[GRAPHIC OMITTED: LOGO OF DELAWARE INVESTMENTS
----------------------------
Philadelphia * London]
Decatur Equity Income Fund
(formerly Decatur Income Fund)
Growth and Income Fund
(formerly Decatur Total Return Fund)
Class A (bullet)Class B (bullet)Class C
Prospectus
January 29, 1999
Total Return Funds
[GRAPHIC OMITTED: ILLUSTRATION OF MAN AND WOMAN HOLDING BROKEN ARTWORK]
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.
[inside front cover]
Table of contents
Fund profiles page 1
Decatur Equity Income Fund 2
Growth and Income Fund 4
How we manage the Funds page 6
Our investment strategies 6
The securities we typically invest in 7
The risks of investing in the Funds 9
Who manages the Funds page 10
Investment manager 10
Portfolio managers 10
Fund administration (Who's who) 11
About your account page 12
Investing in the Funds 12
Choosing a share class 12
How to reduce your sales charge 14
How to buy shares 15
Retirement plans 16
How to redeem shares 17
Account minimum 18
Special services 19
Dividends, distributions and taxes 20
Certain management
considerations page 21
Financial information page 22
[sidebar copy at bottom of page]
How to use this prospectus
Here are guidelines to help you use this prospectus to make well-informed
investment decisions about our funds. If you're looking for a specific
piece of information, the table of contents can guide you directly to the
appropriate section.
Step 1
Take a look at the fund profiles for an overview of each Fund.
Step 2
Learn in-depth information about how the Funds invest, the risks involved
and the people and organizations responsible for the Funds' day-to-day
operations.
Step 3
Determine which fund features and services you would like to take
advantage of.
Step 4
Use the glossary that begins on page 6 to find definitions of words
printed in bold type in the text throughout the prospectus.
Fund Profiles:
An investment overview
When choosing a mutual fund to invest in, you have a variety of options
and important information to consider. This prospectus provides
information about Decatur Equity Income Fund and the Growth and Income
Fund, two mutual funds from the Delaware Investments Family of Funds.
Before evaluating individual funds, however, your first step is to define
your personal financial goals. Knowing your goals and determining your
investment time horizon in advance can help you make a more appropriate
fund selection. It is also important to select a fund in the context of
your entire investment program. Diversification, or spreading your money
among different types of investments, is usually a sound investment
strategy. This is commonly called "asset allocation." The way you choose
to allocate your money depends on a number of factors. A professional
financial adviser can help you build an investment portfolio that fits
your financial situation, your investment objectives and your risk
tolerance.
Investing for total return with Decatur Equity Income Fund and the Growth
and Income Fund
Decatur Equity Income Fund and the Growth and Income Fund are both total
return funds. Investors with long-term goals often choose mutual funds
designed to provide total return. Total return funds typically provide
moderate growth potential as well as some current income. They generally
involve less risk than aggressive stock funds but more risk than bond
funds. Like all mutual funds, total return funds allow you to invest
conveniently in a diversified portfolio without having to select and
monitor individual securities on your own.
["HOUSE" GRAPHIC, WITH TOTAL RETURN "ROOM" HIGHLIGHTED]
Building Blocks of Asset Allocation
Aggressive Growth Equity Funds
Growth Equity Funds
International and Global Funds
Asset Allocation Funds
Moderate Growth Equity Funds for...
Total Return
These stock-oriented funds provide moderate growth potential as well as
some current income, with generally less risk than aggressive stock funds
but more risk than bond funds.
Taxable Bond Funds
Tax-Exempt Bond Funds
Money Market Funds (Taxable and Tax-Exempt)
Profile: Decatur Equity Income Fund
What are the Fund's goals?
Decatur Equity Income Fund seeks to provide the highest possible current
income by investing primarily in common stocks that provide the potential
for income and capital appreciation without undue risk to principal.
Although the Fund will strive to achieve its goals, there is no assurance
that it will.
What are the Fund's main investment strategies?
We invest primarily in dividend-paying stocks of large companies.
Typically, we consider buying a stock when its dividend yield is higher
than the average of the unmanaged S&P 500 Composite Stock Price Index. The
manager then considers the financial strength of the company, its
management and any developments affecting the security, the company or its
industry. If the yield on a stock in the portfolio falls below the average
of the S&P 500, we generally sell that stock.
Decatur Equity Income Fund also may invest up to 15% of its net assets in
high-yield, higher risk corporate bonds, commonly known as junk bonds.
These bonds involve the risk that the issuing company may be unable to pay
interest or repay principal. However, they can offer high income potential
which we believe can make a positive contribution to the Fund's
performance.
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 price of Fund shares
will increase and decrease according to changes in the value of the Fund's
investments. This Fund will be affected by declines in stock and
high-yield bond prices, which could be caused by a drop in the stock
market, interest rate changes, problems in the economy or poor performance
from particular companies or sectors. For a more complete discussion of
risk, please turn to page 9.
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.
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.
Who should invest in the Fund
(bullet) Investors with long-term financial goals.
(bullet) Investors looking for growth potential combined with regular
income.
(bullet) Investors looking for supplemental monthly income from an
investment that also offers possible protection against inflation.
Who should not invest in the Fund
(bullet) Investors with short-term financial goals.
(bullet) Investors who are unwilling to accept share prices that may
fluctuate, sometimes significantly, over the short term.
(bullet) Investors seeking an investment primarily in fixed-income
securities.
How has Decatur Equity Income Fund performed?
This bar chart and table can help you evaluate the potential risks of
investing in the Fund. We show how returns for the Fund's Class A shares
have varied over the past ten calendar years, as well as the average
annual returns of all shares for one, five, and ten years - all compared
to the performance of the S&P 500 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 Fund's past performance does not necessarily indicate how
it will perform in the future.
[GRAPHIC OMITTED: BAR CHART SHOWING YEAR-BY-YEAR TOTAL RETURN (CLASS A)]
Decatur Equity Income Fund
S&P 500
*Decatur Equity Income Fund
*S&P 500
[bar chart]
Year-by-year total return (Class A)
Decatur Equity
Income Fund S&P 500
1989 21.50% 31.50%
1990 -12.36% -3.20%
1991 21.78% 30.60%
1992 8.80% 7.70%
1993 15.35% 10.00%
1994 -0.76% 1.30%
1995 32.85% 37.40%
1996 20.31% 23.10%
1997 29.71% 33.40%
1998 9.87% 28.74%
As of December 31, 1998, the Fund's Class A shares had a year-to-date
return of 9.87%. During the ten years illustrated in this bar chart, Class
A's highest return was 13.73% for the quarter ended June 30, 1997 and its
lowest return was -15.08% for the quarter ended September 30, 1990.
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. If this
fee were included, the returns would be less than those shown. The average
annual returns shown on page 3 do include the sales charge.
How has Decatur Equity Income Fund performed? (continued)
<TABLE>
<CAPTION>
Average annual returns for periods ending 12/31/98
CLASS A B C S&P 500**
(if redeemed)* (if redeemed)*
(Inception 3/18/57) (Inception 9/6/94) (Inception 11/29/95)
<S> <C> <C> <C> <C>
1 year 3.55% 4.44% 8.08% 28.74%
5 years 16.33% N/A N/A 24.08%
10 years or
lifetime** 13.24% 18.64% 19.11% 19.20%
* If redeemed at end of period shown. If shares were not redeemed, the returns for
Class B would be 8.98% and 18.90% for the one-year and lifetime periods, respectively.
Returns for Class C would be 8.99% and 19.11% for the one-year and lifetime periods,
respectively.
** Lifetime returns are shown if the Fund or Class existed for less than 10 years.
S&P 500 returns are for 10 years. S&P 500 returns for Class B and Class C lifetimes
were 27.12% and 28.21%, respectively. Maximum sales charges are included in the
Fund returns above.
</TABLE>
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. The Fund may waive or reduce sales charges;
please see the Statement of Additional Information for details.
CLASS A B 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 before
it pays dividends and before its net asset value and total return are
calculated. We will not charge you separately for these expenses. These
expenses are based on amounts incurred during the Fund's most recent
fiscal year.
Management fees 0.48% 0.48% 0.48%
Distribution and service (12b-1) fees 0.20% (4) 1.00% 1.00%
Other expenses 0.22% 0.22% 0.22%
Total operating expenses 0.90% 1.70% 1.70%
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.(5) This is an example only, and does not represent future expenses,
which may be greater or less than those shown here.
CLASS(6) A B B C C
(if redeemed) (if redeemed)
1 year $ 662 $ 173 $ 673 $ 173 $ 273
3 years $ 845 $ 536 $ 836 $ 536 $ 536
5 years $1,045 $ 923 $1,123 $ 923 $ 923
10 years $1,619 $1,796 $1,796 $2,009 $2,009
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 Board of Directors adopted a formula for calculating 12b-1 plan
expenses for Decatur Equity Income Fund's Class A shares that went
into effect on May 2, 1994. Under this formula, 12b-1 plan expenses
will not be more than 0.30% or less than 0.10%.
5 The Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. Also, this example assumes that
the Fund's total operating expenses remain unchanged in each of the
periods we show.
6 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.
Profile: Growth and Income Fund
What are the Fund's goals?
The 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. 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 dividend-paying stocks of large, well-established
companies. Typically, we consider buying a stock when its dividend yield
is higher than the average of the unmanaged S&P 500 Index. We then
consider the financial strength of the company, the nature of its
management and any developments affecting the security, the company or its
industry. If the yield on a stock already in the portfolio falls below the
average of the S&P 500, we generally sell that stock.
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 price of Fund shares
will increase and decrease according to changes in the value of the Fund's
investments. This Fund will be affected by declines in stock prices, which
could be caused by a drop in the stock market or poor performance from
particular companies or industries. For a more complete discussion of
risk, please turn to page 9.
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.
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.
Who should invest in the Fund
(bullet) Investors with long-term financial goals.
(bullet) Investors seeking long-term capital appreciation.
(bullet) Investors seeking an investment primarily in common stocks.
(bullet) Investors seeking moderate quarterly income with the opportunity
for inflation protection.
Who should not invest in the Fund
(bullet) Investors seeking an investment primarily in fixed-income
securities.
(bullet) Investors with short-term financial goals.
(bullet) Investors who are unwilling to accept share prices that may
fluctuate, sometimes significantly over the short term.
How has Growth and Income Fund performed?
This bar chart and table can help you evaluate the potential risks of
investing in the Fund. We show how returns for the Fund's Class A shares
have varied over the past ten calendar years, as well as the average
annual returns of all shares for one, five, and ten years - all compared
to the performance of the S&P 500 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 Fund's past performance does not necessarily indicate how
it will perform in the future.
[GRAPHIC OMITTED: BAR CHART SHOWING YEAR BY YEAR TOTAL RETURN (CLASS A)]
* Growth and Income Fund
* S&P 500
Year-by-year total return (Class A)
Growth and Income Fund S&P 500
1989 26.57% 31.50%
1990 -8.33% -3.20%
1991 20.40% 30.60%
1992 8.17% 7.70%
1993 14.93% 10.00%
1994 -0.53% 1.30%
1995 36.51% 37.40%
1996 19.97% 23.10%
1997 31.24% 33.40%
1998 10.57% 28.74%
As of December 31, 1998, the Fund's Class A shares had a year-to-date
return of 10.57%. During the ten years illustrated in this bar chart,
Class A's highest return was 15.30% for the quarter ended June 30, 1997
and its lowest return was -10.99% for the quarter ended September 30,
1990.
The maximum Class A sales charge of 5.75%, assessed when you purchase
shares, is not reflected in the total returns above. If this fee were
included, the returns would be less than those shown. The average annual
returns shown on page 5 do include the sales charge.
How has Growth and Income Fund performed? (continued)
<TABLE>
<CAPTION>
Average annual returns for periods ending 12/31/98
CLASS A B C S&P 500**
(if redeemed)* (if redeemed)*
(Inception 8/27/86) (Inception 9/6/94) (Inception 11/29/95)
<S> <C> <C> <C> <C>
1 year 4.21% 4.95% 8.89% 28.74%
5 years 17.37% N/A N/A 24.08%
10 years or lifetime** 14.49% 19.99% 19.92% 19.20%
* If redeemed at end of period shown. If shares were not redeemed, the returns for Class B
would be 9.76% and 20.24% for the one-year and lifetime periods, respectively. Returns
for Class C would be 9.85% and 19.92% for the one-year and lifetime periods, respectively.
** Lifetime returns are shown if the Fund or Class existed for less than 10 years. S&P 500
returns are for 10 years. S&P 500 returns for Class B and Class C lifetimes were 27.12%
and 28.21%, respectively. Maximum sales charges are included in the Class returns above.
</TABLE>
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. The Fund may waive or reduce sales charges;
please see the Statement of Additional Information for details.
CLASS A B 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 before
it pays dividends and before its net asset value and total return are
calculated. We will not charge you separately for these expenses. These
expenses are based on amounts incurred during the Fund's most recent
fiscal year.
Management fees 0.57% 0.57% 0.57%
Distribution and service (12b-1) fees 0.30% 1.00% 1.00%
Other expenses 0.26% 0.26% 0.26%
Total operating expenses 1.13% 1.83% 1.83%
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.
CLASS(5) A B B C C
(if redeemed) (if redeemed)
1 year $ 684 $ 186 $ 686 $ 186 $ 286
3 years $ 913 $ 576 $ 876 $ 576 $ 576
5 years $1,161 $ 990 $1,190 $ 990 $ 990
10 years $1,871 $1,965 $1,965 $2,148 $2,148
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 Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. Also, this example assumes that
the Fund's total operating expenses remain unchanged in each of the
periods we show.
5 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.
How we manage the Funds
Our investment strategies
We first identify companies that have above-average dividend yields
compared to the unmanaged S&P 500 Index, a commonly used measure of U.S.
stocks. We then research individual companies and analyze economic and
market conditions, seeking to identify the securities that we think are
the best investments for each Fund. Following are descriptions of how the
portfolio manager pursues the Funds' investment goals.
We take a disciplined approach to investing, combining investment
strategies and risk management techniques that can help shareholders meet
their goals.
Decatur Equity Income Fund
Decatur Equity Income Fund is a total return fund that invests primarily
in stocks, but also in corporate bonds. It strives to provide high current
income and capital appreciation to its shareholders.
We invest primarily in the common stocks of established companies that we
believe have long-term total return potential. That is, they offer both
current income through dividends and capital growth potential through
increases in stock prices. Our focus on stocks with high dividend yields
is generally considered to be a value-oriented investment approach.
To help supplement the dividend income provided by the stocks in the
portfolio, the Fund may also invest up to 15% of its net assets in
high-yield, higher risk corporate bonds. The companies that issue these
bonds do not generally have good credit ratings. As a result, the bonds
generally pay more interest than better quality bonds. We carefully
evaluate individual bonds before they are purchased and monitor them
carefully while in the portfolio. We look closely at each company and the
characteristics of the bond to better judge the ability of the company to
pay interest and repay principal.
We conduct ongoing analysis of both the stock and bond markets to
determine how much of the portfolio should be allocated to stocks and how
much to high-yield bonds.
Growth and Income Fund
The Growth and Income Fund is also a total return fund, but it generally
does not hold bonds in the portfolio. This Fund's objective is to provide
long-term growth of capital. It also seeks to provide a moderate amount of
current income.
The Growth and Income Fund invests primarily in the common stocks of
established companies that we believe have long-term total return
potential. These stocks offer both current income through dividends and
capital growth potential through possible increases in stock prices. This
focus on stocks with high dividend yields is generally considered to be a
value-oriented investment approach.
The Growth and Income Fund offers slightly greater growth potential and
slightly less income potential than Decatur Equity Income Fund due to its
greater focus on common stocks.
How to use this glossary
Words found in the glossary are printed in boldface only the first time
they appear in the prospectus. So if you would like to know the meaning of
a word that isn't in boldface, you might still find it in the glossary.
Glossary A-B
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.
Average maturity
An average of when the individual bonds and other debt securities held in
a portfolio will mature.
The securities we typically invest in
Stocks offer investors the potential for capital appreciation, and may pay
dividends as well. High-yield bonds offer the potential for greater income
payments than stocks, and also may provide capital appreciation.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Securities How we use them
- ------------------------------------------------------------------------------------
<S> <C> <C>
Decatur Equity Income Growth and Income
Fund Fund
---------------------- ----------------------
Common stocks: Securities that Generally, we invest Generally, 90% to 100%
represent shares of ownership in a 85% to 100% of net of the Fund's net
corporation. Stockholders assets in dividend- assets will be
participate in the corporation's paying common stocks. invested in dividend-
profits and losses, proportionate paying common stocks.
to the number of shares they own.
- ------------------------------------------------------------------------------------
High-Yield Corporate Bonds: Decatur Equity The Growth and Income
Securities that are rated lower Income Fund may Fund generally does
than Investment Grade by an invest up to 15% of not invest in high-
NRSRO or, if unrated, that we net assets in high- yield corporate bonds.
believe are of comparable yield corporate
quality. These securities are bonds, typically
considered to be of poor quality those rated B or BB
and often speculative. by an NRSRO.
- ------------------------------------------------------------------------------------
American Depositary Receipts: We may invest without limitation in ADRs. We
The certificates issued by a U.S. use them when we believe they offer better
bank which represent a stated number total return opportunities than U.S.
of shares of a foreign corporation securities.
that the bank holds in its vault.
An ADR entitles the holder to all
dividends and capital gains earned
by the underlying foreign shares,
and an ADR is bought and sold the
same as U.S. securities.
- ------------------------------------------------------------------------------------
Repurchase agreements: An agreement Typically, we use repurchase agreements as a
between a buyer and seller of short-term investment for a Fund's cash
securities in which the seller position. In order to enter into these
agrees to buy the securities back repurchase agreements, a Fund must have
within a specified time at the collateral of at least 102% of the repurchase
same price the buyer paid for them, price.
plus an amount equal to an agreed
upon interest rate. Repurchase
agreements are often viewed as
equivalent to cash.
- ------------------------------------------------------------------------------------
Restricted securities: Privately We may invest without limitation in privately
placed securities whose resale is placed securities that are eligible for resale
restricted under securities law. among certain institutional buyers without
registration. These are commonly known as
"Rule 144A Securities."
- ------------------------------------------------------------------------------------
Illiquid Securities: Securities We may invest up to 10% of a Fund's total
that do not have a ready market, assets in illiquid securities.
and cannot be easily sold, if at
all, at approximately the price
that the Fund has valued them.
- ------------------------------------------------------------------------------------
</TABLE>
Bond
A debt security, like an IOU, issued by a company, municipality or
government agency. In return for lending money to the issuer, a bond buyer
generally receives fixed periodic interest payments and repayment of the
loan amount on a specified maturity date. A bond's price changes prior to
maturity and is inversely related to current interest rates. When interest
rates rise, bond prices fall, and when interest rates fall, bond prices
rise.
Bond ratings
Independent evaluations of creditworthiness, ranging from Aaa/AAA (highest
quality) to D (lowest quality). Bonds rated Baa/BBB or better are
considered investment grade. Bonds rated Ba/BB or lower are commonly known
as junk bonds. See also Nationally recognized statistical rating
organization.
How we manage the Funds (continued)
Securities we typically invest in (continued)
The Funds are permitted to invest in all available types of equity
securities including preferred stock, rights and warrants and convertible
securities. The Funds may also invest in fixed-income securities and enter
into futures and options transactions for defensive purposes. Both Decatur
Equity Income Fund and Growth and Income Fund may invest in global and
European depositary receipts and directly in foreign securities; however,
the manager has no present intention of doing so. Each Fund reserves the
right to hold a substantial part of its assets in cash or cash equivalents
as a temporary, defensive strategy. You can find additional information
about the investments in each Fund's portfolio in the annual or
semi-annual shareholder report.
Lending securities Each Fund may lend up to 25% of its assets to qualified
brokers, dealers and institutional investors for their use in security
transactions.
Purchasing securities on a when-issued or delayed delivery basis Each Fund
may buy or sell securities on a when-issued or delayed delivery basis;
that is, paying for securities before delivery or taking delivery at a
later date.
Portfolio turnover Both Funds anticipate that their annual portfolio
turnover will be less 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.
Borrowing from banks Each Fund may borrow money as a temporary measure for
extraordinary purposes or to facilitate redemptions.
C-C
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 or selling mutual funds, stocks, bonds or other securities.
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 a Fund
you should carefully evaluate the risks. Because of the nature of the
Funds, you should consider an investment in either one to be a long-term
investment that typically provides the best results when held for a number
of years. The following are the chief risks you assume when investing in
Decatur Equity Income Fund and the Growth and Income Fund. Please see the
Statement of Additional Information for further discussion of these risks
and the other risks not discussed here.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Risks How we strive to manage them
- ------------------------------------------------------------------------------------
<S> <C> <C>
Decatur Equity Income Growth and Income
Fund Fund
---------------------- ----------------------
Market risk is the risk that all We maintain a long-term investment approach
or a majority of the securities in and focus on stocks we believe can appreciate
a certain market -- like the stock over an extended time frame regardless of
or bond market -- will decline in interim market fluctuations. We do not try to
value because of factors such as predict overall stock market movements and do
economic conditions, future not trade for short-term purposes.
expectations or investor confidence.
- ------------------------------------------------------------------------------------
Industry and security risk is the We limit the amount of each Fund's assets
risk that the value of securities invested in any one industry and in any
in a particular industry or the individual security. We also follow a rigorous
value of an individual stock or bond selection process designed to identify under-
will decline because of changing valued securities before choosing securities
expectations for the performance of for the portfolio.
that industry or for the individual
company issuing the stock or bond.
- ------------------------------------------------------------------------------------
Interest rate risk is the risk that We limit the amount of The Growth and Income
securities will decrease in value high-yield bonds in Fund does not
if interest rates rise. The risk the portfolio to 15% generally hold a
is greater for bonds with of net assets. significant portion
longer maturities than for those of assets in bonds,
with shorter maturities. so interest rate risk
not a major risk in
this Fund.
- ------------------------------------------------------------------------------------
Credit Risk The possibility that We limit the amount of The Growth and Income
a bond's issuer (or an entity that high-yield bonds in Fund is generally not
insures the bond) will be unable the portfolio to 15% subject to credit
to make timely payments of interest of net assets and we risk.
and principal. only invest in these
high-yield bonds
rated at least C or
Ca by an NRSRO or,
if unrated, that we
believe are of
comparable quality.
This limitation,
combined with our
careful, credit-
oriented bond
selection and our
commitment to hold
a diversified
selection of high-
yield bonds are
designed to manage
this risk.
- ------------------------------------------------------------------------------------
Foreign risk is the risk that We typically invest only a small portion of
foreign securities may be each Fund's portfolio in foreign corporations
adversely affected by political through American Depositary Receipts. We do
instability, changes in currency not invest directly in foreign securities.
exchange rates, foreign economic When we do purchase ADRs, they are generally
conditions or inadequate regulatory denominated in U.S. dollars and traded on a
and accounting standards. U.S. exchange.
- ------------------------------------------------------------------------------------
Liquidity risk is the possibility We limit exposure to illiquid securities.
that securities cannot be readily
sold, or can only be sold at a price
lower than the price that the Fund
has valued them.
- ------------------------------------------------------------------------------------
</TABLE>
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.
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 makes
investment decisions for the Funds, 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:
Investment Management Fees
Decatur Equity Income Fund Growth and Income Fund
As a percentage of average
daily net assets 0.48% 0.57%
Portfolio managers
John B. Fields has primary responsibility for making day-to-day investment
decisions for each Fund. He has been Senior Portfolio Manager for Decatur
Equity Income Fund since 1993 and for Growth and Income Fund since 1992.
Mr. Fields, who has 27 years experience in investment management, earned a
bachelor's degree and an MBA from Ohio State University. Before joining
Delaware Investments in 1992, he was Director of Domestic Equity Risk
Management at DuPont. Prior to that time, he was Director of Equity
Research at Comerica Bank. Mr. Fields is a member of the Financial
Analysts Society of Wilmington, Delaware. In researching securities and
making investment decisions for the Funds, Mr. Fields regularly consults
with a team of Delaware portfolio managers utilizing the same investment
strategy and with Richard G. Unruh.
Richard G. Unruh, Executive Vice President/Chief Investment Officer,
Equity, joined Delaware Investments in 1982 after 19 years of investment
experience with Kidder, Peabody & Co. Inc. Mr. Unruh was named an
Executive Vice President of the Funds in 1994 and named Chief Investment
Officer for equities in 1998. He is also a member of the Board of
Directors of the manager and was named Executive Vice President of the
manager in 1994.
C-F
Corporate bond
A debt security issued by a corporation. See Bond.
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.
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 INVESTMENTS
FUNDS]
Board of Directors
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 10 Delaware Distributors, Delaware Service
for details) L.P. Company Inc.
1818 Market Street 1818 Market Street
Philadelphia, PA Philadelphia, PA
19103 19103
Financial advisers
Shareholders
Board of directors A mutual fund is governed by a board of directors which
has oversight responsibility for the management of the fund's business
affairs. Directors 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 directors must
be independent of the fund's investment manager or distributor. These
independent fund directors, 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 typically 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 National Association of Securities Dealers, 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
directors. 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.
Duration
A measurement of a fixed-income investment's price volatility. The larger
the number, the greater the likely price change for a given change in
interest rates.
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.
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
(bullet) 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.
(bullet) If you invest $50,000 or more, your front-end sales charge will
be reduced.
(bullet) 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.
(bullet) 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.
(bullet) Class A shares generally are not subject to a contingent deferred
sales charge.
Class B
(bullet) Class B shares have no up-front sales charge, so the full amount
of your purchase is invested in the Fund. However, you will pay
a contingent deferred sales charge if you redeem your shares
within six years after you buy them.
(bullet) 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.
(bullet) Under certain circumstances the contingent deferred sales charge
may be waived; please see the Statement of Additional Information.
(bullet) 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.
(bullet) 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.
(bullet) 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.
(bullet) You may purchase up to $250,000 of Class B shares at any one
time. The limitation on maximum purchases varies for retirement
plans.
F-M
Fixed-income securities
With fixed-income securities, the money you originally invested is paid
back at a pre-specified maturity date. These securities, which include
government, corporate or municipal bonds, as well as money market
securities, typically pay a fixed rate of return (often referred to as
interest). See Bond.
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).
Class C
(bullet) Class C shares have no up-front sales charge, so the full amount
of your purchase is invested in the Fund. However, you will pay
a contingent deferred sales charge if you redeem your shares
within 12 months after you buy them.
(bullet) Under certain circumstances the contingent deferred sales charge
may be waived; please see the Statement of Additional Information.
(bullet) 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 personal services and maintaining shareholder
accounts.
(bullet) Because of the higher 12b-1 fees, Class C shares have higher
expenses and pay lower dividends than Class A shares.
(bullet) Unlike Class B shares, Class C shares do not automatically
convert into another class.
(bullet) 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 the 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 chages.
Class A Sales Charges
<TABLE>
<CAPTION>
Sales charge Sales charge as % of amount invested Dealer's commission
as % of Decatur Equity Growth and Income as % of
Amount of purchase offering price Income Fund Income Fund offering price
<S> <C> <C> <C> <C>
Less than $50,000 5.75% 6.12% 6.12% 5.00%
$50,000 but 4.75% 5.00% 4.97% 4.00%
under $100,000
$100,000 but 3.75% 3.88% 3.87% 3.00%
under $250,000
$250,000 but 2.50% 2.57% 2.56% 2.00%
under $500,000
$500,000 but 2.00% 2.06% 2.04% 1.60%
under $1 million
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.
<CAPTION>
Sales charge Sales charge as % of amount invested Dealer's commission
as % of Decatur Equity Growth and Income as % of
Amount of purchase offering price Income Fund Income Fund offering price
<S> <C> <C> <C> <C>
$1 million up
to $5 million none none none 1.00%
Next $20 million
Up to $25 million none none none 0.50%
Amount over $25
million none none none 0.25%
</TABLE>
Investment goal
The objective, such as long-term capital growth or high current income,
that a mutual fund pursues.
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.
Maturity
The length of time until a bond issuer must repay the underlying loan
principal to bondholders.
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>
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Share class
Program How it works A B C
- ------------------------------------------------------------------------------------
Letter of Intent Through a Letter of Intent X Although the
you agree to invest a Letter of Intent
certain amount in Delaware and Rights of
Investment Funds (except Accumulation do
money market funds with no not apply to the
sales charge) over a 13-month purchase of Class
period to qualify for reduced B and C shares,
front-end sales charges. you can combine
your purchase of
Class B and C
shares to fulfill
your Letter of
Intent or qualify
for Rights of
Accumulation.
- ------------------------------------------------------------------------------------
Rights of Accumulation You can combine your holdings X
or 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 of redeemed Up to 12 months after you X Not available.
shares redeem shares, you can reinvest
the proceeds without paying a
front-end sales charge.
- ------------------------------------------------------------------------------------
SIMPLE IRA, SEP IRA, These investment plans may X Not available.
SARSEP, Prototype Profit qualify for reduced sales
Sharing, Pension, 401(k), charges by combining the
SIMPLE 401(k), 403(b)(7), purchases of all members
and 457 Retirement Plans of the group. Members of
these groups may also qualify
to purchase shares without a
front-end sales charge and a
waiver of any contingent
deferred sales charges.
- ------------------------------------------------------------------------------------
</TABLE>
N-P
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.
Nationally recognized statistical rating organization (NRSRO)
A company that assesses the credit quality of bonds, commercial paper,
preferred and common stocks and municipal short-term issues, rating the
probability that the issuer of the debt will meet the scheduled interest
payments and repay the principal. Ratings are published by such companies
as Moody's Investors Service (Moody's), Standard & Poor's Corporation
(S&P), Duff & Phelps, Inc. (Duff), and Fitch Investor Services, Inc.
(Fitch).
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.delawarefunds.com. For
more information about how to sign up for these services, call our
Shareholder Service Center at 800.523.1918.
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 pays
dividends at a fixed rate and is sometimes convertible into common stock.
Price/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.
About your account (continued)
How to buy shares (continued)
Once you have completed an application, you can generally 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 close of
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 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.
Currently the Exchange is closed when the following holidays are observed:
New Year's Day, Martin Luther King, Jr.'s Birthday, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas. We reserve the right to reject any purchase order.
We determine the Funds' net asset value (NAV) per share at the close of
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
directors. Any fixed-income securities that have a maturity of less than
60 days we price at amortized cost. We price all other securities at their
fair market value using a method approved by the board of directors.
Retirement plans
In addition to being an appropriate investment for your Individual
Retirement Account (IRA), Roth IRA and Education IRA, shares in the Funds
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 these 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.
P-S
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.
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 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
$50,000 or more, 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, the First Union Bank
fee (currently $7.50) will 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.delawarefunds.com. For more information about
how to sign up for these services, call our Shareholder Service Center at
800.523.1918.
S&P 500 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.
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, 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 minimum
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, the Fund may redeem your account after 60 days' written notice to
you.
S-U
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 prospectusthat provides more
detailed information about the fund's organization, investments, policies
and risks.
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
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 similar 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.
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.
About your account (continued)
Special services (continued)
MoneyLineSM On Demand Service
Through our MoneyLineSM 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.
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
MoneyLine Direct Deposit Service.
Dividends, distributions and taxes
For Decatur Equity Income Fund, dividends, if any, are paid monthly, while
any capital gains are distributed annually. For Growth and Income Fund,
dividends, if any, are paid quarterly, while any capital gains are
distributed annually. 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 these Funds 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
the 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.
V
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.
Certain management considerations
Year 2000
As with other mutual funds, financial and business organizations and
individuals around the world, the Funds could be adversely affected if the
computer systems used by their 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 is taking
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 the Funds.
Investments by Fund of Funds
Growth and Income Fund accepts investments from the series portfolios of
Delaware Group Foundation Funds, a fund of funds. From time to time, the
Fund may experience large investments or redemptions due to allocations or
rebalancings by Foundation Funds. While it is impossible to predict the
overall impact of these transactions over time, there could be adverse
effects on portfolio management. For example, the Fund may be required to
sell securities or invest cash at times when it would not otherwise do so.
These transactions could also have tax consequences if sales of securities
result in gains, and could also increase transactions costs or portfolio
turnover. The manager will monitor transactions by Foundation Funds and
will attempt to minimize any adverse effects on both Growth and Income
Fund and Foundation Funds as a result of these transactions.
Financial information
Financial highlights
The Financial highlights table is intended to help you understand the
Fund's financial performance for the past five years. 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>
Class A
Decatur Equity Income Fund 1998(1) 1997(1) 1996(1)
<S> <C> <C> <C>
Net asset value, beginning
of period $22.580 $21.320 $19.070
Income (loss) from
investment operations
Net investment income 0.569 0.600 0.650
Net realized and unrealized
gain (loss) on investments 1.811 3.940 3.630
-------- ------- -------
Total from investment
operations 2.380 4.540 4.280
-------- ------- -------
Less dividends and
distributions
Dividends from net
investment income (0.490) (0.600) (0.690)
Distributions from net
realized gain on
investments (3.070) (2.680) (1.340)
-------- ------- -------
Total dividends and
distributions (3.560) (3.280) (2.030)
-------- ------- -------
Net asset value, end of
period $21.400 $22.580 $21.320
======== ======= =======
Total return(2) 12.03% 24.78% 24.47%
Ratios and supplemental data
Net assets, end of period
(000 omitted) $1,969,181 $1,906,726 $1,616,315
Ratio of expenses to
average net assets 0.90% 0.88% 0.85%
Ratio of net investment
income to average net
assets 2.68% 2.87% 3.40%
Portfolio turnover 94% 90% 101%
Volatility
Volatility, as indicated by 1998(1) 1997(1) 1996(1)
year-by-year total return(2) 12.03% 24.78% 24.47%
Volatility chart is not part
of the Financial highlights
and has not been audited by
Ernst & Young LLP
</TABLE>
<TABLE>
<CAPTION>
Class A Class B
Year ended 11/30
Decatur Equity Income Fund 1995(1) 1994(1) 1998
<S> <C> <C> <C>
Net asset value, beginning
of period $15.570 $18.240 $22.480
Income (loss) from
investment operations
Net investment income 0.700 0.670 0.403
Net realized and unrealized
gain (loss) on investments 3.910 (0.730) 1.797
-------- ------- -------
Total from investment
operations 4.610 (0.060) 2.200
-------- ------- -------
Less dividends and
distributions
Dividends from net
investment income (0.690) (0.860) (0.290)
Distributions from net
realized gain on
investments (0.420) (1.750) (3.070)
-------- ------- -------
Total dividends and
distributions (1.110) (2.610) (3.360)
-------- ------- -------
Net asset value, end of
period $19.070 $15.570 $21.320
======== ======= =======
Total return(2) 31.02% (0.57%) 11.14%
Ratios and supplemental data
Net assets, end of period
(000 omitted) $1,382,693 $1,153,884 $169,985
Ratio of expenses to average
net assets 0.87% 0.81% 1.70%
Ratio of net investment
income to average net
assets 4.03% 3.92% 1.88%
Portfolio turnover 74% 92% 94%
Volatility Year ended 11/30
Volatility, as indicated by 1995(1) 1994(1) 1998
year-by-year total return(2) 31.02% -0.57% 11.14%
Volatility chart is not part
of the Financial highlights
and has not been audited by
Ernst & Young LLP
</TABLE>
<TABLE>
<CAPTION>
Class B
Year ended 11/30
Decatur Equity Income Fund 1997 1996 1995
<S> <C> <C> <C>
Net asset value, beginning
of period $21.260 $19.030 $15.550
Income (loss) from
investment operations
Net investment income 0.450 0.500 0.560
Net realized and unrealized
gain (loss) on investments 3.900 3.610 3.890
-------- ------- -------
Total from investment
operations 4.350 4.110 4.450
-------- ------- -------
Less dividends and
distributions
Dividends from net
investment income (0.450) (0.540) (0.550)
Distributions from net
realized gain on
investments (2.680) (1.340) (0.420)
-------- ------- -------
Total dividends and
distributions (3.130) (1.880) (0.970)
-------- ------- -------
Net asset value, end of
period $22.480 $21.260 $19.030
======== ======= =======
Total return(2) 23.73% 23.43% 29.85%
Ratios and supplemental data
Net assets, end of period
(000 omitted) $123,180 $60,689 $19,665
-------- ------- -------
Ratio of expenses to average
net assets 1.68% 1.69% 1.74%
Ratio of net investment
income to average net
assets 2.07% 2.56% 3.16%
Portfolio turnover 90% 101% 74%
Volatility Year ended 11/30
Volatility, as indicated by 1997 1996 1995
year-by-year total return(2) 23.73% 23.43% 29.85%
Volatility chart is not part
of the Financial highlights
and has not been audited by
Ernst & Young LLP
</TABLE>
<TABLE>
<CAPTION>
Class B Class C
Period
9/6/94(3)
through
Decatur Equity Income Fund 11/30/94 1998 1997
<S> <C> <C> <C>
Net asset value, beginning
of period $16.590 $22.570 $21.330
Income (loss) from
investment operations
Net investment income 0.150 0.402 0.460
Net realized and unrealized
gain (loss) on investments (1.020) 1.808 3.910
-------- ------- -------
Total from investment
operations (0.870) 2.210 4.370
-------- ------- -------
Less dividends and
distributions
Dividends from net
investment income (0.170) (0.290) (0.450)
Distributions from net
realized gain on
investments None (3.070) (2.680)
-------- ------- -------
Total dividends and
distributions (0.170) (3.360) (3.130)
-------- ------- -------
Net asset value, end of
period $15.550 $21.420 $22.570
======== ======= =======
Total return(2) (5.27%) 11.14% 23.75%
Ratios and supplemental data
Net assets, end of period
(000 omitted) $2,765 $23,076 $15,343
Ratio of expenses to average
net assets 1.70% 1.70% 1.68%
Ratio of net investment
income to average net
assets 3.03% 1.88% 2.07%
Portfolio turnover 92% 94% 90%
Period
Volatility 9/6/94(3)
Volatility, as indicated by through
year-by-year total return(2) 11/30/94 1998 1997
Volatility chart is not part
of the Financial highlights
and has not been audited by
Ernst & Young LLP -5.27% 11.14% 23.75%
</TABLE>
<TABLE>
<CAPTION>
Class C
Period
11/29/95(4)
Year ended 11/30 through
Decatur Equity Income Fund 1996 11/30/95
<S> <C> <C>
Net asset value, beginning
of period $19.080 $19.150
Income (loss) from
investment operations
Net investment income 0.510 0.040
Net realized and unrealized
gain (loss) on investments 3.630 (0.060)
-------- -------
Total from investment
operations 4.140 (0.020)
-------- -------
Less dividends and
distributions
Dividends from net
investment income (0.550) (0.050)
Distributions from net
realized gain on
investments (1.340) None
-------- -------
Total dividends and
distributions (1.890) (0.050)
-------- -------
Net asset value, end of
period $21.330 $19.080
======== =======
Total return(2) 23.47% (5)
Ratios and supplemental data
Net assets, end of period
(000 omitted) $4,833 $5
Ratio of expenses to average
net assets 1.69% (5)
Ratio of net investment
income to average net
assets 2.56% (5)
Portfolio turnover 101% (5)
Volatility
Volatility, as indicated by Year ended 11/30
year-by-year total return(2) 1996
Volatility chart is not part
of the Financial highlights
and has not been audited by
Ernst & Young LLP 23.47%
1 The data appearing above reflects 12b-1 distribution expenses that
apply on and after May 2, 1994.
2 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.
3 Date of initial public offering; ratios have been annualized but total
return has not been annualized.
4 Date of initial public offering.
5 The ratios of expenses and net investment income to average net assets
have been omitted as management believes that such ratios, portfolio
turnover and total return for this relatively short period are not
meaningful.
</TABLE>
How to read the Financial highlights
Net investment income
Net investment income includes dividend and interest income earned from
the Fund's securities; 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 the Fund's
portfolio, less any liabilities, that are attributable to that class of
the Fund.
(continues on page 24)
Financial information (continued)
Financial highlights (continued)
The Financial highlights table is intended to help you understand the
Fund's financial performance for the past five years. 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>
Class A
Growth and Income Fund 1998 1997 1996
<S> <C> <C> <C>
Net asset value, beginning
of period $19.230 $17.520 $15.610
Income (loss) from
investment operations
Net investment income 0.280 0.280 0.340
Net realized and unrealized
gain (loss) on investments 1.930 3.610 3.210
-------- ------- -------
Total from investment
operations 2.210 3.890 3.550
-------- ------- -------
Less dividends and
distributions
Dividends from net
investment income (0.240) (0.330) (0.350)
Distributions from net
realized gain on
investments (2.080) (1.850) (1.290)
-------- ------- -------
Total dividends and
distributions (2.320) (2.180) (1.640)
-------- ------- -------
Net asset value, end of
period $19.120 $19.230 $17.520
======== ======= =======
Total return(1) 12.70% 25.26% 24.89%
Ratios and supplemental data
Net assets, end of period
(000 omitted) $1,006,642 $863,855 $670,912
Ratio of expenses to average
net assets 1.13% 1.13% 1.11%
Ratio of net investment
income to average net
assets 1.52% 1.60% 2.21%
Portfolio turnover 87% 69% 87%
Volatility
Volatility, as indicated by 1998 1997 1996
year-by-year total return(1) 12.70% 25.26% 24.89%
Volatility chart is not part
of the Financial highlights
and has not been audited by
Ernst & Young LLP
</TABLE>
<TABLE>
<CAPTION>
Class A Class B
Year ended 11/30
Growth and Income Fund 1995 1994 1998
<S> <C> <C> <C>
Net asset value, beginning
of period $12.320 $14.380 $19.200
Income (loss) from
investment operations
Net investment income 0.370 0.370 0.151
Net realized and unrealized
gain (loss) on investments 3.700 (0.340) 1.917
-------- ------- -------
Total from investment
operations 4.070 0.030 2.068
-------- ------- -------
Less dividends and
distributions
Dividends from net
investment income (0.360) (0.430) (0.098)
Distributions from net
realized gain on
investments (0.420) (1.660) (2.080)
-------- ------- -------
Total dividends and
distributions (0.780) (2.090) (2.178)
-------- ------- -------
Net asset value, end of
period $15.610 $12.320 $19.090
======== ======= =======
Total return(1) 34.68% (0.04%) 11.92%
Ratios and supplemental data
Net assets, end of period
(000 omitted) $534,342 $402,849 $218,584
Ratio of expenses to average
net assets 1.19% 1.26% 1.83%
Ratio of net investment
income to average net
assets 2.72% 2.88% 0.82%
Portfolio turnover 81% 74% 87%
Volatility Year ended 11/30
Volatility, as indicated by 1995 1994 1998
year-by-year total return(1) 34.68% -0.04% 11.92%
Volatility chart is not part
of the Financial highlights
and has not been audited by
Ernst & Young LLP
</TABLE>
<TABLE>
<CAPTION>
Class B
Year ended 11/30
Growth and Income Fund 1997 1996 1995
<S> <C> <C> <C>
Net asset value, beginning
of period $17.460 $15.560 $12.310
Income (loss) from
investment operations
Net investment income 0.170 0.230 0.300
Net realized and unrealized
gain (loss) on investments 3.600 3.200 3.670
-------- ------- -------
Total from investment
operations 3.770 3.430 3.970
-------- ------- -------
Less dividends and
distributions
Dividends from net
investment income (0.180) (0.240) (0.300)
Distributions from net
realized gain on
investments (1.850) (1.290) (0.420)
-------- ------- -------
Total dividends and
distributions (2.030) (1.530) (0.720)
-------- ------- -------
Net asset value, end of
period $19.200 $17.460 $15.560
======== ======= =======
Total return(1) 24.45% 24.01% 33.79%
Ratios and supplemental data
Net assets, end of period
(000 omitted) $135,737 $53,467 $14,745
Ratio of expenses to average
net assets 1.83% 1.81% 1.89%
Ratio of net investment
income to average net
assets 0.90% 1.53% 2.02%
Portfolio turnover 69% 87% 81%
Volatility
Volatility, as indicated by 1997 1996 1995
year-by-year total return(1) 24.45% 24.01% 33.79%
Volatility chart is not part
of the Financial highlights
and has not been audited by
Ernst & Young LLP
</TABLE>
<TABLE>
<CAPTION>
Class B Class C
Period
9/6/94(2)
through
Growth and Income Fund 11/30/94 1998 1997
<S> <C> <C> <C>
Net asset value, beginning
of period $13.110 $19.160 $17.430
Income (loss) from
investment operations
Net investment income 0.120 0.153 0.170
Net realized and unrealized
gain (loss) on investments (0.820) 1.915 3.590
-------- ------- -------
Total from investment
operations (0.700) 2.068 3.760
-------- ------- -------
Less dividends and
distributions
Dividends from net
investment income (0.100) (0.098) (0.180)
Distributions from net
realized gain on
investments None (2.080) (1.850)
-------- ------- -------
Total dividends and
distributions (0.100) (2.178) (2.030)
-------- ------- -------
Net asset value, end of
period $12.310 $19.050 $19.160
======== ======= =======
Total return(1) (5.37%) 12.00% 24.44%
Ratios and supplemental data
Net assets, end of period
(000 omitted) $1,738 $48,683 $26,231
Ratio of expenses to average
net assets 1.96% 1.83% 1.83%
Ratio of net investment
income to average net
assets 2.18% 0.82% 0.90%
Portfolio turnover 74% 87% 69%
Period
9/6/94(2)
Volatility through
Volatility, as indicated by 11/30/94 1998 1997
year-by-year total return(1) -5.37% 12.00% 24.44%
Volatility chart is not part
of the Financial highlights
and has not been audited by
Ernst & Young LLP
</TABLE>
<TABLE>
<CAPTION>
Class C
Period
11/29/95(3)
Year ended 11/30 through
Growth and Income Fund 1996 11/30/96
<S> <C> <C>
Net asset value, beginning
of period $15.610 $15.610
Income (loss) from
investment operations
Net investment income 0.330 None
Net realized and unrealized
gain (loss) on investments 3.100 None
-------- -------
Total from investment
operations 3.430 None
-------- -------
Less dividends and
distributions
Dividends from net
investment income (0.320) None
Distributions from net
realized gain on
investments (1.290) None
-------- -------
Total dividends and
distributions (1.610) None
-------- -------
Net asset value, end of
period $17.430 $15.610
======== =======
Total return(1) 24.04% (4)
Ratios and supplemental data
Net assets, end of period
(000 omitted) $7,591 $5
Ratio of expenses to average
net assets 1.81% (4)
Ratio of net investment
income to average net
assets 1.53% (4)
Portfolio turnover 87% (4)
Volatility Year ended 11/30
Volatility, as indicated by 1996
year-by-year total return(1) 24.04%
Volatility chart is not part
of the Financial highlights
and has not been audited by
Ernst & Young LLP
1 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.
2 Date of initial public offering; ratios have been annualized but total return
has not been annualized.
3 Date of initial public offering.
4 The ratios of expenses and net investment income to average net assets have
been omitted as management believes that such ratios, portfolio turnover and
total return for this relatively short period are not meaningful.
</TABLE>
How to read the Financial highlights (begins on page 22)
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 rate
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.
Decatur Equity Income Fund
Growth and Income Fund
Additional information about the Funds' investments is available in the
Funds' annual and semi-annual reports to shareholders. In the Funds'
shareholder reports, you will find a discussion of the market conditions
and investment strategies that significantly affected the Funds'
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 these Funds, you can write to us at 1818 Market Street, Philadelphia,
PA 19103-3682, or call toll-free 800.523.1918. You may also obtain
additional information about the Funds 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.delawarefunds.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:
(bullet) For fund information; literature; price, yield and
performance figures.
(bullet) 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)
(bullet) 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: 811-750
[GRAPHIC OMITTED: LOGO OF DELAWARE INVESTMENTS
----------------------------
Philadelphia * London]
P-118 [--] PP 1/99
[GRAPHIC OMITTED: LOGO OF DELAWARE INVESTMENTS
----------------------------
Philadelphia * London]
Decatur Equity
Income Fund
(formerly Decatur Income Fund)
Growth and Income Fund
(formerly Decatur Total
Return Fund)
Institutional Class
Prospectus January 29, 1999
Total Return Funds
[GRAPHIC OMITTED: ILLUSTRATION OF A MAN FISHING IN A STREAM]
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.
[inside front cover]
Table of contents
Fund profiles page 1
Decatur Equity Income Fund 2
Growth and Income Fund 4
How we manage the Funds page 6
Our investment strategies 6
The securities we typically
invest in 7
The risks of investing in
the Funds 9
Who manages the Funds page 10
Investment manager 10
Portfolio managers 10
Fund administration (Who's
who) 11
About your account page 12
Investing in the Funds 12
How to buy shares 13
How to redeem shares 15
Account minimum 16
Exchanges 16
Dividends, distributions and
taxes 16
Certain management
considerations page 17
Financial information page 18
[sidebar copy at bottom of page]
How to use this prospectus
Here are guidelines to help you use this prospectus to make well-informed
investment decisions about our funds. If you're looking for a specific
piece of information, the table of contents can guide you directly to the
appropriate section.
Step 1
Take a look at the fund profiles for an overview of each Fund.
Step 2
Learn in-depth information about how the Funds invest, the risks involved
and the people and organizations responsible for the Funds' day-to-day
operations.
Step 3
Determine which fund features and services you would like to take
advantage of.
Step 4
Use the glossary that begins on page 6 to find definitions of words
printed in bold type in the text throughout the prospectus.
Fund Profiles:
An investment overview
When choosing a mutual fund to invest in, you have a variety of options
and important information to consider. This prospectus provides
information about Decatur Equity Income Fund and the Growth and Income
Fund, two mutual funds from the Delaware Investments Family of Funds.
Before evaluating individual funds, however, your first step is to define
your personal financial goals. Knowing your goals and determining your
investment time horizon in advance can help you make a more appropriate
fund selection. It is also important to select a fund in the context of
your entire investment program. Diversification, or spreading your money
among different types of investments, is usually a sound investment
strategy. This is commonly called "asset allocation." The way you choose
to allocate your money depends on a number of factors. A professional
financial adviser can help you build an investment portfolio that fits
your financial situation, your investment objectives and your risk
tolerance.
Investing for total return with Decatur Equity Income Fund and the Growth
and Income Fund
Decatur Equity Income Fund and the Growth and Income Fund are both total
return funds. Investors with long-term goals often choose mutual funds
designed to provide total return. Total return funds typically provide
moderate growth potential as well as some current income. They generally
involve less risk than aggressive stock funds but more risk than bond
funds. Like all mutual funds, total return funds allow you to invest
conveniently in a diversified portfolio without having to select and
monitor individual securities on your own.
["HOUSE" GRAPHIC, WITH TOTAL RETURN "ROOM" HIGHLIGHTED]
Building Blocks of Asset Allocation
Aggressive Growth Equity Funds
Growth Equity Funds
International and Global Funds
Asset Allocation Funds
Moderate Growth Equity Funds for...
Total Return
These stock funds provide moderate growth potential as well as some
current income, with generally less risk than aggressive stock funds but
more risk than bond funds.
Taxable Bond Funds
Tax-Exempt Bond Funds
Money Market Funds (Taxable and Tax-Exempt)
Profile: Decatur Equity Income Fund
What are the Fund's goals?
Decatur Equity Income Fund seeks to provide the highest possible current
income by investing primarily in common stocks that provide the potential
for income and capital appreciation without undue risk to principal.
Although the Fund will strive to achieve its goals, there is no assurance
that it will.
What are the Fund's main investment strategies?
We invest primarily in dividend-paying stocks of large companies.
Typically, we consider buying a stock when its dividend yield is higher
than the average of the unmanaged S&P 500 Composite Stock Price Index. The
manager then considers the financial strength of the company, its
management and any developments affecting the security, the company or its
industry. If the yield on a stock in the portfolio falls below the average
of the S&P 500, we generally sell that stock.
Decatur Equity Income Fund also may invest up to 15% of its net assets in
high-yield, higher risk corporate bonds, commonly known as junk bonds.
These bonds involve the risk that the issuing company may be unable to pay
interest or repay principal. However, they can offer high income potential
which we believe can make a positive contribution to the Fund's
performance.
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 price of Fund shares
will increase and decrease according to changes in the value of the Fund's
investments. This Fund will be affected by declines in stock and
high-yield bond prices, which could be caused by a drop in the stock
market, interest rate changes, problems in the economy or poor performance
from particular companies or sectors. For a more complete discussion of
risk, please turn to page 9.
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.
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.
Who should invest in the Fund
(bullet) Investors with long-term financial goals.
(bullet) Investors looking for growth potential combined with regular
income.
(bullet) Investors looking for supplemental monthly income from an
investment that also offers possible protection against inflation.
Who should not invest in the Fund
(bullet) Investors with short-term financial goals.
(bullet) Investors who are unwilling to accept share prices that may
fluctuate, sometimes significantly, over the short term.
(bullet) Investors seeking an investment primarily in fixed-income
securities.
How has Decatur Equity Income Fund performed?
This bar chart and table can help you evaluate the risks of investing in
the Fund. We show how returns for the Decatur Equity Income Fund's
Institutional Class shares have varied over the past ten calendar years,
as well as average annual returns of all shares for one, five, and ten
years - all compared to the performance of the S&P 500 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. Decatur Equity Income Fund's
Institutional Class commenced operations on January 13, 1994. Return
information for the Institutional Class for the periods prior to the time
the Institutional Class commenced operations is calculated by taking the
performance of Decatur Equity Income Fund A Class and eliminating all
sales charges that apply to Class A shares. The Fund's past performance is
not necessarily an indication of how it will perform in the future.
[GRAPHIC OMITTED: BAR CHART SHOWING YEAR-BY-YEAR TOTAL RETURN
(INSTITUTIONAL CLASS)]
*Decatur Equity Income Fund
*S&P 500
[bar chart]
Year-by-year total return (Institutional Class)
Decatur Equity
Income Fund S&P 500
1989 21.50% 31.50%
1990 -12.36% -3.20%
1991 21.78% 30.60%
1992 8.80% 7.70%
1993 15.35% 10.00%
1994 -0.69% 1.30%
1995 33.06% 37.40%
1996 20.51% 23.10%
1997 29.96% 33.40%
1998 10.10% 28.74%
As of December 31, 1998, the Institutional Class had a year-to-date
return of 10.10%. During the ten years illustrated in this bar chart,
the Institutional Class' highest return was 13.86% for the quarter ended
June 30, 1997 and its lowest return was -15.08% for the quarter ended
September 30, 1990.
Average annual return as of 12/31/98
Institutional Class S&P 500
1 year 10.10% 28.74%
5 years 17.90% 24.08%
10 years 14.00% 19.20%
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
purchases as a percentage of
offering price none
Maximum contingent deferred sales charge (load)
as a percentage of original purchase price or
redemption price, whichever is lower none
Maximum sales charge (load) imposed on
reinvested dividends none
Redemption fees none
Exchange Fees(1) none
Annual fund operating expenses are deducted from the Fund's assets before
it pays dividends and before its net asset value and total return are
calculated. We will not charge you separately for these expenses. These
expenses are based on amounts incurred during the Fund's most recent
fiscal year.
Management fees 0.48%
Distribution and service (12b-1) fees none
Other expenses 0.22%
Total operating expenses 0.70%
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.(2) This is an example only, and does not represent future expenses,
which may be greater or less than those shown here.
1 year $72
3 years $224
5 years $390
10 years $871
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 Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. Also, this example assumes that
the Fund's total operating expenses remain unchanged in each of the
periods we show.
Profile: Growth and Income Fund
What are the Fund's goals?
The 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. 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 dividend-paying stocks of large, well-established
companies. Typically, we consider buying a stock when its dividend yield
is higher than the average of the unmanaged S&P 500 Index. We then
consider the financial strength of the company, the nature of its
management and any developments affecting the security, the company or its
industry. If the yield on a stock already in the portfolio falls below the
average of the S&P 500, we generally sell that stock.
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 price of Fund shares
will increase and decrease according to changes in the value of the Fund's
investments. This Fund will be affected by declines in stock prices, which
could be caused by a drop in the stock market or poor performance from
particular companies or industries. For a more complete discussion of
risk, please turn to page 9.
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.
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.
Who should invest in the Fund
(bullet) Investors with long-term financial goals.
(bullet) Investors seeking long-term capital appreciation.
(bullet) Investors seeking an investment primarily in common stocks.
(bullet) Investors seeking moderate quarterly income with the opportunity
for inflation protection.
Who should not invest in the Fund
(bullet) Investors seeking an investment primarily in fixed-income
securities.
(bullet) Investors with short-term financial goals.
(bullet) Investors who are unwilling to accept share prices that may
fluctuate, sometimes significantly over the short term.
How has Growth and Income Fund performed?
This bar chart and table can help you evaluate the risks of investing in
the Fund. We show how returns for the Growth and Income Fund's
Institutional Class shares have varied over the past ten calendar years,
as well as average annual returns of all shares for one, five, and ten
years - all compared to the performance of the S&P 500 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. Growth and Income Fund's
Institutional Class commenced operations on July 26, 1993. Return
information for the Institutional Class for the periods prior to the time
the Institutional Class commenced operations is calculated by taking the
performance of Growth and Income Fund A Class and eliminating all sales
charges that apply to Class A shares. However, for those periods, Class A
12b-1 payments were not eliminated, and performance would have been
affected if this adjustment had been made. The Fund's past performance is
not necessarily an indication of how it will perform in the future.
[GRAPHIC OMITTED: BAR CHART SHOWING YEAR BY YEAR TOTAL RETURN
(INSTITUTIONAL CLASS)]
*Growth and Income Fund
*S&P 500
[bar chart]
Year-by-year total return (Institutional Class)
Growth and
Income Fund S&P 500
1989 26.57% 31.50%
1990 -8.33% -3.20%
1991 20.40% 30.60%
1992 8.17% 7.70%
1993 15.08% 10.00%
1994 -0.29% 1.30%
1995 36.96% 37.40%
1996 20.38% 23.10%
1997 31.56% 33.40%
1998 10.90% 28.74%
As of December 31, 1998, the Institutional Class had a year-to-date return
of 10.90%. During the ten years illustrated in this bar chart, the
Institutional Class' highest return was 15.35% for the quarter ended June
30, 1997 and its lowest return was -10.99% for the quarter ended September
30, 1990.
How has Growth and Income Fund performed? (continued)
Average annual return as of 12/31/98
Institutional Class S&P 500
1 year 10.90% 28.74%
5 years 19.12% 24.08%
10 years 15.35% 19.20%
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
purchases as a percentage of
offering price none
Maximum contingent deferred sales charge (load)
as a percentage of original purchase price or
redemption price, whichever is lower none
Maximum sales charge (load) imposed on
reinvested dividends none
Redemption fees none
Exchange Fees(1) none
Annual fund operating expenses are deducted from the Fund's assets before
it pays dividends and before its net asset value and total return are
calculated. We will not charge you separately for these expenses. These
expenses are based on amounts incurred during the Fund's most recent
fiscal year.
Management fees 0.57%
Distribution and service (12b-1) fees none
Other expenses 0.26%
Total operating expenses 0.83%
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.(2) This is an example only, and does not represent
future expenses, which may be greater or less than those shown here.
1 year $85
3 years $265
5 years $460
10 years $1,025
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 Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. Also, this example assumes that
the Fund's total operating expenses remain unchanged in each of the
periods we show.
How we manage the Funds
Our investment strategies
We first identify companies that have above-average dividend yields
compared to the unmanaged S&P 500 Index, a commonly used measure of U.S.
stocks. We then research individual companies and analyze economic and
market conditions, seeking to identify the securities that we think are
the best investments for each Fund. Following are descriptions of how the
portfolio manager pursues the Funds' investment goals.
We take a disciplined approach to investing, combining investment
strategies and risk management techniques that can help shareholders meet
their goals.
Decatur Equity Income Fund
Decatur Equity Income Fund is a total return fund that invests primarily
in stocks, but also in corporate bonds. It strives to provide high current
income and capital appreciation to its shareholders.
We invest primarily in the common stocks of established companies that we
believe have long-term total return potential. That is, they offer both
current income through dividends and capital growth potential through
increases in stock prices. Our focus on stocks with high dividend yields
is generally considered to be a value-oriented investment approach.
To help supplement the dividend income provided by the stocks in the
portfolio, the Fund may also invest up to 15% of its net assets in
high-yield, higher risk corporate bonds. The companies that issue these
bonds do not generally have good credit ratings. As a result, the bonds
generally pay more interest than better quality bonds. We carefully
evaluate individual bonds before they are purchased and monitor them
carefully while in the portfolio. We look closely at each company and the
characteristics of the bond to better judge the ability of the company to
pay interest and repay principal.
We conduct ongoing analysis of both the stock and bond markets to
determine how much of the portfolio should be allocated to stocks and how
much to high-yield bonds.
Growth and Income Fund
The Growth and Income Fund is also a total return fund, but it generally
does not hold bonds in the portfolio. This Fund's objective is to provide
long-term growth of capital. It also seeks to provide a moderate amount of
current income.
The Growth and Income Fund invests primarily in the common stocks of
established companies that we believe have long-term total return
potential. These stocks offer both current income through dividends and
capital growth potential through possible increases in stock prices. This
focus on stocks with high dividend yields is generally considered to be a
value-oriented investment approach.
The Growth and Income Fund offers slightly greater growth potential and
slightly less income potential than Decatur Equity Income Fund due to its
greater focus on common stocks.
How to use this glossary
Words found in the glossary are printed in boldface only the first time
they appear in the prospectus. So if you would like to know the meaning of
a word that isn't in boldface, you might still find it in the glossary.
Glossary A-C
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.
Average maturity
An average of when the individual bonds and other debt securities held in
a portfolio will mature.
The securities we typically invest in
Stocks offer investors the potential for capital appreciation, and may pay
dividends as well. High-yield bonds offer the potential for greater income
payments than stocks, and also may provide capital appreciation.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Securities How we use them
- ------------------------------------------------------------------------------------
<S> <C> <C>
Decatur Equity Income Growth and Income
Fund Fund
---------------------- ----------------------
Common stocks: Securities that Generally, we invest Generally, 90% to 100%
represent shares of ownership in a 85% to 100% of net of the Fund's net
corporation. Stockholders assets in dividend- assets will be
participate in the corporation's paying common stocks. invested in dividend-
profits and losses, proportionate paying common stocks.
to the number of shares they own.
- ------------------------------------------------------------------------------------
High-Yield Corporate Bonds: Decatur Equity The Growth and Income
Securities that are rated lower Income Fund may Fund generally does
than Investment Grade by an invest up to 15% of not invest in high-
NRSRO or, if unrated, that we net assets in high- yield corporate bonds.
believe are of comparable yield corporate
quality. These securities are bonds, typically
considered to be of poor quality those rated B or BB
and often speculative. by an NRSRO.
- ------------------------------------------------------------------------------------
American Depositary Receipts: We may invest without limitation in ADRs. We
The certificates issued by a U.S. use them when we believe they offer better
bank which represent a stated number total return opportunities than U.S.
of shares of a foreign corporation securities.
that the bank holds in its vault.
An ADR entitles the holder to all
dividends and capital gains earned
by the underlying foreign shares,
and an ADR is bought and sold the
same as U.S. securities.
- ------------------------------------------------------------------------------------
Repurchase agreements: An agreement Typically, we use repurchase agreements as a
between a buyer and seller of short-term investment for a Fund's cash
securities in which the seller position. In order to enter into these
agrees to buy the securities back repurchase agreements, a Fund must have
within a specified time at the collateral of at least 102% of the repurchase
same price the buyer paid for them, price.
plus an amount equal to an agreed
upon interest rate. Repurchase
agreements are often viewed as
equivalent to cash.
- ------------------------------------------------------------------------------------
Restricted securities: Privately We may invest without limitation in privately
placed securities whose resale is placed securities that are eligible for resale
restricted under securities law. among certain institutional buyers without
registration. These are commonly known as
"Rule 144A Securities."
- ------------------------------------------------------------------------------------
Illiquid Securities: Securities We may invest up to 10% of a Fund's total
that do not have a ready market, assets in illiquid securities.
and cannot be easily sold, if at
all, at approximately the price
that the Fund has valued them.
- ------------------------------------------------------------------------------------
</TABLE>
Bond
A debt security, like an IOU, issued by a company, municipality or
government agency. In return for lending money to the issuer, a bond buyer
generally receives fixed periodic interest payments and repayment of the
loan amount on a specified maturity date. A bond's price changes prior to
maturity and is inversely related to current interest rates. When interest
rates rise, bond prices fall, and when interest rates fall, bond prices
rise. See also Nationally recognized statistical rating organization.
Bond ratings
Independent evaluations of creditworthiness, ranging from Aaa/AAA (highest
quality) to D (lowest quality). Bonds rated Baa/BBB or better are
considered investment grade.
Capital
The amount of money you invest.
How we manage the Funds (continued)
Securities we typically invest in (continued)
The Funds are permitted to invest in all available types of equity
securities including preferred stock, rights and warrants and convertible
securities. The Funds may also invest in fixed-income securities and enter
into futures and options transactions for defensive purposes. Both Decatur
Equity Income Fund and Growth and Income Fund may invest in global and
European depositary receipts and directly in foreign securities; however,
the manager has no present intention of doing so. Each Fund reserves the
right to hold a substantial part of its assets in cash or cash equivalents
as a temporary, defensive strategy. You can find additional information
about the investments in each Fund's portfolio in the annual or
semi-annual shareholder report.
Lending securities Each Fund may lend up to 25% of its assets to qualified
brokers, dealers and investors for their use in security transactions.
Purchasing securities on a when-issued or delayed delivery basis Each Fund
may buy or sell securities on a when-issued or delayed delivery basis;
that is, paying for securities before delivery or taking delivery at a
later date.
Portfolio turnover Both Funds anticipate that their annual portfolio
turnover will be less 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.
Borrowing from banks Each Fund may borrow money as a temporary
measure for extraordinary purposes or to facilitate redemptions.
C-D
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.
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 a Fund
you should carefully evaluate the risks. Because of the nature of the
Funds, you should consider an investment in either one to be a long-term
investment that typically provides the best results when held for a number
of years. The following are the chief risks you assume when investing in
Decatur Equity Income Fund and the Growth and Income Fund. Please see the
Statement of Additional Information for further discussion of these risks
and the other risks not discussed here.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Risks How we strive to manage them
- ------------------------------------------------------------------------------------
<S> <C> <C>
Decatur Equity Income Growth and Income
Fund Fund
---------------------- ----------------------
Market risk is the risk that all We maintain a long-term investment approach
or a majority of the securities in and focus on stocks we believe can appreciate
a certain market -- like the stock over an extended time frame regardless of
or bond market -- will decline in interim market fluctuations. We do not try to
value because of factors such as predict overall stock market movements and do
economic conditions, future not trade for short-term purposes.
expectations or investor confidence.
- ------------------------------------------------------------------------------------
Industry and security risk is the We limit the amount of each Fund's assets
risk that the value of securities invested in any one industry and in any
in a particular industry or the individual security. We also follow a rigorous
value of an individual stock or bond selection process designed to identify under-
will decline because of changing valued securities before choosing securities
expectations for the performance of for the portfolio.
that industry or for the individual
company issuing the stock or bond.
- ------------------------------------------------------------------------------------
Interest rate risk is the risk that We limit the amount of The Growth and Income
securities will decrease in value high-yield bonds in Fund does not
if interest rates rise. The risk the portfolio to 15% generally hold a
is greater for bonds with of net assets. significant portion
longer maturities than for those of assets in bonds,
with shorter maturities. so interest rate risk
not a major risk in
this Fund.
- ------------------------------------------------------------------------------------
Credit risk The possibility that We limit the amount of The Growth and Income
a bond's issuer (or an entity that high-yield bonds in Fund is generally not
insures the bond) will be unable the portfolio to 15% subject to credit
to make timely payments of interest of net assets and we risk.
and principal. only invest in these
high-yield bonds
rated at least C or
Ca by an NRSRO or,
if unrated, that we
believe are of
comparable quality.
This limitation,
combined with our
careful, credit-
oriented bond
selection and our
commitment to hold
a diversified
selection of high-
yield bonds are
designed to manage
this risk.
- ------------------------------------------------------------------------------------
Foreign risk is the risk that We typically invest only a small portion of
foreign securities may be each Fund's portfolio in foreign corporations
adversely affected by political through American Depositary Receipts. We do
instability, changes in currency not invest directly in foreign securities.
exchange rates, foreign economic When we do purchase ADRs, they are generally
conditions or inadequate regulatory denominated in U.S. dollars and traded on a
and accounting standards. U.S. exchange.
- ------------------------------------------------------------------------------------
Liquidity risk is the possibility We limit exposure to illiquid securities.
that securities cannot be readily
sold, or can only be sold at a price
lower than the price that the Fund
has valued them.
- ------------------------------------------------------------------------------------
</TABLE>
Corporate bond
A debt security issued by a corporation. See Bond.
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.
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 makes
investment decisions for the Funds, 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:
Investment Management Fees
Decatur Equity Growth and
Income Fund Income Fund
As a percentage of average daily net assets 0.48% 0.57%
Portfolio managers
John B. Fields has primary responsibility for making day-to-day investment
decisions for each Fund. He has been Senior Portfolio Manager for Decatur
Equity Income Fund since 1993 and for Growth and Income Fund since 1992.
Mr. Fields, who has 27 years experience in investment management, earned a
bachelor's degree and an MBA from Ohio State University. Before joining
Delaware Investments in 1992, he was Director of Domestic Equity Risk
Management at DuPont. Prior to that time, he was Director of Equity
Research at Comerica Bank. Mr. Fields is a member of the Financial
Analysts Society of Wilmington, Delaware. In researching securities and
making investment decisions for the Funds, Mr. Fields regularly consults
with a team of Delaware portfolio managers utilizing the same investment
strategy and with Richard G. Unruh.
Richard G. Unruh, Executive Vice President/Chief Investment Officer,
Equity, joined Delaware Investments in 1982 after 19 years of investment
experience with Kidder, Peabody & Co. Inc. Mr. Unruh was named an
Executive Vice President of the Funds in 1994 and named Chief Investment
Officer for equities in 1998. He is also a member of the Board of
Directors of the manager and was named Executive Vice President of the
manager in 1994.
D-I
Dividend distribution
Payments to mutual fund shareholders of dividends passed along from the
fund's portfolio of securities.
Duration
A measurement of a fixed-income investment's price volatility. The larger
the number, the greater the likely price change for a given change in
interest rates.
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.
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 INVESTMENTS
FUNDS]
Board of Directors
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 Distributor Service agent
managers Delaware Distributors, L.P. Delaware Service Company, Inc.
(see page 10 1818 Market Street 1818 Market Street
for details) Philadelphia, PA 19103 Philadelphia, PA 19103
Shareholders
Board of directors A mutual fund is governed by a board of directors which
has oversight responsibility for the management of the fund's business
affairs. Directors 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 directors must
be independent of the fund's investment manager or distributor. These
independent fund directors, 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 typically 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 National Association of Securities Dealers, 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
directors. 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.
Financial adviser
Financial professional (e.g., broker, banker, accountant, planner or
insurance agent) who analyzes clients' finances and prepares personalized
programs to meet objectives.
Fixed-income securities
With fixed-income securities, the money you originally invested is paid
back at a pre-specified maturity date. These securities, which include
government, corporate or municipal bonds, as well as money market
securities, typically pay a fixed rate of return (often referred to as
interest). See Bonds.
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.
About your account
Investing in the Funds
Institutional Class shares are available for purchase only by the
following:
(bullet) 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
(bullet) tax-exempt employee benefit plans of the manager or its
affiliates and securities dealer firms with a selling agreement with the
distributor
(bullet) 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
(bullet) 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
(bullet) 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
M-P
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.
Maturity
The length of time until a bond issuer must repay the underlying loan
principal to bondholders.
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.
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.
Nationally recognized statistical rating organization (NRSRO)
A company that assesses the credit quality of bonds, commercial paper,
preferred and common stocks and municipal short-term issues, rating the
probability that the issuer of the debt will meet the scheduled interest
payments and repay the principal. Ratings are published by such companies
as Moody's Investors Service (Moody's), Standard & Poor's Corporation
(S&P), Duff & Phelps, Inc. (Duff), and Fitch Investor Services, Inc.
(Fitch).
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 pays
dividends at a fixed rate and is sometimes convertible into common stock.
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
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 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.
Currently, the Exchange is closed when the following holidays are
observed: New Year's Day, Martin Luther King, Jr.'s Birthday, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving
and Christmas. We reserve the right to reject any purchase order.
We determine the Funds' net asset value (NAV) per share at the close of
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
directors. Any fixed-income securities that have a maturity of less than
60 days we price at amortized cost. We price all other securities at their
fair market value using a method approved by the board of directors.
P-S
Price/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.
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
$50,000 or more, 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.
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 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.
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, 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.
Account minimum
If you redeem shares and your account balance falls below $250, the 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
For Decatur Equity Income Fund, dividends, if any, are paid monthly, while
any capital gains are distributed annually. For Growth and Income Fund,
dividends, if any, are paid quarterly, while any capital gains are
distributed annually. 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 these Funds 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
the 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.
S-V
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.
Certain management considerations
Year 2000
As with other mutual funds, financial and business organizations and
individuals around the world, the Funds could be adversely affected if the
computer systems used by their 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 is taking
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 the Funds.
Investments by Fund of Funds
Growth and Income Fund accepts investments from the series portfolios of
Delaware Group Foundation Funds, a fund of funds. From time to time, the
Fund may experience large investments or redemptions due to allocations or
rebalancings by Foundation Funds. While it is impossible to predict the
overall impact of these transactions over time, there could be adverse
effects on portfolio management. For example, the Fund may be required to
sell securities or invest cash at times when it would not otherwise do so.
These transactions could also have tax consequences if sales of securities
result in gains, and could also increase transactions costs or portfolio
turnover. The manager will monitor transactions by Foundation Funds and
will attempt to minimize any adverse effects on both Growth and Income
Fund and Foundation Funds as a result of these transactions.
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.
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.
Financial information
Financial highlights
The financial highlights table is intended to help you understand Decatur
Equity Income Fund's financial performance for the past five years. 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>
Institutional Class
Decatur Equity Income Fund 1998(2) 1997(2) 1996(2)
<S> <C> <C> <C>
Net asset value, beginning
of period $22.570 $21.310 $19.060
Income (loss) from
investment operations
Net investment income (loss) 0.612 0.650 0.690
Net realized and unrealized
gain (loss) on investments 1.808 3.930 3.620
------- ------- -------
Total from investment
operations 2.420 4.580 4.310
------- ------- -------
Less dividends and
distributions
Dividends from net
investment income (0.520) (0.640) (0.720)
Distributions from realized
gain on investments (3.070) (2.680) (1.340)
------- ------- -------
Total dividends and
distributions (3.590) (3.320) (2.060)
------- ------- -------
Net asset value, end of
period $21.400 $22.570 $21.310
======= ======= =======
Total return 12.25% 25.02% 24.65%
Ratios and supplemental data
Net assets, end of period
(000 omitted) $243,245 $278,384 $244,048
Ratio of expenses to average
net assets 0.70% 0.68% 0.69%
Ratio of net investment
income to average net
assets 2.88% 3.07% 3.56%
Portfolio turnover 94% 90% 101%
Volatility 1998(2) 1997(2) 1996(2)
Volatility, as indicated by
year-by-year return 12.25% 25.02% 24.65%
Volatility chart is not part
of the Financial highlights
and has not been audited by
Ernst & Young LLP.
Institutional Class
Period
1/13/94
Year Ended 11/30 Through Year Ended
Decatur Equity Income Fund 1995(2) 11/30/94(2) 11/30/94(1)
<S> <C> <C> <C>
Net asset value, beginning
of period $15.590 $16.720 $18.240
Income (loss) from
investment operations
Net investment income (loss) 0.710 0.590 0.670
Net realized and unrealized
gain (loss) on investments 3.920 (1.100) (0.730)
------- ------- -------
Total from investment
operations 4.630 (0.510) 0.060
------- ------- -------
Less dividends and
distributions
Dividends from net
investment income (0.740) (0.620) (0.860)
Distributions from realized
gain on investments (0.420) None (1.750)
------- ------- -------
Total dividends and
distributions (1.160) (0.620) (2.610)
------- ------- -------
Net asset value, end of
period $19.060 $15.590 $15.570
======= ======= =======
Total return 31.14% (0.45%) (0.57%)(3)
Ratios and supplemental data
Net assets, end of period
(000 omitted) $211,409 $182,105 $1,153,884
Ratio of expenses to average
net assets 0.74% 0.70% 0.81%
Ratio of net investment
income to average net
assets 4.16% 4.03% 3.92%
Portfolio turnover 74% 92% 92%
Period
1/13/94
Volatility Year Ended 11/30 Through Year Ended
1995(2) 11/30/94(2) 11/30/94(1)(3)
Volatility, as indicated by
year-by-year return 31.14% -0.45% -0.57%
Volatility chart is not part
of the Financial highlights
and has not been audited by
Ernst & Young LLP.
1 Data for Decatur Equity Income Fund Institutional Class are derived from data of
Decatur Equity Income Fund A Class, which prior to May 2, 1994 was not subject to
12b-1 fees.
2 Data are derived from data for Decatur Equity Income Fund Institutional Class,
which began operating on January 13, 1994. Ratios and total return have been
annualized.
3 Does not reflect current maximum sales charges that are or were in effect for
Decatur Equity Income Fund A Class.
</TABLE>
How to read the Financial highlights
Net investment income
Net investment income includes dividend and interest income earned from
the Fund's securities; 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 investments 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, and assume the
shareholder has reinvested all dividends and realized gains.
Net assets
Net assets represent the total value of all the assets in the Fund's
portfolio, less any liabilities, that are attributable to that class of
the Fund.
(continues on page 20)
Financial information (continued)
Financial highlights (continued)
The financial highlights table is intended to help you understand Growth
and Income Fund's financial performance for the past five years. 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>
Institutional Class
Growth and Income Fund 1998 1997 1996
<S> <C> <C> <C>
Net asset value, beginning
of period $19.260 $17.570 $15.650
Income (loss) from
investment operations
Net investment income 0.346 0.350 0.370
Net realized and unrealized
gain (loss) on investments 1.917 3.600 3.230
------- ------- -------
Total from investment
operations 2.263 3.950 3.600
------- ------- -------
Less dividends and
distributions
Dividends from net
investment income (0.293) (0.410) (0.390)
Distributions from net
realized gain on
investments (2.080) (1.850) (1.290)
------- ------- -------
Total dividends and
distributions (2.373) (2.260) (1.680)
------- ------- -------
Net asset value, end of
period $19.150 $19.260 $17.570
======= ======= =======
Total return 13.07% 25.65% 25.24%
Ratios and supplemental data
Net assets, end of period
(000 omitted) $112,381 $78,813 $45,958
Ratio of expenses to average
net assets 0.83% 0.83% 0.81%
Ratio of net investment
income to average net
assets 1.82% 1.90% 2.53%
Portfolio turnover 87% 69% 87%
Volatility 1998 1997 1996
Volatility, as indicated by
year-by-year return 13.07% 25.65% 25.24%
Volatility chart is not part
of the Financial highlights
and has not been audited by
Ernst & Young LLP.
Institutional Class
Year Ended 11/30
Growth and Income Fund 1995 1994
<S> <C> <C>
Net asset value, beginning
of period $12.350 $14.400
Income (loss) from
investment operations
Net investment income 0.470 0.430
Net realized and unrealized
gain (loss) on investments 3.650 (0.370)
------- -------
Total from investment
operations 4.120 0.060
------- -------
Less dividends and
distributions
Dividends from net
investment income (0.400) (0.450)
Distributions from net
realized gain on
investments (0.420) (1.660)
------- -------
Total dividends and
distributions (0.820) (2.110)
------- -------
Net asset value, end of
period $15.650 $12.350
======= =======
Total return 35.13% 0.19%
Ratios and supplemental data
Net assets, end of period
(000 omitted) $11,520 $1,376
Ratio of expenses to average
net assets 0.89% 0.96%
Ratio of net investment
income to average net
assets 3.02% 3.18%
Portfolio turnover 81% 74%
Year Ended 11/30
Volatility 1995 1994
Volatility, as indicated by
year-by-year return 35.13% 0.19%
Volatility chart is not part
of the Financial highlights
and has not been audited by
Ernst & Young LLP.
</TABLE>
How to read the Financial highlights (begins on page 18)
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 rate
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
[back cover]
Decatur Equity Income Fund
Growth and Income Fund
Additional information about the Funds' investments is available in the
Funds' annual and semi-annual reports to shareholders. In the Funds'
shareholder reports, you will find a discussion of the market conditions
and investment strategies that significantly affected the Funds'
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 these Funds, you can write to us at 1818 Market Street, Philadelphia,
PA 19103-3682, or call toll-free 800.523.1918. You may also obtain
additional information about the Funds 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.delawarefunds.com
E-mail
[email protected]
Client Services Representative
800.510.4015
Delaphone Service
800.362.FUND (800.362.3863)
(bullet)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.
[GRAPHIC OMITTED: LOGO OF DELAWARE INVESTMENTS
- ----------------------------
Philadelphia * London]
Registrant's Investment Company Act file number: 811-750
P-501 [--] PP 1/99
