<PAGE>
DELAWARE
INVESTMENTS
-----------
Philadelphia o London
Delaware Foundation Funds
Income Portfolio
Balanced Portfolio
Growth Portfolio
Class A o Class B o Class C
Prospectus
December 30, 1999
Asset Allocation Funds
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the accuracy of this prospectus, and any
representation to the contrary is a criminal offense.
<PAGE>
Table of contents
Fund profiles page 2
Delaware Foundation Funds Income Portfolio 2
Delaware Foundation Funds Balanced Portfolio 4
Delaware Foundation Funds Growth Portfolio 6
How we manage the Funds page 9
Our investment strategies 9
The securities we typically invest in 11
The risks of investing in the Funds 16
Who manages the Funds page 20
Investment manager 20
Portfolio managers 20
Fund administration (Who's who) 21
About your account page 22
Investing in the Funds 22
Choosing a share class 22
How to reduce your sales charge 24
How to buy shares 25
Retirement plans 26
How to redeem shares 27
Account minimums 28
Special services 28
Dividends, distributions and taxes 30
Certain management considerations page 30
Financial highlights page 31
<PAGE>
Profile: Delaware Foundation Funds Income Portfolio
What are the Fund's goals?
The Delaware Foundation Funds Income Portfolio seeks a combination of current
income and preservation of capital with capital appreciation. Although the Fund
will strive to meet its goals, there is no assurance that it will.
What are the Fund's main investment strategies?
We invest primarily in shares of selected Delaware Investments funds including
equity and fixed-income funds. We may also invest in individual securities. We
use an active asset allocation approach in selecting investments for the Fund.
In striving to meet its objective, the Fund would typically have a larger
percentage of its assets allocated to fixed-income funds and securities
(generally at least 45%) than to equity funds and securities (generally at least
20%). The Fund may allocate up to 10% to international funds and securities.
What are the main risks of investing in the Fund?
Investing in any mutual fund involves risk, including the risk that you may lose
part or all of the money you invest. The value of your investment in the Fund
will increase and decrease according to changes in the value of the securities
in the Fund's portfolio. This Fund is subject to the same risks as the
underlying Delaware Investments funds that it invests in. Therefore, to the
extent that it invests in equity funds, it will be affected by declines in stock
prices. To the extent that it invests in fixed-income funds, it will be affected
by changes in interest rates. If interest rates rise, the value of the bonds in
the portfolio will decline, and the Fund's share value could decline as well.
Because the Fund may invest in as few as four different underlying funds or a
small number of securities, it is considered a non-diversified investment
company under the Investment Company Act of 1940 and may be subject to greater
risk than if it were diversified. However, the underlying Delaware Investments
funds generally hold a broad mix of securities, which helps to lessen this risk.
For a more complete discussion of risk, please turn to "The risks of investing
in the Funds."
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
Who should invest in the Fund
o Investors who are in the wealth preservation phase, generally with lower
risk tolerance.
o Investors in the pre-retirement or retirement phase, looking for an
increase in income.
o Investors who want a portfolio with broad diversification across various
types of securities and active asset allocation by a professional money
manager.
Who should not invest in the Fund
o Investors with short-term financial goals.
o Investors whose primary goal is capital appreciation.
o Investors who are unwilling to accept share prices that may fluctuate,
sometimes significantly, over the short term.
You should keep in mind that an investment in the Fund is not a complete
investment program; it should be considered just one part of your total
financial plan. Be sure to discuss this Fund with your financial adviser to
determine whether it is an appropriate choice for you.
<PAGE>
How has the Fund performed?
This bar chart and table can help you evaluate the potential risks of investing
in the Fund. We show the return for the Fund's Class A shares for the past
calendar year as well as the average annual return of all shares for one year.
The Fund's past performance does not necessarily indicate how it will perform in
the future. The returns reflect expense caps. The returns would be lower without
the expense caps.
[GRAPHIC OMITTED: BAR CHART TOTAL RETURN (CLASS A)]
Total return (Class A)
-----
1998
-----
6.24%
-----
The Fund`s Class A had a -0.65% year-to-date return as of September 30, 1999.
During the period illustrated in this bar chart, Class A's highest quarterly
return was 7.54% for the quarter ended December 31, 1998 and its lowest
quarterly return was -6.34% for the quarter ended September 30, 1998.
The maximum Class A sales charge of 5.75%, which is normally deducted when you
purchase shares, is not reflected in the total returns above or in the bar
chart. If this fee were included, the returns would be less than those shown.
The average annual returns for the Fund shown in the table on page 3 do include
the sales charges.
Average annual returns as of 12/31/98
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
CLASS A B (if redeemed)* C (if redeemed)* Lehman Brothers
(Inception 12/31/97) (Inception 12/31/97) (Inception 12/31/97) Aggregate Bond Index
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 year 0.12% 0.87% 4.63% 8.69%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
The Fund's returns are compared to the performance of the Lehman Brothers
Aggregate Bond Index. You should remember that unlike the Fund, the Index is
unmanaged and doesn't include the costs of operating a mutual fund, such as the
costs of buying, selling, and holding the securities. In addition, the Index is
not a perfect comparision to the Fund because the Fund invests in a variety of
asset classes, not represented in the Index, including equity securities,
international securities and high-yielding corporate bonds.
* If shares were not redeemed, the return for Class B would be 5.87% and the
return for Class C would be 5.63%.
<PAGE>
What are the Fund's fees and expenses?
Sales charges are fees paid directly from your investments when you buy or sell
shares of the Fund.
<TABLE>
<CAPTION>
CLASS A B C
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum sales charge (load) imposed on
purchases as a percentage of offering price 5.75% none none
- ---------------------------------------------------------------------------------------------
Maximum contingent deferred sales charge (load)
as a percentage of original purchase price or
redemption price, whichever is lower none(1) 5%(2) 1%(3)
- ---------------------------------------------------------------------------------------------
Maximum sales charge (load) imposed on
reinvested dividends none none none
- ---------------------------------------------------------------------------------------------
Redemption fees none none none
- ---------------------------------------------------------------------------------------------
Annual fund operating expenses are deducted from the Fund's assets.
- ---------------------------------------------------------------------------------------------
Management fees(4) 0.10% 0.10% 0.10%
- ---------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.25%(5) 1.00% 1.00%
- ---------------------------------------------------------------------------------------------
Other expenses 1.78% 1.78% 1.78%
- ---------------------------------------------------------------------------------------------
Total annual fund operating expenses 2.13% 2.88% 2.88%
- ---------------------------------------------------------------------------------------------
Fee waivers and payments(6) (1.33%) (1.33%) (1.33%)
- ---------------------------------------------------------------------------------------------
Net expenses 0.80% 1.55% 1.55%
- ---------------------------------------------------------------------------------------------
</TABLE>
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds with similar investment
objectives. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 with an annual 5% return over the time shown.(7) This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
<TABLE>
<CAPTION>
CLASS(8) A B B C C
(if redeemed) (if redeemed)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 year $652 $158 $658 $158 $258
- ---------------------------------------------------------------------------------------------------------------------------
3 years $1,082 $766 $1,066 $766 $766
- ---------------------------------------------------------------------------------------------------------------------------
5 years $1,538 $1,401 $1,601 $1,401 $1,401
- ---------------------------------------------------------------------------------------------------------------------------
10 years $2,796 $2,929 $2,929 $3,109 $3,109
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
This example is also based on a hypothetical investment of $10,000 with an
annual 5% return over the time shown but assumes the net expenses of the
Delaware Foundation Funds Income Portfolio noted above. In this example we have
also included an estimate of the average aggregate total operating expenses of
the Delaware Investments funds as described on page 8. When the Fund invests in
any of these funds, it absorbs a portion of their underlying expenses. This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
<TABLE>
<CAPTION>
CLASS(8) A B B C C
(if redeemed) (if redeemed)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 year $750 $261 $761 $261 $361
- ---------------------------------------------------------------------------------------------------------------------------
3 years $1,117 $802 $1,102 $802 $802
- ---------------------------------------------------------------------------------------------------------------------------
5 years $1,508 $1,370 $1,570 $1,370 $1,370
- ---------------------------------------------------------------------------------------------------------------------------
10 years $2,599 $2,732 $2,732 $2,915 $2,915
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) A purchase of Class A shares of $1 million or more may be made at net asset
value. However, if you buy the shares through a financial adviser who is
paid a commission, a contingent deferred sales charge will apply to certain
redemptions. Additional Class A purchase options that involve a contingent
deferred sales charge may be permitted from time to time and will be
disclosed in the prospectus if they are available.
(2) If you redeem Class B shares during the first year after you buy them, you
will pay a contingent deferred sales charge of 5%, which declines to 4%
during the second year, 3% during the third and fourth years, 2% during the
fifth year, 1% during the sixth year, and 0% thereafter.
(3) Class C shares redeemed within one year of purchase are subject to a 1%
contingent deferred sales charge.
(4) The investment manager has contracted to limit its management fee to no
more than 0.10% of average daily net assets through November 30, 2000.
(5) The Board of Trustees set the 12b-1 fee for Class A shares at 0.25%. The
maximum annual 12b-1 plan expenses permitted under the 12b-1 plan for Class
A shares are 0.30% of average daily net assets.
(6) The investment manager has contracted to waive fees and pay expenses
through November 30, 2000 in order to prevent total operating expenses
(excluding any 12b-1 expenses, taxes, interest, brokerage fees and
extraordinary expenses) from exceeding 0.55% of average daily net assets.
(7) The Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. Also, this example reflects the net
operating expenses with expense waivers for the one-year period and the
total operating expenses without expense waivers for years two through 10.
(8) The Class B example reflects the conversion of Class B shares to Class A
shares after approximately eight years. Information for the ninth and tenth
years reflects expenses of the Class A shares.
<PAGE>
Profile: Delaware Foundation Funds Balanced Portfolio
What are the Fund's goals?
The Delaware Foundation Funds Balanced Portfolio seeks capital appreciation with
current income as a secondary objective. Although the Fund will strive to meet
its goals, there is no assurance that it will.
What are the Fund's main investment strategies?
We invest primarily in shares of selected Delaware Investments funds including
equity, fixed-income and international funds. We may also invest in individual
securities. We use an active asset allocation approach in selecting investments
for the Fund.
The Fund has the flexibility to invest more in equity funds and securities or
more in fixed-income funds and securities, depending on market conditions.
However, it will typically invest at least 25% in fixed-income securities or
fixed-income funds. The Fund will typically invest between 5% and 20% of its
assets in international funds and securities.
What are the main risks of investing in the Fund?
Investing in any mutual fund involves risk, including the risk that you may lose
part or all of the money you invest. The value of your investment in the Fund
will increase and decrease according to changes in the value of the securities
in the Fund's portfolio. This Fund is subject to the same risks as the
underlying Delaware Investments funds that it invests in. Therefore, to the
extent that it invests in equity funds, it will be affected by declines in stock
prices. To the extent that it invests in fixed-income funds, it will be affected
by changes in interest rates. If interest rates rise, the value of the bonds in
the portfolio will decline, and the Fund's share value could decline as well. To
the extent that it invests in international funds or securities, the Fund will
be affected by changes in currency exchange rates as well as political, economic
and regulatory conditions in the countries represented in its portfolio.
Because the Fund may invest in as few as four different underlying funds or a
small number of securities, it is considered a non-diversified investment
company under the Investment Company Act of 1940 and may be subject to greater
risk than if it were diversified. However, the underlying Delaware Investments
funds generally hold a broad mix of securities, which helps to lessen this risk.
For a more complete discussion of risk, please turn to "The risks of investing
in the Funds."
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
Who should invest in the Fund
o Investors who are in the wealth accumulation phase, generally with moderate
risk tolerance.
o Investors looking for the capital appreciation potential of the stock
market and the income potential of the bond market.
o Investors who would like a portfolio with broad diversification across
various types of securities and active asset allocation by a professional
money manager.
Who should not invest in the Fund
o Investors with short-term financial goals.
o Investors whose primary goal is high current income.
o Investors who are unwilling to accept share prices that may fluctuate,
sometimes significantly, over the short term.
You should keep in mind that an investment in the Fund is not a complete
investment program; it should be considered just one part of your total
financial plan. Be sure to discuss this Fund with your financial adviser to
determine whether it is an appropriate choice for you.
<PAGE>
How has the Fund performed?
This bar chart and table can help you evaluate the potential risks of investing
in the Fund. We show the return for the Fund's Class A shares for the past
calendar year as well as the average annual returns of all shares for one year.
The Fund's past performance does not necessarily indicate how it will perform in
the future. The returns reflect expense caps. The returns would be lower without
the expense caps.
[GRAPHIC OMITTED: BAR CHART TOTAL RETURN(CLASS A)]
Total return (Class A)
-----
1998
-----
7.44%
-----
The Fund`s Class A had a 0.88% year-to-date return as of September 30, 1999.
During the period illustrated in this bar chart, Class A's highest quarterly
return was 11.54% for the quarter ended December 31, 1998 and its lowest
quarterly return was -9.64% for the quarter ended September 30, 1998.
The maximum Class A sales charge of 5.75%, which is normally deducted when you
purchase shares, is not reflected in the total returns above or in the bar
chart. If this fee were included, the returns would be less than those shown.
The average annual returns for the Fund shown in the table on page 5 do include
the sales charges.
How has the Fund performed? (continued)
Average annual returns for the period ending 12/31/98
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
CLASS A B (if C (if S&P 500 Lehman Brothers
(Inception redeemed)* redeemed)* Composite Stock Aggregate Bond
12/31/97) (Inception (Inception Index Index
12/31/97) 12/31/97)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 year 1.25% 1.89% 6.12% 28.74% 8.69%
- -------------------------------------------------------------------------------------------
</TABLE>
The Fund's returns are compared to the performance of the S&P 500 Composite
Stock Index and the Lehman Brothers Aggregate Bond Index. You should remember
that unlike the Fund, the indexes are unmanaged and don't reflect the actual
costs of operating a mutual fund, such as the costs of buying, selling, and
holding securities. Neither index is a perfect comparison to Delaware Foundation
Funds Balanced Portfolio since the S&P 500 does not include fixed-income
securities and the Lehman Brothers Aggregate Bond Index does not include stocks.
* If shares were not redeemed, the returns for Class B would be 6.89% and the
return for Class C would be 7.12%.
<PAGE>
What are the Fund's fees and expenses?
Sales charges are fees paid directly from your investments when you buy or sell
shares of the Fund.
<TABLE>
<CAPTION>
CLASS A B C
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum sales charge (load) imposed on
purchases as a percentage of offering price 5.75% none none
- ------------------------------------------------------------------------------------------------
Maximum contingent deferred sales charge (load)
as a percentage of original purchase price or
redemption price, whichever is lower none(1) 5%(2) 1%(3)
- ------------------------------------------------------------------------------------------------
Maximum sales charge (load) imposed on
reinvested dividends none none none
- ------------------------------------------------------------------------------------------------
Redemption fees none none none
- ------------------------------------------------------------------------------------------------
Annual fund operating expenses are deducted from the Fund's assets.
- ------------------------------------------------------------------------------------------------
Management fees(4) 0.10% 0.10% 0.10%
- ------------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.25%(5) 1.00% 1.00%
- ------------------------------------------------------------------------------------------------
Other expenses 1.22% 1.22% 1.22%
- ------------------------------------------------------------------------------------------------
Total annual fund operating expenses 1.57% 2.32% 2.32%
- ------------------------------------------------------------------------------------------------
Fee waivers and payments(6) (0.77%) (0.77%) (0.77%)
- ------------------------------------------------------------------------------------------------
Net expenses 0.80% 1.55% 1.55%
- ------------------------------------------------------------------------------------------------
</TABLE>
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds with similar investment
objectives. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 with an annual 5% return over the time shown.(7) This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
CLASS(8) A B B C C
(if redeemed) (if redeemed)
- --------------------------------------------------------------------------------
1 year $652 $158 $658 $158 $258
- --------------------------------------------------------------------------------
3 years $971 $651 $951 $651 $651
- --------------------------------------------------------------------------------
5 years $1,312 $1,170 $1,370 $1,170 $1,170
- --------------------------------------------------------------------------------
10 years $2,273 $2,408 $2,408 $2,597 $2,597
- --------------------------------------------------------------------------------
This example is also based on a hypothetical investment of $10,000 with an
annual 5% return over the time shown but assumes the net expenses of the
Delaware Foundation Funds Balanced Portfolio noted above. In this example we
have also included an estimate of the average aggregate total operating expenses
of the Delaware Investments funds as described on page 8. When the Fund invests
in any of these funds, it absorbs a portion of their underlying expenses. This
is an example only, and does not represent future expenses, which may be greater
or less than those shown here.
<PAGE>
CLASS(8) A B B C C
(if redeemed) (if redeemed)
- --------------------------------------------------------------------------------
1 year $760 $271 $771 $271 $371
- --------------------------------------------------------------------------------
3 years $1,146 $832 $1,132 $832 $832
- --------------------------------------------------------------------------------
5 years $1,557 $1,420 $1,620 $1,420 $1,420
- --------------------------------------------------------------------------------
10 years $2,699 $2,831 $2,831 $3,012 $3,012
- --------------------------------------------------------------------------------
(1) A purchase of Class A shares of $1 million or more may be made at net asset
value. However, if you buy the shares through a financial adviser who is
paid a commission, a contingent deferred sales charge will apply to certain
redemptions. Additional Class A purchase options that involve a contingent
deferred sales charge may be permitted from time to time and will be
disclosed in the prospectus if they are available.
(2) If you redeem Class B shares during the first year after you buy them, you
will pay a contingent deferred sales charge of 5%, which declines to 4%
during the second year, 3% during the third and fourth years, 2% during the
fifth year, 1% during the sixth year, and 0% thereafter.
(3) Class C shares redeemed within one year of purchase are subject to a 1%
contingent deferred sales charge.
(4) The investment manager has contracted to limit its management fee to no
more than 0.10% of average daily net assets through November 30, 2000.
(5) The Board of Trustees set the 12b-1 fee for Class A shares at 0.25%. The
maximum annual 12b-1 plan expenses permitted under the 12b-1 plan for Class
A shares are 0.30% of average daily net assets.
(6) The investment manager has contracted to waive fees and pay expenses
through November 30, 2000 in order to prevent total operating expenses
(excluding any 12b-1 expenses, taxes, interest, brokerage fees and
extraordinary expenses) from exceeding 0.55% of average daily net assets.
(7) The Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. Also, this example reflects the net
operating expenses with expense waivers for the one-year period and total
operating expenses without expense waivers for years two through 10.
(8) The Class B example reflects the conversion of Class B shares to Class A
shares after approximately eight years. Information for the ninth and tenth
years reflects expenses of the Class A shares.
<PAGE>
Profile: Delaware Foundation Funds Growth Portfolio
What are the Fund's goals?
The Delaware Foundation Funds Growth Portfolio seeks long-term capital growth.
Although the Fund will strive to meet its goals, there is no assurance that it
will.
What are the Fund's main investment strategies?
We invest primarily in shares of selected Delaware Investments funds including
equity funds and to a lesser extent, fixed-income funds. We may also invest in
individual securities. We use an active asset allocation approach in selecting
investments for the Fund. In striving to meet its objective, the Fund will
typically invest more of its assets in equity funds and securities than in
fixed-income funds and securities. Typically, the Fund will invest between 10%
and 30% of its assets in international funds or securities.
What are the main risks of investing in the Fund?
Investing in any mutual fund involves risk, including the risk that you may lose
part or all of the money you invest. The value of your investment in the Fund
will increase and decrease according to changes in the value of the securities
in the Fund's portfolio. This Fund is subject to the same risks as the
underlying Delaware Investments funds that it invests in. Therefore, to the
extent that it invests in equity funds, it will be affected by declines in stock
prices. To the extent that it invests in fixed-income funds, it will be affected
by changes in interest rates. If interest rates rise, the value of the bonds in
the portfolio would decline, and the value of Fund shares could decline as well.
To the extent that it invests in international funds or securities, the Fund
will be affected by changes in currency exchange rates as well as political,
economic and regulatory conditions in the countries represented in its
portfolio.
Because the Fund may invest in as few as four different underlying funds or a
small number of securities, it is considered a non-diversified investment
company under the Investment Company Act of 1940 and may be subject to greater
risk than if it were diversified. However, because the underlying Delaware
Investments funds generally hold a broad mix of securities, which help to lessen
this risk. For a more complete discussion of risk, please turn to "The risks of
investing in the Funds."
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
Who should invest in the Fund
o Investors who are in the earlier stage of wealth accumulation, generally
with higher risk tolerance.
o Investors looking for the capital appreciation potential of the stock
market and who have no need for current income.
o Investors who would like a portfolio with broad diversification across
various types of securities and active asset allocation by a professional
money manager.
Who should not invest in the Fund
o Investors with short-term financial goals.
o Investors whose primary goal is current income.
o Investors who are unwilling to accept share prices that may fluctuate,
sometimes significantly, over the short term.
You should keep in mind that an investment in the Fund is not a complete
investment program; it should be considered just one part of your total
financial plan. Be sure to discuss this Fund with your financial adviser to
determine whether it is an appropriate choice for you.
<PAGE>
How has the Fund performed?
This bar chart and table can help you evaluate the potential risks of investing
in the Fund. We show the return for the Fund's Class A shares for the past
calendar year as well as the average annual returns of all shares for one year.
The Fund's past performance does not necessarily indicate how it will perform in
the future. The returns reflect expense caps. The returns would be lower without
the expense caps.
[GRAPHIC OMITTED: BAR CHART TOTAL RETURN (CLASS A)]
Total return (Class A)
------
1998
------
10.28%
------
The Fund`s Class A had a 2.27% year-to-date return as of September 30, 1999.
During the period illustrated in this bar chart, Class A's highest quarterly
return was 14.73% for the quarter ended December 31, 1998 and its lowest
quarterly return was -11.58% for the quarter ended September 30, 1998.
The maximum Class A sales charge of 5.75%, which is normally deducted when you
purchase shares, is not reflected in the total returns above or in the bar
chart. If this fee were included, the returns would be less than those shown.
The average annual returns for the Fund shown in the table on page 7 do include
the sales charges.
Average annual returns for the period ending 12/31/98
- --------------------------------------------------------------------------------
CLASS A B (if C (if S&P 500
(Inception redeemed)* redeemed)* Composite Stock
12/31/97) (Inception (Inception Index
12/31/97) 12/31/97)
- --------------------------------------------------------------------------------
1 year 3.92% 4.71% 8.71% 28.74%
- --------------------------------------------------------------------------------
The Fund's returns are compared to the performance of the S&P 500 Composite
Stock Index. You should remember that unlike the Fund, the index is unmanaged
and doesn't reflect the actual costs of operating a mutual fund, such as the
costs of buying, selling, and holding securities.
The Index is not a perfect comparison for the Fund because the Fund may invest
in fixed-income and international securities which are not included in the
Index.
* If shares were not redeemed, the return for Class B and Class C would be
9.71%.
<PAGE>
What are the Fund's fees and expenses?
Sales charges are fees paid directly from your investments when you buy or sell
shares of the Fund.
<TABLE>
<CAPTION>
CLASS A B C
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum sales charge (load) imposed on
purchases as a percentage of offering price 5.75% none none
- ------------------------------------------------------------------------------------------------
Maximum contingent deferred sales charge (load)
as a percentage of original purchase price or
redemption price, whichever is lower none(1) 5%(2) 1%(3)
- ------------------------------------------------------------------------------------------------
Maximum sales charge (load) imposed on
reinvested dividends none none none
- ------------------------------------------------------------------------------------------------
Redemption fees none none none
- ------------------------------------------------------------------------------------------------
Annual fund operating expenses are deducted from the Fund's assets.
- ------------------------------------------------------------------------------------------------
Management fees(4) 0.10% 0.10% 0.10%
- ------------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.25%(5) 1.00% 1.00%
- ------------------------------------------------------------------------------------------------
Other expenses 1.86% 1.86% 1.86%
- ------------------------------------------------------------------------------------------------
Total annual fund operating expenses 2.21% 2.96% 2.96%
- ------------------------------------------------------------------------------------------------
Fee waivers and payments(6) (1.41%) (1.41%) (1.41%)
- ------------------------------------------------------------------------------------------------
Net expenses 0.80% 1.55% 1.55%
- ------------------------------------------------------------------------------------------------
</TABLE>
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds with similar investment
objectives. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 with an annual 5% return over the time shown.(7) This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
CLASS(8) A B B C C
(if redeemed) (if redeemed)
- --------------------------------------------------------------------------------
1 year $652 $158 $658 $158 $258
- --------------------------------------------------------------------------------
3 years $1,098 $783 $1,083 $783 $783
- --------------------------------------------------------------------------------
5 years $1,570 $1,433 $1,633 $1,433 $1,433
- --------------------------------------------------------------------------------
10 years $2,869 $3,002 $3,002 $3,180 $3,180
- --------------------------------------------------------------------------------
This example is also based on a hypothetical investment of $10,000 with an
annual 5% return over the time shown but assumes the net expenses of the
Delaware Foundation Funds Growth Portfolio noted above. In this example we have
also included an estimate of the average aggregate total operating expenses of
the Delaware Investments funds as described on page 8. When the Fund invests in
any of these funds, it absorbs a portion of their underlying expenses. This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
<PAGE>
CLASS(8) A B B C C
(if redeemed) (if redeemed)
- --------------------------------------------------------------------------------
1 year $760 $271 $771 $271 $371
- --------------------------------------------------------------------------------
3 years $1,146 $832 $1,132 $832 $832
- --------------------------------------------------------------------------------
5 years $1,557 $1,420 $1,620 $1,420 $1,420
- --------------------------------------------------------------------------------
10 years $2,699 $2,831 $2,831 $3,012 $3,012
- --------------------------------------------------------------------------------
(1) A purchase of Class A shares of $1 million or more may be made at net asset
value. However, if you buy the shares through a financial adviser who is
paid a commission, a contingent deferred sales charge will apply to certain
redemptions. Additional Class A purchase options that involve a contingent
deferred sales charge may be permitted from time to time and will be
disclosed in the prospectus if they are available.
(2) If you redeem Class B shares during the first year after you buy them, you
will pay a contingent deferred sales charge of 5%, which declines to 4%
during the second year, 3% during the third and fourth years, 2% during the
fifth year, 1% during the sixth year, and 0% thereafter.
(3) Class C shares redeemed within one year of purchase are subject to a 1%
contingent deferred sales charge.
(4) The investment manager has contracted to limit its management fee to no
more than 0.10% of average daily net assets through November 30, 2000.
(5) The Board of Trustees set the 12b-1 fee for Class A shares at 0.25%. The
maximum annual 12b-1 plan expenses permitted under the 12b-1 plan for Class
A shares are 0.30% of average daily net assets.
(6) The investment manager has contracted to waive fees and pay expenses
through November 30, 2000 in order to prevent total operating expenses
(excluding any 12b-1 expenses, taxes, interest, brokerage fees and
extraordinary expenses) from exceeding 0.55% of average daily net assets.
(7) The Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. Also, this example reflects the net
operating expenses with expense waivers for the one-year period and total
operating expenses without expense waivers for years two through 10.
(8) The Class B example reflects the conversion of Class B shares to Class A
shares after approximately eight years. Information for the ninth and tenth
years reflects expenses of the Class A shares.
<PAGE>
Profiles (continued)
Indirect expenses paid by the Delaware Foundation Funds
Because the Delaware Foundations Funds invest primarily in other Delaware
Investments funds, they will be shareholders of those funds. Like all
shareholders, the Delaware Foundation Funds will indirectly bear a proportionate
share of any management fees and other expenses of the funds it holds. These
fees, which are deducted from the underlying funds before their share prices are
calculated, are in addition to the fees and expenses described in each Delaware
Foundation Fund profile. Depending on which funds are held in each Delaware
Foundation Fund portfolio, the fees will vary over time. However, in order to
give you an idea of what these fees might be, we have calculated an average
expense ratio for each Delaware Foundation Fund, based on the expense ratios of
the Delaware Investments funds for each of their most recent fiscal years and
the Delaware Foundation Funds' portfolio allocations as of September 30, 1999.
Based on these hypothetical calculations, the combined average expense ratio of
the Delaware Investments funds that is borne indirectly by each of the Delaware
Foundation Funds would have been as follows:
Income Portfolio 1.03%
Balanced Portfolio 1.13%
Growth Portfolio 1.13%
Expenses will differ depending on how the Delaware Foundation Funds allocate
assets among the Delaware Investments funds.
<PAGE>
How we manage the Funds
Our investment strategies
In order to meet the changing needs of investors throughout their lives,
Delaware Foundation Funds offer three different portfolios with varying levels
of income and growth potential and corresponding variations in risk. From the
most conservative (the Delaware Foundation Funds Income Portfolio) to the
moderate (the Delaware Foundation Funds Balanced Portfolio) to the most
aggressive (the Delaware Foundation Funds Growth Portfolio), each Fund relies on
active asset allocation and invests in a range of Delaware Investments mutual
funds as they strive to attain their objectives.
We take a disciplined approach to investing, combining investment strategies and
risk management techniques that can help shareholders meet their goals.
Each Delaware Foundation Fund is a type of mutual fund known as a fund-of-funds.
A fund-of-funds typically invests in other mutual funds rather than individual
securities. The potential benefits of such a strategy are three-fold:
1. An extra layer of diversification through shared ownership in the individual
securities held by the underlying funds;
2. Access to the investment expertise of multiple portfolio managers and
analysts who work on the individual underlying funds; and
3. A professional portfolio manager who makes asset allocation decisions.
We offer the Delaware Foundation Funds because we determined that a
fund-of-funds was an efficient way to provide active asset allocation services
to meet the needs of investors at various stages of their life and wealth
accumulation efforts. Our active asset allocation strategy begins with an
evaluation of three key factors:
o the expected return of specific asset classes such as equities or fixed-income
securities;
o the expected volatility or degree to which returns of each asset class have
varied from one period to the next; and
o the correlation of various asset classes, that is, the degree to which two
asset classes move up or down together.
After using this information to determine how much of each Delaware Foundation
Fund will be allocated to a particular asset class, we then select specific
Delaware Investments funds for the portfolio. We have identified a select group
of funds that suit the allocation strategies of the Delaware Foundation Funds
and have grouped them into four broad asset classes.
<PAGE>
How to use
this glossary
The glossary includes definitions of investment terms used throughout the
prospectus. If you would like to know the meaning of an investment term that is
not explained in the text please check the glossary.
Amortized cost
Amortized cost is a method used to value a fixed-income security that starts
with the face value of the security and then adds or subtracts from that value
depending on whether the purchase price was greater or less than the value of
the security at maturity. The amount greater or less than the par value is
divided equally over the time remaining until maturity.
Capital
The amount of money you invest.
Glossary A-C
<PAGE>
How we manage the Funds (continued)
The Delaware Investments funds we typically invest in are listed below in their
respective asset classes. Groupings are approximate and based on the core
strategy of each individual fund. Management may add or delete funds from this
list without shareholder approval.
Delaware Investments Funds available to the Delaware Foundation Funds
U.S. Equities
Delaware Blue Chip Fund Delaware Research Fund
Delaware DelCap Fund Delaware Select Growth Fund
Delaware Devon Fund Delaware Small Cap Value Fund
Delaware Diversified Growth Fund Delaware Trend Fund
Delaware Diversified Value Fund Delaware U.S. Growth Fund
Delaware REIT Fund
International Equities
Delaware Emerging Markets Fund Delaware International Small Cap Fund
Delaware International Equity Fund Delaware New Pacific Fund
Fixed-Income
Delaware American Government Bond Fund Delaware Global Bond Fund.
Delaware Corporate Bond Fund Delaware High-Yield Opportunities Fund
Delaware Delchester Fund Delaware Limited-Term Government Fund
Delaware Extended Duration Bond Fund
Money Market
Delaware Cash Reserve Fund
Once we select appropriate investments for each Delaware Foundation Funds
portfolio, we continually monitor the market and economic environments, the
risk/reward profiles of each asset class and the performance of individual funds
and actively adjust each Delaware Foundation Funds portfolio, striving to meet
its investment objective.
The Delaware Foundation Funds' investment objectives are non-fundamental. This
means that the Board of Trustees may change an objective without obtaining
shareholder approval. If an objective were changed, we would notify shareholders
before the change became effective.
<PAGE>
Capital appreciation
An increase in the value of an investment.
Capital gains distributions
Payments to mutual fund shareholders of profits (realized gains) from the sale
of a fund's portfolio securities. Usually paid once a year; may be either
short-term gains or long-term gains.
Commission
The fee an investor pays to a financial adviser for investment advice and help
in buying or selling mutual funds, stocks, bonds or other securities.
Compounding
Earnings on an investment's previous earnings.
Consumer Price Index (CPI)
Measurement of U.S. inflation; represents the price of a basket
of commonly purchased goods.
C-D
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
The securities we typically invest in How we use them
- ---------------------------------------------------------------------------------------------------------------------------
Delaware Foundation Delaware Foundation Delaware Foundation
Funds Income Portfolio Funds Balanced Portfolio Funds Growth Portfolio
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. equity funds or U.S. equity 20% to 50% of Assets 35% to 65% of Assets 45% to 75% of Assets
securities May include Delaware
Investments funds in the equity
asset class or individual
equity securities. -------------------------------------------------------------------------------
Each Fund may invest in one or more of the mutual funds listed below.
- ---------------------------------------------------------------------------------------------------------------------------
Delaware Blue Chip Fund Delaware Blue Chip Fund seeks long-term capital appreciation. Current income is
a secondary objective. It invests primarily in large ("blue chip") companies.
- ---------------------------------------------------------------------------------------------------------------------------
Delaware Growth and Income Fund Delaware Growth and Income Fund seeks long-term growth by investing primarily in
securities that provide the potential for income and capital appreciation
without undue risk to principal. It invests primarily in dividend-paying stocks
of large, well-established companies.
- ---------------------------------------------------------------------------------------------------------------------------
Delaware DelCap Fund Delaware DelCap Fund seeks long-term capital growth. It invests primarily in
common stocks and convertible securities of medium-sized companies believed to
have growth potential.
- ---------------------------------------------------------------------------------------------------------------------------
Delaware Devon Fund Delaware Devon Fund seeks current income and capital appreciation. It invests
primarily in income-producing common stocks.
- ---------------------------------------------------------------------------------------------------------------------------
Delaware Diversified Growth Fund Delaware Diversified Growth Fund seeks capital appreciation. It invests
primarily in large companies believed to have the potential to grow faster than
the average company in the S&P 500 Index.
- ---------------------------------------------------------------------------------------------------------------------------
Delaware Diversified Value Fund Delaware Diversified Value Fund seeks capital appreciation with current income
as a secondary objective. It invests primarily in dividend-paying stocks or
income-producing securities that are convertible into common stocks.
- ---------------------------------------------------------------------------------------------------------------------------
Delaware REIT Fund Delaware REIT Fund seeks maximum long-term total return, with capital
appreciation as a secondary objective. It invests primarily in real estate
investment trusts (REITs) and other companies in the real estate industry.
- ---------------------------------------------------------------------------------------------------------------------------
Delaware Research Fund Delaware Research Fund seeks to provide long-term capital growth. It invests
primarily in 20 to 30 exchange traded equity securities that are held by other
Delaware Investments funds.
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
The securities we typically invest in How we use them
- ---------------------------------------------------------------------------------------------------------------------------
Delaware Foundation Delaware Foundation Delaware Foundation
Funds Income Portfolio Funds Balanced Portfolio Funds Growth Portfolio
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Delaware Select Growth Fund Delaware Select Growth Fund seeks long-term capital appreciation, which the Fund
attempts to achieve by investing primarily in equity securities of companies of
all sizes that the Manager believes have the potential for high earnings growth.
- ---------------------------------------------------------------------------------------------------------------------------
Delaware Small Cap Value Fund Delaware Small Cap Value Fund seeks capital appreciation. It invests primarily
in small cap companies that are believed to be undervalued.
- ---------------------------------------------------------------------------------------------------------------------------
Delaware Trend Fund Delaware Trend Fund seeks capital appreciation by investing primarily in
securities of emerging or other growth-oriented companies. It focuses on small
companies that are believed to be responsive to changes in the marketplace and
that have the fundamental characteristics to support continued growth.
- ---------------------------------------------------------------------------------------------------------------------------
Delaware U.S. Growth Fund Delaware U.S. Growth Fund seeks maximum capital appreciation. It invests
primarily in large company growth stocks.
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Contingent deferred sales
charge (CDSC)
Fee charged by some mutual funds when shares are redeemed (sold back to the
fund) within a set number of years; an alternative method for investors to
compensate a financial adviser for advice and service, rather than an up-front
commission.
Cost basis
The original purchase price of an investment, used in determining capital gains
and losses.
Depreciation
A decline in an investment's value.
Diversification
The process of spreading investments among a number of different securities,
asset classes or investment styles to reduce the risks of investing.
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
The securities we typically invest in How we use them
- ---------------------------------------------------------------------------------------------------------------------------
Delaware Foundation Delaware Foundation Delaware Foundation
Funds Income Portfolio Funds Balanced Portfolio Funds Growth Portfolio
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fixed-income funds or fixed-income 45% to 75% of Assets 25% to 55% of Assets 5% to 35% of Assets
securities May include Delaware Investments
funds in the fixed-income asset class
or individual fixed-income securities.
-------------------------------------------------------------------------------
Each Fund may invest in one or more of the mutual funds listed below.
- ---------------------------------------------------------------------------------------------------------------------------
Delaware American Government Delaware American Government Bond Fund seeks high current income consistent with
Bond Fund safety of principal by investing primarily in debt obligations issued or
guaranteed by the U.S. government, its agencies or instrumentalities, including
mortgage-backed securities.
- ---------------------------------------------------------------------------------------------------------------------------
Delaware Corporate Bond Fund Delaware Corporate Bond Fund seeks to provide investors with total return. It
invests primarily in investment grade corporate bonds of intermediate duration.
- ---------------------------------------------------------------------------------------------------------------------------
Delaware Extended Duration Bond Fund Delaware Extended Duration Bond Fund seeks to provide investors with total
return. It invests primarily in investment grade corporate bonds of relatively
longer duration.
- ---------------------------------------------------------------------------------------------------------------------------
Delaware Delchester Fund Delaware Delchester Fund seeks as high a current income as is consistent with
providing reasonable safety. It invests primarily in high-yield, higher risk
corporate bonds, commonly known as "junk bonds."
- ---------------------------------------------------------------------------------------------------------------------------
Delaware Global Bond Fund Delaware Global Bond Fund seeks current income consistent with preservation of
principal. It invests primarily in fixed-income securities that may also provide
the potential for capital appreciation. At least 65% of its assets will be
invested in three different countries, including the U.S.
- ---------------------------------------------------------------------------------------------------------------------------
Delaware Limited-Term Delaware Limited-Term Government Fund seeks to provide a high stable level of
Government Fund current income, while attempting to minimize fluctuations in principal and
provide maximum liquidity. It invests primarily in short and intermediate-term
fixed income securities issued or guaranteed by the U.S. government as well as
instruments backed by those securities.
- ---------------------------------------------------------------------------------------------------------------------------
Delaware High-Yield Delaware High-Yield Opportunities Fund seeks to provide investors with total
Opportunities Fund return and, as a secondary objective, high current income. It invests primarily
in high-yield, higher risk corporate bonds, commonly known as "junk bonds."
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Dividend distribution
Payments to mutual fund shareholders of dividends passed along from the fund's
portfolio of securities.
Expense ratio
A mutual fund's total operating expenses, expressed as a percentage of its total
net assets. Operating expenses are the costs of running a mutual fund, including
management fees, offices, staff, equipment and expenses related to maintaining
the fund's portfolio of securities and distributing its shares. They are paid
from the fund's assets before any earnings are distributed to shareholders.
Financial adviser
Financial professional (e.g., broker, banker, accountant, planner or insurance
agent) who analyzes clients' finances and prepares personalized programs to meet
objectives.
D-M
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
The securities we typically invest in How we use them
- ---------------------------------------------------------------------------------------------------------------------------
Delaware Foundation Delaware Foundation Delaware Foundation
Funds Income Portfolio Funds Balanced Portfolio Funds Growth Portfolio
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Money market funds or money market 0-35% of Assets 0-35% of Assets 0-35% of Assets
securities May include Delaware Cash
Reserve, a money market fund, individual
money market securities or repurchase
agreements.
- ---------------------------------------------------------------------------------------------------------------------------
Delaware Cash Reserve Fund Delaware Cash Reserve Fund seeks to provide maximum current income, while
preserving principal and maintaining liquidity. As a money market fund, it
invests in highly liquid money market instruments.
- ---------------------------------------------------------------------------------------------------------------------------
Repurchase agreements: An agreement The Delaware Foundation Funds may use overnight repurchase agreements to invest
between a buyer, such as a Fund, and cash prior to investing it in other funds or securities, or for temporary
seller of securities in which the seller defensive purposes. A Fund will only enter into repurchase agreements in which
agrees to buy the securities back within a the collateral is composed of U.S. government securities.
specified time at the same price the
buyer paid for them, plus an amount equal
to an agreed upon interest rate.
Repurchase agreements are often viewed as
equivalent to cash.
- ---------------------------------------------------------------------------------------------------------------------------
International equity funds or 0-10% of Assets 5% to 20% of Assets 10%-30% of Assets
international equity securities
May include Delaware Investments funds in
the international equity asset class or
individual international equity -------------------------------------------------------------------------------
securities. Each Fund may invest in one or more of the mutual funds listed below.
- ---------------------------------------------------------------------------------------------------------------------------
Delaware Emerging Markets Fund Delaware Emerging Markets Fund seeks long-term capital appreciation. It invests
primarily in companies located in under-developed, emerging market countries.
- ---------------------------------------------------------------------------------------------------------------------------
Delaware International Equity Fund Delaware International Equity Fund seeks long-term growth without undue risk to
principal. It invests primarily in large companies located in developed
countries.
- ---------------------------------------------------------------------------------------------------------------------------
Delaware International Small Cap Fund Delaware International Small Cap Fund seeks to achieve long-term capital
appreciation. It invests primarily in small companies located in foreign
countries.
- ---------------------------------------------------------------------------------------------------------------------------
Delaware New Pacific Fund Delaware New Pacific Fund seeks to maximize long-term capital appreciation by
investing primarily in equity securities of companies that are domiciled in or
have their principal business activities in countries located in the Pacific
Basin.
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Inflation
The increase in the cost of goods and services over time. U.S. inflation is
frequently measured by changes in the Consumer Price Index (CPI).
Investment goal
The objective, such as long-term capital growth or high current income, that a
mutual fund pursues.
Lehman Brothers Aggregate Bond Index
An index that measures the performance of about 6,500 U.S. corporate and
government bonds.
Management fee
The amount paid by a mutual fund to the investment adviser for management
services, expressed as an annual percentage of the fund's average daily net
assets.
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
The securities we typically invest in How we use them
- ---------------------------------------------------------------------------------------------------------------------------
Delaware Foundation Delaware Foundation Delaware Foundation
Funds Income Portfolio Funds Balanced Portfolio Funds Growth Portfolio
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Other types of securities which may be
held by the Delaware Foundation Funds.
- ---------------------------------------------------------------------------------------------------------------------------
Options and futures: Options represent a We might use options or futures to gain exposure to a particular market segment
right to buy or sell a security or without purchasing individual funds or securities in that segment. We might use
group of securities at an agreed upon this approach if we had excess cash that we wanted to invest quickly or to make
price at a future date. The purchaser of an investment without disrupting one of the other Delaware Investments funds.
an option may or may not choose to go
through with the transaction. We might also use options or futures to neutralize the effect of potential price
declines without selling securities.
Futures contracts are agreements for the
purchase or sale of a security or group Use of these strategies can increase the operating costs of the Funds and can
of securities at a specified price, on a lead to loss of principal.
specified date. Unlike an option, a
futures contract must be executed unless
it is sold before the settlement date.
Options and futures are generally
considered to be derivative securities.
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Borrowing from banks
The Delaware Foundation Funds may borrow money as a temporary measure for
extraordinary purposes or to facilitate redemptions. Borrowing money could
result in the Funds being unable to meet their investment objectives.
Temporary defensive positions
The Delaware Foundation Funds are permitted to make temporary investments in
bonds, cash or cash equivalents and may allocate 100% of their net assets to
Delaware Cash Reserve Fund in response to unfavorable market conditions. To the
extent that a Fund engages in temporary defensive measures, it may be unable to
achieve its objective.
Portfolio turnover
Though we anticipate that each of the Delaware Foundation Funds will have an
annual portfolio turnover of less than 100%, some of the funds that the Delaware
Foundation Funds may invest in could have turnover rates greater than 100%. A
turnover rate of 100% would occur if a fund sold and replaced securities valued
at 100% of its net assets within one year. High turnover rates in the individual
funds held by the Delaware Foundation Funds could result in higher expenses.
<PAGE>
Market capitalization
The value of a corporation determined by multiplying the current market price of
a share of common stock by the number of shares held by shareholders. A
corporation with one million shares outstanding and the market price per share
of $10 has a market capitalization of $10 million.
National Association of Securities Dealers (NASD)
A self-regulating organization, consisting of brokerage firms (including
distributors of mutual funds), that is responsible for overseeing the actions of
its members.
Net asset value (NAV)
The daily dollar value of one mutual fund share. Equal to a fund's net assets
divided by the number of shares outstanding.
M-P
<PAGE>
More About the Delaware Foundation Funds
Guidelines for Purchasing and Redeeming Shares of Other Delaware Investments
funds
Following is important information about how the Delaware Foundation Funds
operate, which you should consider when evaluating the Funds.
o Each Delaware Foundation Funds portfolio will invest in the institutional
class shares of approved Delaware Investments funds. When investing in
Delaware Cash Reserve Fund, Class A will be used. This means the Foundation
Funds will pay no sales charges or 12b-1 distribution fees on the shares that
they purchase.
o Each Foundation Funds' portfolio will indirectly bear a share of fees and
expenses that apply to the institutional classes of the Delaware Investments
funds they hold. For more information about this, see page 8.
o Any performance reported for the Delaware Foundation Funds will include the
impact of all fund expenses whether they are related to the Delaware
Foundation Funds or the underlying funds they invest in.
o We have adopted Asset Allocation Guidelines for our purchase and sale of other
Delaware Investments funds. If the manager of the Delaware Foundation Funds
anticipates that a purchase or redemption will disrupt the investment
strategies of another fund, the manager will confer with the portfolio
managers of that fund to determine how to minimize adverse affects on both
funds. Such steps might include staggering the timing and amounts of the
transactions. As a result, the Delaware Foundation Funds might not be able to
purchase or redeem shares of other Delaware Investments funds in the exact
manner they would like to. This could decrease the total return or increase
the volatility of each Foundation Fund.
o Because many Delaware Investments funds are managed independently by different
individuals or investment teams, there is no overall coordination of purchases
and sales of individual securities. Therefore, it is possible that one of the
funds held by a Delaware Foundation Funds portfolio or the Delaware Foundation
Funds themselves might be acquiring securities at the same time another is
selling them. This could increase transaction costs.
<PAGE>
Preferred stock
Preferred stock has preference over common stock in the payment of dividends and
liquidation of assets. Preferred stocks also often pay dividends at a fixed rate
and are sometimes convertible into common stock.
Price-to-earnings ratio
A measure of a stock's value calculated by dividing the current market price of
a share of stock by its annual earnings per share. A stock selling for $100 per
share with annual earnings per share of $5 has a P/E of 20.
Principal
Amount of money you invest (also called capital). Also refers to a bond's
original face value, due to be repaid at maturity.
Prospectus
The official offering document that describes a mutual fund, containing
information required by the SEC, such as investment objectives, policies,
services and fees.
<PAGE>
How we manage the Funds (continued)
The risks of investing in the Funds
Investing in any mutual fund involves risk, including the risk that you may
receive little or no return on your investment, and the risk that you may lose
part or all of the money you invest. Before you invest in the Funds you should
carefully evaluate the risks. An investment in the Funds typically provides the
best results when held for a number of years. The following are the chief risks
you assume when investing in the Funds. Please see the Statement of Additional
Information for further discussion of these risks and the other risks not
discussed here.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Risks Degree to which the Funds are subject to this risk and
How we strive to manage the risk
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Delaware Delaware Delaware
Foundation Foundation Foundation Funds
Funds Income Funds Balanced Growth Portfolio
Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Market risk is the risk that all or a Most of the underlying Delaware Investments funds and the
majority of the securities in a certain Delaware Foundation Funds themselves are subject to this
market--like the stock or bond market-- risk. In all Funds, we generally maintain a long-term
will decline in value because of factors investment approach and focus on securities we believe can
such as economic conditions, future appreciate over an extended time frame regardless of interim
expectations or investor confidence. market fluctuations. Though we may hold securities for any
amount of time, we typically do not trade for short-term
purposes.
Each Fund may hold a substantial part of its assets in cash or
cash equivalents as a temporary, defensive strategy.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Risks Degree to which the Funds are subject to this risk and
How we strive to manage the risk
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Delaware Delaware Delaware
Foundation Foundation Foundation Funds
Funds Income Funds Balanced Growth Portfolio
Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Industry and security risk is the risk Most of the underlying Delaware Investments funds and the
that the value of securities in a particular Foundation Funds themselves are subject to this risk. The
industry or the value of an individual underlying funds generally hold a number of different
stock or bond will decline because of securities spread across various sectors. The Funds also
changing expectations for the follow a rigorous selection process before choosing securities
performance of that industry or for the and continuously monitor them while they remain in the
individual company issuing the stock. portfolio. Delaware REIT Fund is particularly sensitive to
changes in the real estate market. This combined with the
fact that the Delaware Foundation Funds will hold at least
four different Delaware Investments funds, typically
representing different asset classes, should help to reduce
industry and security risk.
- ------------------------------------------------------------------------------------------------------------------------------------
Small company risk is the risk that Delaware DelCap Fund, Delaware Select Growth Fund,
prices of smaller companies may be Delaware Small Cap Value Fund, Delaware Trend Fund and
more volatile than larger companies Delaware International Small Cap Fund are all subject to this
because of limited financial resources or risk. These Funds maintain well-diversified portfolios, select
dependence on narrow product lines. stocks carefully and monitor them continuously. In
determining the asset allocation for the Delaware Foundation
Funds, the manager will evaluate the current risk and reward
potential of small-cap stocks and make allocation decisions
accordingly.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Risks Degree to which the Funds are subject to this risk and
How we strive to manage the risk
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Delaware Delaware Delaware
Foundation Foundation Foundation Funds
Funds Income Funds Balanced Growth Portfolio
Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Income Portfolio Balanced Growth Portfolio will
will generally Portfolio will have generally have
have less moderate significant exposure
exposure to this exposure to this to this risk, due to its
risk due to its risk. greater emphasis on
reduced equities.
emphasis on
equity securities.
- ------------------------------------------------------------------------------------------------------------------------------------
Interest rate risk is the risk that For Delaware Investments funds in the Fixed-Income group
securities will decrease in value if this is generally the most significant risk. In striving to
interest rates rise. The risk is generally manage this risk, managers of Delaware fixed-income funds
associated with bonds; however, will typically monitor economic conditions and the interest
because smaller companies often borrow rate environment. They will also usually keep the average
money to finance their operations, they maturity of a fund as short as is prudent, in keeping with the
may be adversely affected by rising individual fund's investment objective.
interest rates.
The Funds listed on page 16 that are subject to small
company risk may also be subject to this risk. The managers
of these Funds consider the potential effect that rising interest
rates might have on a stock before the stock is purchased.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Risks Degree to which the Funds are subject to this risk and
How we strive to manage the risk
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Delaware Delaware Delaware
Foundation Foundation Foundation Funds
Funds Income Funds Balanced Growth Portfolio
Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
For the Income The Delaware The Growth Portfolio
Portfolio, this is a Balanced will generally have
significant risk Portfolio will moderate exposure
due to its generally have to this risk due to its
substantial moderate lesser emphasis on
allocation to exposure to this fixed-income funds
fixed-income risk. Though it and securities.
funds and will have a fixed- Though it will have
securities. income allocation holdings of small
and holdings of companies, these
small companies, may be balanced by
these may be equity holdings of
balanced by larger companies.
equity holdings of
larger
companies.
- ------------------------------------------------------------------------------------------------------------------------------------
Credit risk is the risk that a bond's Each of the Delaware Investments funds in the Fixed-Income
issuer might be unable to make timely group is subject to some degree of credit risk. This is less
payments of interest and principal. substantial for high-quality, government-oriented funds like
Delaware American Government Bond Fund and Delaware
Investing in so-called "junk" or "high- Limited-Term Government Fund and more significant for
yield" bonds entails greater risk of funds that invest in lower quality bonds such as Delaware
principal loss than the risk involved in Delchester Fund, Delaware High-Yield Opportunities Fund
investment grade bonds. and, to some extent, Delaware Emerging Markets Fund.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Risks Degree to which the Funds are subject to this risk and
How we strive to manage the risk
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Delaware Delaware Delaware
Foundation Foundation Foundation Funds
Funds Income Funds Balanced Growth Portfolio
Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
For the Income For the Balanced For the Growth
Portfolio, this Portfolio, this is a Portfolio, this is a
may be a moderate risk. less significant risk
significant risk Though it due to its reduced
because the probably will emphasis on fixed-
Fund may have a invest in income securities.
substantial Delaware
allocation to Delchester Fund
Delaware or Delaware
Delchester Fund High-Yield
or Delaware Opportunities
High-Yield Fund, these
Opportunities holdings may be
Fund. balanced by an
equity allocation
or better quality
bond holdings.
- ------------------------------------------------------------------------------------------------------------------------------------
Prepayment risk risk is the risk that the Prepayment risk can be a significant risk to funds that have a
principal on a bond you own will be large percentage of holdings in mortgage securities. Among
prepaid prior to maturity at a time when the funds available to the Delaware Foundation Funds
interest rates are lower than what that portfolios, these include the Delaware American Government
bond was paying. A fund would then Bond Fund and the Delaware Limited-Term Government
have to reinvest that money at a lower Fund. In order to manage this risk, when we think interest
interest rate. rates are low or that rates will be declining, managers of
these funds typically look for mortgage securities that they
believe are less likely to be prepaid. The Delaware
Foundation Funds will be more or less subject to this risk
depending on how much they have allocated to these
Delaware Investments funds.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Risks Degree to which the Funds are subject to this risk and
How we strive to manage the risk
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Delaware Delaware Delaware
Foundation Foundation Foundation Funds
Funds Income Funds Balanced Growth Portfolio
Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
For the Income For the Balanced For the Growth
Portfolio, this Portfolio there is Portfolio there is low
could be a relatively low exposure to this risk
significant risk exposure to this due to a reduced
due to its greater risk, due to its emphasis on the
focus on the balanced fixed-income asset
fixed-income approach and class.
asset class. allocation to
equity securities.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Risks Degree to which the Funds are subject to this risk and
How we strive to manage the risk
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Delaware Delaware Delaware
Foundation Foundation Foundation Funds
Funds Income Funds Balanced Growth Portfolio
Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Futures and options risk is the Each of the Delaware Foundation Funds and many of the
possibility that a fund may experience a Delaware Investments funds may use options and futures for
loss if it employs an options or futures defensive purposes, such as to protect gains in the portfolio
strategy related to a security or a market without actually selling a security, or to gain exposure to a
index and that security or index moves in particular market segment without purchasing individual
the opposite direction from what the securities in the segment. We will generally not use futures
manager anticipated. Futures and and options for speculative reasons.
options also involve additional expenses,
which could reduce any benefit or
increase any loss that Fund gains from
using the strategy.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Risks Degree to which the Funds are subject to this risk and
How we strive to manage the risk
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Delaware Delaware Delaware
Foundation Foundation Foundation Funds
Funds Income Funds Balanced Growth Portfolio
Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Foreign risk is the risk that foreign Many of the Delaware Investments funds invest some or all of
securities may be adversely affected by their assets in foreign securities. Though each of the
political instability, changes in currency Delaware Foundation Funds may invest in international funds
exchange rates, inefficient markets, or international securities, they may only invest a limited
foreign economic conditions, lack of portion of their net assets in international funds as described
information or inadequate regulatory and below. Holding both international and domestic securities in
accounting standards. a well-allocated portfolio may actually help to reduce overall
portfolio risk since these types of securities may experience
different performance cycles.
- ------------------------------------------------------------------------------------------------------------------------------------
The Income The Balanced The Growth Portfolio
Portfolio has low Portfolio has has moderate
exposure to this moderate exposure to this risk,
risk because exposure to this since international
international risk, since holdings may range
holdings are international from 10% to 30% of
limited to 10% of holdings may net assets.
net assets. range from 5% to
20% of net
assets.
- ------------------------------------------------------------------------------------------------------------------------------------
Emerging markets risk is the possibility The Delaware Global Bond Fund, Delaware Emerging Markets
that the risks associated with Fund and Delaware New Pacific Fund are all subject to this
international investing will be greater in risk. Each Fund carefully selects securities within emerging
emerging markets than in more markets and strives to consider all relevant risks associated
developed foreign markets because, with an individual company. When deciding how much to
among other things, emerging markets allocate to these Funds, the Delaware Foundation Funds
may have less stable political and manager will consider whether the potential rewards of
economic environments. investing in these Funds outweigh the potential risks.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Risks Degree to which the Funds are subject to this risk and
How we strive to manage the risk
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Delaware Delaware Delaware
Foundation Foundation Foundation Funds
Funds Income Funds Balanced Growth Portfolio
Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
The Income The Balanced The Growth
Portfolio has low Portfolio has Portfolio has
exposure to this moderate moderate
risk because exposure to this exposure to this
international risk, since risk, since
holdings are international international
limited to 10% of holdings may holdings may
net assets. range from 5% to range from 10% to
20% of net assets. 30% of net assets.
- ------------------------------------------------------------------------------------------------------------------------------------
Currency risk is the risk that the value of Each of the Delaware Investments funds in the International
a fund's investments may be negatively group is subject to this risk. The Funds may try to hedge
affected by changes in foreign currency currency risk by purchasing foreign currency exchange
exchange rates. Adverse changes in contracts. By agreeing to purchase or sell foreign securities
exchange rates may reduce or eliminate at a pre-set price on a future date, the Funds strive to protect
any gains produced by investments that the value of the securities they own from future changes in
are denominated in foreign currencies currency rates. The Funds will use forward currency
and may increase any losses. exchange contracts only for defensive measures, not to
enhance portfolio returns. However, there is no assurance
that a strategy such as this will be successful.
- ------------------------------------------------------------------------------------------------------------------------------------
The Income The Balanced The Growth
Portfolio has Portfolio has Portfolio has
minimal exposure moderate moderate
to this risk exposure to this exposure to this
because risk, since risk, since
international international international
holdings are holdings may holdings may
limited to 10% of range from 5% to range from 10% to
net assets. 20% of net assets. 30% of net assets.
- ------------------------------------------------------------------------------------------------------------------------------------
Non-diversified risk: Non-diversified Each of the Delaware Foundation Funds, as well as several
funds have the flexibility to invest as of the Delaware Investments funds they may hold, are non-
much as 50% of their assets in as few as diversified funds subject to this risk. Nevertheless, we
two issuers provided no single issuer typically hold shares of at least four different Delaware
accounts for more than 25% of the Investments funds, which in turn hold a number of securities
portfolio. The remaining 50% of the representing a variety of different issuers or industry sectors.
portfolio must be diversified so that no Though we are technically subject to non-diversified risk, we
more than 5% of the Fund's assets is do not believe it will have a substantial impact on the
invested in the securities of a single Delaware Foundation Funds.
issuer. When a fund invests its assets in
fewer issuers, the value of fund shares
may increase or decrease more rapidly
than if the fund were fully diversified.
- ------------------------------------------------------------------------------------------------------------------------------------
Liquidity risk is the possibility that Each of the Delaware Foundation Funds' exposure to illiquid
securities cannot be readily sold within securities is limited to 15% of net assets. For each of the
seven days at approximately the price Delaware Investments funds, exposure to illiquid securities is
that a fund has valued them. limited to 10% to 15% of net assets.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Who manages the Funds
Investment manager
The Funds are managed by Delaware Management Company, a series of Delaware
Management Business Trust, which is an indirect, wholly owned subsidiary of
Delaware Management Holdings, Inc. Delaware Management Company manages each
Fund's assets by allocating a Fund's assets among the Delaware Investments
funds. The management services include monitoring the Delaware Investments Funds
in order to determine whether they are investing their assets in a manner that
is consistent with the asset classes targeted for investment by each Fund.
Delaware Management Company also oversees the Funds' direct investment in
securities, manages the Funds' business affairs and provides daily
administrative services. For these services, the manager was paid a fee for the
last fiscal year as follows:
Asset Allocation Fees*
<TABLE>
<CAPTION>
Delaware Delaware Delaware
Foundation Foundation Foundation
Funds Income Funds Balanced Funds Growth
Portfolio Portfolio Portfolio
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
As a percentage of average daily net assets none none none
- --------------------------------------------------------------------------------------------
</TABLE>
*Reflects the manager's expense caps.
Portfolio managers
J. Paul Dokas has primary responsibility for making day-to-day investment
decisions for the Funds. In making investment decisions for each Fund, Mr. Dokas
regularly consults with Christopher S. Adams and Robert E. Ginsberg.
J. Paul Dokas, Vice President/Senior Portfolio Manager, is responsible for both
asset allocations among the underlying Delaware Investments Funds and the
Portfolios' direct investments in securities. He holds a BBA in Business from
Loyola College and an MBA from the University of Maryland. Prior to joining
Delaware Investments in 1997, he was a Director of Trust Investments for Bell
Atlantic Corporation in Philadelphia. Mr. Dokas is a CFA charterholder.
Christopher S. Adams, Vice President, Equity Analyst, holds both bachelor's and
master's degrees in History & Economics from Oxford University, England and
received his MBA with dual majors in Finance & Insurance/Risk Management from
the Wharton School of the University of Pennsylvania. He joined Delaware
Investments in 1995 as a member of the Strategic Planning Department, later
becoming the Equity Department Business Manager. Prior to joining Delaware
Investments, he held positions with Coopers & Lybrand, LLP's Financial Advisory
Services group, Sumitomo Bank Ltd. and Bank of America NT & SA in London. Mr.
Adams is a CFA level II candidate.
Robert E. Ginsberg, Assistant Vice President/Equity Analyst, graduated magna cum
laude from the Wharton School of Business at the University of Pennsylvania with
a degree in Economics with a concentration in Finance. Prior to joining Delaware
Investments in September of 1997, he was a Consultant at Andersen Consulting
working primarily with financial services companies. At Delaware Investments,
Mr. Ginsberg handles diverse analytical responsibilities involving large
capitalization stocks. He is a CFA Level III candidate.
<PAGE>
Who's who?
This diagram shows the various organizations involved with managing,
administering, and servicing the Delaware Investments funds.
[GRAPHIC OMITTED: DIAGRAM SHOWING THE VARIOUS ORGANIZATIONS INVOLVED WITH
MANAGING, ADMINISTERING, AND SERVICING THE DELAWARE INVESTMENT FUNDS)]
Board of Trustees
<TABLE>
<S> <C> <C> <C> <C>
Investment manager The Funds Custodian
Delaware Management Company The Chase Manhattan Bank
One Commerce Square 4 Chase Metrotech Center
Philadelphia, PA 19103 Brooklyn, NY 11245
Portfolio managers Distributor Service agent
(see page 20 for details) Delaware Distributors, L.P. Delaware Service Company, Inc.
1818 Market Street 1818 Market Street
Philadelphia, PA 19103 Philadelphia, PA 19103
</TABLE>
Financial advisers
Shareholders
Board of Trustees A mutual fund is governed by a Board of Trustees which has
oversight responsibility for the management of the fund's business affairs.
Trustees establish procedures and oversee and review the performance of the
investment manager, the distributor and others that perform services for the
fund. At least 40% of the Board of Trustees must be independent of the fund's
investment manager and distributor. These independent fund trustees, in
particular, are advocates for shareholder interests.
Investment manager An investment manager is a company responsible for selecting
portfolio investments consistent with the objective and policies stated in the
mutual fund's prospectus. The investment manager places portfolio orders with
broker/dealers and is responsible for obtaining the best overall execution of
those orders. A written contract between a mutual fund and its investment
manager specifies the services the manager performs. Most management contracts
provide for the manager to receive an annual fee based on a percentage of the
fund's average daily net assets. The manager is subject to numerous legal
restrictions, especially regarding transactions between itself and the funds it
advises.
Portfolio managers Portfolio managers are employed by the investment manager to
make investment decisions for individual portfolios on a day-to-day basis.
Custodian Mutual funds are legally required to protect their portfolio
securities and most funds place them with a qualified bank custodian who
segregates fund securities from other bank assets.
Distributor Most mutual funds continuously offer new shares to the public
through distributors who are regulated as broker-dealers and are subject to NASD
Regulation, Inc. (NASD) rules governing mutual fund sales practices.
Service agent Mutual fund companies employ service agents (sometimes called
transfer agents) to maintain records of shareholder accounts, calculate and
disburse dividends and capital gains and prepare and mail shareholder statements
and tax information, among other functions. Many service agents also provide
customer service to shareholders.
Financial advisers Financial advisers provide advice to their clients--analyzing
their financial objectives and recommending appropriate funds or other
investments. Financial advisers are compensated for their services, generally
through sales commissions, and through 12b-1 and/or service fees deducted from
the fund's assets.
Shareholders Like shareholders of other companies, mutual fund shareholders have
specific voting rights, including the right to elect trustees. Material changes
in the terms of a fund's management contract must be approved by a shareholder
vote, and funds seeking to change fundamental investment objectives or policies
must also seek shareholder approval.
<PAGE>
About your account
Investing in the Funds
You can choose from a number of share classes for each Fund. Because each share
class has a different combination of sales charges, fees, and other features,
you should consult your financial adviser to determine which class best suits
your investment goals and time frame.
Choosing a share class
Class A
o Class A shares have an up-front sales charge of up to 5.75% that you pay
when you buy the shares. The offering price for Class A shares includes the
front-end sales charge.
o If you invest $50,000 or more, your front-end sales charge will be reduced.
o You may qualify for other reduced sales charges, as described in "How to
reduce your sales charge," and under certain circumstances the sales charge
may be waived; please see the Statement of Additional Information.
o Class A shares are also subject to an annual 12b-1 fee no greater than
0.30% of average daily net assets, which is lower than the 12b-1 fee for
Class B and Class C shares.
o Class A shares generally are not subject to a contingent deferred sales
charge except in the limited circumstances described in the table below.
Class A sales charges
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Amount of Sales charge as % of Sales charge as % of Dealer's commission as %
purchase offering price amount invested of offering price
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
- --------------------------------------------------------------------------------------------
$50,000 but 4.75% 5.00% 4.00%
- --------------------------------------------------------------------------------------------
under $100,000
- --------------------------------------------------------------------------------------------
$100,000 but 3.75% 3.90% 3.00%
- --------------------------------------------------------------------------------------------
under $250,000
- --------------------------------------------------------------------------------------------
$250,000 but 2.50% 2.60% 2.00%
- --------------------------------------------------------------------------------------------
under $500,000
- --------------------------------------------------------------------------------------------
$500,000 but 2.00% 2.04% 1.60%
- --------------------------------------------------------------------------------------------
under $1 million
</TABLE>
As shown below, there is no front-end sales charge when you purchase $1 million
or more of Class A shares. However, if your financial adviser is paid a
commission on your purchase, you may have to pay a limited contingent deferred
sales charge of 1% if you redeem these shares within the first year and 0.50% if
you redeem them within the second year.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Amount of Sales charge as % of Sales charge as % of Dealer's commission as %
purchase offering price amount invested of offering price
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$1 million up to none none 1.00%
$5 million
- --------------------------------------------------------------------------------------------
Next $20 million none none 0.50%
Up to $25 million
- --------------------------------------------------------------------------------------------
Amount over $25 none none 0.25%
million
- --------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Class B
o Class B shares have no up-front sales charge, so the full amount of your
purchase is invested in a Fund. However, you will pay a contingent deferred
sales charge if you redeem your shares within six years after you buy them.
o If you redeem Class B shares during the first year after you buy them, the
shares will be subject to a contingent deferred sales charge of 5%. The
contingent deferred sales charge is 4% during the second year, 3% during
the third and fourth years, 2% during the fifth year, 1% during the sixth
year, and 0% thereafter.
o Under certain circumstances the contingent deferred sales charge may be
waived; please see the Statement of Additional Information.
o For approximately eight years after you buy your Class B shares, they are
subject to annual 12b-1 fees no greater than 1% of average daily net
assets, of which 0.25% are service fees paid to the distributor, dealers or
others for providing services and maintaining accounts. w Because of the
higher 12b-1 fees, Class B shares have higher expenses and any dividends
paid on these shares are lower than dividends on Class A shares.
o Approximately eight years after you buy them, Class B shares automatically
convert into Class A shares with a 12b-1 fee of no more than 0.30%.
Conversion may occur as late as three months after the eighth anniversary
of purchase, during which time Class B's higher 12b-1 fees apply.
o You may purchase up to $250,000 of Class B shares at any one time. The
limitation on maximum purchases varies for retirement plans.
Class C
o Class C shares have no up-front sales charge, so the full amount of your
purchase is invested in a Fund. However, you will pay a contingent deferred
sales charge of 1% if you redeem your shares within 12 months after you buy
them.
o Under certain circumstances the contingent deferred sales charge may be
waived; please see the Statement of Additional Information.
o Class C shares are subject to an annual 12b-1 fee which may not be greater
than 1% of average daily net assets, of which 0.25% are service fees paid
to the distributor, dealers or others for providing services and
maintaining shareholder accounts.
o Because of the higher 12b-1 fees, Class C shares have higher expenses and
pay lower dividends than Class A shares.
o Unlike Class B shares, Class C shares do not automatically convert into
another class.
o You may purchase any amount less than $1,000,000 of Class C shares at any
one time. The limitation on maximum purchases varies for retirement plans.
Each share class of the Funds has adopted a separate 12b-1 plan that allows it
to pay distribution fees for the sales and distribution of its shares. Because
these fees are paid out of a Fund's assets on an ongoing basis, over time these
fees will increase the cost of your investment and may cost you more than paying
other types of sales charges.
<PAGE>
About your account (continued)
How to reduce your sales charge
We offer a number of ways to reduce or eliminate the sales charge on shares.
Please refer to the Statement of Additional Information for detailed information
and eligibility requirements. You can also get additional information from your
financial adviser. You or your financial adviser must notify us at the time you
purchase shares if you are eligible for any of these programs.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Program How it works Share class
A B C
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Letter of Intent Through a Letter of Intent you X Although the Letter of Intent and
agree to invest a certain amount in Rights of Accumulation do not apply
Delaware Investment Funds (except to the purchase of Class B and C
money market funds with no sales shares, you can combine your
charge) over a 13-month period to purchase of Class A shares with
qualify for reduced front-end sales your purchase of B and C shares to
charges. fulfill your Letter of Intent or
qualify for Rights of Accumulation.
- --------------------------------------------------------------------------------
Rights of You can combine your holdings or X
Accumulation purchases of all funds in the
Delaware Investments family (except
money market funds with no sales
charge) as well as the holdings and
purchases of your spouse and
children under 21 to qualify for
reduced front-end sales charges.
- ----------------------------------------------------------------------------------------------------------------------------
Reinvestment Up to 12 months after you redeem For Class A, For Class B, your account Not
of redeemed shares, you can reinvest the you will not will be credited with the available
shares proceeds with no additional sales have to pay an contingent deferred sales
charge. additional charge you previously paid
front-end sales on the amount you are
charge. reinvesting. Your schedule
for contingent deferred sales
charges and conversion to
Class A will not start over
again; it will pick up from
the point at which you
redeemed your shares.
- ----------------------------------------------------------------------------------------------------------------------------
SIMPLE IRA, SEP These investment plans may qualify X There is no reduction in sales
IRA, SARSEP, for reduced sales charges by charges for Class B or Class C
Prototype combining the purchases of all shares for group purchases by
Profit Sharing, members of the group. Members of retirement plans.
Pension, these groups may also qualify to
401(k), SIMPLE purchase shares without a front-end
401(k), sales charge and a waiver of any
403(b)(7), and contingent deferred sales charges.
457 Retirement
Plans
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
How to buy shares
[GRAPHIC OMITTED: ILLUSTRATION OF A PERSON]
Through your financial adviser
Your financial adviser can handle all the details of purchasing shares,
including opening an account. Your adviser may charge a separate fee for this
service.
[GRAPHIC OMITTED: ILLUSTRATION OF AN ENVELOPE]
By mail
Complete an investment slip and mail it with your check, made payable to the
fund and class of shares you wish to purchase, to Delaware Investments, 1818
Market Street, Philadelphia, PA 19103-3682. If you are making an initial
purchase by mail, you must include a completed investment application (or an
appropriate retirement plan application if you are opening a retirement account)
with your check.
[GRAPHIC OMITTED: ILLUSTRATION OF A JAGGED LINE]
By wire
Ask your bank to wire the amount you want to invest to First Union Bank, ABA
#031201467, Bank Account number 2014 12893 4013. Include your account number and
the name of the fund in which you want to invest. If you are making an initial
purchase by wire, you must call us so we can assign you an account number.
[GRAPHIC OMITTED: ILLUSTRATION OF AN EXCHANGE SYMBOL]
By exchange
You can exchange all or part of your investment in one or more funds in the
Delaware Investments family for shares of other funds in the family. Please keep
in mind, however, that under most circumstances you are allowed to exchange only
between like classes of shares. To open an account by exchange, call the
Shareholder Service Center at 800.523.1918.
[GRAPHIC OMITTED: ILLUSTRATION OF A KEYPAD]
Through automated shareholder services
You can purchase or exchange shares through Delaphone, our automated telephone
service, or through our web site, www.delawareinvestments.com. For more
information about how to sign up for these services, call our Shareholder
Service Center at 800.523.1918.
<PAGE>
About your account (continued)
How to buy shares (continued)
Once you have completed an application, you can open an account with an initial
investment of $1,000 and make additional investments at any time for as little
as $100. If you are buying shares in an IRA or Roth IRA, under the Uniform Gifts
to Minors Act or the Uniform Transfers to Minors Act; or through an Automatic
Investing Plan, the minimum purchase is $250, and you can make additional
investments of only $25. The minimum for an Education IRA is $500. The minimums
vary for retirement plans other than IRAs, Roth IRAs or Education IRAs.
The price you pay for shares will depend on when we receive your purchase order.
If we or an authorized agent receive your order before the regular close of
regular trading on the New York Stock Exchange (normally 4:00 p.m. Eastern Time)
on a business day, you will pay that day's closing share price which is based on
the Fund's net asset value. If we receive your order after the close of regular
trading, you will pay the next business day's price. A business day is any day
that the New York Stock Exchange is open for business. We reserve the right to
reject any purchase order.
We determine a Fund's net asset value (NAV) per share at the close of regular
trading of the New York Stock Exchange each business day that the Exchange is
open. We calculate this value by adding the market value of all the securities
and assets in a Fund's portfolio, deducting all liabilities, and dividing the
resulting number by the number of shares outstanding. The result is the net
asset value per share. We price securities and other assets for which market
quotations are available at their market value. We price fixed-income securities
on the basis of valuations provided to us by an independent pricing service that
uses methods approved by the Board of Trustees. Any fixed-income securities that
have a maturity of less than 60 days we price at amortized cost. For all other
securities, we use methods approved by the Board of Trustees that are designed
to price securities at their fair market value.
Retirement plans
In addition to being an appropriate investment for your Individual Retirement
Account (IRA), Roth IRA and Education IRA, shares in a Fund may be suitable for
group retirement plans. You may establish your IRA account even if you are
already a participant in an employer-sponsored retirement plan. For more
information on how shares in the Funds can play an important role in your
retirement planning or for details about group plans, please consult your
financial adviser, or call 800.523.1918.
<PAGE>
How to redeem shares
[GRAPHIC OMITTED: ILLUSTRATION OF A PERSON]
Through your financial adviser
Your financial adviser can handle all the details of redeeming your shares. Your
adviser may charge a separate fee for this service.
[GRAPHIC OMITTED: ILLUSTRATION OF AN ENVELOIPE]
By mail
You can redeem your shares (sell them back to the fund) by mail by writing to:
Delaware Investments, 1818 Market Street, Philadelphia, PA 19103-3682. All
owners of the account must sign the request, and for redemptions of more than
$50,000, you must include a signature guarantee for each owner. Signature
guarantees are also required when redemption proceeds are going to an address
other than the address of record on an account.
[GRAPHIC OMITTED: ILLUSTRATION OF A TELEPHONE]
By telephone
You can redeem up to $50,000 of your shares by telephone. You may have the
proceeds sent to you by check, or, if you redeem at least $1,000 of shares, you
may have the proceeds sent directly to your bank by wire. Bank information must
be on file before you request a wire redemption.
[GRAPHIC OMITTED: ILLUSTRATION OF A JAGGED LINE]
By wire
You can redeem $1,000 or more of your shares and have the proceeds deposited
directly to your bank account the next business day after we receive your
request. If you request a wire deposit, a bank wire fee may be deducted from
your proceeds. Bank information must be on file before you request a wire
redemption.
[GRAPHIC OMITTED: ILLUSTRATION OF A KEYPAD]
Through automated shareholder services
You can redeem shares through Delaphone, our automated telephone service, or
through our web site, www.delawareinvestments.com. For more information about
how to sign up for these services, call our Shareholder Service Center at
800.523.1918.
<PAGE>
About your account (continued)
How to redeem shares (continued)
If you hold your shares in certificates, you must submit the certificates with
your request to sell the shares. We recommend that you send your certificates by
certified mail.
When you send us a properly completed request to redeem or exchange shares
before the close of regular trading on the New York Stock Exchange (normally
4:00 p.m. Eastern Time), you will receive the net asset value as determined on
the business day we receive your request. We will deduct any applicable
contingent deferred sales charges. You may also have to pay taxes on the
proceeds from your sale of shares. We will send you a check, normally the next
business day, but no later than seven days after we receive your request to sell
your shares. If you purchased your shares by check, we will wait until your
check has cleared, which can take up to 15 days, before we send your redemption
proceeds.
If you are required to pay a contingent deferred sales charge when you redeem
your shares, the amount subject to the fee will be based on the shares' net
asset value when you purchased them or their net asset value when you redeem
them, whichever is less. This arrangement assures that you will not pay a
contingent deferred sales charge on any increase in the value of your shares.
You also will not pay the charge on any shares acquired by reinvesting dividends
or capital gains. If you exchange shares of one fund for shares of another, you
do not pay a contingent deferred sales charge at the time of the exchange. If
you later redeem those shares, the purchase price for purposes of the contingent
deferred sales charge formula will be the price you paid for the original
shares--not the exchange price. The redemption price for purposes of this
formula will be the NAV of the shares you are actually redeeming.
Account minimums
If you redeem shares and your account balance falls below the required account
minimum of $1,000 ($250 for IRAs, Uniform Gift to Minors Act accounts or
accounts with automatic investing plans, $500 for Education IRAs) for three or
more consecutive months, you will have until the end of the current calendar
quarter to raise the balance to the minimum. If your account is not at the
minimum by the required time, you will be charged a $9 fee for that quarter and
each quarter after that until your account reaches the minimum balance. If your
account does not reach the minimum balance, a Fund may redeem your account after
60 days' written notice to you.
<PAGE>
Special services
To help make investing with us as easy as possible, and to help you build your
investments, we offer the following special services.
Automatic Investing Plan
The Automatic Investing Plan allows you to make regular monthly or quarterly
investments directly from your checking account.
Direct Deposit
With Direct Deposit you can make additional investments through payroll
deductions, recurring government or private payments such as social security or
direct transfers from your bank account.
Wealth Builder Option
With the Wealth Builder Option you can arrange automatic monthly exchanges
between your shares in one or more Delaware Investments funds. Wealth Builder
exchanges are subject to the same rules as regular exchanges (see below) and
require a minimum monthly exchange of $100 per fund.
Dividend Reinvestment Plan
Through our Dividend Reinvestment Plan, you can have your distributions
reinvested in your account or the same share class in another fund in the
Delaware Investments family. The shares that you purchase through the Dividend
Reinvestment Plan are not subject to a front-end sales charge or to a contingent
deferred sales charge. Under most circumstances, you may reinvest dividends only
into like classes of shares.
Exchanges
You can exchange all or part of your shares for shares of the same class in
another Delaware Investments fund without paying a sales charge and without
paying a contingent deferred sales charge at the time of the exchange. However,
if you exchange shares from a money market fund that does not have a sales
charge you will pay any applicable sales charges on your new shares. When
exchanging Class B and Class C shares of one fund for the same class of shares
in other funds, your new shares will be subject to the same contingent deferred
sales charge as the shares you originally purchased. The holding period for the
CDSC will also remain the same, with the amount of time you held your original
shares being credited toward the holding period of your new shares. You don't
pay sales charges on shares that you acquired through the reinvestment of
dividends. You may have to pay taxes on your exchange. When you exchange shares,
you are purchasing shares in another fund so you should be sure to get a copy of
the fund's prospectus and read it carefully before buying shares through an
exchange.
<PAGE>
About your account (continued)
Special services (continued)
MoneyLine(SM) On Demand Service
Through our MoneyLine(SM) On Demand Service, you or your financial adviser may
transfer money between your Fund account and your predesignated bank account by
telephone request. This service is not available for retirement plans, except
for purchases into IRAs. MoneyLine has a minimum transfer of $25 and a maximum
transfer of $50,000. Delaware Investments does not charge a fee for this
service; however, your bank may assess one.
MoneyLine Direct Deposit Service.
Through our MoneyLine Direct Deposit Service you can have $25 or more in
dividends and distributions deposited directly to your bank account. Delaware
Investments does not charge a fee for this service; however, your bank may
assess one. This service is not available for retirement plans.
Systematic Withdrawal Plan
Through our Systematic Withdrawal Plan you can arrange a regular monthly or
quarterly payment from your account made to you or someone you designate. If the
value of your account is $5,000 or more, you can make withdrawals of at least
$25 monthly, or $75 quarterly. You may also have your withdrawals deposited
directly to your bank account through our
Dividends, distributions and taxes
Dividends for the Delaware Foundation Funds Income Portfolio and Delaware
Foundation Funds Balanced Portfolio, if any, are paid quarterly. Dividends for
the Delaware Foundation Funds Growth Portfolio, if any, are paid once a year.
Capital gains, if any, are paid once a year. We automatically reinvest all
dividends and any capital gains, unless you tell us otherwise.
Tax laws are subject to change, so we urge you to consult your tax adviser about
your particular tax situation and how it might be affected by current tax law.
The tax status of your dividends from a Fund is the same whether you reinvest
your dividends or receive them in cash. Distributions from a Fund's long-term
capital gains are taxable as capital gains, while distributions from short-term
capital gains and net investment income are generally taxable as ordinary
income. Any capital gains may be taxable at different rates depending on the
length of time a Fund held the assets. In addition, you may be subject to state
and local taxes on distributions.
We will send you a statement each year by January 31 detailing the amount and
nature of all dividends and capital gains that you were paid for the prior year.
<PAGE>
Certain Management Considerations
Year 2000
As with other mutual funds, financial and business organizations and individuals
around the world, each Fund could be adversely affected if the computer systems
used by its service providers do not properly process and calculate date-related
information from and after January 1, 2000. This is commonly known as the "Year
2000 Problem." Each Fund has taken steps to obtain satisfactory assurances that
its major service providers are taking steps reasonably designed to address the
Year 2000 Problem on the computer systems that the service providers use.
However, there can be no assurance that these steps will be sufficient to avoid
any adverse impact on the business of any Fund. The Year 2000 Problem may also
adversely affect the issuers of securities in which the Funds invest. The
portfolio manager and investment professionals of each Fund consider Year 2000
compliance (including, but not limited to, any or all of the following: impact
on business, cost of compliance plan review and contingency planning, and vendor
compliance) in the securities selection and investment process. However, there
can be no guarantee that, even with their due diligence efforts, they will be
able to predict the effect of Year 2000 on any company or the performance of its
securities.
<PAGE>
Financial highlights
The Financial highlights tables are intended to help you understand each Fund's
financial performance. All "per share" information reflects financial results
for a single Fund share. This information has been audited by Ernst & Young LLP,
whose report, along with the Fund's financial statements, is included in the
Fund's annual report, which is available upon request by calling 800.523.1918.
<TABLE>
<CAPTION>
Income Portfolio Class A Class B Class C
Year Period Year Period Year Period
ended 12/31/97(1) ended 12/31/97(1) ended 12/31/97(1)
9/30 through 9/30 through 9/30 through
1999 9/30/98 1999 9/30/98 1999 9/30/98
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $8.290 $8.500 $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 0.316 0.204
Net realized and unrealized gain
(loss) on investments 0.198 (0.350) 0.219 (0.331) 0.209 (0.334)
------ ------ ------ ------ ------ ------
Total from investment operations 0.580 (0.100) 0.535 (0.130) 0.525 (0.130)
------ ------ ------ ------ ------ ------
Less dividends and distributions:
Dividends from net investment income (0.295) (0.110) (0.210) (0.080) (0.210) (0.080)
Distributions from net realized
gain on investments (0.025) none (0.025) none (0.025) none
------ ------ ------ ------ ------ ------
Total dividends and distributions (0.320) (0.110) (0.235) (0.080) (0.235) (0.080)
------ ------ ------ ------ ------ ------
Net asset value, end of period $8.550 $8.290 $8.590 $8.290 $8.580 $8.290
====== ====== ====== ====== ====== ======
Total return(3) 6.85% (1.21%) 6.18% (1.56%) 6.06% (1.56%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) $17,239 $398 $243 $26 $195 $123
Ratio of expenses to average net assets 0.80% 0.80% 1.55% 1.55% 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% 2.88% 33.70%
Ratio of net investment income to
average net assets 4.34% 3.80% 3.59% 3.05% 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%) 2.26% (29.10%)
Portfolio turnover 73% 81% 73% 81% 73% 81%
</TABLE>
(1) Date of commencement of trading; ratios have been annualized but 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. Total return
also reflects expense limitation in effect during the period.
<PAGE>
<TABLE>
<CAPTION>
Balanced Portfolio Class A Class B Class C
Year Period Year Period Year Period
ended 12/31/97(1) ended 12/31/97(1) ended 12/31/97(1)
9/30 through 9/30 through 9/30 through
1999 9/30/98 1999 9/30/98 1999 9/30/98
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $8.130 $8.500 $8.130 $8.500 $8.140 $8.500
Income (loss) from investment operations:
Net investment income(2) 0.249 0.153 0.181 0.104 0.182 0.104
Net realized and unrealized gain
(loss) on investments 0.789 (0.463) 0.787 (0.444) 0.786 (0.434)
------ ------ ------ ------ ------ ------
Total from investment operations 1.038 (0.310) 0.968 (0.340) 0.968 (0.330)
------ ------ ------ ------ ------ ------
Less dividends and distributions:
Dividends from net investment income (0.200) (0.060) (0.120) (0.030) (0.120) (0.030)
Distributions from net realized
gain on investments (0.028) none (0.028) none (0.028) none
------ ------ ------ ------ ------ ------
Total dividends and distributions (0.228) (0.060) (0.148) (0.030) (0.148) (0.030)
------ ------ ------ ------ ------ ------
Net asset value, end of period $8.940 $8.130 $8.950 $8.130 $8.960 $8.140
====== ====== ====== ====== ====== ======
Total return(3) 12.52% (3.68%) 11.66% (4.02%) 11.77% (3.90%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) $17,373 $972 $1,035 $408 $802 $694
Ratio of expenses to average net assets 0.80% 0.80% 1.55% 1.55% 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% 2.32% 13.62%
Ratio of net investment income
to average net assets 2.73% 2.34% 1.98% 1.59% 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%) 1.21% (10.48%)
Portfolio turnover 93% 73% 93% 73% 93% 73%
</TABLE>
(1) Date of commencement of trading; ratios have been annualized but 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. Total return
also reflects expense limitations in effect during the period.
<PAGE>
<TABLE>
<CAPTION>
Growth Portfolio Class A Class B Class C
Year Period Year Period Year Period
ended 12/31/97(1) ended 12/31/97(1) ended 12/31/97(1)
9/30 through 9/30 through 9/30 through
1999 9/30/98 1999 9/30/98 1999 9/30/98
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $8.170 $8.500 $8.140 $8.500 $8.140 $8.500
Income (loss) from investment operations:
Net investment income(2) 0.138 0.062 0.068 0.014 0.067 0.013
Net realized and unrealized gain
(loss) on investments 1.295 (0.392) 1.287 (0.374) 1.298 (0.373)
------ ------ ------ ------ ------ ------
Total from investment operations 1.433 (0.330) 1.355 (0.360) 1.365 (0.360)
------ ------ ------ ------ ------ ------
Less dividends and distributions:
Dividends from net investment income (0.078) none none none none none
Distributions from net realized
gain on investments (0.025) none (0.025) none (0.025) none
------ ------ ------ ------ ------ ------
Total dividends and distributions (0.103) none (0.025) none (0.025) none
------ ------ ------ ------ ------ ------
Net asset value, end of period $9.500 $8.170 $9.470 $8.140 $9.480 $8.140
====== ====== ====== ====== ====== ======
Total return(3) 17.33% (3.88%) 16.41% (4.24%) 16.53% (4.24%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) $11,328 $547 $1,561 $885 $506 $74
Ratio of expenses to average net assets 0.80% 0.80% 1.55% 1.55% 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% 2.96% 15.11%
Ratio of net investment income to
average net assets 1.45% 0.96% 0.70% 0.21% 0.70% 0.21%
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%) (0.71%) (13.35%)
Portfolio turnover 104% 77% 104% 77% 104% 77%
</TABLE>
(1) Date of commencement of trading; ratios have been annualized but 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. Total return
also reflects expense limitations in effect during the period.
<PAGE>
How to read the Financial highlights
Net investment income
Net investment income includes dividend and interest income earned from a fund's
investments; it is after expenses have been deducted.
Net realized and unrealized gain (loss) on investments
A realized gain occurs when we sell an investment at a profit, while a realized
loss occurs when we sell an investment at a loss. When an investment increases
or decreases in value but we do not sell it, we record an unrealized gain or
loss. The amount of realized gain per share that we pay to shareholders is
listed under "Less dividends and distributions-Distributions from net realized
gain on investments."
Net asset value (NAV)
This is the value of a mutual fund share, calculated by dividing the net assets
by the number of shares outstanding.
Total return
This represents the rate that an investor would have earned or lost on an
investment in the Fund. In calculating this figure for the financial highlights
table, we include applicable fee waivers, exclude front-end and contingent
deferred sales charges, and assume the shareholder has reinvested all dividends
and realized gains.
Net assets
Net assets represent the total value of all the assets in a fund's portfolio,
less any liabilities, that are attributable to that class of the fund.
Ratio of expenses to average net assets
The expense ratio is the percentage of net assets that a fund pays annually for
operating expenses and management fees. These expenses include accounting and
administration expenses, services for shareholders, and similar expenses.
Ratio of net investment income to average net assets
We determine this ratio by dividing net investment income by average net assets.
Portfolio turnover
This figure tells you the amount of trading activity in a fund's portfolio. For
example, a fund with a 50% turnover has bought and sold half of the value of its
total investment portfolio during the stated period.
<PAGE>
How to use this glossary
The glossary includes definitions of investment terms used throughout the
prospectus. If you would like to know the meaning of an investment term that is
not explained in the text please check the glossary.
Amortized cost
Amortized cost is a method used to value a fixed-income security that starts
with the face value of the security and then adds or subtracts from that value
depending on whether the purchase price was greater or less than the value of
the security at maturity. The amount greater or less than the par value is
divided equally over the time remaining until maturity.
Capital
The amount of money you invest.
Capital appreciation
An increase in the value of an investment.
Capital gains distributions
Payments to mutual fund shareholders of profits (realized gains) from the sale
of a fund's portfolio securities. Usually paid once a year; may be either
short-term gains or long-term gains.
Commission
The fee an investor pays to a financial adviser for investment advice and help
in buying and selling mutual funds, stocks, bonds or other securities
Compounding
Earnings on an investment's previous earnings.
Consumer Price Index (CPI)
Measurement of U.S. inflation; represents the price of a basket of commonly
purchased goods.
Contingent deferred sales charge (CDSC)
Fee charged by some mutual funds when shares are redeemed (sold back to the
fund) within a set number of years; an alternative method for investors to
compensate a financial adviser for advice and service, rather than an up-front
commission.
Cost basis
The original purchase price of an investment, used in determining capital gains
and losses.
Depreciation
A decline in an investment's value.
Diversification
The process of spreading investments among a number of different securities,
asset classes or investment styles to reduce the risks of investing.
Dividend distribution
Payments to mutual fund shareholders of dividends passed along from the fund's
portfolio of securities.
Expense ratio
A mutual fund's total operating expenses, expressed as a percentage of its total
net assets. Operating expenses are the costs of running a mutual fund, including
management fees, offices, staff, equipment and expenses related to maintaining
the fund's portfolio of securities and distributing its shares. They are paid
from the fund's assets before any earnings are distributed to shareholders.
<PAGE>
Financial adviser
Financial professional (e.g., broker, banker, accountant, planner or insurance
agent) who analyzes clients' finances and prepares personalized programs to meet
objectives.
Inflation
The increase in the cost of goods and services over time. U.S. inflation is
frequently measured by changes in the Consumer Price Index (CPI).
Investment goal
The objective, such as long-term capital growth or high current income, that a
mutual fund pursues.
Lehman Brothers Aggregate Bond Index
An index that measures the performance of about 6,500 U.S. corporate and
government bonds.
Management fee
The amount paid by a mutual fund to the investment adviser for management
services, expressed as an annual percentage of the fund's average daily net
assets.
Market capitalization
The value of a corporation determined by multiplying the current market price of
a share of common stock by the number of shares held by shareholders. A
corporation with one million shares outstanding and the market price per share
of $10 has a market capitalization of $10 million.
National Association of Securities Dealers (NASD)
A self-regulating organization, consisting of brokerage firms (including
distributors of mutual funds), that is responsible for overseeing the actions of
its members.
Net asset value (NAV)
The daily dollar value of one mutual fund share. Equal to a fund's net assets
divided by the number of shares outstanding.
Preferred stock
Preferred stock has preference over common stock in the payment of dividends and
liquidation of assets. Preferred stocks also often pay dividends at a fixed rate
and are sometimes convertible into common stock.
Price-to-earnings ratio
A measure of a stock's value calculated by dividing the current market price of
a share of stock by its annual earnings per share. A stock selling for $100 per
share with annual earnings per share of $5 has a P/E of 20.
Principal
Amount of money you invest (also called capital). Also refers to a bond's
original face value, due to be repaid at maturity.
Prospectus
The official offering document that describes a mutual fund, containing
information required by the SEC, such as investment objectives, policies,
services and fees.
Redeem
To cash in your shares by selling them back to the mutual fund.
Risk
Generally defined as variability of value; also credit risk, inflation risk,
currency and interest rate risk. Different investments involve different types
and degrees of risk.
<PAGE>
S&P 500 Composite Stock Index
The Standard & Poor's 500 Composite Stock Index; an unmanaged index of 500
widely held common stocks that is often used to represent performance of the
U.S. stock market.
Sales charge
Charge on the purchase or redemption of fund shares sold through financial
advisers. May vary with the amount invested. Typically used to compensate
advisers for advice and service provided.
SEC (Securities and Exchange Commission)
Federal agency established by Congress to administer the laws governing the
securities industry, including mutual fund companies.
Share classes
Different classifications of shares; mutual fund share classes offer a variety
of sales charge choices.
Signature guarantee
Certification by a bank, brokerage firm or other financial institution that a
customer's signature is valid; signature guarantees can be provided by members
of the STAMP program.
Standard deviation
A measure of an investment's volatility; for mutual funds, measures how much a
fund's total return has typically varied from its historical average.
Statement of Additional Information (SAI)
The document serving as "Part B" of a fund's prospectus that provides more
detailed information about the fund's organization, investments, policies and
risks.
Stock
An investment that represents a share of ownership (equity) in a corporation.
Stocks are often referred to as equities.
Total return
An investment performance measurement, expressed as a percentage, based on the
combined earnings from dividends, capital gains and change in price over a given
period.
Uniform Gift to Minors Act and Uniform Transfers to Minors Act
Federal and state laws that provide a simple way to transfer property to a minor
with special tax advantages.
Volatility
The tendency of an investment to go up or down in value by different magnitudes.
Investments that generally go up or down in value in relatively small amounts
are considered "low volatility" investments, whereas those investments that
generally go up or down in value in relatively large amounts are considered
"high volatility" investments.
<PAGE>
Delaware Foundation Funds Income Portfolio
Delaware Foundation Funds Balanced Portfolio
Delaware Foundation Funds Growth Portfolio
Additional information about each Fund's investments is available in the Funds'
annual and semi-annual report to shareholders. In the Funds' shareholder report,
you will find a discussion of the market conditions and investment strategies
that significantly affected a Fund's performance during the report period. You
can find more detailed information about the Funds in the current Statement of
Additional Information, which we have filed electronically with the Securities
and Exchange Commission (SEC) and which is legally a part of this prospectus. If
you want a free copy of the Statement of Additional Information, the annual or
semi-annual report, or if you have any questions about investing in the Funds,
you can write to us at 1818 Market Street, Philadelphia, PA 19103, or call
toll-free 800.523.1918. You may also obtain additional information about the
Fund from your financial adviser.
You can find reports and other information about the Funds on the SEC web site
(http://www.sec.gov), or you can get copies of this information, after payment
of a duplicating fee, by writing to the Public Reference Section of the SEC,
Washington, D.C. 20549-6009. Information about the Funds, including their
Statement of Additional Information, can be reviewed and copied at the
Securities and Exchange Commission's Public Reference Room in Washington, D.C.
You can get information on the public reference room by calling the SEC at
1.800.SEC.0330.
Web site
www.delawareinvestments.com
- ---------------------------
E-mail
[email protected]
Shareholder Service Center
800.523.1918
Call the Shareholder Service Center Monday to Friday, 8 a.m. to 8 p.m. Eastern
time:
o For fund information; literature; price, yield and performance figures.
o For information on existing regular investment accounts and retirement plan
accounts including wire investments; wire redemptions; telephone
redemptions and telephone exchanges.
Delaphone Service
800.362.FUND (800.362.3863)
o For convenient access to account information or current performance
information on all Delaware Investments Funds seven days a week, 24 hours a
day, use this Touch-Tone(R) service.
Investment Company Act file number: 811-08457
<PAGE>
Fund Symbols
CUSIP NASDAQ
Delaware Foundation Funds Income Portfolio
Class A 245918107 DFIAX
Class B 245918206
Class C 245918305
Delaware Foundation Funds Balanced Portfolio
Class A 245918503 DFBAX
Class B 245918602
Class C 245918701
Delaware Foundation Funds Growth Portfolio
Class A 245918883 DFGAX
Class B 245918875
Class C 245918867
DELAWARE
INVESTMENTS
-----------
Philadelphia o London
P-002 [--] PP 1/00
<PAGE>
DELAWARE
INVESTMENTS
---------------------
Philadelphia o London
Delaware Foundation Funds
Income Portfolio
Balanced Portfolio
Growth Portfolio
Institutional Classes
Prospectus
December 30, 1999
Asset Allocation Funds
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the accuracy of this prospectus, and any
representation to the contrary is a criminal offense.
<PAGE>
Table of contents
Fund profiles page 2
Delaware Foundation Funds Income Portfolio 2
Delaware Foundation Funds Balanced Portfolio 4
Delaware Foundation Funds Growth Portfolio 6
How we manage the Funds page 9
Our investment strategies 9
The securities we typically invest in 11
The risks of investing in the Funds 16
Who manages the Funds page 20
Investment manager 20
Portfolio managers 20
Fund administration (Who's who) 21
About your account page 22
Investing in the Funds 22
How to buy shares 23
How to redeem shares 24
Account minimum 25
Exchanges 25
Dividends, distributions and taxes 25
Certain management considerations page 26
Financial highlights page 27
<PAGE>
Profile: Delaware Foundation Funds Income Portfolio
What are the Fund's goals?
The Delaware Foundation Funds Income Portfolio seeks a combination of current
income and preservation of capital with capital appreciation. Although the Fund
will strive to meet its goals, there is no assurance that it will.
What are the Fund's main investment strategies?
We invest primarily in shares of selected Delaware Investments funds including
equity and fixed-income funds. We may also invest in individual securities. We
use an active asset allocation approach in selecting investments for the Fund.
In striving to meet its objective, the Fund would typically have a larger
percentage of its assets allocated to fixed-income funds and securities
(generally at least 45%) than to equity funds and securities (generally at least
20%). The Fund may allocate up to 10% to international funds and securities.
What are the main risks of investing in the Fund?
Investing in any mutual fund involves risk, including the risk that you may lose
part or all of the money you invest. The value of your investment in the Fund
will increase and decrease according to changes in the value of the securities
in the Fund's portfolio. This Fund is subject to the same risks as the
underlying Delaware Investments funds that it invests in. Therefore, to the
extent that it invests in equity funds, it will be affected by declines in stock
prices. To the extent that it invests in fixed-income funds, it will be affected
by changes in interest rates. If interest rates rise, the value of the bonds in
the portfolio will decline and the Fund's share value could decline as well.
Because the Fund may invest in as few as four different underlying funds or a
small number of securities, it is considered a non-diversified investment
company under the Investment Company Act of 1940 and may be subject to greater
risk than if it were diversified. However, the underlying Delaware Investments
funds generally hold a broad mix of securities, which helps to lessen this risk.
For a more complete discussion of risk, please turn to "The risks of investing
in the Funds."
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
Who should invest in the Fund
o Investors who are in the wealth preservation phase, generally with lower
risk tolerance.
o Investors in the pre-retirement or retirement phase, looking for an
increase in income.
o Investors who want a portfolio with broad diversification across various
types of securities and active asset allocation by a professional money
manager.
Who should not invest in the Fund
o Investors with short-term financial goals.
o Investors whose primary goal is capital appreciation.
o Investors who are unwilling to accept share prices that may fluctuate,
sometimes significantly, over the short term.
You should keep in mind that an investment in the Fund is not a complete
investment program; it should be considered just one part of your total
financial plan. Be sure to discuss this Fund with your financial adviser to
determine whether it is an appropriate choice for you.
1
<PAGE>
How has the Fund performed?
This bar chart and table can help you evaluate the potential risks of investing
in the Fund. We show the return for the Fund for the past calendar year as well
as the average annual return for one compared to an index. The Fund's past
performance does not necessarily indicate how it will perform in the future. The
returns reflect expense caps. The returns would be lower without the expense
caps.
[GRAPHIC OMITTED: BAR CHART TOTAL RETURN (Institutional)]
Institutional Class total return
- -------
1998
- -------
6.49%
- -------
The Fund's Institutional Class had a -0.47% year-to-date return as of September
30, 1999. During the period illustrated in this bar chart, the Class' highest
quarterly return was 7.67% for the quarter ended December 31, 1998 and its
lowest quarterly return was -6.34% for the quarter ended September 30, 1998.
Average annual returns for the period ending 12/31/98
- --------------------------------------------------------------------------------
Delaware Lehman Brothers
Foundation Funds Aggregate Bond
Income Index
Portfolio
Institutional Class
(Inception 12/31/97)
- --------------------------------------------------------------------------------
1 year 6.49% 8.69%
- --------------------------------------------------------------------------------
The Fund's returns are compared to the performance of the Lehman Brothers
Aggregate Bond Index. You should remember that unlike the Fund, the Index is
unmanaged and doesn't include the costs of operating a mutual fund, such as the
costs of buying, selling, and holding the securities. In addition, the Index is
not a perfect comparison to the Fund because the Fund invests in a variety of
asset classes, not represented in the Index, including equity securities,
international securities and high-yielding corporate bonds.
2
<PAGE>
What are the Fund's fees and expenses?
You do not pay sales charges directly from your investments when you buy or sell
shares of the Institutional Class.
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on none
purchases as a percentage of offering price
- --------------------------------------------------------------------------------
Maximum contingent deferred sales charge (load) none
as a percentage of original purchase price or
redemption price, whichever is lower
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on none
reinvested dividends
- --------------------------------------------------------------------------------
Redemption fees none
- --------------------------------------------------------------------------------
Exchange fees(1) none
- --------------------------------------------------------------------------------
Annual fund operating expenses are deducted from the Fund's assets.
- --------------------------------------------------------------------------------
Management fees(2) 0.10%
- --------------------------------------------------------------------------------
Distribution and service (12b-1) fees none
- --------------------------------------------------------------------------------
Other expenses 1.78%
- --------------------------------------------------------------------------------
Total annual fund operating expenses 1.88%
- --------------------------------------------------------------------------------
Fee waivers and payments(3) (1.33%)
- --------------------------------------------------------------------------------
Net expenses 0.55%
- --------------------------------------------------------------------------------
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds with similar investment
objectives. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 with an annual 5% return over the time shown.(4) This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
- -----------------------------------
1 year $56
- -----------------------------------
3 years $461
- -----------------------------------
5 years $892
- -----------------------------------
10 years $2,092
- -----------------------------------
<PAGE>
This example is also based on a hypothetical investment of $10,000 with an
annual 5% return over the time shown but assumes the net expenses of the
Delaware Foundation Funds Income Portfolio noted above. In this example we have
also included an estimate of the average aggregate total operating expenses of
the Delaware Investments funds as described on page 8. When the Fund invests in
any of these funds, it absorbs a portion of their underlying expenses. This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
- -----------------------------------
1 year $161
- -----------------------------------
3 years $499
- -----------------------------------
5 years $860
- -----------------------------------
10 years $1,878
- -----------------------------------
(1) Exchanges are subject to the requirements of each fund in the Delaware
Investments family. A front-end sales charge may apply if you exchange your
shares into a fund that has a front-end sales charge.
(2) The investment manager has contracted to limit its management fee to no
more than 0.10% of average daily net assets through November 30, 2000.
(3) The investment manager has contracted to waive fees and pay expenses
through November 30, 2000 in order to prevent total operating expenses
(excluding taxes, interest, brokerage fees and extraordinary expenses) from
exceeding 0.55% of average daily net assets.
(4) The Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. Also, this example reflects the net
operating expenses with expense waivers for the one-year period and the
total operating expenses without expense waivers for years two through 10.
3
<PAGE>
Profile: Delaware Foundation Funds Balanced Portfolio
What are the Fund's goals?
The Delaware Foundation Funds Balanced Portfolio seeks capital appreciation
with current income as a secondary objective. Although the Fund will strive to
meet its goals, there is no assurance that it will.
What are the Fund's main investment strategies?
We invest primarily in shares of selected Delaware Investments funds including
equity, fixed-income and international funds. We may also invest in individual
securities. We use an active asset allocation approach in selecting investments
for the Fund.
The Fund has the flexibility to invest more in equity funds and securities or
more in fixed-income funds and securities, depending on market conditions.
However, it will typically invest at least 25% in fixed-income securities or
fixed-income funds. The Fund will typically invest between 5% and 20% of its
assets in international funds and securities.
What are the main risks of investing in the Fund?
Investing in any mutual fund involves risk, including the risk that you may lose
part or all of the money you invest. The value of your investment in the Fund
will increase and decrease according to changes in the value of the securities
in the Fund's portfolio. This Fund is subject to the same risks as the
underlying Delaware Investments funds that it invests in. Therefore, to the
extent that it invests in equity funds, it will be affected by declines in stock
prices. To the extent that it invests in fixed-income funds, it will be affected
by changes in interest rates. If interest rates rise, the value of the bonds in
the portfolio will decline and the Fund's share value could decline as well. To
the extent that it invests in international funds or securities, the Fund will
be affected by changes in currency exchange rates as well as political, economic
and regulatory conditions in the countries represented in its portfolio.
Because the Fund may invest in as few as four different underlying funds or a
small number of securities, it is considered a non-diversified investment
company under the Investment Company Act of 1940 and may be subject to greater
risk than if it were diversified. However, the underlying Delaware Investments
funds generally hold a broad mix of securities, which helps to lessen this risk.
For a more complete discussion of risk, please turn to "The risks of investing
in the Funds."
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
Who should invest in the Fund
o Investors who are in the wealth accumulation phase, generally with moderate
risk tolerance.
o Investors looking for the capital appreciation potential of the stock
market and the income potential of the bond market.
o Investors who would like a portfolio with broad diversification across
various types of securities and active asset allocation by a professional
money manager.
Who should not invest in the Fund
o Investors with short-term financial goals.
o Investors whose primary goal is high current income.
o Investors who are unwilling to accept share prices that may fluctuate,
sometimes significantly, over the short term.
You should keep in mind that an investment in the Fund is not a complete
investment program; it should be considered just one part of your total
financial plan. Be sure to discuss this Fund with your financial adviser to
determine whether it is an appropriate choice for you.
4
<PAGE>
How has the Fund performed?
This bar chart and table can help you evaluate the potential risks of investing
in the Fund. We show the return for the Fund for the past calendar year as well
as the average annual return for one year compared to indexes. The Fund's past
performance does not necessarily indicate how it will perform in the future. The
returns reflect expense caps. The returns would be lower without the expense
caps.
[GRAPHIC OMITTED: BAR CHART TOTAL RETURN (Institutional)]
Institutional Class total return
- --------
1998
- --------
7.69%
- --------
The Delaware Foundation Funds Balanced Fund Institutional Class had a 1.05%
year-to-date return as of September 30, 1999. During the period illustrated in
this bar chart, the Class' highest quarterly return was 11.67% for the quarter
ended December 31, 1998 and its lowest quarterly return was -9.58% for the
quarter ended September 30, 1998
Average annual returns for the period ending 12/31/98
- --------------------------------------------------------------------------------
Delaware Foundation S&P 500 Composite Lehman Brothers
Funds Balanced Portfolio Stock Index Aggregate Bond Index
Institutional Class
(Inception 12/31/97)
- --------------------------------------------------------------------------------
1 year 7.69% 28.74% 8.69%
- --------------------------------------------------------------------------------
The Fund's returns are compared to the performance of the S&P 500 Composite
Stock Index and the Lehman Brothers Aggregate Bond Index. You should remember
that unlike the Fund, the indexes are unmanaged and don't reflect the actual
costs of operating a mutual fund, such as the costs of buying, selling, and
holding securities. Neither index is a perfect comparison to Delaware Foundation
Funds Balanced Portfolio since the S&P 500 does not include fixed-income
securities and the Lehman Brothers Aggregate Bond Index does not include stocks.
5
<PAGE>
What are the Fund's fees and expenses?
You do not pay sales charges directly from your investments when you buy or sell
shares of the Institutional Class.
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on none
purchases as a percentage of offering price
- --------------------------------------------------------------------------------
Maximum contingent deferred sales charge (load) none
as a percentage of original purchase price or
redemption price, whichever is lower
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on none
reinvested dividends
- --------------------------------------------------------------------------------
Redemption fees none
- --------------------------------------------------------------------------------
Exchange fees(1) none
- --------------------------------------------------------------------------------
Annual fund operating expenses are deducted from the Fund's assets.
- --------------------------------------------------------------------------------
Management fees(2) 0.10%
- --------------------------------------------------------------------------------
Distribution and service (12b-1) fees none
- --------------------------------------------------------------------------------
Other expenses 1.22%
- --------------------------------------------------------------------------------
Total annual fund operating expenses 1.32%
- --------------------------------------------------------------------------------
Fee waivers and payments(3) (0.77%)
- --------------------------------------------------------------------------------
Net expenses 0.55%
- --------------------------------------------------------------------------------
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds with similar investment
objectives. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 with an annual 5% return over the time shown.(4) This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
- -----------------------------------
1 year $56
- -----------------------------------
3 years $342
- -----------------------------------
5 years $650
- -----------------------------------
10 years $1,523
- -----------------------------------
This example is also based on a hypothetical investment of $10,000 with an
annual 5% return over the time shown but assumes the net expenses of the
Delaware Foundation Funds Balanced Portfolio noted above. In this example we
have also included an estimate of the average aggregate total operating expenses
of the Delaware Investments funds as described on page 8. When the Fund invests
in any of these funds, it absorbs a portion of their underlying expenses. This
is an example only, and does not represent future expenses, which may be greater
or less than those shown here.
- -----------------------------------
1 year $171
- -----------------------------------
3 years $454
- -----------------------------------
5 years $758
- -----------------------------------
10 years $1,622
- -----------------------------------
6
<PAGE>
(1) Exchanges are subject to the requirements of each fund in the Delaware
Investments family. A front-end sales charge may apply if you exchange your
shares into a fund that has a front-end sales charge.
(2) The investment manager has contracted to limit its management fee to no
more than 0.10% of average daily net assets through November 30, 2000.
(3) The investment manager has contracted to waive fees and pay expenses
through November 30, 2000 in order to prevent total operating expenses
(excluding taxes, interest, brokerage fees and extraordinary expenses) from
exceeding 0.55% of average daily net assets.
(4) The Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. Also, this example reflects the net
operating expenses with expense waivers for the one-year period and the
total operating expenses without expense waivers for years two through 10.
Profile: Delaware Foundation Funds Growth Portfolio
What are the Fund's goals?
The Delaware Foundation Funds Growth Portfolio seeks long-term capital growth.
Although the Fund will strive to meet its goals, there is no assurance that it
will.
What are the Fund's main investment strategies?
We invest primarily in shares of selected Delaware Investments funds including
equity funds and to a lesser extent, fixed-income funds. We may also invest in
individual securities. We use an active asset allocation approach in selecting
investments for the Fund. In striving to meet its objective, the Fund will
typically invest more of its assets in equity funds and securities than in
fixed-income funds and securities. Typically, the Fund will invest between 10%
and 30% of its assets in international funds or securities.
What are the main risks of investing in the Fund?
Investing in any mutual fund involves risk, including the risk that you may lose
part or all of the money you invest. The value of your investment in the Fund
will increase and decrease according to changes in the value of the securities
in the Fund's portfolio. This Fund is subject to the same risks as the
underlying Delaware Investments funds that it invests in. Therefore, to the
extent that it invests in equity funds, it will be affected by declines in stock
prices. To the extent that it invests in fixed-income funds, it will be affected
by changes in interest rates. If interest rates rise, the value of the bonds in
the portfolio would decline and the value of Fund shares could decline as well.
To the extent that it invests in international funds or securities, the Fund
will be affected by changes in currency exchange rates as well as political,
economic and regulatory conditions in the countries represented in its
portfolio.
Because the Fund may invest in as few as four different underlying funds or a
small number of securities, it is considered a non-diversified investment
company under the Investment Company Act of 1940 and may be subject to greater
risk than if it were diversified. However, because the underlying Delaware
Investments funds generally hold a broad mix of securities, which helps to
lessen this risk. For a more complete discussion of risk, please turn to "The
risks of investing in the Funds."
<PAGE>
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
Who should invest in the Fund
o Investors who are in the earlier stage of wealth accumulation, generally
with higher risk tolerance.
o Investors looking for the capital appreciation potential of the stock
market and who have no need for current income.
o Investors who would like a portfolio with broad diversification across
various types of securities and active asset allocation by a professional
money manager.
Who should not invest in the Fund
o Investors with short-term financial goals.
o Investors whose primary goal is current income.
o Investors who are unwilling to accept share prices that may fluctuate,
sometimes significantly, over the short term.
You should keep in mind that an investment in the Fund is not a complete
investment program; it should be considered just one part of your total
financial plan. Be sure to discuss this Fund with your financial adviser to
determine whether it is an appropriate choice for you.
7
<PAGE>
How has the Fund performed?
This bar chart and table can help you evaluate the potential risks of investing
in the Fund. We show the return for the Fund for the past calendar year as well
as the average annual return for one year compared to an index. The Fund's past
performance does not necessarily indicate how it will perform in the future. The
returns reflect expense caps. The returns would be lower without the expense
caps.
[GRAPHIC OMITTED: BAR CHART TOTAL RETURN (Institutional)]
Institutional Class total return
- --------
1998
- --------
10.54%
- --------
The Delaware Foundation Funds Growth Fund Institutional Class had a 2.48%
year-to-date return as of September 30, 1999. During the period illustrated in
this bar chart, the Class' highest quarterly return was 14.86% for the quarter
ended December 31, 1998 and its lowest quarterly return was -11.57% for the
quarter ended September 30, 1998.
Average annual returns for the period ending 12/31/98
- --------------------------------------------------------------------------------
CLASS Delaware Foundation S&P 500 Composite
Funds Growth Portfolio Stock Index
Institutional Class
(Inception 12/31/97)
- --------------------------------------------------------------------------------
1 year 10.54% 28.74%
The Fund's returns are compared to the performance of the S&P 500 Composite
Stock Index. You should remember that unlike the Fund, the index is unmanaged
and doesn't reflect the actual costs of operating a mutual fund, such as the
costs of buying, selling, and holding securities. The Index is not a perfect
comparison for the Fund because the Fund may invest in fixed-income and
international securities which are not included in the Index.
8
<PAGE>
What are the Fund's fees and expenses?
You do not pay sales charges directly from your investments when you buy or sell
shares of the Institutional Class.
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on none
purchases as a percentage of offering price
- --------------------------------------------------------------------------------
Maximum contingent deferred sales charge (load) none
as a percentage of original purchase price or
redemption price, whichever is lower
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on none
reinvested dividends
- --------------------------------------------------------------------------------
Redemption fees none
- --------------------------------------------------------------------------------
Exchange fees(1) none
- --------------------------------------------------------------------------------
Annual fund operating expenses are deducted from the Fund's assets.
- --------------------------------------------------------------------------------
Management fees(2) 0.10%
- --------------------------------------------------------------------------------
Distribution and service (12b-1) fees none
- --------------------------------------------------------------------------------
Other expenses 1.86%
- --------------------------------------------------------------------------------
Total annual fund operating expenses 1.96%
- --------------------------------------------------------------------------------
Fee waivers and payments(3) (1.41%)
- --------------------------------------------------------------------------------
Net expenses 0.55%
- --------------------------------------------------------------------------------
<PAGE>
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds with similar investment
objectives. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 with an annual 5% return over the time shown.(4) This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
- ------------------------------------
1 year $56
- ------------------------------------
3 years $478
- ------------------------------------
5 years $926
- ------------------------------------
10 years $2,171
- ------------------------------------
This example is also based on a hypothetical investment of $10,000 with an
annual 5% return over the time shown but assumes the net expenses of the
Delaware Foundation Funds Income Portfolio noted above. In this example we have
also included an estimate of the average aggregate total operating expenses of
the Delaware Investments funds as described on page 8. When the Fund invests in
any of these funds, it absorbs a portion of their underlying expenses. This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
- ------------------------------------
1 year $171
- ------------------------------------
3 years $530
- ------------------------------------
5 years $913
- ------------------------------------
10 years $1,987
- ------------------------------------
(1) Exchanges are subject to the requirements of each fund in the Delaware
Investments family. A front-end sales charge may apply if you exchange your
shares into a fund that has a front-end sales charge.
(2) The investment manager has contracted to limit its management fee to no
more than 0.10% of average daily net assets through November 30, 2000.
(3) The investment manager has contracted to waive fees and pay expenses
through November 30, 2000 in order to prevent total operating expenses
(excluding taxes, interest, brokerage fees and extraordinary expenses) from
exceeding 0.55% of average daily net assets.
(4) The Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. Also, this example reflects the net
operating expenses with expense waivers for the one-year period and the
total operating expenses without expense waivers for years two through 10.
9
<PAGE>
Indirect expenses paid by the Delaware Foundation Funds
Because the Delaware Foundations Funds invest primarily in other Delaware
Investments funds, they will be shareholders of those funds. Like all
shareholders, the Delaware Foundation Funds will indirectly bear a proportionate
share of any management fees and other expenses of the funds it holds. These
fees, which are deducted from the underlying funds before their share prices are
calculated, are in addition to the fees and expenses described in each Delaware
Foundation Fund profile. Depending on which funds are held in each Delaware
Foundation Fund portfolio, the fees will vary over time. However, in order to
give you an idea of what these fees might be, we have calculated an average
expense ratio for each Delaware Foundation Fund, based on the expense ratios of
the Delaware Investments funds for each of their most recent fiscal years and
the Delaware Foundation Funds' portfolio allocations as of September 30, 1999.
Based on these hypothetical calculations, the combined average expense ratio of
the Delaware Investments funds that is borne indirectly by each of the Delaware
Foundation funds would have been as follows:
Income Portfolio 1.03%
Balanced Portfolio 1.13%
Growth Portfolio 1.13%
Expenses will differ depending on how the Delaware Foundation Funds allocate
assets among the Delaware Investments funds.
10
<PAGE>
How we manage the Funds
Our investment strategies
In order to meet the changing needs of investors throughout their lives,
Delaware Foundation Funds offer three different portfolios with varying levels
of income and growth potential and corresponding variations in risk. From the
most conservative (the Delaware Foundation Funds Income Portfolio) to the
moderate (the Delaware Foundation Funds Balanced Portfolio) to the most
aggressive (the Delaware Foundation Funds Growth Portfolio), each Fund relies on
active asset allocation and invests in a range of Delaware Investments mutual
funds as they strive to attain their objectives.
We take a disciplined approach to investing, combining investment strategies and
risk management techniques that can help shareholders meet their goals.
Each Delaware Foundation Fund is a type of mutual fund known as a fund-of-funds.
A fund-of-funds typically invests in other mutual funds rather than individual
securities. The potential benefits of such a strategy are three-fold:
1. An extra layer of diversification through shared ownership in the
individual securities held by the underlying funds;
2. Access to the investment expertise of multiple portfolio managers and
analysts who work on the individual underlying funds; and
3. A professional portfolio manager who makes asset allocation decisions.
We offer the Delaware Foundation Funds because we determined that a
fund-of-funds was an efficient way to provide active asset allocation services
to meet the needs of investors at various stages of their life and wealth
accumulation efforts. Our active asset allocation strategy begins with an
evaluation of three key factors:
o the expected return of specific asset classes such as equities or
fixed-income securities;
o the expected volatility or degree to which returns of each asset class have
varied from one period to the next; and
o the correlation of various asset classes, that is, the degree to which two
asset classes move up or down together.
After using this information to determine how much of each Delaware Foundation
Fund will be allocated to a particular asset class, we then select specific
Delaware Investments funds for the portfolio. We have identified a select group
of funds that suit the allocation strategies of the Delaware Foundation Funds
and have grouped them into four broad asset classes.
The Delaware Investments funds we typically invest in are listed below in their
respective asset classes. Groupings are approximate and based on the core
strategy of each individual fund. Management may add or delete funds from this
list without shareholder approval.
11
<PAGE>
Delaware Investments Funds available to the Delaware Foundation Funds
U.S. Equities
Delaware Blue Chip Fund Delaware Research Fund
Delaware DelCap Fund Delaware Select Growth Fund
Delaware Devon Fund Delaware Small Cap Value Fund
Delaware Diversified Growth Fund Delaware Trend Fund
Delaware Diversified Value Fund Delaware REIT Fund
Delaware U.S. Growth Fund
International Equities
Delaware Emerging Markets Fund Delaware International Small Cap Fund
Delaware International Equity Fund Delaware New Pacific Fund
Fixed-Income
Delaware American Government Bond Fund Delaware Global Bond Fund
Delaware Delchester Fund Delaware High-Yield Opportunities Fund
Delaware Corporate Bond Fund Delaware Limited-Term Government Fund
Delaware Extended Duration Bond Fund
Money Market
Delaware Cash Reserve Fund
Once we select appropriate investments for each Delaware Foundation Funds
portfolio, we continually monitor the market and economic environments, the
risk/reward profiles of each asset class and the performance of individual funds
and actively adjust each Delaware Foundation Funds portfolio, striving to meet
its investment objective.
The Delaware Foundation Funds' investment objectives are non-fundamental. This
means that the Board of Trustees may change an objective without obtaining
shareholder approval. If an objective were changed, we would notify shareholders
before the change became effective.
12
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
The securities we typically invest in How we use them
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Delaware Delaware Foundation Delaware
Foundation Funds Funds Balanced Foundation Funds
Income Portfolio Portfolio Growth Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. equity funds or U.S. equity securities 20% to 50% of 35% to 65% of 45% to 75% of
may include Delaware Investments funds in Assets Assets Assets
the equity asset class or individual equity
securities.
- ------------------------------------------------------------------------------------------------------------------------------------
Each Fund may invest in one or more of the mutual funds listed below.
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Blue Chip Fund Delaware Blue Chip Fund seeks long-term capital appreciation. Current income
is a secondary objective. It invests primarily in large ("blue chip")
companies.
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Growth and Income Fund Delaware Growth and Income Fund seeks long-term growth by investing
primarily in securities that provide the potential for income and capital
appreciation without undue risk to principal. It invests primarily in
dividend-paying stocks of large, well-established companies.
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware DelCap Fund Delaware DelCap Fund seeks long-term capital growth. It invests primarily in
common stocks and convertible securities of medium-sized companies believed
to have growth potential.
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Devon Fund Delaware Devon Fund seeks current income and capital appreciation. It
invests primarily in income-producing common stocks.
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Diversified Growth Fund Delaware Diversified Growth Fund seeks capital appreciation. It invests
primarily in large companies believed to have the potential to grow faster
than the average company in the S&P 500 Index.
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Diversified Value Fund Delaware Diversified Value Fund seeks capital appreciation with current
income as a secondary objective. It invests primarily in dividend-paying
stocks or income-producing securities that are convertible into common
stocks.
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware REIT Fund Delaware REIT Fund seeks maximum long-term total return, with capital
appreciation as a secondary objective. It invests primarily in real estate
investment trusts (REITs) and other companies in the real estate industry.
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Research Fund Delaware Research Fund seeks to provide long-term capital growth. It invests
primarily in 20 to 30 exchange traded equity securities that are held by
other Delaware Investment funds.
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Select Growth Fund Delaware Select Growth Fund seeks long-term capital appreciation, which the
Fund attempts to achieve by investing primarily in equity securities of
companies of all sizes that the Manager believes have the potential for high
earnings growth.
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Small Cap Value Fund Delaware Small Cap Value Fund seeks capital appreciation. It invests
primarily in small cap companies that are believed to be undervalued.
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Trend Fund Delaware Trend Fund seeks capital appreciation by investing primarily in
securities of emerging or other growth-oriented companies. It focuses on
small companies that are believed to be responsive to changes in the
marketplace and that have the fundamental characteristics to support
continued growth.
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware U.S. Growth Fund Delaware U.S. Growth Fund seeks maximum capital appreciation. It invests
primarily in large company growth stocks.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
The securities we typically invest in How we use them
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Delaware Delaware Foundation Delaware
Foundation Funds Funds Balanced Foundation Funds
Income Portfolio Portfolio Growth Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Fixed-income funds or fixed-income securities 45% to 75% of 25% to 55% of 5% to 35% of
may include Delaware Investments funds in the Assets Assets Assets
fixed-income asset class or individual
fixed-income securities.
- ------------------------------------------------------------------------------------------------------------------------------------
Each Fund may invest in one or more of the mutual funds listed below.
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware American Government Bond Fund Delaware American Government Bond Fund seeks high current income consistent
with safety of principal by investing primarily in debt obligations issued
or guaranteed by the U.S. government, its agencies or instrumentalities,
including mortgage-backed securities.
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Corporate Bond Fund Delaware Corporate Bond Fund seeks to provide investors with total return.
It invests primarily in investment grade corporate bonds of intermediate
duration.
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Extended Duration Bond Fund Delaware Extended Duration Bond Fund seeks to provide investors with total
return. It invests primarily in investment grade corporate bonds of
relatively longer duration.
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Delchester Fund Delaware Delchester Fund seeks as high a current income as is consistent
with providing reasonable safety. It invests primarily in high-yield, higher
risk corporate bonds, commonly known as "junk bonds."
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Global Bond Fund Delaware Global Bond Fund seeks current income consistent with preservation
of principal. It invests primarily in fixed-income securities that may also
provide the potential for capital appreciation. At least 65% of its assets
will be invested in three different countries, including the U.S.
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Limited-Term Government Fund Delaware Limited-Term Government Fund seeks to provide a high stable level
of current income, while attempting to minimize fluctuations in principal
and provide maximum liquidity. It invests primarily in short and
intermediate-term fixed income securities issued or guaranteed by the U.S.
government as well as instruments backed by those securities.
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware High-Yield Opportunities Fund Delaware High-Yield Opportunities Fund seeks to provide investors with total
return and, as a secondary objective, high current income. It invests
primarily in high-yield, higher risk corporate bonds, commonly known as
"junk bonds."
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
The securities we typically invest in How we use them
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Delaware Delaware Foundation Delaware
Foundation Funds Funds Balanced Foundation Funds
Income Portfolio Portfolio Growth Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Money market funds or money market securities 0-35% of Assets 0-35% of Asset 0-35% of Assets
may include Delaware Cash Reserve Fund, a money
market fund, individual money market securities
or repurchase agreements.
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Cash Reserve Fund Delaware Cash Reserve Fund seeks to provide maximum current income,
while preserving principal and maintaining liquidity. As a money market
fund, it invests in highly liquid money market instruments.
- ------------------------------------------------------------------------------------------------------------------------------------
Repurchase agreements: An agreement between a The Delaware Foundation Funds may use overnight repurchase agreements to
buyer, such as a Fund, and seller of securities invest cash prior to investing it in other funds or securities, or for
in which the seller agrees to buy the securities temporary defensive purposes. A Fund will only enter into repurchase
back within a specified time at the same price agreements that are composed of U.S. government securities.
the buyer paid for them, plus an amount equal to
an agreed upon interest rate. Repurchase
agreements are often viewed as equivalent to
cash.
- ------------------------------------------------------------------------------------------------------------------------------------
International equity funds or international 0-10% of Assets 5% to 20% of Assets 10%-30% of Assets
equity securities may include Delaware Investments
funds in the international equity asset class or
individual international equity securities.
- ------------------------------------------------------------------------------------------------------------------------------------
Each Fund may invest in one or more of the mutual funds listed below.
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Emerging Markets Fund Delaware Emerging Markets Fund seeks long-term capital appreciation. It
invests primarily in companies located in under-developed, emerging
market countries.
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware International Equity Fund Delaware International Equity Fund seeks long-term growth without undue
risk to principal. It invests primarily in large companies located in
developed countries.
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware International Small Cap Fund Delaware International Small Cap Fund seeks to achieve long-term capital
appreciation. It invests primarily in small companies located in foreign
countries.
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware New Pacific Fund Delaware New Pacific Fund seeks to maximize long-term capital
appreciation by investing primarily in equity securities of companies
that are domiciled in or have their principal business activities in
countries located in the Pacific Basin.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
The securities we typically invest in How we use them
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Delaware Delaware Foundation Delaware
Foundation Funds Funds Balanced Foundation Funds
Income Portfolio Portfolio Growth Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Other types of securities which may be held
by the Delaware Foundation Funds.
- ------------------------------------------------------------------------------------------------------------------------------------
Options and futures: Options represent a right We might use options or futures to gain exposure to a particular market
to buy or sell a security or group of securities segment without purchasing individual funds or securities in that
at an agreed upon price at a future date. The segment. We might use this approach if we had excess cash that we wanted
purchaser of an option may or may not choose to to invest quickly or to make an investment without disrupting one of the
go through with the transaction. other Delaware Investments funds.
Futures contracts are agreements for the We might also use options or futures to neutralize the effect of
purchase or sale of a security or group of potential price declines without selling securities.
securities at a specified price, on a specified
date. Unlike an option, a futures contract must Use of these strategies can increase the operating costs of the Funds
be executed unless it is sold before the and can lead to loss of principal.
settlement date.
Options and futures are generally considered to
be derivative securities.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
Borrowing from banks
The Delaware Foundation Funds may borrow money as a temporary measure for
extraordinary purposes or to facilitate redemptions. Borrowing money could
result in the Funds being unable to meet their investment objectives.
Temporary defensive positions
The Delaware Foundation Funds are permitted to make temporary investments in
bonds, cash or cash equivalents and may allocate 100% of their net assets to
Delaware Cash Reserve Fund in response to unfavorable market conditions. To the
extent that a Fund engages in temporary defensive measures, it may be unable to
achieve its objective.
Portfolio turnover
Though we anticipate that each of the Delaware Foundation Funds will have an
annual portfolio turnover of less than 100%, some of the funds that the Delaware
Foundation Funds may invest in could have turnover rates greater than 100%. A
turnover rate of 100% would occur if a fund sold and replaced securities valued
at 100% of its net assets within one year. High turnover rates in the individual
funds held by the Delaware Foundation Funds could result in higher expenses.
17
<PAGE>
More About the Delaware Foundation Funds
Guidelines for Purchasing and Redeeming Shares of Other Delaware Investments
funds
Following is important information about how the Delaware Foundation Funds
operate, which you should consider when evaluating the Funds.
o Each Delaware Foundation Funds portfolio will invest in the institutional
class shares of approved Delaware Investments funds. When investing in
Delaware Cash Reserve Fund Class A will be used. This means the Foundation
Funds will pay no sales charges or 12b-1 distribution fees on the shares
that they purchase.
o Each Foundation Funds' portfolio will indirectly bear a share of fees and
expenses that apply to the institutional classes of the Delaware
Investments funds they hold. For more information about this, see 8.
o Any performance reported for the Delaware Foundation Funds will include the
impact of all fund expenses whether they are related to the Foundation
Funds or the underlying funds they invest in.
o We have adopted Asset Allocation Guidelines for our purchase and sale of
other Delaware Investments funds. If the manager of the Delaware Foundation
Funds anticipates that a purchase or redemption will disrupt the investment
strategies of another fund, the manager will confer with the portfolio
managers of that fund to determine how to minimize adverse affects on both
funds. Such steps might include staggering the timing and amounts of the
transactions. As a result, the Delaware Foundation Funds might not be able
to purchase or redeem shares of other Delaware Investments funds in the
exact manner they would like to. This could decrease the total return or
increase the volatility of each Foundation Fund.
o Because many Delaware Investments funds are managed independently by
different individuals or investment teams, there is no overall coordination
of purchases and sales of individual securities. Therefore, it is possible
that one of the funds held by a Delaware Foundation Funds portfolio or the
Delaware Foundation Funds themselves might be acquiring securities at the
same time another is selling them. This could increase transaction costs.
18
<PAGE>
The risks of investing in the Funds
Investing in any mutual fund involves risk, including the risk that you may
receive little or no return on your investment, and the risk that you may lose
part or all of the money you invest. Before you invest in the Funds you should
carefully evaluate the risks. An investment in the Funds typically provides the
best results when held for a number of years. The following are the chief risks
you assume when investing in the Funds. Please see the Statement of Additional
Information for further discussion of these risks and the other risks not
discussed here.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Risks Degree to which the Funds are subject to this risk and
How we strive to manage the risk
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Foundation Delaware Foundation Delaware Foundation
Funds Income Portfolio Funds Balanced Portfolio Funds Growth Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Market risk is the risk that all or a Most of the underlying Delaware Investments funds and the Delaware Foundation
majority of the securities in a certain Funds themselves are subject to this risk. In all Funds, we generally maintain a
market--like the stock or bond long-term investment approach and focus on securities we believe can appreciate
market--will decline in value because of over an extended time frame regardless of interim market fluctuations. Though we
factors such as economic conditions, may hold securities for any amount of time, we typically do not trade for
future expectations or investor short-term purposes.
confidence.
Each Fund may hold a substantial part of its assets in cash or cash equivalents as
a temporary, defensive strategy.
- ------------------------------------------------------------------------------------------------------------------------------------
Industry and security risk is the risk Most of the underlying Delaware Investments funds and the Foundation Funds
that the value of securities in a themselves are subject to this risk. The underlying funds generally hold a number
particular industry or the value of an of different securities spread across various sectors. The Funds also follow a
individual stock or bond will decline rigorous selection process before choosing securities and continuously monitor
because of changing expectations for the them while they remain in the portfolio. Delaware REIT Fund is particularly
performance of that industry or for the sensitive to changes in the real estate market.
individual company issuing the stock.
This combined with the fact that the Delaware Foundation Funds will hold at least
four different Delaware Investments funds, typically representing different asset
classes, should help to reduce industry and security risk.
- ------------------------------------------------------------------------------------------------------------------------------------
Small company risk is the risk that Delaware DelCap Fund, Delaware Select Growth Fund, Delaware Small Cap Value Fund,
prices of smaller companies may be more Delaware Trend Fund and Delaware International Small Cap Fund are all subject to
volatile than larger companies because this risk. These Funds maintain well-diversified portfolios, select stocks
of limited financial resources or carefully and monitor them continuously. In determining the asset allocation for
dependence on narrow product lines. the Delaware Foundation Funds, the manager will evaluate the current risk and
reward potential of small-cap stocks and make allocation decisions accordingly.
- ------------------------------------------------------------------------------------------------------------------------------------
Income Portfolio will Balanced Portfolio will Growth Portfolio will
generally have less have moderate exposure to generally have
exposure to this risk due this risk. significant exposure to
to its reduced emphasis this risk, due to its
on equity securities. greater emphasis on
equities.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Risks Degree to which the Funds are subject to this risk and
How we strive to manage the risk
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Foundation Delaware Foundation Delaware Foundation
Funds Income Portfolio Funds Balanced Portfolio Funds Growth Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Interest rate risk is the risk that For Delaware Investments funds in the Fixed-Income group this is generally the
securities will decrease in value if most significant risk. In striving to manage this risk, managers of Delaware
interest rates rise. The risk is fixed-income funds will typically monitor economic conditions and the interest
generally associated with bonds; rate environment. They will also usually keep the average maturity of a fund as
however, because smaller companies often short as is prudent, in keeping with the individual fund's investment objective.
borrow money to finance their
operations, they may be adversely The Funds listed on page 16 that are subject to small company risk may also be
affected by rising interest rates. subject to this risk. The managers of these Funds consider the potential effect
that rising interest rates might have on a stock before the stock is purchased.
- ------------------------------------------------------------------------------------------------------------------------------------
For the Income Portfolio, The Delaware Balanced The Growth Portfolio
this is a significant Portfolio will generally will generally have
risk due to its have moderate exposure to moderate exposure to
substantial allocation to this risk. Though it will this risk due to its
fixed-income funds and have a fixed-income lesser emphasis on
securities. allocation and holdings fixed-income funds and
of small companies, these securities. Though it
may be balanced by equity will have holdings of
holdings of larger small companies, these
companies. may be balanced by
equity holdings of
larger companies.
- ------------------------------------------------------------------------------------------------------------------------------------
Credit risk is the risk that a bond's Each of the Delaware Investments funds in the Fixed-Income group is subject to
issuer might be unable to make timely some degree of credit risk. This is less substantial for high-quality,
payments of interest and principal. government-oriented funds like Delaware American Government Bond Fund and Delaware
Limited-Term Government Fund and more significant for funds that invest in lower
Investing in so-called "junk" or quality bonds such as Delaware Delchester Fund, Delaware High-Yield Opportunities
"high-yield" bonds entails greater risk Fund and, to some extent, Delaware Emerging Markets Fund.
of principal loss than the risk involved
in investment grade bonds.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Risks Degree to which the Funds are subject to this risk and
How we strive to manage the risk
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Foundation Delaware Foundation Delaware Foundation
Funds Income Portfolio Funds Balanced Portfolio Funds Growth Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
For the Income Portfolio, For the Balanced For the Growth
this may be a significant Portfolio, this is a Portfolio, this is a
risk because the Fund may moderate risk. Though it less significant risk
have a substantial probably will invest in due to its reduced
allocation to Delaware Delaware Delchester Fund emphasis on fixed-
Delchester Fund and or Delaware High-Yield income securities.
Delaware High-Yield Opportunities Fund, these
Opportunities Fund. holdings may be balanced
by an equity allocation
or better quality bond
holdings.
- ------------------------------------------------------------------------------------------------------------------------------------
Prepayment risk is the risk that the Prepayment risk can be a significant risk to funds that have a large percentage of
principal on a bond you own will be holdings in mortgage securities. Among the funds available to the Delaware
prepaid prior to maturity at a time when Foundation Funds portfolios, these include the Delaware American Government Bond
interest rates are lower than what that Fund and the Delaware Limited-Term Government Fund. In order to manage this risk,
bond was paying. A fund would then have when we think interest rates are low or that rates will be declining, managers of
to reinvest that money at a lower these funds typically look for mortgage securities that they believe are less
interest rate. likely to be prepaid. The Delaware Foundation Funds will be more or less subject
to this risk depending on how much they have allocated to these Delaware
Investments funds.
- ------------------------------------------------------------------------------------------------------------------------------------
For the Income Portfolio, For the Balanced For the Growth Portfolio
this could be a Portfolio there is there is low exposure to
significant risk due to relatively low exposure this risk due to a
its greater focus on the to this risk, due to its reduced emphasis on the
fixed-income asset class. balanced approach and fixed-income asset
allocation to equity class.
securities.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Risks Degree to which the Funds are subject to this risk and
How we strive to manage the risk
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Foundation Delaware Foundation Delaware Foundation
Funds Income Portfolio Funds Balanced Portfolio Funds Growth Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Futures and options risk is the Each of the Delaware Foundation Funds and many of the Delaware Investments funds
possibility that a fund may experience a may use options and futures for defensive purposes, such as to protect gains in
loss if it employs an options or futures the portfolio without actually selling a security, or to gain exposure to a
strategy related to a security or a particular market segment without purchasing individual securities in the segment.
market index and that security or index We will generally not use futures and options for speculative reasons.
moves in the opposite direction from
what the manager anticipated. Futures
and options also involve additional
expenses, which could reduce any benefit
or increase any loss that fund gains
from using the strategy.
- ------------------------------------------------------------------------------------------------------------------------------------
Foreign risk is the risk that foreign Many of the Delaware Investments funds invest some or all of their assets in
securities may be adversely affected by foreign securities. Though each of the Delaware Foundation Funds may invest in
political instability, changes in international funds or international securities, they may only invest a limited
currency exchange rates, inefficient portion of their net assets in international funds as described below. Holding
markets, foreign economic conditions, both international and domestic securities in a well-allocated portfolio may
lack of information or inadequate actually help to reduce overall portfolio risk since these types of securities may
regulatory and accounting standards. experience different performance cycles.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Risks Degree to which the Funds are subject to this risk and
How we strive to manage the risk
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Foundation Delaware Foundation Delaware Foundation
Funds Income Portfolio Funds Balanced Portfolio Funds Growth Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
The Income Portfolio has The Balanced Portfolio The Growth Portfolio has
low exposure to this risk has moderate exposure to moderate exposure to
because international this risk, since this risk, since
holdings are limited to international holdings international holdings
10% of net assets. may range from 5% to 20% may range from 10% to
of net assets. 30% of net assets.
- ------------------------------------------------------------------------------------------------------------------------------------
Emerging markets risk is the possibility Delaware Global Bond Fund, Delaware Emerging Markets Fund and Delaware New Pacific
that the risks associated with Fund are all subject to this risk. Each Fund carefully selects securities within
international investing will be greater emerging markets and strives to consider all relevant risks associated with an
in emerging markets than in more individual company. When deciding how much to allocate to these Funds, the
developed foreign markets because, among Delaware Foundation Funds manager will consider whether the potential rewards of
other things, emerging markets may have investing in these Funds outweigh the potential risks.
less stable political and economic
environments.
- ------------------------------------------------------------------------------------------------------------------------------------
The Income Portfolio, has The Balanced Portfolio, The Growth Portfolio,
minimal exposure to this has moderate exposure to has moderate exposure to
risk because this risk, since this risk, since
international holdings international holdings international holdings
are limited to 10% of net may range from 5% to 20% may range from 10% to
assets. of net assets. 30% of net assets.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Risks Degree to which the Funds are subject to this risk and
How we strive to manage the risk
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Foundation Delaware Foundation Delaware Foundation
Funds Income Portfolio Funds Balanced Portfolio Funds Growth Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Currency risk is the risk that the value Each of the Delaware Investments funds in the International group is subject to
of a fund's investments may be this risk. The Funds may try to hedge currency risk by purchasing foreign currency
negatively affected by changes in exchange contracts. By agreeing to purchase or sell foreign securities at a
foreign currency exchange rates. Adverse pre-set price on a future date, the Funds strive to protect the value of the
changes in exchange rates may reduce or securities they own from future changes in currency rates. The Funds will use
eliminate any gains produced by forward currency exchange contracts only for defensive measures, not to enhance
investments that are denominated in portfolio returns. However, there is no assurance that a strategy such as this
foreign currencies and may increase any will be successful.
losses.
- ------------------------------------------------------------------------------------------------------------------------------------
The Income Portfolio, has The Balanced Portfolio, The Growth Portfolio,
minimal exposure to this has moderate exposure to has moderate exposure to
risk because this risk, since this risk, since
international holdings international holdings international holdings
are limited to 10% of net may range from 5% to 20% may range from 10% to
assets. of net assets. 30% of net assets.
- ------------------------------------------------------------------------------------------------------------------------------------
Non-diversified risk: Non-diversified Each of the Delaware Foundation Funds, as well as several of the Delaware
funds have the flexibility to invest as Investments funds they may hold, are non-diversified funds subject to this risk.
much as 50% of their assets in as few as Nevertheless, we typically hold shares of at least four different Delaware
two issuers provided no single issuer Investments funds, which in turn hold a number of securities representing a
accounts for more than 25% of the variety of different issuers or industry sectors. Though we are technically
portfolio. The remaining 50% of the subject to non-diversified risk, we do not believe it will have a substantial
portfolio must be diversified so that no impact on the Delaware Foundation Funds.
more than 5% of the Fund's assets is
invested in the securities of a single
issuer. When a fund invests its assets
in fewer issuers, the value of fund
shares may increase or decrease more
rapidly than if the fund were fully
diversified.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Risks Degree to which the Funds are subject to this risk and
How we strive to manage the risk
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Foundation Delaware Foundation Delaware Foundation
Funds Income Portfolio Funds Balanced Portfolio Funds Growth Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Liquidity risk is the possibility that Each of the Delaware Foundation Funds' exposure to illiquid securities is limited
securities cannot be readily sold within to 15% of net assets. For each of the Delaware Investments funds, exposure to
seven days at approximately the price illiquid securities is limited to 10% to 15% of net assets.
that a fund has valued them.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
28
<PAGE>
Who manages the Funds
Investment manager
The Funds are managed by Delaware Management Company, a series of Delaware
Management Business Trust, which is an indirect, wholly owned subsidiary of
Delaware Management Holdings, Inc. Delaware Management Company manages each
Fund's assets by allocating a Fund's assets among the Delaware Investments
funds. The management services include monitoring the Delaware Investments Funds
in order to determine whether they are investing their assets in a manner that
is consistent with the asset classes targeted for investment by each Fund.
Delaware Management Company also oversees the Funds' direct investment in
securities, manages the Funds' business affairs and provides daily
administrative services. For these services, the manager was paid a fee for the
last fiscal year as follows:
Asset Allocation Fees*
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Delaware Delaware Delaware
Foundation Foundation Foundation
Funds Income Funds Balanced Funds Growth
Portfolio Portfolio Portfolio
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
As a percentage of average daily net assets none none none
- -----------------------------------------------------------------------------------------------------
</TABLE>
*Reflects the manager's expense caps.
Portfolio managers
J. Paul Dokas has primary responsibility for making day-to-day investment
decisions for the Funds. In making investment decisions for each Fund, Mr. Dokas
regularly consults with Christopher S. Adams and Robert E. Ginsberg.
J. Paul Dokas, Vice President/Senior Portfolio Manager, is responsible for both
asset allocations among the underlying Delaware Investments Funds and the
Portfolios' direct investments in securities. He holds a BBA in Business from
Loyola College and an MBA from the University of Maryland. Prior to joining
Delaware Investments in 1997, he was a Director of Trust Investments for Bell
Atlantic Corporation in Philadelphia. Mr. Dokas is a CFA charterholder.
Christopher S. Adams, Vice President, Equity Analyst, holds both bachelor's and
master's degrees in History and Economics from Oxford University, England and
received his MBA with dual majors in Finance & Insurance/Risk Management from
the Wharton School of the University of Pennsylvania. He joined Delaware
Investments in 1995 as a member of the Strategic Planning Department, later
becoming the Equity Department Business Manager. Prior to joining Delaware
Investments, he held positions with Coopers & Lybrand, LLP's Financial Advisory
Services group, Sumitomo Bank Ltd. and Bank of America NT & SA in London. Mr.
Adams is a CFA level II candidate.
Robert E Ginsberg, Assistant Vice President/Equity Analyst, graduated magna cum
laude from the Wharton School of Business at the University of Pennsylvania with
a degree in Economics with a concentration in Finance. Prior to joining Delaware
Investments in September of 1997, he was a Consultant at Andersen Consulting
working primarily with financial services companies. At Delaware Investments,
Mr. Ginsberg handles diverse analytical responsibilities involving large
capitalization stocks. He is a CFA Level III candidate.
29
<PAGE>
Who's who?
This diagram shows the various organizations involved with managing,
administering, and servicing the Delaware Investments funds.
Board of Trustees
Investment manager The Funds Custodian
Delaware Management Company The Chase Manhattan Bank
One Commerce Square 4 Chase Metrotech Center
Philadelphia, PA 19103 Brooklyn, NY 11245
Distributor Service agent
Delaware Distributors, L.P. Delaware Service Company, Inc.
1818 Market Street 1818 Market Street
Philadelphia, PA 19103 Philadelphia, PA 19103
Portfolio managers
(see page 20 for details)
Shareholders
Board of Trustees A mutual fund is governed by a Board of Trustees which has
oversight responsibility for the management of the fund's business affairs.
Trustees establish procedures and oversee and review the performance of the
investment manager, the distributor and others that perform services for the
fund. At least 40% of the Board of Trustees must be independent of the fund's
investment manager and distributor. These independent fund trustees, in
particular, are advocates for shareholder interests.
Investment manager An investment manager is a company responsible for selecting
portfolio investments consistent with the objective and policies stated in the
mutual fund's prospectus. The investment manager places portfolio orders with
broker/dealers and is responsible for obtaining the best overall execution of
those orders. A written contract between a mutual fund and its investment
manager specifies the services the manager performs. Most management contracts
provide for the manager to receive an annual fee based on a percentage of the
fund's average daily net assets. The manager is subject to numerous legal
restrictions, especially regarding transactions between itself and the funds it
advises.
Portfolio managers Portfolio managers are employed by the investment manager or
sub-adviser to make investment decisions for individual portfolios on a
day-to-day basis.
Custodian Mutual funds are legally required to protect their portfolio
securities and most funds place them with a qualified bank custodian who
segregates fund securities from other bank assets.
Distributor Most mutual funds continuously offer new shares to the public
through distributors who are regulated as broker-dealers and are subject to NASD
Regulation, Inc. (NASD) rules governing mutual fund sales practices.
Service agent Mutual fund companies employ service agents (sometimes called
transfer agents) to maintain records of shareholder accounts, calculate and
disburse dividends and capital gains and prepare and mail shareholder statements
and tax information, among other functions. Many service agents also provide
customer service to shareholders.
Shareholders Like shareholders of other companies, mutual fund shareholders have
specific voting rights, including the right to elect trustees. Material changes
in the terms of a fund's management contract must be approved by a shareholder
vote, and funds seeking to change fundamental investment objectives or policies
must also seek shareholder approval.
30
<PAGE>
About your account
Investing in the Funds
Institutional Class shares are available for purchase only by the following:
o retirement plans introduced by persons not associated with brokers or dealers
that are primarily engaged in the retail securities business and rollover
individual retirement accounts from such plans
o tax-exempt employee benefit plans of the manager or its affiliates and
securities dealer firms with a selling agreement with the distributor
o institutional advisory accounts of the manager, or its affiliates and those
having client relationships with Delaware Investment Advisers, an affiliate
of the manager, or its affiliates and their corporate sponsors, as well as
subsidiaries and related employee benefit plans and rollover individual
retirement accounts from such institutional advisory accounts
o a bank, trust company and similar financial institution investing for its own
account or for the account of its trust customers for whom such financial
institution is exercising investment discretion in purchasing shares of the
Class, except where the investment is part of a program that requires payment
to the financial institution of a Rule 12b-1 Plan fee
o registered investment advisers investing on behalf of clients that consist
solely of institutions and high net-worth individuals having at least
$1,000,000 entrusted to the adviser for investment purposes, but only if the
adviser is not affiliated or associated with a broker or dealer and derives
compensation for its services exclusively from its clients for such advisory
services
31
<PAGE>
How to buy shares
[GRAPHIC OMITTED: ILLUSTRATION OF AN ENVELOPE]
By mail
Complete an investment slip and mail it with your check, made payable to the
fund and class of shares you wish to purchase, to Delaware Investments, 1818
Market Street, Philadelphia, PA 19103-3682. If you are making an initial
purchase by mail, you must include a completed investment application (or an
appropriate retirement plan application if you are opening a retirement account)
with your check.
[GRAPHIC OMITTED: ILLUSTRATION OF A JAGGED LINE]
By wire
Ask your bank to wire the amount you want to invest to First Union Bank, ABA
#031201467, Bank Account number 2014128934013. Include your account number and
the name of the fund in which you want to invest. If you are making an initial
purchase by wire, you must call us at 800.510.4015 so we can assign you an
account number.
[GRAPHIC OMITTED: ILLUSTRATION OF AN EXCHANGE SYMBOL]
By exchange
You can exchange all or part of your investment in one or more funds in the
Delaware Investments family for shares of other funds in the family. Please keep
in mind, however, that you may not exchange your shares for Class B or Class C
shares. To open an account by exchange, call your Client Services Representative
at 800.510.4015.
[GRAPHIC OMITTED: ILLUSTRATION OF A PERSON]
Through your financial adviser
Your financial adviser can handle all the details of purchasing shares,
including opening an account. Your adviser may charge a separate fee for this
service.
32
<PAGE>
About your account (continued)
How to buy shares (continued)
The price you pay for shares will depend on when we receive your purchase order.
If we or an authorized agent receive your order before the close of regular
trading on the New York Stock Exchange (normally 4:00 p.m. Eastern Time) on a
business day, you will pay that day's closing share price which is based on a
Fund's net asset value. If we receive your order after the close of regular
trading, you will pay the next business day's price. A business day is any day
that the New York Stock Exchange is open for business. We reserve the right to
reject any purchase order.
We determine the funds net asset value (NAV) per share at the close of regular
trading of the New York Stock Exchange each business day that the Exchange is
open. We calculate this value by adding the market value of all the securities
and assets in a Fund's portfolio, deducting all liabilities, and dividing the
resulting number by the number of shares outstanding. The result is the net
asset value per share. We price securities and other assets for which market
quotations are available at their market value. We price fixed-income securities
on the basis of valuations provided to us by an independent pricing service that
uses methods approved by the Board of Trustees. Any fixed-income securities that
have a maturity of less than 60 days we price at amortized cost. For all other
securities, we use methods approved by the Board of Trustees that are designed
to price securities at their fair market value.
33
<PAGE>
How to redeem shares
[GRAPHIC OMITTED: ILLUSTRATION OF AN ENVELOPE]
By mail
You can redeem your shares (sell them back to the fund) by mail by writing to:
Delaware Investments, 1818 Market Street, Philadelphia, PA 19103-3682. All
owners of the account must sign the request, and for redemptions of more than
$50,000, you must include a signature guarantee for each owner. You can also fax
your written request to 215.255.8864. Signature guarantees are also required
when redemption proceeds are going to an address other than the address of
record on an account.
[GRAPHIC OMITTED: ILLUSTRATION OF A TELEPHONE]
By telephone
You can redeem up to $50,000 of your shares by telephone. You may have the
proceeds sent to you by check, or, if you redeem at least $1,000 of shares, you
may have the proceeds sent directly to your bank by wire. Bank information must
be on file before you request a wire redemption.
[GRAPHIC OMITTED: ILLUSTRATION OF A JAGGED LINE]
By wire
You can redeem $1,000 or more of your shares and have the proceeds deposited
directly to your bank account the next business day after we receive your
request. Bank information must be on file before you request a wire redemption.
[GRAPHIC OMITTED: ILLUSTRATION OF A PERSON]
Through your financial adviser
Your financial adviser can handle all the details of redeeming your shares. Your
adviser may charge a separate fee for this service.
If you hold your shares in certificates, you must submit the certificates with
your request to sell the shares. We recommend that you send your certificates by
certified mail.
When you send us a properly completed request to redeem or exchange shares
before the close of regular trading on the New York Stock Exchange (normally
4:00 p.m. Eastern Time), you will receive the net asset value as determined on
the business day we receive your request. We will send you a check, normally the
next business day, but no later than seven days after we receive your request to
sell your shares. If you purchased your shares by check, we will wait until your
check has cleared, which can take up to 15 days, before we send your redemption
proceeds.
34
<PAGE>
About your account (continued)
How to redeem shares (continued)
Account minimums
If you redeem shares and your account balance falls below $250, a Fund may
redeem your account after 60 days' written notice to you.
Exchanges
You can exchange all or part of your shares for shares of the same class in
another Delaware Investments fund. If you exchange shares to a fund that has a
sales charge you will pay any applicable sales charges on your new shares. You
don't pay sales charges on shares that are acquired through the reinvestment of
dividends. You may have to pay taxes on your exchange. When you exchange shares,
you are purchasing shares in another fund so you should be sure to get a copy of
the fund's prospectus and read it carefully before buying shares through an
exchange. You may not exchange your shares for Class B and Class C shares of the
funds in the Delaware Investments family.
Dividends, distributions and taxes
Dividends for the Delaware Foundation Funds Income Portfolio and Delaware
Foundation Funds Balanced Portfolio, if any, are paid quarterly. Dividends for
the Delaware Foundation Funds Growth Portfolio, if any, are paid once a year.
Capital gains, if any, are paid once a year. We automatically reinvest all
dividends and any capital gains.
Tax laws are subject to change, so we urge you to consult your tax adviser about
your particular tax situation and how it might be affected by current tax law.
The tax status of your dividends from a Fund is the same whether you reinvest
your dividends or receive them in cash. Distributions from a Fund's long-term
capital gains are taxable as capital gains, while distributions from short-term
capital gains and net investment income are generally taxable as ordinary
income. Any capital gains may be taxable at different rates depending on the
length of time a Fund held the assets. In addition, you may be subject to state
and local taxes on distributions.
We will send you a statement each year by January 31 detailing the amount and
nature of all dividends and capital gains that you were paid for the prior year.
35
<PAGE>
Certain management considerations
Year 2000
As with other mutual funds, financial and business organizations and individuals
around the world, each Fund could be adversely affected if the computer systems
used by its service providers do not properly process and calculate date-related
information from and after January 1, 2000. This is commonly known as the "Year
2000 Problem." Each Fund has taken steps to obtain satisfactory assurances that
its major service providers are taking steps reasonably designed to address the
Year 2000 Problem on the computer systems that the service providers use.
However, there can be no assurance that these steps will be sufficient to avoid
any adverse impact on the business of any Fund. The Year 2000 Problem may also
adversely affect the issuers of securities in which the Funds invest. The
portfolio manager and investment professionals of each Fund consider Year 2000
compliance (including, but not limited to, any or all of the following: impact
on business, cost of compliance, plan review and contingency planning, and
vendor compliance) in the securities selection and investment process. However,
there can be no guarantee that, even with their due diligence efforts, they will
be able to predict the effect of Year 2000 on any company or the performance of
its securities.
36
<PAGE>
Financial highlights
The financial highlights table is intended to help you understand the Fund's
financial performance. All "per share" information reflects financial results
for a single Fund share. This information has been audited by Ernst & Young LLP,
whose report, along with the Fund's financial statements, is included in the
Fund's annual report, which is available upon request by calling 800.523.1918.
37
<PAGE>
<TABLE>
<CAPTION>
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Income Portfolio Institutional Class
- ---------------------------------------------------------------------------------------
Year Period
Ended 12/31/97(1)
9/30 through
1999 9/30/98
<S> <C> <C>
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
Net asset value, beginning of period $8.280 $8.500
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
Income (loss) from investment operations:
- ---------------------------------------------------------------------------------------
Net investment income(2) 0.403 0.266
- ---------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.212 (0.356)
----- -----
- ---------------------------------------------------------------------------------------
Total from investment operations 0.615 (0.090)
----- -----
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
Less dividends and distributions:
- ---------------------------------------------------------------------------------------
Dividends from net investment income (0.310) (0.130)
- ---------------------------------------------------------------------------------------
Distributions from net realized gain on investments (0.025) none
----- ----
- ---------------------------------------------------------------------------------------
Total dividends and distributions (0.335) (0.130)
----- -----
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
Net asset value, end of period $8.560 $8.280
===== =====
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
Total return(3) 7.16% (1.10%)
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
Ratios and supplemental data:
- ---------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $57 $49
- ---------------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.55% 0.55%
- ---------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.88% 32.70%
- ---------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 4.59% 4.05%
- ---------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets
prior to expense limitation and expenses paid indirectly 3.26% (28.10%)
- ---------------------------------------------------------------------------------------
Portfolio turnover 73% 81%
- ---------------------------------------------------------------------------------------
</TABLE>
(1) Date of initial public offering; ratios have been annualized but total
return has not been annualized.
(2) The average shares outstanding method has been applied for per share
information.
(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 reflects expense limitations in effect during the period.
38
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Balanced Portfolio Institutional Class
- ---------------------------------------------------------------------------------------
Year Period
Ended 12/31/97(1)
9/30 through
1999 9/30/98
<S> <C> <C>
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
Net asset value, beginning of period $8.130 $8.500
- ---------------------------------------------------------------------------------------
Income (loss) from investment operations:
- ---------------------------------------------------------------------------------------
Net investment income(2) 0.271 0.169
- ---------------------------------------------------------------------------------------
Net realized and unrealized loss on investments 0.792 (0.469)
----- -----
- ---------------------------------------------------------------------------------------
Total from investment operations 1.063 (0.300)
----- -----
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
Less dividends and distributions:
- ---------------------------------------------------------------------------------------
Dividends from net investment income (0.225) (0.070)
- ---------------------------------------------------------------------------------------
Distributions from net realized gain on investments (0.028) none
----- ----
- ---------------------------------------------------------------------------------------
Total dividends and distributions (0.253) (0.070)
----- -----
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
Net asset value, end of period $8.940 $8.130
===== =====
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
Total return(3) 12.83% (3.56%)
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
Ratios and supplemental data:
- ---------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $61 $48
- ---------------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.55% 0.55%
- ---------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.32% 12.62%
- ---------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 2.98% 2.59%
- ---------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets
prior to expense limitation and expenses paid indirectly 2.21% (9.48%)
- ---------------------------------------------------------------------------------------
Portfolio turnover 93% 73%
- ---------------------------------------------------------------------------------------
</TABLE>
(1) Date of initial public offering; ratios have been annualized but total
return has not been annualized.
(2) The average shares outstanding method has been applied for per share
information.
(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 reflects expense limitations in effect during the period.
39
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Growth Portfolio Institutional Class
- ---------------------------------------------------------------------------------------
Year Period
Ended 12/31/97(1)
9/30 through
1999 9/30/98
<S> <C> <C>
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
Net asset value, beginning of period $8.180 $8.500
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
Income (loss) from investment operations:
- ---------------------------------------------------------------------------------------
Net investment income(2) 0.162 0.078
- ---------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 1.303 (0.398)
----- -----
- ---------------------------------------------------------------------------------------
Total from investment operations 1.465 (0.320)
----- -----
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
Less dividends and distributions:
- ---------------------------------------------------------------------------------------
Dividends from net investment income (0.100) none
- ---------------------------------------------------------------------------------------
Distributions from net realized gain on investments (0.025) none
----- ----
- ---------------------------------------------------------------------------------------
Total dividends and distributions (0.125) none
----- ----
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
Net asset value, end of period $9.520 $8.180
====== ======
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
Total return(3) 17.71% (3.77%)
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
Ratios and supplemental data:
Net assets, end of period (000 omitted) $65 $48
- ---------------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.55% 0.55%
- ---------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.96% 14.11%
- ---------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 1.70% 1.21%
- ---------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets
prior to expense limitation and expenses paid indirectly 0.29% (12.35%)
- ---------------------------------------------------------------------------------------
Portfolio turnover 104% 77%
- ---------------------------------------------------------------------------------------
</TABLE>
(1) Date of initial public offering; ratios have been annualized but total
return has not been annualized.
(2) The average shares outstanding method has been applied for per share
information.
(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 reflects expense limitations in effect during the period.
40
<PAGE>
How to read the financial highlights
Net investment income
Net investment income includes dividend and interest income earned from a fund's
investments; it is after expenses have been deducted.
Net realized and unrealized gain (loss) on investments
A realized gain occurs when we sell an investment at a profit, while a realized
loss occurs when we sell an investment at a loss. When an investment increases
or decreases in value but we do not sell it, we record an unrealized gain or
loss. The amount of realized gain per share that we pay to shareholders is
listed under "Less dividends and distributions-Distributions from net realized
gain on investments."
Net asset value (NAV)
This is the value of a mutual fund share, calculated by dividing the net assets
by the number of shares outstanding.
Total return
This represents the rate that an investor would have earned or lost on an
investment in a fund. In calculating this figure for a financial highlights
table, we include applicable fee waivers, exclude front-end and contingent
deferred sales charges, and assume the shareholder has reinvested all dividends
and realized gains.
Net assets
Net assets represent the total value of all the assets in a fund's portfolio,
less any liabilities, that are attributable to that class of the fund.
Ratio of expenses to average net assets
The expense ratio is the percentage of net assets that a fund pays annually for
operating expenses and management fees. These expenses include accounting and
administration expenses, services for shareholders, and similar expenses.
Ratio of net investment income to average net assets
We determine this ratio by dividing net investment income by average net assets.
Portfolio turnover
This figure tells you the amount of trading activity in a fund's portfolio. For
example, a fund with a 50% turnover has bought and sold half of the value of its
total investment portfolio during the stated period.
41
<PAGE>
How to use this glossary
The glossary includes definitions of investment terms used throughout the
prospectus. If you would like to know the meaning of an investment term that is
not explained in the text please check the glossary.
Amortized cost
Amortized cost is a method used to value a fixed-income security that starts
with the face value of the security and then adds or subtracts from that value
depending on whether the purchase price was greater or less than the value of
the security at maturity. The amount greater or less than the par value is
divided equally over the time remaining until maturity.
Capital
The amount of money you invest.
Capital appreciation
An increase in the value of an investment.
Capital gains distributions
Payments to mutual fund shareholders of profits (realized gains) from the sale
of a fund's portfolio securities. Usually paid once a year; may be either
short-term gains or long-term gains.
Compounding
Earnings on an investment's previous earnings.
Consumer Price Index (CPI)
Measurement of U.S. inflation; represents the price of a basket of commonly
purchased goods.
Cost basis
The original purchase price of an investment, used in determining capital gains
and losses.
Depreciation
A decline in an investment's value.
Diversification
The process of spreading investments among a number of different securities,
asset classes or investment styles to reduce the risks of investing.
Dividend distribution
Payments to mutual fund shareholders of dividends passed along from the fund's
portfolio of securities.
Expense ratio
A mutual fund's total operating expenses, expressed as a percentage of its total
net assets. Operating expenses are the costs of running a mutual fund, including
management fees, offices, staff, equipment and expenses related to maintaining
the fund's portfolio of securities and distributing its shares. They are paid
from the fund's assets before any earnings are distributed to shareholders.
Inflation
The increase in the cost of goods and services over time. U.S. inflation is
frequently measured by changes in the Consumer Price Index (CPI).
Investment goal
The objective, such as long-term capital growth or high current income, that a
mutual fund pursues.
Lehman Brothers Aggregate Bond Index
An index that measures the performance of about 6,500 U.S. corporate and
government bonds.
42
<PAGE>
Management fee
The amount paid by a mutual fund to the investment adviser for management
services, expressed as an annual percentage of the fund's average daily net
assets.
Market capitalization
The value of a corporation determined by multiplying the current market price of
a share of common stock by the number of shares held by shareholders. A
corporation with one million shares outstanding and the market price per share
of $10 has a market capitalization of $10 million.
National Association of Securities Dealers (NASD)
A self-regulating organization, consisting of brokerage firms (including
distributors of mutual funds), that is responsible for overseeing the actions of
its members.
Net asset value (NAV)
The daily dollar value of one mutual fund share. Equal to a fund's net assets
divided by the number of shares outstanding.
Preferred stock
Preferred stock has preference over common stock in the payment of dividends and
liquidation of assets. Preferred stocks also often pay dividends at a fixed rate
and are sometimes convertible into common stock.
Price-to-earnings ratio
A measure of a stock's value calculated by dividing the current market price of
a share of stock by its annual earnings per share. A stock selling for $100 per
share with annual earnings per share of $5 has a P/E of 20.
Principal
Amount of money you invest (also called capital). Also refers to a bond's
original face value, due to be repaid at maturity.
Prospectus
The official offering document that describes a mutual fund, containing
information required by the SEC, such as investment objectives, policies,
services and fees.
Redeem
To cash in your shares by selling them back to the mutual fund.
Risk
Generally defined as variability of value; also credit risk, inflation risk,
currency and interest rate risk. Different investments involve different types
and degrees of risk.
S&P 500 Composite Stock Index
The Standard & Poor's 500 Composite Stock Index; an unmanaged index of 500
widely held common stocks that is often used to represent performance of the
U.S. stock market.
Sales charge
Charge on the purchase or redemption of fund shares sold through financial
advisers.
May vary with the amount invested. Typically used to compensate advisers for
advice and service provided.
SEC (Securities and Exchange Commission)
Federal agency established by Congress to administer the laws governing the
securities industry, including mutual fund companies.
Share classes
Different classifications of shares; mutual fund share classes offer a variety
of sales charge choices.
Signature guarantee
Certification by a bank, brokerage firm or other financial institution that a
customer's signature is valid; signature guarantees can be provided by members
of the STAMP program.
43
<PAGE>
Standard deviation
A measure of an investment's volatility; for mutual funds, measures how much a
fund's total return has typically varied from its historical average.
Statement of Additional Information (SAI)
The document serving as "Part B" of a fund's prospectus that provides more
detailed information about the fund's organization, investments, policies and
risks.
Stock
An investment that represents a share of ownership (equity) in a corporation.
Stocks are often referred to as equities.
Total return
An investment performance measurement, expressed as a percentage, based on the
combined earnings from dividends, capital gains and change in price over a given
period.
Uniform Gift to Minors Act and Uniform Transfers to Minors Act
Federal and state laws that provide a simple way to transfer property to a minor
with special tax advantages.
Volatility
The tendency of an investment to go up or down in value by different magnitudes.
Investments that generally go up or down in value in relatively small amounts
are considered "low volatility" investments, whereas those investments that
generally go up or down in value in relatively large amounts are considered
"high volatility" investments.
44
<PAGE>
Delaware Foundation Funds Income Portfolio
Delaware Foundation Funds Balanced Portfolio
Delaware Foundation Funds Growth Portfolio
Additional information about each Fund's investments is available in the Funds'
annual and semi-annual report to shareholders. In the Funds' shareholder report,
you will find a discussion of the market conditions and investment strategies
that significantly affected a Fund's performance during the report period. You
can find more detailed information about the Funds in the current Statement of
Additional Information, which we have filed electronically with the Securities
and Exchange Commission (SEC) and which is legally a part of this prospectus. If
you want a free copy of the Statement of Additional Information, the annual or
semi-annual report, or if you have any questions about investing in the Funds,
you can write to us at 1818 Market Street, Philadelphia, PA 19103, or call
toll-free 800.523.1918. You may also obtain additional information about the
Fund from your financial adviser.
You can find reports and other information about the Funds on the SEC web site
(http://www.sec.gov), or you can get copies of this information, after payment
of a duplicating fee, by writing to the Public Reference Section of the SEC,
Washington, D.C. 20549-6009. Information about the Funds, including their
Statement of Additional Information, can be reviewed and copied at the
Securities and Exchange Commission's Public Reference Room in Washington, D.C.
You can get information on the public reference room by calling the SEC at
1.800.SEC.0330.
Web site
www.delawareinvestments.com
- ---------------------------
E-mail
[email protected]
Client Services Representative
800.510.4015
Delaphone Service
800.362.FUND (800.362.3863)
o For convenient access to account information or current performance
information on all Delaware Investments Funds seven days a week, 24 hours a
day, use this Touch-Tone(R) service.
Investment Company Act file number: 811-08457
CUSIP
Delaware Foundation
Funds Income Portfolio 245918404
Delaware Foundation
Funds Balanced Portfolio 245918800
Delaware Foundation
Funds Growth Portfolio 245918859
DELAWARE(SM)
INVESTMENTS
- -----------
Philadelphia o London
P-447 [--] PP 1/00
45
