DELAWARE GROUP FOUNDATION FUNDS
A CLASS/B CLASS/C CLASS
SUPPLEMENT DATED APRIL 23, 1999
TO PROSPECTUS DATED NOVEMBER 30, 1998
The Income Portfolio, Balanced Portfolio and Growth
Portfolio of Delaware Group Foundation Funds are adding four
new Underlying Funds from the Delaware Investments Family of
Funds: the Corporate Bond Fund (Fixed Income), the Extended
Duration Bond Fund (Fixed Income), the Diversified Growth
Fund (U.S. Equity) and the Diversified Value Fund (U.S.
Equity).
The following information supplements the Underlying Fund
Information Table on page 5 of the Prospectus:
Underlying Fund Adviser Management Fee Expense Ratio*
Corporate Bond Manager 0.50% 0.55%
Extended Duration Manager 0.55% 0.55%
Diversified Growth Manager 0.75% 1.20%
Diversified Value Manager 0.65% 0.75%
* Includes management and other fees. Reflects voluntary
waiver and payment of fees by the investment manager.
U.S. Equity Funds
The following supplements the discussion beginning on page
14 of the Prospectus regarding Underlying Funds investing
primarily in U.S. equity securities.
Diversified Growth Fund. The investment objective of
Diversified Growth Fund is to seek capital appreciation. It
seeks to achieve its objective by investing, under normal
market conditions, primarily in equity securities of large-
sized companies that the Manager believes exhibit growth
potential that exceeds the average anticipated growth rate
of companies included in the S&P 500. Diversified Growth
Fund will generally consider large-sized companies to
include those in the Russell 1000 Index. Diversified Growth
Fund will generally invest in companies currently having a
market capitalization of at least $3 billion, although it
may invest in securities with lower market capitalizations.
The Manager will select the securities of companies that
have one or more of the following characteristics in
relation to the market as represented by the S&P 500 Index:
a lower dividend yield, stronger balance sheet, lower debt
ratio, high expected earnings growth, or favorable trend in
earnings estimates.
The Manager will rank a broad universe of stocks using
quantitative models that assess each company on a variety of
growth and value characteristics. The model used for
Diversified Growth Fund weights growth characteristics
higher than value characteristics. Generally speaking, a
growth oriented strategy typically concentrates on stocks
with earnings that the Manager believes will grow faster
than the overall market. A value orientation, on the other
hand, focuses on stocks that the Manager believes are
undervalued in price and will eventually be recognized by
the market. A composite ranking is generated which seeks to
identify companies with the most attractive characteristics.
The Manager then performs qualitative assessments of these
companies in selecting securities that it believes will best
help the Fund achieve its objective. In selecting portfolio
securities, the Manager will structure a portfolio that is
weighted towards those securities that are more highly
ranked by the quantitative models.
Diversified Value Fund. The investment objective of
Diversified Value Fund is to seek capital appreciation with
current income as a secondary objective. The Diversified
Value Fund seeks to achieve its objective by investing
primarily in dividend-paying stocks and income producing
securities that are convertible into common stocks.
Diversified Value Fund will generally invest in companies
currently having a market capitalization of at least $1
billion.
The Manager ranks a broad universe of stocks using both
value characteristics (low price-to-earnings ratio, low
price to book ratio, low price to cashflow ratio) and growth
characteristics (favorable trends in earnings estimates).
The model used for Diversified Value Fund weights value
characteristics higher than growth characteristics. A
composite ranking is generated which seeks to identify
companies with favorable valuations and/or improving
fundamentals. Based on the ranking, the Manager then does
fundamental research on the most attractive companies. A
combination of these two analyses is used to select stocks
for Diversified Value Fund's portfolio. In selecting
portfolio securities, the Manger will structure a portfolio
that is weighted towards those securities that are more
highly ranked by the quantitative models.
Diversified Growth Fund and Diversified Value Fund. While
it is anticipated that Diversified Growth Fund and
Diversified Value Fund will invest principally in common
stock and securities that are convertible into common stock,
they may invest in all available types of equity securities,
including without limitation, preferred stock and warrants.
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.
Up to 20% of Diversified Growth Fund's and Diversified Value
Fund's total assets may be invested directly or indirectly
in foreign securities, including investments in American,
European and Global Depositary Receipts. Diversified Growth
Fund and Diversified Value Fund may also engage in short
sales. Diversified Growth Fund and Diversified Value Fund
may enter into futures contracts on stocks, stock indices
and foreign currencies, and purchase or sell options on such
futures contracts. These activities will not be entered
into for speculative purposes, but rather for hedging
purposes and to facilitate the ability to quickly deploy
into the stock market Diversified Growth Fund's and
Diversified Value Fund's positions in cash, short-term debt
securities and other money market instruments, at times when
their respective 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 Diversified Growth Fund and Diversified
Value Fund, respectively.
Fixed Income Funds
The following supplements the discussion beginning on page
22 of the Prospectus regarding Underlying Funds investing
primarily in fixed income securities.
Corporate Bond Fund and Extended Duration Fund. The
investment objective of each of Corporate Bond Fund and
Extended Duration Fund is to seek total return. Each of
Corporate Bond Fund and Extended Duration Fund seeks to
achieve its objective by investing at least 65% of its
assets at the time of purchase in investment grade corporate
bonds, that is corporate bonds rated BBB or higher by S&P or
Baa or higher 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.
The Corporate Bond Fund will seek to maintain an average
duration of between 4 and 7 years and the Extended Duration
Bond Fund will seek to maintain an average duration of
between 8 and 11 years. The average duration of a Fund's
portfolio provides a measure of a Fund's interest-rate
sensitivity. In general, the longer a Fund's duration, the
more sensitive the Fund is to shifts in interest rates.
Each of Corporate Bond Fund and Extended Duration 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. Each of Corporate
Bond Fund and Extended Duration Fund may acquire zero-coupon
bonds and, to a lesser extent, pay-in-kind (PIK) bonds. Each
of Corporate Bond Fund and Extended Duration 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. Each of Corporate Bond Fund and Extended
Duration 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. Each of Corporate Bond Fund and Extended
Duration Fund will not purchase illiquid assets, if more
than 15% of its net assets would consist of such illiquid
securities. Each of Corporate Bond Fund and Extended
Duration Fund may invest up to 20% of its net assets in high
yield, higher risk fixed-income securities, which are
commonly called "junk" bonds and are considered to be
speculative. Each of Corporate Bond Fund and Extended
Duration Fund may invest up to 15% of its total assets in
securities of issuers domiciled in foreign countries.
DELAWARE GROUP FOUNDATION FUNDS
INCOME PORTFOLIO INSTITUTIONAL/BALANCED
PORTFOLIO INSTITUTIONAL/GROWTH PORTFOLIO INSTITUTIONAL
SUPPLEMENT DATED APRIL 23, 1999
TO PROSPECTUS DATED NOVEMBER 30, 1998
The Income Portfolio, Balanced Portfolio and Growth
Portfolio of Delaware Group Foundation Funds are adding four
new Underlying Funds from the Delaware Investments Family of
Funds: the Corporate Bond Fund (Fixed Income), the Extended
Duration Bond Fund (Fixed Income), the Diversified Growth
Fund (U.S. Equity) and the Diversified Value Fund (U.S.
Equity).
The following information supplements the Underlying Fund
Information Table on page 3 of the Prospectus:
Underlying Fund Adviser Management Fee Expense Ratio*
Corporate Bond Manager 0.50% 0.55%
Extended Duration Manager 0.55% 0.55%
Diversified Growth Manager 0.75% 1.20%
Diversified Value Manager 0.65% 0.75%
* Includes management and other fees. Reflects voluntary
waiver and payment of fees by the investment manager.
U.S. Equity Funds
The following supplements the discussion beginning on page
9 of the Prospectus regarding Underlying Funds investing
primarily in U.S. equity securities.
Diversified Growth Fund. The investment objective of
Diversified Growth Fund is to seek capital appreciation. It
seeks to achieve its objective by investing, under normal
market conditions, primarily in equity securities of large-
sized companies that the Manager believes exhibit growth
potential that exceeds the average anticipated growth rate
of companies included in the S&P 500. Diversified Growth
Fund will generally consider large-sized companies to
include those in the Russell 1000 Index. Diversified Growth
Fund will generally invest in companies currently having a
market capitalization of at least $3 billion, although it
may invest in securities with lower market capitalizations.
The Manager will select the securities of companies that
have one or more of the following characteristics in
relation to the market as represented by the S&P 500 Index:
a lower dividend yield, stronger balance sheet, lower debt
ratio, high expected earnings growth, or favorable trend in
earnings estimates.
The Manager will rank a broad universe of stocks using
quantitative models that assess each company on a variety of
growth and value characteristics. The model used for
Diversified Growth Fund weights growth characteristics
higher than value characteristics. Generally speaking, a
growth oriented strategy typically concentrates on stocks
with earnings that the Manager believes will grow faster
than the overall market. A value orientation, on the other
hand, focuses on stocks that the Manager believes are
undervalued in price and will eventually be recognized by
the market. A composite ranking is generated which seeks to
identify companies with the most attractive characteristics.
The Manager then performs qualitative assessments of these
companies in selecting securities that it believes will best
help the Fund achieve its objective. In selecting portfolio
securities, the Manager will structure a portfolio that is
weighted towards those securities that are more highly
ranked by the quantitative models.
Diversified Value Fund. The investment objective of
Diversified Value Fund is to seek capital appreciation with
current income as a secondary objective. The Diversified
Value Fund seeks to achieve its objective by investing
primarily in dividend-paying stocks and income producing
securities that are convertible into common stocks.
Diversified Value Fund will generally invest in companies
currently having a market capitalization of at least $1
billion.
The Manager ranks a broad universe of stocks using both
value characteristics (low price-to-earnings ratio, low
price to book ratio, low price to cashflow ratio) and growth
characteristics (favorable trends in earnings estimates).
The model used for Diversified Value Fund weights value
characteristics higher than growth characteristics. A
composite ranking is generated which seeks to identify
companies with favorable valuations and/or improving
fundamentals. Based on the ranking, the Manager then does
fundamental research on the most attractive companies. A
combination of these two analyses is used to select stocks
for Diversified Value Fund's portfolio. In selecting
portfolio securities, the Manger will structure a portfolio
that is weighted towards those securities that are more
highly ranked by the quantitative models.
Diversified Growth Fund and Diversified Value Fund. While
it is anticipated that Diversified Growth Fund and
Diversified Value Fund will invest principally in common
stock and securities that are convertible into common stock,
they may invest in all available types of equity securities,
including without limitation, preferred stock and warrants.
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.
Up to 20% of Diversified Growth Fund's and Diversified Value
Fund's total assets may be invested directly or indirectly
in foreign securities, including investments in American,
European and Global Depositary Receipts. Diversified Growth
Fund and Diversified Value Fund may also engage in short
sales. Diversified Growth Fund and Diversified Value Fund
may enter into futures contracts on stocks, stock indices
and foreign currencies, and purchase or sell options on such
futures contracts. These activities will not be entered
into for speculative purposes, but rather for hedging
purposes and to facilitate the ability to quickly deploy
into the stock market Diversified Growth Fund's and
Diversified Value Fund's positions in cash, short-term debt
securities and other money market instruments, at times when
their respective 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 Diversified Growth Fund and Diversified
Value Fund, respectively.
Fixed Income Funds
The following supplements the discussion beginning on page
19 of the Prospectus regarding Underlying Funds investing
primarily in fixed income securities.
Corporate Bond Fund and Extended Duration Fund. The
investment objective of each of Corporate Bond Fund and
Extended Duration Fund is to seek total return. Each of
Corporate Bond Fund and Extended Duration Fund seeks to
achieve its objective by investing at least 65% of its
assets at the time of purchase in investment grade corporate
bonds, that is corporate bonds rated BBB or higher by S&P or
Baa or higher 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.
The Corporate Bond Fund will seek to maintain an average
duration of between 4 and 7 years and the Extended Duration
Bond Fund will seek to maintain an average duration of
between 8 and 11 years. The average duration of a Fund's
portfolio provides a measure of a Fund's interest-rate
sensitivity. In general, the longer a Fund's duration, the
more sensitive the Fund is to shifts in interest rates.
Each of Corporate Bond Fund and Extended Duration 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. Each of Corporate
Bond Fund and Extended Duration Fund may acquire zero-coupon
bonds and, to a lesser extent, pay-in-kind (PIK) bonds. Each
of Corporate Bond Fund and Extended Duration 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. Each of Corporate Bond Fund and Extended
Duration 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. Each of Corporate Bond Fund and Extended
Duration Fund will not purchase illiquid assets, if more
than 15% of its net assets would consist of such illiquid
securities. Each of Corporate Bond Fund and Extended
Duration Fund may invest up to 20% of its net assets in high
yield, higher risk fixed-income securities, which are
commonly called "junk" bonds and are considered to be
speculative. Each of Corporate Bond Fund and Extended
Duration Fund may invest up to 15% of its total assets in
securities of issuers domiciled in foreign countries.
