delaware Pooled Trust, Inc.

The Real Estate Investment Trust Portfolio (added
October 14, 1997)

REIT Fund A Class
REIT Fund B Class
REIT Fund C Class
REIT Fund Institutional Class

<PAGE>

9. Delaware Group Foundation Funds (December 18, 1997)

Income Portfolio

Income Fund A Class
Income Fund B Class
Income Fund C Class
Income Fund Institutional Class

Balanced Portfolio

Balanced Fund A Class
Balanced Fund B Class
Balanced Fund C Class
Balanced Fund Institutional Class

Growth Portfolio

Growth Fund A Class
Growth Fund B Class
Growth Fund C Class
Growth Fund Institutional Class

<PAGE>
EX-99.B19
EXHIBIT 19

POWER OF ATTORNEY

Each of the undersigned, a member of the Boards of Directors/Trustees
of the Delaware Group Funds listed on Exhibit A to this Power of Attorney,
hereby constitutes and appoints on behalf of each of the Funds listed on
Exhibit A, Wayne A. Stork, Jeffrey J. Nick and Walter P. Babich and any one
of them acting singly, his true and lawful attorneys-in-fact, in his name,
place, and stead, to execute and cause to be filed with the Securities and
Exchange Commission and other federal or state government agency or body,
such registration statements, and any and all amendments thereto as either
of such designees may deem to be appropriate under the Securities Act of
1933, as amended, the Investment Company Act of 1940, as amended, and all
other applicable federal and state securities laws.

IN WITNESS WHEREOF, the undersigned have executed this instrument as
of this 18th day of December, 1997.

/s/ Walter P. Babich /s/ Thomas F. Madison
- ------------------------------------ -------------------------------------
Walter P. Babich Thomas F. Madison

/s/ Anthony D. Knerr /s/ Jeffrey J. Nick
- ------------------------------------ -------------------------------------
Anthony D. Knerr Jeffrey J. Nick

/s/ Ann R. Leven /s/ Charles E. Peck
- ------------------------------------ -------------------------------------
Ann R. Leven Charles E. Peck

/s/ W. Thacher Longstreth /s/ Wayne A. Stork
- ------------------------------------ -------------------------------------
W. Thacher Longstreth Wayne A. Stork

<PAGE>

POWER OF ATTORNEY

EXHIBIT A
DELAWARE GROUP FUNDS

DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE GROUP EQUITY FUNDS II, INC.
DELAWARE GROUP EQUITY FUNDS III, INC.
DELAWARE GROUP EQUITY FUNDS IV, INC.
DELAWARE GROUP EQUITY FUNDS V, INC.
DELAWARE GROUP INCOME FUNDS, INC.
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP LIMITED-TERM GOVERNMENT FUNDS, INC.
DELAWARE GROUP TAX-FREE FUND, INC.
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
DELAWARE GROUP ADVISER FUNDS, INC.
DELAWARE POOLED TRUST, INC.
DELAWARE GROUP PREMIUM FUND, INC.
DELAWARE GROUP STATE TAX-FREE INCOME TRUST
DELAWARE GROUP DIVIDEND AND INCOME FUND, INC.
DELAWARE GROUP GLOBAL DIVIDEND AND INCOME FUND, INC.
DELAWARE GROUP FOUNDATION FUNDS
VOYAGEUR FUNDS, INC.
VOYAGEUR INSURED FUNDS, INC.
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
VOYAGEUR INVESTMENT TRUST
VOYAGEUR INVESTMENT TRUST II
VOYAGEUR MUTUAL FUNDS, INC.
VOYAGEUR MUTUAL FUNDS II, INC.
VOYAGEUR MUTUAL FUNDS III, INC.
VOYAGEUR TAX FREE FUNDS, INC.
VOYAGEUR ARIZONA MUNICIPAL INCOME FUND, INC.
VOYAGEUR COLORADO INSURED MUNICIPAL INCOME FUND, INC.
VOYAGEUR FLORIDA INSURED MUNICIPAL INCOME FUND
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND, INC.
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND II, INC.
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND III, INC.