DELAWARE GROUP FOUNDATION FUNDS, N-30D, 1999-11-23

DELAWARE GROUP FOUNDATION FUNDS
N-30D, 1999-11-23

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<PAGE>
For Asset Allocation

Foundation Funds

Growth Portfolio

Balanced Portfolio

Income Portfolio

service and guidance

professional management

goals

1999
Annual
Report

(various photos demonstrating service and
guidance, professional management and goals)

DELAWARE(SM)
INVESTMENTS
- ---------------------
Philadelphia o London
<PAGE>

A TRADITION OF SOUND INVESTING

commitment

A Commitment
To Our Investors

Delaware Investments has a tradition of money management that dates back to
1929. We have a long and distinguished history of helping individuals and
institutions--including some of America's largest pension funds--reach their
financial goals.
Headquartered in Philadelphia, a block from the nation's oldest stock
exchange, the Delaware organization established its first mutual fund in 1938.
Delaware International Advisers Ltd., our international affiliate, was
established in 1990 and is headquartered in London.
Delaware Investments offers a full range of mutual funds. We also manage
investments for variable annuities and closed-end funds as well as offer a wide
range of retirement plan services for individuals and businesses.
Delaware Investments has approximately $47 billion in mutual fund assets and
institutional advisory accounts under management for more than half-a-million
investors.

Complete information on any fund offered by Delaware Investments can be found in
each fund's current prospectus. Prospectuses for all funds offered by Delaware
Investments are available from your financial adviser. Please read the
prospectus carefully before you invest or send money.

(photo of computer keyboard)

(photo of illustration
from Asset Allocation Brochure)

Fund Objectives:
GROWTH PORTFOLIO
To seek long-term capital growth.

BALANCED PORTFOLIO
To seek capital appreciation with current income as a secondary objective.

INCOME PORTFOLIO
To seek a combination of current income and preservation of capital with
capital appreciation.

Table of Contents
Letter to Shareholders Page 1
Portfolio Manager's Review Page 3
Foundation Funds Positioning Page 5
Fund Allocations Page 6
Performance Summary Page 8
Statements of Net Assets Page 10
Financial Highlights Page 14

asset allocation

tradition

<PAGE>

October 7, 1999

for asset
allocation
1

Dear Shareholder:

AS WE BEGAN FISCAL 1999 LAST October, the Federal Reserve began lowering
short-term interest rates to ease the strain of global economic weakness on U.S.
markets. Against this supportive backdrop, investors began pouring money into
U.S. equities reassured that U.S. economic growth would not be interrupted. As a
result, the Standard & Poor's 500 Index, an unmanaged index of large-company
blue chip stocks, advanced 21.26% between October 1 and December 31.
Major stock market indexes continued climbing to record territory during the
first six months of 1999 driven by investors' seemingly insatiable appetite for
large company earnings growth. The Dow Jones Industrial Average closed above
10,000 for the first time in late March and crossed 11,000 in early May. Since
then, the Fed has raised its target for short-term interest rates twice--once in
June and again in August. Concerns about the future direction of interest rates
caused large-cap stocks to retrace some of those gains.
For the 12 months ended September 30, the S&P 500 Index returned 27.80% with
dividends reinvested, reflecting a correction of over six percentage points
between July 1 and September 30. Small company stocks, which rallied in the
spring as investors broadened their focus beyond the largest stocks, also lost
ground to

WE ARE CONFIDENT THAT AN ASSET ALLOCATION APPROACH THAT INCLUDES A MIX OF STOCK
AND BOND MUTUAL FUNDS HAS THE POTENTIAL TO ACHIEVE MORE CONSISTENT RETURNS OVER
TIME, GENERALLY AT LOWER LEVELS OF PORTFOLIO VOLATILITY.

TOTAL RETURN
- ------------------------------------------------------------------

12 Months Ended
- ------------------------------------------------------------------
Foundation Funds September 30, 1999
- ------------------------------------------------------------------
Growth Portfolio A Class +17.33%
Balanced Portfolio A Class +12.52%
Income Portfolio A Class +6.85%
- ------------------------------------------------------------------
Unmanaged Equity Indexes
S&P 500 Index +27.80%
Morgan Stanley Europe, Australia and
Far East (EAFE) Index +31.32%
Russell 2000 Index +19.07%
Morgan Stanley Emerging Markets Free Index +56.52%
- ------------------------------------------------------------------
Unmanaged Fixed Income Indexes
Lehman Brothers Aggregate Bond Index -0.37%
Salomon Brothers High-Yield Bond Index +3.02%
- ------------------------------------------------------------------

All performance shown above is at net asset value and assumes reinvestment of
distributions. See pages 8 and 9 for portfolio performance for all Classes.
Performance of other Fund classes varies due to different sales charges and
expenses. The indexes mentioned above are unmanaged and are not available for
direct investment. S&P 500 Index is an unmanaged index of 500, mostly large
capitalization stocks. The Russell 2000 Index is a measure of 2000 smaller
companies as compiled by the Frank Russell Co. The Morgan Stanley EAFE index is
a measure of international stocks in established markets. The Morgan Stanley
Emerging Markets Free Index is a measure of international stocks in emerging
markets. The Lehman Brothers Aggregate Bond Index is a measure of investment
grade domestic bonds. The Salomon Brothers High-Yield Bond Index is a measure of
lower rated domestic corporate bonds. Source: Bloomberg and Lipper, Inc. Past
performance does not guarantee future results.

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for asset
allocation
2

interest-rate jitters. The Russell 2000 Index returned 19.07% for the 12-month
period.
The Delaware Foundation Funds held their ground during this bumpy period. On
page 1, we compare the results of the three portfolios to the returns of
unmanaged indexes representing different asset classes. The Delaware Foundation
Funds hold a mix of Delaware Investments mutual funds that invest in U.S.
stocks, U.S. corporate and government bonds, and foreign stocks. The indexes
provide a reference point for performance in each of these asset classes during
the fiscal period.
The U.S. bond market endured its own hardships in fiscal 1999. Interest rate
worries and inflation fears resulted in sluggish demand for government and
corporate bonds. High-yield bonds fared slightly better than the rest of the
bond market.
In foreign equity markets, renewed strength in Asia, including Japan,
Malaysia, Singapore and Hong Kong, helped boost stock returns in those markets.
Japan's stock market made particularly strong advances, rising 40.01% in just
the first nine months of 1999. Many countries, including the UK, that export
products to Asia also benefited from the recovery.
Early in fiscal 1999, we made a strategic shift in each of the Foundation
Fund portfolios out of stock mutual funds and into bond investments. We had
become concerned that stock prices had risen to a point where their risks in the
short term outweighed their potential returns. We readjusted our positioning in
late August to take advantage of declining stock prices, shifting assets out of
bond funds and back into equities.

On the following pages, J. Paul Dokas, Senior Portfolio Manager of the
Delaware Foundation Funds, reviews developments in the U.S. and world securities
markets over the past 12 months and how this influenced his positioning of the
portfolios. He also shares his outlook for fiscal 2000.
We thank you for your continued investment in Foundation Funds. We are
pleased to report that combined assets in the Funds grew from $5 million to $50
million during fiscal 1999. As firm believers in the importance of portfolio
diversification, we are pleased that so many investors share that belief. We are
confident that an asset allocation approach with a mix of stock and bond mutual
funds has the potential to achieve more consistent returns over time, generally
at lower levels of portfolio volatility.

Sincerely,

/s/Wayne A. Stork
- --------------------
WAYNE A. STORK
Chairman,
Delaware Investments Family of Funds

/s/David K. Downes
- --------------------
DAVID K. DOWNES
President and Chief Executive Officer,
Delaware Investments Family of Funds

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for asset
allocation
3

Portfolio Manager's Review

J. PAUL DOKAS
Vice President/Senior Portfolio Manager
October 7, 1999

U.S. STOCKS AND BONDS
COMPETE IN INTEREST RATE
TUG-OF-WAR
During fiscal 1999, U.S. stocks and bonds were entangled in an interest rate
tug-of-war. Concerns about a U.S. recession last fall prompted the Federal
Reserve to lower its target for short-term interest rates. Through late
November, the federal funds rate--or the interest rate charged between banks for
overnight loans--was reduced 0.75% to 4.75%. Then, in the latter part of our
fiscal year, the Fed reversed its position and twice raised short-term interest
rates.
Following the Fed's rate reductions last year, U.S. stocks--particularly
those of the largest and fastest growing companies--skyrocketed as investor
confidence in the economy returned. In spite of higher confidence, investors
nonetheless remained focused on the largest companies since they believed these
companies were the most likely to maintain earnings growth if worldwide economic
conditions worsened.
As we advanced through the winter and spring of 1999, many investors saw
strong economic and corporate earnings reports as a reason to expand their
investment selection beyond the largest companies. They took advantage of strong
earnings growth potential in more fairly priced areas of the market. This
resulted in strong performance from former laggards such as large-cap value
stocks and small-cap stocks.
The market's glorious run was interrupted when the Fed began raising
short-term interest rates in early summer. The federal funds rate increased
0.50% to 5.25% between June and August. Fears of future rate increases triggered
sell decisions that caused stock prices to decline through the end of September.

overview

Foundation Chart Data

S&P 500 TOTAL RETURNS
4Q 98 +21.26%
1Q 99 + 4.98%
2Q 99 + 7.04%
3Q 99 - 6.24%

Source: Bloomberg

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for asset
allocation
4

We saw declining stock prices as an opportunity to increase each of the
Foundation Funds' stock mutual fund allocations. In conjunction with this move,
we sold our holdings of the corporate bond funds we had added earlier in the
year when our analysis indicated that they offered better risk-adjusted returns
than large company stock funds. We detail this reallocation under each Fund's
positioning discussion.

LACK OF DEMAND PLAGUES
U.S. BONDS
Last fall, global economic uncertainty raised concerns about credit risk,
causing many investors to seek a safe haven in U.S. Treasuries. Investment-grade
and high-yield corporate bonds languished in this environment as demand fell to
very low levels.
The reduction in short-term interest rates late in 1998 helped restore demand
in the bond market. But, corporate bonds experienced only a brief recovery as
inflation worries and subsequent rate increases by the Fed in 1999 reduced
demand again. Despite poor demand, high-yield corporate bonds managed to finish
ahead of other segments of the bond market during the fiscal period.

JAPAN LEADS RECOVERY IN WORLD MARKETS
A new drama unfolded in world equity markets in fiscal 1999 as lower global
interest rates restored liquidity and reduced concerns about global economic
growth. Many of last year's weakest markets staged recoveries during our fiscal
period. Japan led the world in rebounding from deep recession--as a result of
the Japanese government having had some success in administering a substantial
economic reform package aimed at stimulating the economy. Since January 1,
Japan's stock market has risen over 38% as investors' outlook for overseas
investing has improved.
Many corporations in Asia have restructured and are operating more
efficiently. Governments have adopted pro-business policies that should support
economic growth in the region. These changes may benefit the long-term
performance of the Asian markets.
For the 12 months ended September 30, the MSCI Emerging Markets Free Index,
an unmanaged index of emerging markets stocks, rose an astounding +56.32%. The
MSCI EAFE Index, an unmanaged index of international stocks in developed
markets, returned +31.32%.

(photo of couple talking with financial advisor)
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for asset
allocation
5
(photo of family on beach)

DELAWARE FOUNDATION FUNDS:
Positioning Growth Portfolio
At the start of fiscal 1999, we believed U.S. stocks were attractively priced as
a result of summer 1998's flight to U.S. Treasuries. We had used the stock
market's decline to add to the Growth Portfolio's equity mutual fund allocation,
thus taking advantage of relatively low stock prices. The equity position then
stood at 90% of net assets.
As stock prices rose by leaps and bounds in the final quarter of calendar
year 1998, we reallocated a portion of the portfolio's equity fund position to a
diversified mix of fixed income funds. We believed that large company stocks
carried risks that exceeded their potential rewards. We also believed that U.S.
corporate and government bonds represented better opportunities for attractive
risk-adjusted returns. Given this outlook, we reduced positions in Delaware
Growth and Income Fund and Delaware U.S. Growth Fund to add investments in
Delaware Delchester Fund, Delaware American Government Bond Fund and Delaware
Extended Duration Bond Fund.
This positioning served us well in the first fiscal half. Since then, we made
further modifications to take advantage of the more recent stock market
correction. In late August and early September, we moved money out of some of
our fixed income holdings to increase the portfolio's equity fund allocation.
Specifically, we sold Delaware Extended Duration Bond Fund and added Delaware
Select Equity Fund, which invests in stocks believed to offer the greatest
potential for long-term price appreciation.
We also substituted Delaware Diversified Growth Fund, which invests primarily
in large-cap growth companies, for Delaware U.S. Growth Fund. We wanted the
Growth Portfolio to have more large-cap growth exposure--our lower exposure hurt
the portfolio's performance in fiscal 1999. We think the combination of Delaware
Diversified Growth Fund with the Delaware Growth and Income Fund, a large-cap
value fund, (22.4% and 20.3% of net assets, respectively as of September 30,
1999) will allow us to better achieve that objective.
As of fiscal year-end, the Growth Portfolio's equity position was 83.4% of
net assets. One quarter of this was in foreign equity funds, including Delaware
International Equity Fund and Delaware Emerging Markets Fund. We had a higher
than normal allocation to international securities throughout our fiscal year.
This proved beneficial to us as world markets were generally very strong in
fiscal 1999. After experiencing price appreciation in our international
holdings, we sold a small

growth

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for asset
allocation
6

percentage of our international funds to take some of our profits. However, we
remain positive about the opportunities in international markets. We also
continued to invest in Delaware Select Growth Fund (formerly Aggressive Growth
Fund) and Delaware Small Cap Value Fund since we remain optimistic about a
rebound in mid- and small-cap stocks.

Balanced Portfolio
Within the Balanced Portfolio, we made adjustments similar to those in the
Growth Portfolio during the course of fiscal 1999. We began the year with an
equity position of 70%, which was reduced to 60% by March 31 given our
perceptions of higher risks associated with large-cap stock investing.
Through July, we added to the Balanced Portfolio's fixed income investments
in Delaware American Government Bond Fund (formerly U.S. Government Fund),
Delaware Delchester Fund and Delaware Extended Duration Bond Fund since we
believed that U.S. government and corporate securities had a more attractive
risk/reward profile than large company stocks at that time.
As stock prices fell in late summer, we began to reallocate a modest portion
of the portfolio's fixed income holdings to Delaware's equity funds, including
Delaware Select Equity and Delaware Diversified Growth Fund (3% and 17% of net
assets, respectively) to take advantage of more reasonable equity valuations. As
of September 30, 1999, the portfolio's total equity position was 60.7% of net
assets. We expect to continue adding to the portfolio's equity holdings if stock
prices move lower.

balance

FUND ALLOCATIONS
SEPTEMBER 30, 1999

<TABLE>
<CAPTION>
Growth Balanced Income
Fund Type/Style Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Delaware Growth and Income Fund Large-Cap Value Stocks 20.4% 15.4% 8.5%
- ------------------------------------------------------------------------------------------------------------
Delaware Diversified Growth Large-Cap Growth Stocks 22.4% 17.0% 11.3%
- ------------------------------------------------------------------------------------------------------------
Delaware Select Equity Fund Exchange-Traded Stocks 5.0% 5.0% 4.9%
- ------------------------------------------------------------------------------------------------------------
Delaware Select Growth Fund Multi-Cap Growth Stocks 7.1% 3.4% 1.5%
- ------------------------------------------------------------------------------------------------------------
Delaware Small Cap Value Fund Small-Cap Value Stocks 6.6% 4.8% 1.4%
- ------------------------------------------------------------------------------------------------------------
Delaware REIT Fund Real Estate Stocks 0 0 1.9%
- ------------------------------------------------------------------------------------------------------------
Delaware International Equity Fund Non-U.S. Stocks 18.4% 12.4% 6.3%
- ------------------------------------------------------------------------------------------------------------
Delaware Emerging Markets Fund Developing Country Stocks 3.5% 2.8% 0
- ------------------------------------------------------------------------------------------------------------
Delaware Delchester Fund High-Yield Corporate Bonds 5.0% 10.6% 15.3%
- ------------------------------------------------------------------------------------------------------------
Delaware American Government
Bond Fund Mortgages & Treasuries 10.2% 27.5% 41.9%
- ------------------------------------------------------------------------------------------------------------
Cash 1.4% 1.1% 7.0%
- ------------------------------------------------------------------------------------------------------------
</TABLE>

All portfolio holdings are institutional class shares of each Fund.

<PAGE>

for asset
allocation
7

Income Portfolio
The Income Portfolio began fiscal 1999 with a significant weighting in
equities--48.5% of net assets. Over the past 12 months, we shifted the equity
position to 35.7% to be more in line with what we consider our benchmark
allocation of 35%.
We reduced the Income Portfolio's large company stock fund allocation early
in the fiscal year because of relatively high prices and risk profiles, the same
reasons that we decreased equities in the Growth and Balanced Portfolios.
Likewise, we added back to our equity holdings later in the period buying equity
funds while they were discounted. This included adding new positions in Delaware
Select Equity and Delaware Diversified Growth Fund (4.9% and 11.3% of net
assets, respectively, as of September 30, 1999).
We continue to hold Delaware Delchester Fund (15.3%) which appeals to us for
the high levels of current income it provides the portfolio. High-yield bonds
were one of the best performing groups in the fixed income market in fiscal
1999, and our holdings generated more income than the government bond funds held
in the Income Portfolio.

During the year, we also steadily increased the portfolio's investment in
Delaware American Government Bond Fund (formerly U.S. Government Fund) from
24.2% to 41.9% of net assets to better balance the risks of investing in
aggressive equity funds. We continued to hold a small position in Delaware REIT
Fund--1.9% as of September 30. Delaware REIT Fund has been a good source of
income for the portfolio, and we believe it offers the added potential for price
appreciation.

LOOKING AHEAD
U.S. stocks generally delivered stupendous, and quite probably unsustainable,
returns in the last decade of the 20th Century. While we expect stock returns in
the first decade of the 21st Century to be favorable, we think returns will
resume more normal averages of about 10% annually.
Over the long haul, we believe that a diversified approach is the best way to
participate in the market's reward potential without subjecting your portfolio
to extreme levels of volatility. The Delaware Foundation Funds are modeled on
this philosophy, and as such, we believe they have the potential to achieve the
objectives they were designed to meet.

income

(photo of computer keyboard)

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for asset
allocation
8

Foundation Funds
Performance Summary

DELAWARE FOUNDATION FUNDS
PERFORMANCE OF A $10,000 INVESTMENT
DECEMBER 31, 1997 TO SEPTEMBER 30, 1999

<TABLE>
<CAPTION>
Balanced Portfolio: Growth Portfolio: Income Portfolio: Lehman Brothers Standard & Poor's
A Class A Class A Class Aggregate Bond Index 500 Index
------------------ ---------------- ---------------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Dec. '97 $ 9,425 $ 9,425 $ 9,425 $10,128 $10,111
Jan. '98 9,813 9,968 9,735 10,121 10,839
Feb. '98 10,146 10,401 9,979 10,156 11,394
Mar. '98 10,190 10,467 10,013 10,209 11,511
Apr. '98 9,979 10,168 9,891 10,305 11,313
May '98 10,047 10,246 9,941 10,393 11,772
Jun. '98 9,857 10,035 9,874 10,415 11,684
Jul. '98 8,734 8,638 9,082 10,584 9,965
Aug. '98 9,078 9,059 9,311 10,832 10,604
Sep. '98 9,402 9,525 9,513 10,775 11,465
Oct. '98 9,771 9,957 9,771 10,836 12,160
Nov. '98 10,126 10,394 10,013 10,869 12,860
Dec. '98 10,183 10,438 10,059 10,946 13,397
Jan. '99 9,968 10,203 9,877 10,755 12,981
Feb. '99 10,194 10,495 10,030 10,815 13,500
Mar. '99 10,580 11,010 10,294 10,849 14,023
Apr. '99 10,308 10,696 10,053 10,754 13,692
May '99 10,581 11,111 10,186 10,720 14,452
Jun. '99 10,490 11,022 10,117 10,674 14,001
Jul. '99 10,387 10,876 10,047 10,669 13,932
Aug. '99 $10,215 $10,629 $ 9,949 $10,793 $13,550
</TABLE>

Chart assumes $10,000 invested on December 31, 1997 and includes the effect of a
5.75% maximum front-end sales charge and the reinvestment of all distributions.
Performance of other classes of each Portfolio will vary due to differing
charges and expenses. Past performance does not guarantee future results.

GROWTH PORTFOLIO PERFORMANCE
- --------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH SEPTEMBER 30, 1999

Lifetime One Year
- --------------------------------------------------------------------
Class A (Est. 12/31/97)
Excluding Sales Charge +7.11% +17.33%
Including Sales Charge +3.54% +10.56%
- --------------------------------------------------------------------
Class B (Est. 12/31/97)
Excluding Sales Charge +6.40% +16.41%
Including Sales Charge +4.20% +11.41%
- --------------------------------------------------------------------
Class C (Est. 12/31/97)
Excluding Sales Charge +6.47% +16.53%
Including Sales Charge +6.47% +15.53%

See important performance information on page 9.

<PAGE>

for asset
allocation
9

BALANCED PORTFOLIO PERFORMANCE
- ------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH SEPTEMBER 30, 1999

Lifetime One Year
- ------------------------------------------------------------------
Class A (Est. 12/31/97)
Excluding Sales Charge +4.71% +12.52%
Including Sales Charge +1.22% +6.01%
- ------------------------------------------------------------------
Class B (Est. 12/31/97)
Excluding Sales Charge +4.04% +11.66%
Including Sales Charge +1.80% +6.66%
- ------------------------------------------------------------------
Class C (Est. 12/31/97)
Excluding Sales Charge +4.17% +11.77%
Including Sales Charge +4.17% +10.77%

INCOME PORTFOLIO PERFORMANCE
- --------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH SEPTEMBER 30, 1999

Lifetime One Year
- --------------------------------------------------------------------------------
Class A (Est. 12/31/97)
Excluding Sales Charge +3.14% +6.85%
Including Sales Charge -0.30% +0.66%
- --------------------------------------------------------------------------------
Class B (Est. 12/31/97)
Excluding Sales Charge +2.56% +6.18%
Including Sales Charge +0.30% +1.18%
- --------------------------------------------------------------------------------
Class C (Est. 12/31/97)
Excluding Sales Charge +2.50% +6.06%
Including Sales Charge +2.50% +5.06%

Returns reflect reinvestment of distributions and any applicable sales charges
as noted below. Return and share value will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost. Class B and C
results excluding sales charge assumes either that contingent sales charges did
not apply or the investment was not redeemed. Past performance is not a
guarantee of future results.

Class A shares have a 5.75% maximum front-end sales charge and a 12b-1 fee.
Class B shares do not have a front-end sales charge, but are subject to a 1%
annual distribution and service fee. They are subject to a deferred sales charge
of up to 5% if redeemed before the end of the sixth year.
Class C shares have a 1% annual distribution and service fee. If redeemed within
12 months, a 1% contingent deferred sales charge applies.

Average Annual Institutional Class Returns Through September 30, 1999

Lifetime One Year
Growth Portfolio (Est. 12/31/97) 7.38% 17.71%
Balanced Portfolio (Est. 12/31/97) 4.94% 12.83%
Income Portfolio (Est. 12/31/97) 3.37% 7.16%

Institutional Class shares are available without sales or asset-based
distribution charges only to certain eligible institutional accounts.
<PAGE>
10 for asset allocation

Financial Statements

DELAWARE GROUP FOUNDATION FUNDS
DELAWARE GROWTH PORTFOLIO
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
--------------------------
INVESTMENT COMPANIES - 98.61%
EQUITY FUNDS - 83.42%
Delaware Group Equity Funds II, Inc. -
Delaware Growth and Income Fund .................... 169,939 $ 2,739,418
Delaware Group Equity Funds IV, Inc. -
Delaware Diversified Growth Fund ................... 293,567 3,023,743
Delaware Group Equity Funds V, Inc. -
Delaware Small Cap Value Fund ...................... 35,813 893,165
Delaware Group Global & International Funds, Inc. -
Delaware Emerging Markets Fund ..................... 62,392 467,940
Delaware Group Global & International Funds, Inc. -
Delaware International Equity Fund ................. 156,161 2,482,967
Delaware Pooled Trust, Inc. -
The Select Equity Portfolio ........................ 84,074 670,914
Voyageur Mutual Funds III, Inc. -
Delaware Select Growth Fund ........................ 34,240 950,511
-----------
11,228,658
-----------
FIXED INCOME FUNDS - 15.19%
Delaware Group Government Fund -
Delaware American Government Bond Fund ............. 188,980 1,373,883
Delaware Group Income Funds -
Delaware Delchester Fund ........................... 126,840 670,985
-----------
2,044,868
-----------
Total Investment Companies
(cost $13,364,649) ................................. 13,273,526
-----------

TOTAL MARKET VALUE OF SECURITIES - 98.61%
(COST $13,364,649) ........................................... $13,273,526
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 1.39% 186,358
-----------
NET ASSETS APPLICABLE TO 1,416,969 SHARES
OUTSTANDING - 100.00% ........................................ $13,459,884
===========

NET ASSET VALUE - GROWTH PORTFOLIO A CLASS
($11,328,110 / 1,192,004 SHARES) ............................. $9.50
=====
NET ASSET VALUE - GROWTH PORTFOLIO B CLASS
($1,560,826 / 164,769 SHARES) ................................ $9.47
=====
NET ASSET VALUE - GROWTH PORTFOLIO C CLASS
($505,703 / 53,341 SHARES) ................................... $9.48
=====
NET ASSET VALUE - GROWTH PORTFOLIO INSTITUTIONAL CLASS
($65,245 / 6,855 SHARES) ..................................... $9.52
=====
<PAGE>
- --------------------------------------------------------------------------------
COMPONENTS OF NET ASSETS AT SEPTEMBER 30, 1999:
Capital shares (unlimited authorization-no par) ................ $ 13,063,666
Undistributed net investment income ............................ 136,467
Accumulated net realized gain on investments ................... 350,874
Net unrealized depreciation of investments ..................... (91,123)
------------
Total net assets ............................................... $ 13,459,884
============

NET ASSET VALUE AND OFFERING PRICE PER SHARE -
GROWTH PORTFOLIO
Net asset value A Class (A) ........................................... $ 9.50
Sales charge (5.75% of offering price or 6.11% of the amount
invested per share)(B) ............................................. 0.58
------
Offering price ........................................................ $10.08
======
- ------------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon the redemption or repurchase of shares.
(B) See How to Buy Shares in the current prospectus for purchases of $50,000 or
more.

See accompanying notes

DELAWARE GROUP FOUNDATION FUNDS
DELAWARE BALANCED PORTFOLIO
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
--------------------------
INVESTMENT COMPANIES - 98.82%
EQUITY FUNDS - 60.75%
Delaware Group Equity Funds II, Inc. -
Delaware Growth and Income Fund ................ 183,743 $ 2,961,935
Delaware Group Equity Funds IV, Inc. -
Delaware Diversified Growth Fund ............... 318,433 3,279,858
Delaware Group Equity Funds V, Inc. -
Delaware Small Cap Value Fund .................. 36,974 922,132
Delaware Group Global & International Funds, Inc. -
Delaware Emerging Markets Fund ................. 71,902 539,267
Delaware Group Global & International Funds, Inc. -
Delaware International Equity Fund ............. 149,946 2,384,146
Delaware Pooled Trust, Inc. -
The Select Equity Portfolio .................... 119,789 955,913
Voyageur Mutual Funds III, Inc. -
Delaware Select Growth Fund .................... 23,882 662,973
-----------
11,706,224
-----------
FIXED INCOME FUNDS - 38.07%
Delaware Group Government Fund -
Delaware American Government Bond Fund ......... 729,042 5,300,135

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for asset allocation 11

BALANCED PORTFOLIO (CONTINUED)
STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
--------------------------
INVESTMENT COMPANIES (CONTINUED)
FIXED INCOME FUNDS (CONTINUED)
Delaware Group Income Funds -
Delaware Delchester Fund....................... 385,139 $ 2,037,386
-----------
7,337,521
-----------
Total Investment Companies
(cost $19,555,120)............................. 19,043,745
-----------

PRINCIPAL
AMOUNT
---------
REPURCHASE AGREEMENTS - 1.20%
With J.P. Morgan Securities 5.20% 10/1/99
(dated 9/30/99, collateralized by $27,000
U.S. Treasury Notes 6.25% due 10/31/01,
market value $27,636 and $17,000 U.S.
Treasury Notes 6.375% due 8/15/02,
market value $17,273 and $19,300 U.S.
Treasury Notes 6.50% due 8/31/01,
market value $19,698)........................... $63,300 63,300
With PaineWebber 5.25% 10/1/99
(dated 9/30/99, collateralized by $33,000
U.S. Treasury Bills 5.25% due 12/9/99,
market value $33,027 and $32,000 U.S.
Treasury Notes 6.25% due 1/31/02, market
value $33,027 and $33,000 U.S. Treasury
Notes 6.375% due 3/31/01, market value
$33,666 and $7,600 U.S. Treasury Notes 6.625%
due 11/30/00, market value $7,741).............. 105,400 105,400
With Prudential Securities 5.21% 10/1/99
(dated 9/30/99, collateralized by $64,000
U.S. Treasury Notes 6.375% due 9/30/01,
market value $64,607)........................... 63,300 63,300
-----------
Total Repurchase Agreements (cost $232,000)........ 232,000
-----------

TOTAL MARKET VALUE OF SECURITIES - 100.02%
(COST $19,787,120) .......................................... $19,275,745
LIABILITIES NET OF RECEIVABLES AND OTHER ASSETS - (0.02%)....... (4,417)
-----------
NET ASSETS APPLICABLE TO 2,156,189 SHARES
OUTSTANDING - 100.00% ....................................... $19,271,328
===========

NET ASSET VALUE - BALANCED PORTFOLIO A CLASS
($17,373,293 / 1,944,237 SHARES) ............................ $8.94
=====
NET ASSET VALUE - BALANCED PORTFOLIO B CLASS
($1,034,560 / 115,605 SHARES) ............................... $8.95
=====
NET ASSET VALUE - BALANCED PORTFOLIO C CLASS
($802,114 / 89,480 SHARES) .................................. $8.96
=====
NET ASSET VALUE - BALANCED PORTFOLIO INSTITUTIONAL CLASS
($61,361 / 6,867 SHARES) .................................... $8.94
=====

<PAGE>

COMPONENTS OF NET ASSETS AT SEPTEMBER 30, 1999:
Capital shares (unlimited authorization-no par)................ $19,367,399
Undistributed net investment income ........................... 144,301
Accumulated net realized gain on investments .................. 271,003
Net unrealized depreciation of investments .................... (511,375)
-----------
Total net assets .............................................. $19,271,328
===========

NET ASSET VALUE AND OFFERING PRICE PER SHARE -
BALANCED PORTFOLIO
Net asset value A Class (A).................................... $8.94
Sales charge (5.75% of offering price or 6.15%
of the amount invested per share)(B)........................... 0.55
-----
Offering price ................................................ $9.49
=====
- ----------------------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon the redemption or repurchase of shares.
(B) See How To Buy Shares in the current prospectus for purchases of $50,000 or
more.

See accompanying notes

DELAWARE GROUP FOUNDATION FUNDS
DELAWARE INCOME PORTFOLIO
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
--------------------------
INVESTMENT COMPANIES - 93.00%
EQUITY FUNDS - 35.76%
Delaware Group Equity Funds II, Inc. -
Delaware Growth and Income Fund ................ 93,241 $ 1,503,043
Delaware Group Equity Funds IV, Inc. -
Delaware Diversified Growth Fund ............... 194,947 2,007,953
Delaware Group Equity Funds V, Inc. -
Delaware Small Cap Value Fund .................. 10,158 253,331
Delaware Group Global & International Funds, Inc. -
Delaware International Equity Fund ............. 70,105 1,114,670
Delaware Pooled Trust, Inc. -
The Real Estate Investment Trust Portfolio ..... 29,100 339,010
Delaware Pooled Trust, Inc. -
The Select Equity Portfolio .................... 108,991 869,749
Voyageur Mutual Funds III, Inc. -
Delaware Select Growth Fund .................... 9,188 255,045
-----------
6,342,801
-----------
FIXED INCOME FUNDS - 57.24%
Delaware Group Government Fund -
Delaware American Government Bond Fund ......... 1,022,259 7,431,819
Delaware Group Income Funds -
Delaware Delchester Fund ....................... 513,946 2,718,775
-----------
10,150,594
-----------
Total Investment Companies
(cost $17,299,631) ............................. 16,493,395
-----------

<PAGE>
12 for asset allocation

INCOME PORTFOLIO (CONTINUED)
STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
---------------------------------------------
REPURCHASE AGREEMENTS - 6.49%
With J.P. Morgan Securities 5.20% 10/1/99
(dated 9/30/99, collateralized by $132,000
U.S. Treasury Notes 6.25% due 10/31/01,
market value $136,990 and $84,000 U.S.
Treasury Notes 6.375% due 8/15/02,
market value $85,622 and $96,000 U.S.
Treasury Notes 6.50% due 8/31/01,
market value $97,639) ......................... $314,000 $314,000
With PaineWebber 5.25% 10/1/99
(dated 9/30/99, collateralized by $165,000
U.S. Treasury Bills 5.25% due 12/9/99,
market value $163,709 and $38,000 U.S.
Treasury Notes 6.25% due 1/31/02, market
value $38,369 and $165,000 U.S. Treasury
Notes 6.375% due 3/31/01, market value
$166,881 and $160,000 U.S. Treasury Notes
6.625% due 11/30/00, market value $163,709).... 522,000 522,000
With Prudential Securities 5.21% 10/1/99
(dated 9/30/99, collateralized by $316,000
U.S. Treasury Notes 6.375% due 9/30/01,
market value $320,251)......................... 314,000 314,000
-----------
Total Repurchase Agreements (cost $1,150,000)..... 1,150,000
-----------

TOTAL MARKET VALUE OF SECURITIES - 99.49%
(COST $18,449,631)....................................... $17,643,395
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 0.51%..... 90,843
-----------
NET ASSETS APPLICABLE TO 2,072,932 SHARES
OUTSTANDING - 100.00%.................................... $17,734,238
===========

NET ASSET VALUE - INCOME PORTFOLIO A CLASS
($17,239,482 / 2,015,260 SHARES) .............................. $8.55
=====
NET ASSET VALUE - INCOME PORTFOLIO B CLASS
($242,765 / 28,274 SHARES) .................................... $8.59
=====
NET ASSET VALUE - INCOME PORTFOLIO C CLASS
($194,835 / 22,719 SHARES) .................................... $8.58
=====
NET ASSET VALUE - INCOME PORTFOLIO INSTITUTIONAL CLASS
($57,156 / 6,679 SHARES) ...................................... $8.56
=====

COMPONENTS OF NET ASSETS AT SEPTEMBER 30, 1999:
Capital shares (unlimited authorization-no par) ...............$ 18,312,627
Undistributed net investment income ........................... 186,141
Accumulated net realized gain on investments .................. 41,706
Net unrealized depreciation of investments .................... (806,236)
------------
Total net assets ..............................................$ 17,734,238
============

NET ASSET VALUE AND OFFERING PRICE PER SHARE -
INCOME PORTFOLIO
Net asset value A Class (A)........................................ $8.55
Sales charge (5.75% of offering price or 6.08%
of the amount invested per share)(B) .............................. 0.52
-----
Offering price .................................................... $9.07
=====
- ----------------------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon the redemption or repurchase of shares.
(B) See How to Buy Shares in the current prospectus for purchases of $50,000 or
more.

See accompanying notes

<PAGE>

DELAWARE GROUP FOUNDATION FUNDS
STATEMENTS OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
GROWTH BALANCED INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- ---------
INVESTMENT INCOME:
Dividends ................................. $ 250,148 $ 560,758 $ 690,159
Interest .................................. 3,563 12,141 33,665
--------- --------- ---------
253,711 572,899 723,824
--------- --------- ---------

EXPENSES:
Management fees ........................... 11,302 16,252 14,125
Custodian fees ............................ 240 516 377
Dividend disbursing and transfer agent fees
and expenses ........................... 93,156 89,559 153,446
Distribution expense ...................... 40,855 52,376 38,883
Registration fees ......................... 66,413 58,478 56,696
Reports and statements to shareholders .... 25,000 30,000 17,384
Accounting and administration ............. 4,440 6,385 5,550
Professional fees ......................... 4,860 4,487 9,037
Directors' fees ........................... 1,040 1,129 1,087
Taxes (other than taxes on income) ........ 296 275 57
Amortization of organization expenses ..... 4,780 4,626 4,857
Other ..................................... 10,187 2,987 2,099
--------- --------- ---------
262,569 267,070 303,598
Less expenses absorbed or waived .......... (159,238) (125,204) (187,355)
Less expenses paid indirectly ............. (259) (634) (521)
--------- --------- ---------
Total expenses ............................ 103,072 141,232 115,722
--------- --------- ---------
NET INVESTMENT INCOME ..................... 150,639 431,667 608,102
--------- --------- ---------

NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS :
Capital gain distributions from
investment companies ................... 106,929 109,386 34,363
Net realized gain on investments .......... 267,485 179,893 10,549
Net change in unrealized appreciation/
depreciation of investments ............ 56,705 (335,144) (775,667)
--------- --------- ---------

NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS .................. 431,119 (45,865) (730,755)
--------- --------- ---------

NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS .............. $ 581,758 $ 385,802 $(122,653)
========= ========= =========

See accompanying notes
<PAGE>

for asset allocation 13

DELAWARE GROUP FOUNDATION FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH PORTFOLIO BALANCED PORTFOLIO INCOME PORTFOLIO
------------------------ ----------------------- ------------------------
YEAR 12/31/97* YEAR 12/31/97* YEAR 12/31/97*
ENDED TO ENDED TO ENDED TO
9/30/99 9/30/98 9/30/99 9/30/98 9/30/99 9/30/98
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income ............................... $ 150,639 $ 3,004 $ 431,667 $ 12,005 $ 608,102 $ 9,196
Net realized gain (loss) on investments ............. 374,414 (13,740) 289,279 (6,560) 44,912 594
Net change in unrealized appreciation/depreciation
of investments .................................... 56,705 (147,828) (335,144) (176,231) (775,667) (30,569)
----------- ---------- ----------- ---------- ----------- --------
Net increase (decrease) in net assets resulting
from operations ................................... 581,758 (158,564) 385,802 (170,786) (122,653) (20,779)
----------- ---------- ----------- ---------- ----------- --------

DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
A Class .......................................... (16,588) -- (268,006) (4,474) (408,473) (4,448)
B Class .......................................... -- -- (11,355) (1,113) (10,673) (224)
C Class .......................................... -- -- (10,723) (1,914) (3,980) (679)
Institutional Class .............................. (588) -- (1,373) (413) (1,913) (767)
Net realized gain on investments:
A Class .......................................... (5,317) -- (6,916) -- (2,256) --
B Class .......................................... (3,737) -- (1,985) -- (994) --
C Class .......................................... (599) -- (2,649) -- (401) --
Institutional Class .............................. (147) -- (166) -- (149) --
----------- ---------- ----------- ---------- ----------- --------
(26,976) -- (303,173) (7,914) (428,839) (6,118)
----------- ---------- ----------- ---------- ----------- --------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class .......................................... 15,667,690 631,110 22,952,044 1,049,742 22,106,262 469,501
B Class .......................................... 758,187 986,205 652,910 511,331 706,701 27,226
C Class .......................................... 484,774 82,896 302,321 849,953 147,129 124,824
Institutional Class .............................. 9,370 50,000 7,483 50,000 4,114 50,000
Net asset value of shares issued upon reinvestment
of distributions from net investment income and
net realized gain on investments:
A Class .......................................... 21,959 -- 274,932 4,474 410,729 4,448
B Class .......................................... 3,675 -- 13,190 1,113 9,874 23
C Class .......................................... 597 -- 12,919 1,867 4,381 679
Institutional Class .............................. 735 -- 1,539 413 2,062 767
----------- ---------- ---------- ----------- ----------- --------
16,946,987 1,750,211 24,217,338 2,468,893 23,391,252 677,468
----------- ---------- ---------- ----------- ----------- --------
Cost of shares repurchased:
A Class .......................................... (5,256,441) (35,100) (6,789,571) (21,365) (5,122,105) (54,264)
B Class .......................................... (264,719) (2,495) (81,066) (66,283) (499,183) --
C Class .......................................... (73,721) (490) (279,472) (80,544) (80,420) (121)
Institutional Class .............................. (566) -- (531) -- -- --
----------- ---------- ----------- ---------- ----------- --------
(5,595,447) (38,085) (7,150,640) (168,192) (5,701,708) (54,385)
----------- ---------- ----------- ---------- ----------- --------
Increase in net assets derived from capital
share transactions ................................ 11,351,540 1,712,126 17,066,698 2,300,701 17,689,544 623,083
----------- ---------- ----------- --------- ----------- --------

NET INCREASE IN NET ASSETS .......................... 11,906,322 1,553,562 17,149,327 2,122,001 17,138,052 596,186

NET ASSETS:
Beginning of period ................................. 1,553,562 -- 2,122,001 -- 596,186 --
----------- ---------- ----------- ---------- ----------- --------
End of period ....................................... $13,459,884 $1,553,562 $19,271,328 $2,122,001 $17,734,238 $596,186
=========== ========== =========== ========== =========== ========
</TABLE>
- ----------------------
* Date of commencement of trading.

See accompanying notes

<PAGE>

14 for asset allocation

DELAWARE GROUP FOUNDATION FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout the period were
as follows:
<TABLE>
<CAPTION>
GROWTH PORTFOLIO GROWTH PORTFOLIO
A CLASS B CLASS
------------------- --------------------
YEAR 12/31/97(1) YEAR 12/31/97(1)
ENDED TO ENDED TO
9/30/99 9/30/98 9/30/99 9/30/98
<S> <C> <C> <C> <C>
Net asset value, beginning of period .................. $8.170 $8.500 $8.140 $8.500

Income (loss) from investment operations:
Net investment income(2) ........................... 0.138 0.062 0.068 0.014
Net realized and unrealized gain (loss)
on investments ..................................... 1.295 (0.392) 1.287 (0.374)
------- -------- ------- --------
Total from investment operations ................... 1.433 (0.330) 1.355 (0.360)
------- -------- ------- --------

Less dividends and distributions:
Dividends from net investment income ............... (0.078) none none none
Distributions from net realized gain
on investments ..................................... (0.025) none (0.025) none
------- -------- ------- --------
Total dividends and distributions .................. (0.103) none (0.025) none
------- -------- ------- --------
Net asset value, end of period ........................ $9.500 $8.170 $9.470 $8.140
======= ======== ======= ========

Total return(3) ....................................... 17.33% (3.88%) 16.41% (4.24%)

Ratios and supplemental data:
Net assets, end of period (000 omitted) ............ $11,328 $547 $1,561 $885
Ratio of expenses to average net assets ............ 0.80% 0.80% 1.55% 1.55%
Ratio of expenses to average net assets prior
to expense limitation and expenses
paid indirectly .................................. 2.21% 14.36% 2.96% 15.11%
Ratio of net investment income to average
net assets ....................................... 1.45% 0.96% 0.70% 21.00%
Ratio of net investment income (loss) to average
net assets prior to expense limitation and
expenses paid indirectly ......................... 0.04% (12.60%) (0.71%) (13.35%)
Portfolio turnover ................................. 104% 77% 104% 77%
</TABLE>
- ----------------------
(1) Date of commencement of trading; ratios have been annualized and total
return has not been annualized.

(2) Per share information was based on the average shares outstanding method.

(3) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge.

See accompanying notes

<PAGE>

[RESTUBED TABLE FOR ABOVE]
<TABLE>
<CAPTION>
GROWTH PORTFOLIO GROWTH PORTFOLIO
C CLASS INSTITUTIONAL CLASS
--------------------- ---------------------
YEAR 12/31/97(1) YEAR 12/31/97(1)
ENDED TO ENDED TO
9/30/99 9/30/98 9/30/99 9/30/98
<S> <C> <C> <C> <C>
Net asset value, beginning of period .................. $8.140 $8.500 $8.180 $8.500

Income (loss) from investment operations:
Net investment income(2) ........................... 0.067 0.013 0.162 0.078
Net realized and unrealized gain (loss)
on investments ..................................... 1.298 (0.373) 1.303 (0.398)
------- -------- ------- --------
Total from investment operations ................... 1.365 (0.360) 1.465 (0.320)
------- -------- ------- --------

Less dividends and distributions:
Dividends from net investment income ............... none none (0.100) none
Distributions from net realized gain
on investments ..................................... (0.025) none (0.025) none
------- -------- ------- --------
Total dividends and distributions .................. (0.025) none (0.125) none
------- -------- ------- --------
Net asset value, end of period ........................ $9.480 $8.140 $9.520 $8.180
======= ======== ======= ========

Total return(3) ....................................... 16.53% (4.24%) 17.71% (3.77%)

Ratios and supplemental data:
Net assets, end of period (000 omitted) ............ $506 $74 $65 $48
Ratio of expenses to average net assets ............ 1.55% 1.55% 0.55% 0.55%
Ratio of expenses to average net assets prior
to expense limitation and expenses
paid indirectly .................................. 2.96% 15.11% 1.96% 14.11%
Ratio of net investment income to average
net assets ....................................... 0.70% 0.21% 1.70% 1.21%
Ratio of net investment income (loss) to average
net assets prior to expense limitation and
expenses paid indirectly ......................... (0.71%) (13.35%) 0.29% (12.35%)
Portfolio turnover ................................. 104% 77% 104% 77%
</TABLE>

<PAGE>
for asset allocation 15
FINANCIAL HIGHLIGHTS (CONTINUED)

Selected data for each share of the Fund outstanding throughout the period were
as follows:
<TABLE>
<CAPTION>
BALANCED PORTFOLIO BALANCED PORTFOLIO
A CLASS B CLASS
------------------ -------------------
YEAR 12/31/97(1) YEAR 12/31/97(1)
ENDED TO ENDED TO
9/30/99 9/30/98 9/30/99 9/30/98
<S> <C> <C> <C> <C>
Net asset value, beginning of period ....................... $8.130 $8.500 $8.130 $8.500

Income (loss) from investment operations:
Net investment income(2) ................................ 0.249 0.153 0.181 0.104
Net realized and unrealized gain (loss)
on investments ........................................ 0.789 (0.463) 0.787 (0.444)
------ ------ ------ ------
Total from investment operations ........................ 1.038 (0.310) 0.968 (0.340)
------ ------ ------ ------

Less dividends and distributions:
Dividends from net investment income .................... (0.200) (0.060) (0.120) (0.030)
Distributions from net realized gain on investments ..... (0.028) none (0.028) none
------ ------ ------ ------
Total dividends and distributions ....................... (0.228) (0.060) (0.148) (0.030)
------ ------ ------ ------
Net asset value, end of period ............................. $8.940 $8.130 $8.950 $8.130
====== ====== ====== ======

Total return(3) ............................................ 12.52% (3.68%) 11.66% (4.02%)

Ratios and supplemental data:
Net assets, end of period (000 omitted) ................. $17,373 $972 $1,035 $408
Ratio of expenses to average net assets ................. 0.80% 0.80% 1.55% 1.55%
Ratio of expenses to average net assets prior
to expense limitation and expenses
paid indirectly ....................................... 1.57% 12.87% 2.32% 13.62%
Ratio of net investment income to average
net assets ............................................ 2.73% 2.34% 1.98% 1.59%
Ratio of net investment income (loss) to average
net assets prior to expense limitation and
expenses paid indirectly .............................. 1.96% (9.73%) 1.21% (10.48%)
Portfolio turnover ...................................... 93% 73% 93% 73%
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
BALANCED PORTFOLIO BALANCED PORTFOLIO
C CLASS INSTITUTIONAL CLASS
------------------- -------------------
YEAR 12/31/97(1) YEAR 12/31/97(1)
ENDED TO ENDED TO
9/30/99 9/30/98 9/30/99 9/30/98
<S> <C> <C> <C> <C>
Net asset value, beginning of period .......................... $8.140 $8.500 $8.130 $8.500

Income (loss) from investment operations:
Net investment income(2) ................................... 0.182 0.104 0.271 0.169
Net realized and unrealized gain (loss)
on investments ........................................... 0.786 (0.434) 0.792 (0.469)
------ ------ ------ ------
Total from investment operations ........................... 0.968 (0.330) 1.063 (0.300)
------ ------ ------ ------

Less dividends and distributions:
Dividends from net investment income ....................... (0.120) (0.030) (0.225) (0.070)
Distributions from net realized gain on investments ........ (0.028) none (0.028) none
------ ------ ------ ------
Total dividends and distributions .......................... (0.148) (0.030) (0.253) (0.070)
------ ------ ------ ------
Net asset value, end of period ................................ $8.960 $8.140 $8.940 $8.130
====== ====== ====== ======

Total return(3) ............................................... 11.77% (3.90%) 12.83% (3.56%)

Ratios and supplemental data:
Net assets, end of period (000 omitted) .................... $802 $694 $61 $48
Ratio of expenses to average net assets .................... 1.55% 1.55% 0.55% 0.55%
Ratio of expenses to average net assets prior
to expense limitation and expenses
paid indirectly .......................................... 2.32% 13.62% 1.32% 12.62%
Ratio of net investment income to average
net assets ............................................... 1.98% 1.59% 2.98% 2.59%
Ratio of net investment income (loss) to average
net assets prior to expense limitation and
expenses paid indirectly ................................. 1.21% (10.48%) 2.21% (9.48%)
Portfolio turnover ......................................... 93% 73% 93% 73%
</TABLE>
- ----------------------
(1) Date of commencement of trading; ratios have been annualized and total
return has not been annualized.
(2) Per share information was based on the average shares outstanding method.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.

See accompanying notes

<PAGE>

16 for asset allocation

FINANCIAL HIGHLIGHTS (CONTINUED)

Selected data for each share of the Fund outstanding throughout the period were
as follows:
<TABLE>
<CAPTION>
INCOME PORTFOLIO INCOME PORTFOLIO
A CLASS B CLASS
------------------- -------------------
YEAR 12/31/97(1) YEAR 12/31/97(1)
ENDED TO ENDED TO
9/30/99 9/30/98 9/30/99 9/30/98
<S> <C> <C> <C> <C>
Net asset value, beginning of period ................... $8.290 $8.500 $8.290 $8.500

Income (loss) from investment operations:
Net investment income(2) ............................ 0.382 0.250 0.316 0.201
Net realized and unrealized gain (loss)
on investments .................................... 0.198 (0.350) 0.219 (0.331)
------ ------ ------ ------
Total from investment operations .................... 0.580 (0.100) 0.535 (0.130)
------ ------ ------ ------

Less dividends and distributions:
Dividends from net investment income ................ (0.295) (0.110) (0.210) (0.080)
Distributions from net realized gain
on investments .................................... (0.025) none (0.025) none
------ ------ ------ ------
Total dividends and distributions ................... (0.320) (0.110) (0.235) (0.080)
------ ------ ------ ------
Net asset value, end of period ......................... $8.550 $8.290 $8.590 $8.290
====== ====== ====== ======

Total return(3) ........................................ 6.85% (1.21%) 6.18% (1.56%)

Ratios and supplemental data:
Net assets, end of period (000 omitted) ............. $17,239 $398 $243 $26
Ratio of expenses to average net assets ............. 0.80% 0.80% 1.55% 1.55%
Ratio of expenses to average net assets prior
to expense limitation and expenses
paid indirectly ................................... 2.13% 32.95% 2.88% 33.70%
Ratio of net investment income to average
net assets ........................................ 4.34% 3.80% 3.59% 3.05%
Ratio of net investment income (loss) to average
net assets prior to expense limitation and
expenses paid indirectly .......................... 3.01% (28.35%) 2.26% (29.10%)
Portfolio turnover .................................. 73% 81% 73% 81%
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
INCOME PORTFOLIO INCOME PORTFOLIO
C CLASS INSTITUTIONAL CLASS
------------------- -------------------
YEAR 12/31/97(1) YEAR 12/31/97(1)
ENDED TO ENDED TO
9/30/99 9/30/98 9/30/99 9/30/98
<S> <C> <C> <C> <C>
Net asset value, beginning of period ................... $8.290 $8.500 $8.280 $8.500

Income (loss) from investment operations:
Net investment income(2) ............................ 0.316 0.204 0.403 0.266
Net realized and unrealized gain (loss)
on investments .................................... 0.209 (0.334) 0.212 (0.356)
------ ------ ------ ------
Total from investment operations .................... 0.525 (0.130) 0.615 (0.090)
------ ------ ------ ------

Less dividends and distributions:
Dividends from net investment income ................ (0.210) (0.080) (0.310) (0.130)
Distributions from net realized gain
on investments .................................... (0.025) none (0.025) none
------ ------ ------ ------
Total dividends and distributions ................... (0.235) (0.080) (0.335) (0.130)
------ ------ ------ ------
Net asset value, end of period ......................... $8.580 $8.290 $8.560 $8.280
====== ====== ====== ======

Total return(3) ........................................ 6.06% (1.56%) 7.16% (1.10%)

Ratios and supplemental data:
Net assets, end of period (000 omitted) ............. $195 $123 $57 $49
Ratio of expenses to average net assets ............. 1.55% 1.55% 0.55% 0.55%
Ratio of expenses to average net assets prior
to expense limitation and expenses
paid indirectly ................................... 2.88% 33.70% 1.88% 32.70%
Ratio of net investment income to average
net assets ........................................ 3.59% 3.05% 4.59% 4.05%
Ratio of net investment income (loss) to average
net assets prior to expense limitation and
expenses paid indirectly .......................... 2.26% (29.10%) 3.26% (28.10%)
Portfolio turnover .................................. 73% 81% 73% 81%
</TABLE>
- ----------------------
(1) Date of commencement of trading; ratios have been annualized and total
return has not been annualized.
(2) Per share information was based on the average shares outstanding method.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.

See accompanying notes
<PAGE>

for asset allocation 17

DELAWARE GROUP FOUNDATION FUNDS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
Delaware Group Foundation Funds (the "Trust") is registered as a diversified
open-end investment company under the Investment Company Act of 1940, as amended
(the "1940 Act"). The Trust is organized as a Delaware business trust under a
Certificate of Trust dated October 24, 1997 and offers three portfolios: the
Delaware Growth Portfolio ("Growth Portfolio"), the Delaware Balanced Portfolio
("Balanced Portfolio") and the Delaware Income Portfolio ("Income Portfolio")
(individually a "Portfolio" and collectively, the "Portfolios"). Each Portfolio
of the Trust is diversified, as defined by the 1940 Act, and offers four classes
of shares. Class A carries a front-end sales charge of 5.75%. Class B carries a
back-end deferred sales charge, Class C carries a level load deferred sales
charge and the Institutional Class has no sales charge. The Portfolios will
invest in open-end investment companies (mutual funds) that are members of the
Delaware Investments Family of Funds (collectively, the "Underlying Funds"). The
Underlying Funds include funds investing in U.S. and foreign stocks, bonds and
money market instruments.

The investment objective of each Portfolio is as follows:

Growth Portfolio: To seek long-term capital growth.

Balanced Portfolio: To seek capital appreciation with current income as a
secondary objective.

Income Portfolio: To seek a combination of current income and preservation of
capital with capital appreciation.

1. Significant Accounting Policies
The following accounting policies are in accordance with generally accepted
accounting principles and are consistently followed by the Portfolios.

Security Valuation - The market value of the Portfolios' investments in the
Underlying Funds is based on the published net asset value of each share of an
Underlying Fund computed as of the close of regular trading on the New York
Stock Exchange on days when the Exchange is open. Money market instruments
having less than 60 days to maturity are valued at amortized cost, which
approximates market value.

Federal Income Taxes - Each Portfolio intends to continue to qualify as a
regulated investment company and make the requisite distributions to
shareholders. Accordingly, no provision for federal income taxes has been made
in the financial statements. Income and capital gain distributions are
determined in accordance with federal income tax regulations, which may differ
from generally accepted accounting principles.

Class Accounting - Investment income, common expenses and realized and
unrealized gain (loss) on investments are allocated to the various classes of
the Portfolios on the basis of daily net assets of each class. Distribution
expenses relating to a specific class are charged directly to that class.

Repurchase Agreements - The Portfolios may invest in a pooled cash account along
with other members of the Delaware Investments Family of Funds. The aggregate
daily balance of the pooled cash account is invested in repurchase agreements
secured by obligations of the U.S. government. The respective collateral is held
by the Portfolios' custodian bank until the maturity of the respective
repurchase agreements. Each repurchase agreement is at least 100%
collateralized. However, in the event of default or bankruptcy by the
counterparty to the agreement, realization of the collateral may be subject to
legal proceedings.

Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

Other - Expenses common to all funds within the Delaware Investments Family of
Funds are allocated amongst the funds on the basis of average net assets.
Security transactions are recorded on the date the securities are purchased or
sold (trade date). Costs used in calculating

<PAGE>

realized gains and losses on the sale of investment securities are those of the
specific securities sold. Dividend income is recorded on the ex-dividend date
and interest income is recorded on the accrual basis. Each Portfolio declares
and pays distributions from net realized gain on investments, if any, annually
and from net investment income as follows: the Income Portfolio and the Balanced
Portfolio, quarterly and the Growth Portfolio annually.

Certain expenses of the Portfolios are paid through "soft dollar" arrangements
with brokers. These transactions are done subject to best price and execution.
In addition, the Portfolios receive earnings credits from their custodian when
positive cash balances are maintained, which are used to offset custody fees.
The expenses paid under the above arrangements are included in their respective
expense captions on the Statement of Operations with the corresponding offset
shown as "Expenses paid indirectly". The amount of these expenses and credits
for the period ended September 30, 1999 are as follows:

"SOFT DOLLAR" EARNINGS
EXPENSES CREDITS
------------- --------
Growth Portfolio ................ $259 $ 0
Balanced Portfolio .............. $373 $261
Income Portfolio ................ $324 $197

2. Investment Management and Other Transactions with Affiliates
In accordance with the terms of the Investment Management Agreement, each
Portfolio pays Delaware Management Company (DMC), the Investment Manager of each
Portfolio, an annual asset allocation fee which is calculated at the rate of
0.25% (currently waived to 0.10%) of each of the Portfolios' average daily net
assets.

DMC has elected to waive that portion of the management fee and reimburse each
Portfolio to the extent that annual operating expenses, exclusive of taxes,
interest, brokerage commissions, extraordinary expenses and distribution
expenses, exceed 0.55% of average daily net assets of the Portfolios through
June 30, 2000.

The Portfolios have engaged Delaware Service Company, Inc. (DSC), an affiliate
of DMC, to provide dividend disbursing, transfer agent and accounting services.
Each Portfolio pays DSC a monthly fee based on the number of shareholder
accounts, shareholder transactions and average net assets, subject to certain
minimums. At September 30, 1999, the Portfolios had a liability for such fees
and other expenses payable to DSC as follows:

GROWTH BALANCED INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- ---------
$7,612 $8,016 $12,558

Pursuant to the Distribution Agreement, the Portfolios pay Delaware
Distributors, L.P. (DDLP), the Distributor and an affiliate of DMC, an annual
fee not to exceed 0.25% of the average daily net assets of the A Class and 1.00%
of the average daily net assets of the B and C Class. At September 30, 1999, the
Portfolios had a liability for such fees and other expenses payable to DDLP as
follows:

GROWTH BALANCED INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- ---------
$5,718 $7,555 $5,982

For the year ended September 30, 1999, DDLP earned commissions on sales of the A
Class shares for each Portfolio as follows:

GROWTH BALANCED INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- ---------
$42,915 $38,548 $28,171

Certain officers of DMC, DSC and DDLP are officers, trustees and/or employees of
the Portfolios. These officers, directors and employees are paid no compensation
by the Portfolios.

<PAGE>

18 for asset allocation

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------

3. Investments
During the year ended September 30, 1999, the Portfolios made purchases and
sales of investment securities, including shares of the Underlying Funds, other
than U.S. government securities and temporary cash investments as follows:

GROWTH PORTFOLIO BALANCED PORTFOLIO INCOME PORTFOLIO
------------------ -------------------- ------------------
Purchases ..... $22,377,458 $31,199,572 $25,335,446
Sales ......... 10,972,781 14,092,346 9,194,925

At September 30, 1999, the aggregate cost of securities and unrealized
appreciation (depreciation) for federal income tax purposes for each Portfolio
were as follows:

<TABLE>
<CAPTION>
GROWTH PORTFOLIO BALANCED PORTFOLIO INCOME PORTFOLIO
------------------ -------------------- ------------------
<S> <C> <C> <C>
Cost of investments ..................... $13,453,413 $19,903,672 $18,513,609
=========== =========== ===========
Aggregate unrealized appreciation ....... $ 309,740 $ 327,317 $ 105,769
Aggregate unrealized depreciation ....... (489,627) (955,244) (975,983)
----------- ----------- -----------
Net unrealized depreciation ............. ($179,887) ($627,927) ($870,214)
=========== =========== ===========
</TABLE>

4. Capital Stock
Transactions in capital stock shares were as follows:

<TABLE>
<CAPTION>
GROWTH PORTFOLIO BALANCED PORTFOLIO INCOME PORTFOLIO
-------------------- ----------------------- ---------------------
YEAR 12/31/97* YEAR 12/31/97* YEAR 12/31/97*
ENDED TO ENDED TO ENDED TO
9/30/99 9/30/98 9/30/99 9/30/98 9/30/99 9/30/98
<S> <C> <C> <C> <C> <C> <C>
Shares sold:
A Class ........................................... 1,668,679 70,740 2,536,969 121,481 2,501,936 3,642
B Class ........................................... 83,142 109,008 72,833 57,342 82,008 3,085
C Class ........................................... 52,132 9,145 34,165 95,236 16,945 14,782
Institutional Class ............................... 950 5,882 823 5,882 470 5,882

Shares issued upon reinvestment of distributions
from net investment income and net realized
gain on investments:
A Class ........................................... 2,382 -- 30,428 540 47,302 523
B Class ........................................... 398 -- 1,463 133 1,128 3
C Class ........................................... 64 -- 1,433 222 502 81
Institutional Class ............................... 80 -- 171 49 237 90
--------- -------- --------- ------- --------- ------
1,807,827 194,775 2,678,285 280,885 2,650,528 78,088
--------- -------- --------- ------- --------- ------
Shares repurchased:
A Class ........................................... (545,940) (3,857) (742,675) (2,506) (582,005) (6,138)
B Class ........................................... (27,503) (276) (8,853) (7,313) (57,950) 0
C Class ........................................... (7,945) (55) (31,351) (10,225) (9,577) (14)
Institutional Class ............................... (57) 0 (58) 0 0 0
--------- -------- --------- ------- --------- ------
(581,445) (4,188) (782,937) (20,044) (649,532) (6,152)
--------- -------- --------- ------- --------- ------
Net increase ......................................... 1,226,382 190,587 1,895,348 260,841 2,000,996 71,936
========= ======= ========= ======= ========= ======
</TABLE>

- ----------------------
* Commencement of trading.

<PAGE>

5. Line of Credit
Committed lines of credit were $500,000 for the Growth Portfolio and $700,000
for the Balanced Portfolio and $600,000 for the Income Portfolio. No amount was
outstanding at September 30, 1999, or at any time during the fiscal year.

6. Tax Information (Unaudited)
The information set forth below is for each Fund's fiscal year as required by
federal laws. Shareholders, however, must report distributions on a calendar
year basis for income tax purposes, which may include distributions for portions
of two fiscal years of a fund. Accordingly, the information needed by
shareholders for income tax purposes will be sent to them in early 2000. Please
consult your tax advisor for proper treatment of this information.

For the fiscal year ended September 30, 1999, each Fund designates as long term
capital gains, ordinary income, and tax-exempt income distributions paid during
the year as follows:

<TABLE>
<CAPTION>
LONG TERM CAPITAL ORDINARY INCOME TAX-EXEMPT TOTAL DISTRIBUTIONS
FUND GAINS DISTRIBUTIONS DISTRIBUTIONS INTEREST (TAX BASIS)
- ---------------------------- ---------------------- ---------------- ------------ ---------------------
<S> <C> <C> <C> <C>
Foundation Growth Portfolio 36% 64% -- 100%
Foundation Balanced Portfolio 96% 4% -- 100%
Foundation Income Portfolio 99% 1% -- 100%
</TABLE>

<PAGE>

for asset allocation 19

DELAWARE GROUP FOUNDATION FUNDS
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
DELAWARE GROUP FOUNDATION FUNDS

We have audited the accompanying statements of net assets of Delaware Group
Foundation Funds (the "Funds") (comprised of the Delaware Growth, Delaware
Balanced and Delaware Income Portfolios) as of September 30, 1999, and the
related statements of operations for the year then ended, and the statements of
changes in net assets and the financial highlights for the year then ended and
the period December 31, 1997 (commencement of operations) through September 30,
1998. These financial statements and financial highlights are the responsibility
of the Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of September 30, 1999, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective Portfolios constituting the Delaware Group Foundation Funds at
September 30, 1999, the results of their operations for the year then ended, and
the changes in their net assets and their financial highlights for the year then
ended and the period December 31, 1997 (commencement of operations) through
September 30, 1998, in conformity with generally accepted accounting principles.

/s/ Ernst & Young LLP

Philadelphia, Pennsylvania
November 8, 1999

<PAGE>

DELAWARE INVESTMENTS FAMILY OF FUNDS

FOR GROWTH OF CAPITAL
Delaware Select Growth Fund
Delaware Trend Fund
Delaware DelCap Fund
Delaware Small Cap Value Fund
Delaware U.S. Growth Fund
Delaware Growth Stock Fund
Delaware Tax-Efficient Equity Fund
Delaware Social Awareness Fund

FOR TOTAL RETURN
Delaware Blue Chip Fund
Delaware Devon Fund
Delaware Growth and Income Fund
Delaware Decatur Equity Income Fund
Delaware REIT Fund
Delaware Balanced Fund

FOR INTERNATIONAL DIVERSIFICATION
Delaware Emerging Markets Fund
Delaware New Pacific Fund
Delaware Overseas Equity Fund
Delaware International Equity Fund
Delaware Global Equity Fund
Delaware Global Bond Fund

<PAGE>

FOR CURRENT INCOME
Delaware Delchester Fund
Delaware High-Yield Opportunities Fund
Delaware Strategic Income Fund
Delaware Corporate Bond Fund
Delaware Extended Duration Bond Fund
Delaware American Government Bond Fund
Delaware U.S. Government Securities Fund
Delaware Limited-Term Government Fund

FOR TAX-EXEMPT INCOME
Delaware National High-Yield Municipal Bond Fund
Delaware Tax-Free USA Fund
Delaware Tax-Free Insured Fund
Delaware Tax-Free USA Intermediate Fund
Delaware State Tax-Free Funds*

MONEY MARKET FUNDS
Delaware Cash Reserve
Delaware Tax-Free Money Fund

ASSET ALLOCATION FUNDS
Delaware Foundation Funds
Growth Portfolio
Balanced Portfolio
Income Portfolio

* Available for the following states: Arizona, California, Colorado, Florida,
Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, North Dakota, New Jersey,
New Mexico, New York, Ohio, Oregon, Pennsylvania, Wisconsin. Insured and
intermediate bond funds are available in selected states.

funds

(photo of computer keyboard)

<PAGE>

THIS ANNUAL REPORT IS FOR THE INFORMATION OF DELAWARE GROUP FOUNDATION FUNDS
SHAREHOLDERS, but it may be used with prospective investors when preceded or
accompanied by a current Prospectus, which sets forth details about charges,
expenses, investment objectives and operating policies of each Fund. You should
read the prospectus carefully before you invest. Summary investment results are
documented in each Fund's current Statement of Additional Information. The
figures in this report represent past results which are not a guarantee of
future results. The return and principal value of an investment in each Fund
will fluctuate so that shares, when redeemed, may be worth more or less than
their original cost.

Board of Trustees

WAYNE A. STORK
Chairman
Delaware Investments Family of Funds
Philadelphia, PA

WALTER P. BABICH
Board Chairman, Citadel Constructors, Inc.
King of Prussia, PA

DAVID K. DOWNES
President and Chief Executive Officer
Delaware Investments Family of Funds
Philadelphia, PA

JOHN H. DURHAM
Private Investor
Horsham, PA

ANTHONY D. KNERR
Consultant, Anthony Knerr & Associates
New York, NY

ANN R. LEVEN
Treasurer, National Gallery of Art
Washington, DC

THOMAS F. MADISON
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN

CHARLES E. PECK
Retired
Fredericksburg, VA

JAN L. YEOMANS
Vice President and Treasurer
3M Corporation
St. Paul, Minnesota

<PAGE>

Affiliated Officers

RICHARD J. FLANNERY
Executive Vice President and General Counsel
Delaware Investments Family of Funds
Philadelphia, PA

BRUCE D. BARTON
President and Chief Executive Officer
Delaware Distributors, L.P.
Philadelphia, PA

ERIC E. MILLER
Senior Vice President, Secretary
and Deputy General Counsel
Delaware Investments Family of Funds
Philadelphia, PA

(photo of globes)

directors
& officers

INVESTMENT MANAGER
Delaware Management Company
Philadelphia, Pennsylvania

INTERNATIONAL AFFILIATE
Delaware International Advisers Ltd.
London, England

NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
Philadelphia, Pennsylvania

SHAREHOLDER SERVICING,
DIVIDEND DISBURSING
AND TRANSFER AGENT
Delaware Service Company, Inc.
Philadelphia, Pennsylvania

1818 Market Street
Philadelphia, PA 19103-3682

<PAGE>

(photo of globes)

When used with prospective investors, this report must be preceded or
accompanied by a current Delaware Foundation Funds Prospectus and the Delaware
Investments Performance Update for the most recently completed calendar quarter.
For a prospectus of any other mutual fund from Delaware Investments, contact
your financial adviser or Delaware.

For Shareholders
1.800.523.1918

For Securities Dealers
1.800.362.7500

For Financial Institutions
Representatives Only
1.800.659.2265

www.delawareinvestments.com

[LOGO]

Be sure to consult your financial adviser when making investments. Mutual funds
can be a valuable part of your financial plan; however, shares of the Fund are
not FDIC or NCUSIF insured, are not guaranteed by any bank or any credit union,
and involve investment risk, including the possible loss of the principal amount
invested. Shares of the Fund are not bank or credit union deposits.

Printed in the USA
on recycled paper

(J5116)(2279)
AR-444[9/99]PPL11/99