DELAWARE GROUP FOUNDATION FUNDS, 497, 1998-01-26

DELAWARE GROUP FOUNDATION FUNDS
497, 1998-01-26

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<PAGE>

DELAWARE
GROUP
-----

A CLASS

B CLASS

C CLASS

DELAWARE GROUP
INCOME PORTFOLIO
BALANCED PORTFOLIO
GROWTH PORTFOLIO

PROSPECTUS DECEMBER 31, 1997

(as revised January 23, 1998)

(picture of Wall Street)

<PAGE>

Table of
Contents

COVER PAGE................................................................. 1
SYNOPSIS................................................................... 2
SUMMARY OF EXPENSES........................................................ 4
FINANCIAL HIGHLIGHTS....................................................... 6

INVESTMENT OBJECTIVES
AND POLICIES.............................................................. 7
SUITABILITY............................................................... 7
INVESTMENT STRATEGY....................................................... 7

INVESTMENTS OF THE
UNDERLYING FUNDS......................................................... 10

THE DELAWARE DIFFERENCE
PLANS AND SERVICES...................................................... 23
CLASSES OF SHARES......................................................... 25
HOW TO BUY SHARES......................................................... 31
REDEMPTION AND EXCHANGE................................................... 34
DIVIDENDS AND DISTRIBUTIONS............................................... 39
TAXES..................................................................... 40

CALCULATION OF OFFERING PRICE AND NET ASSET VALUE PER SHARE.............. 42
MANAGEMENT OF THE PORTFOLIOS.............................................. 43

OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS........................ 46

APPENDIX A--RATINGS....................................................... 60
<PAGE>

Income, Balanced And Growth Portfolios
A Class/B Class/C Class
December 31, 1997
(as revised January 23, 1998)

1818 Market Street, Philadelphia, PA 19103

For Prospectus and Performance:
Nationwide 800-523-4640

Information on Existing Accounts:
(SHAREHOLDERS ONLY)
Nationwide 800-523-1918

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

Representatives of Financial Institutions:
Nationwide 800-659-2265

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.

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 January 23, 1998, 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.

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.

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.

1
<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 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 Transfer Agent
Delaware Management Company, Inc. (the "Manager") furnishes investment
management services to each Portfolio, subject to the supervision and direction
of the Trust'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.

2
<PAGE>

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.
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.

3
<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
- --------------------------------------------- ----------- ------------ ------------
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Pur-
chases (as a percentage of
offering price) ........................... 4.75% None None
Maximum Sales Charge Imposed on Rein-
vested Dividends (as a percentage of
offering price) ........................... None None None
Maximum Contingent Deferred Sales
Charge (as a percentage of original pur-
chase price or redemption
proceeds, as applicable) .................. None* 4.00%* 1.00%*
Redemption Fees ............................. None** None** None**

</TABLE>

<TABLE>
<CAPTION>
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 .... 0.45% 0.45% 0.45%
---- ---- ----
Total Operating Expenses (after waivers and
payments ................................ 0.80% 1.55% 1.55%
==== ==== ====
</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"). Additional Class A purchase options involving the
imposition of a CDSC may be permitted as described in the Prospectus from
time to time. 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.
<PAGE>

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 0.55%
(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 A 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.

4
<PAGE>

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:

<TABLE>
<CAPTION>
Underlying Fund Adviser Sub-Adviser** Fee Rate Expense Ratio
- ----------------------------------- ------------------------- ------------------- ------------ --------------
<S> <C> <C> <C> <C>
Agressive 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 1.00%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% 1.25%7
New Pacific Manager AIB Govett 0.80% 1.50%
Delchester Manager 0.59%4 0.79%
High-Yield Opportunities Manager 0.65%5 0.95%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.
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 High-Yield Opportunities 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.

5
<PAGE>

Aggregate average total expenses of the Underlying Funds are estimated to
be 0.90% for the Income Portfolio, 1.09% for the Balanced Portfolio, and 1.16%
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.

INCOME PORTFOLIO
BALANCED PORTFOLIO
GROWTH PORTFOLIO
- -----------------------

Assuming No
Assuming Redemption Redemption
1 Year 3 Years 1 Year 3 Years
-------- --------- -------- --------
Class A Shares1 $55 $72 $55 $72
Class B Shares2 $56 $79 $16 $49
Class C Shares $26 $49 $16 $49

1 Generally, no redemption charge is assessed upon redemption of Class A
Shares. Under certain circumstances, however, a Limited CDSC, or other 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.

Financial
Highlights

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

6
<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)
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 Mutual Funds
(individually, an "Underlying Fund" and collectively, the "Underlying Funds"),
as well as 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).

7
<PAGE>
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 FUNDS
U.S. Equity International Equity
Aggressive Growth Fund Emerging Markets Fund
Blue Chip Fund International Equity Fund
Decatur Total Return Fund International Small
DelCap Fund Cap Fund
Devon Fund New Pacific Fund
Small Cap Value Fund
The Real Estate Investment Fixed Income
Trust Portfolio Delchester Fund
Trend Fund Global Bond Fund
U.S. Growth Fund Limited-Term Government
Fund
U.S. Government Fund
High-Yield Opportunities
Fund
Money Market
Delaware Cash Reserve

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

Income Balanced Growth
Asset Class Portfolio Portfolio Portfolio
- -------------------------- ----------- ----------- ----------
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%

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

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, 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.

8
<PAGE>
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 decreases. 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, 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).
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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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.
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.

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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.

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.

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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.
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.

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.
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.

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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 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.

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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.
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 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.
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, 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.

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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
Markets 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, Colombia, Czech Republic, Egypt, Greece, Hong
Kong, Hungary, India, Indonesia, Israel, Jamaica, Jordan, Kenya, Korea,
Malaysia, Mexico, Nigeria, 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 Fund 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.

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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 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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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 Small to Medium-Sized Companies under Other Investment
Policies and Risk Considerations.

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 under Other Investment Policies and Risk
Considerations and Risk Factors under Investment Objectives and Policies.

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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.

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
(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.

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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 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.

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 its investment objective.

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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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.
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.
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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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 15 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; 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).
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
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.

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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 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.
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.

22
<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.

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.

23
<PAGE>
MoneyLineSM 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. MoneyLineSM 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 MoneyLineSM 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. MoneyLineSM On Demand
You or your investment dealer may request purchases and redemptions of
Portfolio shares by using MoneyLineSM 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 MoneyLineSM On Demand transactions. This service is not
available for retirement plans, except for purchases of shares by IRAs.
For each MoneyLineSM 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 MoneyLineSM 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 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.

24
<PAGE>
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 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 duration of the
annual 12b-1 Plan expenses to which each of the Classes is subject and the
desirability of an automatic conversion feature, which is available only for
Class B Shares.

25
<PAGE>

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.

<TABLE>
<CAPTION>
Class A Shares
- -------------------------------------------------------------------------------------------------------
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>
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.

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
--------------------
Amount of Purchase (as a percentage of
- ---------------------------------- 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

26
<PAGE>

For accounts with assets over $1 million, the dealer commission resets
annually to the highest incremental commission rate on the anniversary of the
first purchase. 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.

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.

27
<PAGE>
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
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 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.

28
<PAGE>
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.

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 lastbusiness 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.
Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to the
Distributor and others for providing distribution and related services, and
bearing related expenses, in connection with the sale of Class C Shares. These
payments support the compensation paid to dealers or brokers for selling Class
C Shares. Payments to the Distributor and others under the Class C 12b-1 Plan
may be in an amount equal to no more than 1% annually.
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.

29
<PAGE>

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

Subject to pending amendments to the NASD's Conduct Rules, 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 Conduct Rules 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 Conduct Rules 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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<PAGE>
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.

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.

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<PAGE>
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.

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. MoneyLineSM On Demand
Through the MoneyLineSM 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 MoneyLineSM 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.
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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<PAGE>
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 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 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 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.
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.

33
<PAGE>
Redemption
And
Exchange

You can redeem or exchange your shares in a number of different ways. The
exchange service is useful if your investment requirements change and you want
an easy way to invest in 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.
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.
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.
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.

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<PAGE>
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.

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.

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<PAGE>
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.

MoneyLineSM On Demand
Through the MoneyLineSM 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 MoneyLineSM 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 MoneyLineSM
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 MoneyLineSM 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 MoneyLineSM 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.

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<PAGE>

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
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 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).

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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 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 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 MoneyLineSM
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 MoneyLineSM 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 intends 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 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.

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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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<PAGE>

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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<PAGE>

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, 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.
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.

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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 and,
if applicable, yield 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.

The current yield for a Class will be calculated by dividing the
annualized net investment income earned by that Class during a recent 30-day
period by the maximum offering price per share on the last day of the period.
The yield formula provides for semi-annual compounding, which assumes that net
investment income is earned and reinvested at a constant rate and annualized at
the end of a six-month period.

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.
<PAGE>

These expenses include, among other things, preparing and distributing
advertisements, sales literature, and prospectuses and reports used for sales
purposes, compensating sales and marketing personnel, holding special
promotions for specified periods of time, and paying distribution and
maintenance fees to brokers, dealers and others. In connection with the
promotion of 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.

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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.

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 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, 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, Emerging Markets
and International Small Cap 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. Such Underlying Fund's privately
placed high-yield securities are particularly susceptible to the liquidity and
valuation risks outlined above.

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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).
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).
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.

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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 S&P or Baa or better by 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.
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.

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.

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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.

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.

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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.

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.
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.

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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.
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.

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.

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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 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.

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.
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.

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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."

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.
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.

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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.
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.
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.

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<PAGE>
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 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.

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.

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<PAGE>
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.

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.

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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.

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. The International Small Cap Fund
may invest in smaller capitalization 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.

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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 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.

While The Real Estate Investment Trust Portfolio and 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.

58
<PAGE>
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.

All references made to directly investing in the same securities and
employing the same strategies of any of the Underlying Funds are subject to the
granting of an exemptive order by the SEC. If and when the order is granted,
the Portfolios may, consistent with their respective investment objectives,
invest in the same securities and employ the same investment strategies as any
of the Underlying Funds.

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.

59
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Appendix A --
Ratings

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 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.

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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.

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.

61
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The Delaware Group includes funds
with a wide range of investment objectives.
Stock funds, income funds, national and
state specific tax-exempt 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 information,
contact your financial adviser or call
Delaware Group at 800-523-4640.

Investment Manager
Delaware Management Company, Inc.
One Commerce Square
Philadelphia, PA 19103

National Distributor
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103

Shareholder Servicing,
Dividend Disbursing,
Accounting Services
and Transfer Agent
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103

Legal Counsel
Stradley, Ronon, Stevens & Young, LLP
One Commerce Square
Philadelphia, PA 19103

Independent Auditors
Ernst & Young LLP
Two Commerce Square
Philadelphia, PA 19103

Custodian
The Chase Manhattan Bank
4 Chase Metrotech Center
Brooklyn, NY 11245
[GRAPHIC OMITTED]

DELAWARE
GROUP
- --------------
Philadelphia o London

<PAGE>

INCOME PORTFOLIO
BALANCED PORTFOLIO
GROWTH PORTFOLIO PROSPECTUS
INSTITUTIONAL CLASS DECEMBER 31, 1997
(as revised January 23, 1998)
-------------------------------------------------------------
1818 Market Street, Philadelphia, PA 19103

For more information about the Institutional Classes
call Delaware Group at 800-828-5052

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, 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 January 23,
1998, 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 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. 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.

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.

TABLE OF CONTENTS

Cover Page ........................ 1 How to Buy Shares ............. 25
Synopsis .......................... 2 Redemption and Exchange ....... 26
Summary of Expenses ............... 3 Dividends and Distributions ... 27
Financial Highlights .............. 5 Taxes ......................... 28
Investment Objectives and Policies 5 Calculation of Net Asset
Suitability ...................... 5 Value Per Share .............. 29
Investment Strategy .............. 6 Management of the Portfolios .. 29
Investments of the Underlying Funds 8 Other Investment Policies and
Classes of Shares ................. 24 Risk Considerations .......... 31
Appendix A -- Ratings ......... 46

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.
- ------------------------------------------------------------------------------
1
<PAGE>
SYNOPSIS
Investment Objective
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.

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.

2
<PAGE>
SUMMARY OF EXPENSES
A general comparison of the sales arrangements and other expenses
applicable to Class follows:

<TABLE>
<CAPTION>
Income Portfolio
Balance Portfolio Annual Operating Expenses
Shareholder Transaction Expenses Growth Portfolio (as a percentage of average
- ---------------------------------------------------- ------------------ --------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases Management Fees (after waivers) ........... 0.10%(2)
(as a percentage of offering price) .............. None 12b-1 Expenses ............................ None
Maximum Sales Charge Imposed on Reinvested Dividends Other Operating Expenses .................. 0.45%(3)
(as a percentage of offering price) .............. None ------
Exchange Fees ...................................... None(1) Total Operating Expenses (after waivers) .. 0.55%
====
</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 management fees ("Asset Allocation Fees") payable by the Portfolios and
to pay the Portfolios to the extent necessary to ensure that the "Total
Operating Expenses" of the Portfolios do not exceed 0.55% (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 payments 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 and "Other Operating Expenses" of 1.42%.
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.

<TABLE>
<CAPTION>
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) 1.00%(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% 1.25%(7)
New Pacific Manager AIB Govett 0.80% 1.50%
Delchester Manager 0.59%(4) 0.79%
High-Yield Opportunities Manager 0.65%(5) 0.95%(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>

3
<PAGE>

*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.
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 High-Yield Opportunities 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.

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 Shares ......... $6 $18

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.
4
<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.

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.

5
<PAGE>
Growth Portfolio (Earlier Wealth Accumulation Phase - Higher Risk Tolerance)
May be appropriate for the investor looking for long term capital growth
with no need for current income.

Investment Strategy

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 FUNDS

U.S. Equity
Aggressive Growth Fund
Blue Chip Fund
Decatur Total Return Fund
DelCap Fund
Devon Fund
Small Cap Value Fund
The Real Estate Investment Trust Portfolio
Trend Fund
U.S. Growth Fund

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

Fixed Income
Delchester Fund
Global Bond Fund
Limited-Term Government Fund
U.S. Government Fund
High-Yield Opportunities Fund

Money Market
Delaware Cash Reserve

<PAGE>
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

Income Balanced Growth
Asset Class Portfolio Portfolio Portfolio
- ---------------------- ----------- ----------- ----------
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%

Direct Investment in Securities and Other Investment Strategies

Risk Factors

<PAGE>
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).
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.

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.
8

<PAGE>
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.
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.

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.

<PAGE>
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.
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.
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.

<PAGE>
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.

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.
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>
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.

<PAGE>
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.

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.

<PAGE>
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.
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, 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
Markets 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.

<PAGE>
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, Colombia, Czech Republic, Egypt, Greece, Hong
Kong, Hungary, India, Indonesia, Israel, Jamaica, Jordan, Kenya, Korea,
Malaysia, Mexico, Nigeria, 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.

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 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>
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.

<PAGE>
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.

<PAGE>
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 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.
18

<PAGE>
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 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.
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 its investment objective.

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.

<PAGE>
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.
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.
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.

<PAGE>

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 15 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).
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
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).

<PAGE>
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 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.

<PAGE>
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.

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.

<PAGE>

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.

<PAGE>

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.
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.

<PAGE>

REDEMPTION AND EXCHANGE

Redemption and exchange requests made on behalf of participants in an
employer-sponsored retirement plan are made in accordance with directions
provided by the employer. Employees should therefore contact their employer for
details.
Your shares will be redeemed or exchanged 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.
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.
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.
All authorizations given by shareholders, including selection of any of
the features described below, shall continue in effect until such time as a
written revocation or modification has been received by the a Portfolio or its
agent.

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.

<PAGE>

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 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.

DIVIDENDS AND
DISTRIBUTIONS

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

<PAGE>
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 intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code (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 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.

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.
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.
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.

<PAGE>

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.

CALCULATION OF 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.
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.

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, 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.

<PAGE>
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.

Performance Information

From time to time, the Portfolios may quote total return performance and,
if applicable, yield 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
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.

<PAGE>

OTHER INVESTMENT
POLICIES AND
RISK CONSIDERATIONS

High-Yield, High Risk Securities

<PAGE>

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. 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.

<PAGE>

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 S&P or Baa or better by 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.

<PAGE>

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.

<PAGE>

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.

<PAGE>

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.
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.
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.

<PAGE>

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 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.
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.

<PAGE>

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.
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.

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.

<PAGE>

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 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.

<PAGE>

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.

<PAGE>

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.

<PAGE>

Small to Medium-Sized Companies

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 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.

<PAGE>

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.

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.

<PAGE>

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 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.

<PAGE>

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.

<PAGE>

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For more information, contact
Delaware Group at 800-828-5052. INCOME PORTFOLIO
INSTITUTIONAL
Investment Manager BALANCED PORTFOLIO
Delaware Management Company, Inc. INSTITUTIONAL
One Commerce Square GROWTH PORTFOLIO
Philadelphia, PA 19103 INSTITUTIONAL

National Distributor ----------------------
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103 P r o s p e c t u s

Shareholder Servicing, December 31, 1997
Dividend Disbursing, (as revised January 23, 1998)
Accounting Services
and Transfer Agent
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103

Legal Counsel
Stradley, Ronon, Stevens
& Young, LLP
One Commerce Square
Philadelphia, PA 19103

Independent Auditors
Ernst & Young LLP
Two Commerce Square
Philadelphia, PA 19103

Custodian
The Chase Manhattan Bank DELAWARE
4 Chase Metrotech Center GROUP
Brooklyn, NY 11245 -------------------
PHILADELPHIA - LONDON
Printed in the U.S.A. on recycled paper.
P-FFI[--] PP1/98