SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
File No. 2-10765
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No. _____
Post-Effective Amendment No. 106 X
_____
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 106 X
DELAWARE GROUP EQUITY FUNDS III, INC.
_______________________________________________________________________
(Exact Name of Registrant as Specified in Charter)
1818 Market Street, Philadelphia, Pennsylvania 19103
_______________________________________________________________________
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (215) 751-2923
George M. Chamberlain, Jr., 1818 Market Street, Philadelphia, PA 19103
_______________________________________________________________________
(Name and Address of Agent for Service)
Approximate Date of Public Offering: December 30, 1998
__________________
It is proposed that this filing will become effective:
_____ immediately upon filing pursuant to paragraph (b)
_____ on (date) pursuant to paragraph (b)
_____ 60 days after filing pursuant to paragraph (a)(1)
X on December 30, 1998 pursuant to paragraph (a)(1)
_____ 75 days after filing pursuant to paragraph (a)(2)
_____ on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate:
_____ This post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
Title of Securities Being Registered
------------------------------------
Delaware Fund A Class
Delaware Fund B Class
Delaware Fund C Class
Delaware Fund Institutional Class
Devon Fund A Class
Devon Fund B Class
Devon Fund C Class
Devon Fund Institutional Class
--- C O N T E N T S ---
This Post-Effective Amendment No. 106 to Registration File No. 2-
10765 includes the following:
1. Facing Page
2. Contents Page
3. Cross-Reference Sheets
4. Part A - Prospectuses
5. Part B - Statement of Additional Information
6. Part C - Other Information
7. Signatures
CROSS-REFERENCE SHEET*
----------------------
PART A
-------
Location in
Item No. Description Prospectuses
- -------- --------------- ------------
Delaware Fund/
Devon Fund Delaware Fund
A Class Devon Fund
B Class Institutional
C Class Class
1 Front and Back Cover Pages Same Same
2 Risk/Return Summary:
Investments, Risks and
Performance Fund Fund
profiles profiles
3 Risk/ReturnSummary
Fee Table Fund Fund
profiles profiles
4 Investment Objectives,
Principal Investment
Strategies, and Related
Risks How we How we
manage manage
the Funds the Funds
5 Management's Discussion
of Performance N/A N/A
6 Management, Organization,
and Capital Structure Who manages Who manages
the Funds the Funds
7 Shareholder Information How to How to
buy shares; buy shares;
How to How to
redeem shares; redeem shares;
Special services; Special services;
Dividends, Dividends,
distributions distributions
and taxes all and taxes all
under About under About
your account your account
8 Distribution
Arrangements Choosing a
share class;
How to reduce
sales charges
under About About
your account your account
9 Financial Highlights
Information Financial Financial
Highlights Highlights
CROSS-REFERENCE SHEET
----------------------
PART B
-------
Location in Statement
Item No. Description of Additional Information
- -------- ----------- -------------------------
10 Cover Page Same
and Table of Contents
11 Fund History General Information
12 Description of the Fund and Its
Investments and Risks Investment Restrictions
and Policies
13 Management of the Fund Officers and Directors;
Purchasing Shares
14 Control Persons and Principal
Holders of Securities Officers and Directors;
15 Investment Advisory and Other
Services Officers and Directors;
Purchasing Shares);
Investment Management
Agreements; General
Information; Financial
Statements
16 Brokerage Allocation and Other
Practices Trading Practices and
Brokerage
17 Capital Stock and Other Securities Capitalization and
Noncumulative Voting
(under General
Information)
18 Purchase, Redemption, and Pricing
of Shares Purchasing Shares;
Redemption and Exchange;
Determining Offering
Price and Net Asset Value
19 Taxation of the Fund Taxes
20 Underwriters Purchasing Shares
21 Calculation of Performance Data Performance Information
22 Financial Statements Financial Statements
CROSS-REFERENCE SHEET
----------------------
PART C
-------
Location in
Item No. Description Part C
- ------- ----------- -----------
23 Exhibits Item 23
24 Persons Controlled by
or under Common
Control with
Registrant Item 24
25 Indemnification Item 25
26 Business and Other
Connections of the
Investment Adviser Item 26
27 Principal Underwriters Item 27
28 Location of Accounts
and Records Item 28
29 Management Services Item 29
30 Undertakings Item 30
[GRAPHIC OMITTED: LOGO OF DELAWARE INVESTMENTS
----------------------------
Philadelphia * London]
DELAWARE FUND
DEVON FUND
Class A
[bullet] Class B
[bullet] Class C
Prospectus December 30, 1998
[GRAPHIC OMITTED: ILLUSTRATION OF A MAN AND A WOMAN HOLDING A PORTRAIT
WHICH IS BROKEN IN HALF]
Total Return Funds
The Securities and Exchange Commission has not approved or disapproved
these securities or passed upon the accuracy of this prospectus, and any
representation to the contrary is a criminal offense.
Table of Contents
Fund profiles page 2
Delaware Fund 2
Devon 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
Who's who?
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
How to redeem shares 17
Special services 19
Dividends, distributions and taxes 21
Retirement plans 21
Financial highlights page 22
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 throughout the prospectus.
Investing for total return...
Investors with long-term goals often choose mutual funds designed to
provide total return. These funds 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.
with Delaware Investments
Your personal financial adviser, working with Delaware Investments, can
help you define, evaluate and set your personal investment objectives.
Your adviser can also explain the role total return funds like Delaware
Fund and Devon Fund can play in a long-term investment program designed
to meet your goals.
The Delaware Investments family includes a full range of mutual funds--
including total return funds--designed to fit your particular investment
needs. With nearly 70 years of investment management experience, we
follow time-tested strategies that emphasize long-term performance and
consistent application of investment disciplines. Today, as part of the
Lincoln Financial Group, a $105 billion financial services complex,
Delaware Investments has access to a variety of experienced and talented
investment managers. We are dedicated to working closely with financial
advisers to bring investors the highest quality investment management
and services.
[GRAPHIC OF A HOUSE]
Building Blocks of Asset Allocation
Aggressive Growth Equity Funds
Growth Equity Funds
International and Global Funds
Asset Allocation Funds
[Table Highlighted] Moderate Growth Equity Funds for...
Total Return
These stock-oriented funds provide moderate growth potential as well as
some current income, with 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: Delaware Fund
What are the Fund's goals?
Delaware Fund seeks a balance of capital appreciation, income and
preservation of capital. Although the Fund will strive to achieve
its goal, there is no assurance that it will.
Who should invest in the Fund
[bullet] Investors with long-term financial goals.
[bullet] Investors looking for stocks and bonds combined in a single
investment.
[bullet] Investors seeking modest quarterly income.
[bullet] Investors seeking a measure of capital preservation.
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.
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.
What are the Fund's main investment strategies? We invest primarily in
common stocks of established companies we believe have the potential for
long-term capital appreciation. In addition, we invest at least 25% of
the Fund's assets in various types of fixed-income securities, including
U.S. government securities and corporate bonds. This mix of stocks and
bonds makes Delaware Fund what is commonly known as a balanced fund.
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 changes in stock and bond prices. An
investment in the Fund is not a deposit of any bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. For a more complete discussion of risk, please turn
to page 9.
How has the Fund performed?
This bar chart and table can help you evaluate the potential risks and
rewards of investing in the Fund. We show how returns for the Fund's
Class A shares have varied over the past ten calendar years. We also
show the average annual returns of all shares for one, five, and ten
years compared to the performance of the S&P 500 Index and the Lehman
Brothers Aggregate Bond Index. You should remember that unlike the Fund,
the indexes are unmanaged and don't include the actual costs of buying,
selling, and holding securities. Neither index is a perfect comparison
to Delaware Fund since the S&P 500 does not include fixed-income
securities and the Lehman Brothers Aggregate Bond Index does not include
stocks. 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)
FPO]
Year-by-year total return (Class A)
Lehman Brothers Aggregate
Delaware Fund S&P 500 Bond Index
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
The maximum Class A sales charge of 5.75%, which is normally deducted
when you purchase shares, is not reflected in these total returns. If
this fee were included, the returns would be less than those shown. The
average annual returns shown below do include the sales charge.
As of September 30, 1998, the Fund had a year-to-date return of XX%.
During the ten years illustrated in this bar chart, the Fund's highest
return in any quarter was XX% and its lowest return in any quarter was
XX%.
Average annual return as of 12/31/97
<TABLE>
<CAPTION>
CLASS A B B (if redeemed) C
<S> <C> <C> <C> <C>
1 year 00.0% 00.0% 00.0% 00.0%
5 years 00.0% 00.0% 00.0% 00.0%
10 years 00.0% 00.0% 00.0% 00.0%
<CAPTION>
CLASS C (if redeemed) Lehman Bros. Agg. Bond Index S&P 500
<S> <C> <C> <C>
1 year 00.0% 00.0% 00.0%
5 years 00.0% 00.0% 00.0%
10 years 00.0% 00.0% 00.0%
</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 (4) none none none
Annual fund operating expenses are deducted from the Fund's income or
assets before it pays dividends and before its total return is
calculated. We will not charge you separately for these expenses.
Management fees 00.0% 00.0% 00.0%
Distribution and service (12b-1) fees (5) 00.0% 00.0% 00.0%
Other expenses 00.0% 00.0% 00.0%
Total operating expenses 00.0% 00.0% 00.0%
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. 6 This is an example only, and does not represent future
expenses, which may be greater or less than those shown here.
CLASS (7) A B B (if redeemed) C C (if redeemed)
1 year 00.0% 00.0% 00.0% 00.0% 00.0%
3 years 00.0% 00.0% 00.0% 00.0% 00.0%
5 years 00.0% 00.0% 00.0% 00.0% 00.0%
10 years 00.0% 00.0% 00.0% 00.0% 00.0%
1 A purchase of Class A shares at $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
of 2% will be imposed on certain redemptions within the first year of
purchase and 1% within the second year of purchase. 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%. 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. Your Class B shares will automatically
convert to Class A shares after approximately eight years.
3 Class C shares redeemed within one year of purchase are subject to a
1% contingent deferred sales charge.
4 First Union Bank, N.A., the bank through which we wire money,
currently charges $7.50 per redemption for redemptions payable by
wire.
5 The Fund has adopted a plan under rule 12b-1 that allows the Fund 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 charges. The
Board of Directors adopted a formula for calculating 12b-1 plan
expenses that went into effect on June 1, 1992. Under this formula,
12b-1 plan expenses will not be more than 0.30% or less than 0.10%.
Each share class is subject to a separate 12b-1 plan.
6 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.
7 The Class B example reflects the conversion of Class B shares to Class
A shares at the end of the eighth year. However, the conversion may
occur as late as three months after the eighth anniversary of
purchase, during which time the higher 12b-1 plan fees payable by
Class B shares will continue to be assessed. Information for the ninth
and tenth years reflects expenses of the Class A shares.
Profile: Devon Fund
What are the Fund's goals?
Devon Fund seeks current income and capital appreciation.
Although the Fund will strive to achieve its goal, there is no
assurance that it will.
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.
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.
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.
What are the Fund's main investment strategies? We invest primarily in
income-producing common stocks of companies. We focus on common stocks
that we believe have the potential for above-average dividend increases
over time.
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 particularly affected by changes in
stock prices, which tend to fluctuate more than bond prices. Moreover,
an investment in the Fund is not a deposit of the bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency. For a more complete discussion of risk,
please turn to page 9.
How has the Fund performed?
This bar chart and table can help you evaluate the risks and rewards of
investing in the Fund. We show how returns for the Fund's Class A shares
have varied over the four calendar years since its inception, as well as
the average annual returns of these shares for the past year and since
inception--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 buying, selling, and holding the securities. The
Fund's past performance is not necessarily an indication of how it will
perform in the future.
Year-by-year total return (Class A)
(GRAPHIC OMITTED: BARCHART SHOWING YEAR BY YEAR TOTAL RETURN (CLASS A)
FPO]
Devon Fund S&P 500
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
The maximum Class A sales charge of 5.75%, assessed when you purchase
shares, is not reflected in these total returns. If this fee were
included, the returns would be less than those shown.
The average annual returns shown below do include the sales charge.
As of September 30, 1998, the Fund had a year-to-date return of XX%.
During the four years illustrated in this bar chart, the Fund's highest
return in any one quarter was XX% and its lowest return in any one
quarter was XX%.
Average annual return as of 12/31/97
<TABLE>
<CAPTION>
CLASS A B B (if redeemed) C C (if redeemed) S&P 500
<S> <C> <C> <C> <C> <C> <C>
1 year 00.0% 00.0% 00.0% 00.0% 00.0% 00.0%
Since
inception
(12/29/93) 00.0% 00.0% 00.0% 00.0% 00.0% 00.0%
</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) 4% (2) 1% (3)
Maximum sales charge (load) imposed on
reinvested dividends none none none
Redemption fees (4) none none none
Annual fund operating expenses are deducted from the Fund's income or
assets before it pays dividends and before its total return is
calculated. We will not charge you separately for these expenses.
Management fees 00.0% 00.0% 00.0%
Distribution and service (12b-1) fees (5) 00.0% (6) 00.0% 00.0%
Other expense 00.0% 00.0% 00.0%
Total operating expenses (6) 00.0% 00.0% 00.0%
This example is intended to help you compare the cost of investing in
the Fund to the cost of investing in other mutual funds with similar
investment objectives. We show the cumulative amount of fund expenses on
a hypothetical investment of $10,000 with an annual 5% return over the
time shown. (7) This is an example only, and does not represent future
expenses, which may be greater or less than those shown here.
CLASS (8) A B B (if redeemed) C C (if redeemed)
1 year 00.0% 00.0% 00.0% 00.0% 00.0%
3 years 00.0% 00.0% 00.0% 00.0% 00.0%
5 years 00.0% 00.0% 00.0% 00.0% 00.0%
10 years 00.0% 00.0% 00.0% 00.0% 00.0%
1 A purchase of Class A shares at $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
of 2% will be imposed on certain redemptions within the first year of
purchase and 1% within the second year of purchase. 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%. 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. Your Class B shares will automatically
convert to Class A shares after approximately eight years.
3 Class C shares redeemed within one year of purchase are subject to a
1% contingent deferred sales charge.
4 First Union, N.A., the bank through which we wire money, currently
charges $7.50 per redemption for redemptions payable by wire.
5 The Fund has adopted a plan under rule 12b-1 that allows the Fund 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 charges. Each
share class is subject to a separate 12b-1 fee plan.
6 The investment manager has agreed to waive fees and reimburse expenses
of 1.00% through _____________ in order to prevent total operating
expenses (excluding any taxes, interest, brokerage fees, extraordinary
expenses and 12b-1 fees) from exceeding 1.00% of average daily net
assets.
7 The Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. Also, this example assumes that
the Fund's total operating expenses remain unchanged in each of the
periods in this example.
8 The Class B example reflects the conversion of Class B shares to Class
A shares at the end of the eighth year. However, the conversion may
occur as late as three months after the eighth anniversary of
purchase, during which time the higher 12b-1 plan fees payable by
Class B shares will continue to be assessed. Information for the ninth
and tenth years reflects expenses of the Class A shares.
How we manage the Funds
Our investment strategies
We research individual companies and analyze economic and market
conditions, seeking to identify the securities or market sectors that we
think are the best investments for a particular Fund. Following are
descriptions of how the portfolio managers pursue 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.
Delaware Fund
Delaware Fund is a balanced fund--a type of total return fund that
invests in both stocks and bonds to pursue a three-pronged investment
objective: capital appreciation, current income and preservation of
principal. We blend several investment strategies to manage this Fund.
We seek capital appreciation by investing primarily in the common stocks
of established companies that we believe have long-term capital growth
potential. We focus on dividend-paying, undervalued stocks.
To seek current income and help preserve capital, we generally invest at
least 25% of the Fund in various types of fixed-income securities,
including U.S. government and government agency securities and corporate
bonds. We generally invest in bonds that have bond ratings in the top
four grades by a nationally recognized statistical rating organization
(NRSRO) at the time we buy them. We buy unrated bonds only if we
determine them to be equivalent to one of the top four grades. Each bond
in the portfolio will have a maturity between five and 30 years, and the
average maturity of the portfolio will typically be between five and ten
years.
We conduct ongoing analysis of the different markets to determine the
appropriate mix of stocks and bonds for the current economic and
investment environment.
Devon Fund
Devon Fund is also a total return fund, but it invests the majority of
its assets in stocks. This Fund has a dual objective of capital
appreciation and current income, but since it invests only in
stocks its shareholders are comfortable accepting somewhat greater
fluctuation of principal than with Delaware Fund.
For Devon Fund, we invest primarily in common stocks that we believe
have the potential for above-average dividend increases over time.
Generally, at least 65% of the Fund's assets will be in dividend-paying
stocks.
In selecting stocks for both Devon Fund and Delaware Fund, we consider
factors such as how much the stock's dividend has grown in the past, the
frequency of the stock's prior dividend increases, the company's
potential for strong positive cash flow, and the price/earnings ratio of
the stock compared to other stocks in the market. We avoid stocks that
we think are overvalued. We seek stocks that we believe have the
potential for above-average dividend growth.
How to use
this glossary
Words found in the glossary are printed in boldface 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
- ------------------------------------------------------------------------
Similar to depreciated value, amortized cost reflects the
value of a fixed-income security adjusted to account for
any premium that was paid above the par value when the security was
purchased. The purpose of amortization is to reflect resale or
redemption value.
Appreciation
- ------------------------------------------------------------------------
An increase in the value of an investment.
The securities we typically invest in
Stocks offer investors the potential for capital appreciation, and may
pay dividends as well. Fixed-income securities offer the potential for
greater income payments than stocks, and also may provide capital
appreciation.
Securities
Common stocks: Securities that represent shares of ownership in a
corporation. Stockholders participate in the corporation's profits and
losses, proportionate to the number of shares they own.
Convertible securities: Usually preferred stocks or corporate bonds that
can be exchanged for a set number of shares of common stock at a
predetermined price. These securities offer higher appreciation
potential than nonconvertible bonds and greater income potential than
nonconvertible preferred stocks.
Mortgage-backed securities: Fixed-income securities that represent pools
of mortgages, with investors receiving principal and interest payments
as the underlying mortgage loans are paid back. Many are issued and
guaranteed against default by the U.S. government or its agencies or
instrumentalities, such as the Federal Home Loan Mortgage Corporation,
the Fannie Mae and the Government National Mortgage Association. Others
are issued by private financial institutions, with some fully
collateralized by certificates issued or guaranteed by the government or
its agencies or instrumentalities.
Collateralized mortgage obligations (CMOs): Privately issued mortgage-
backed bonds whose underlying value is the mortgages that are collected
into different pools according to their maturity.
Real estate mortgage investment conduits (REMICs): Privately issued
mortgage-backed bonds whose underlying value is a fixed pool of
mortgages secured by an interest in real property. Like CMOs, REMICs
offer different pools.
How we use them
Delaware Fund
Common Stocks. Generally, we invest up to 75% of net assets in
dividend-paying stocks.
Delaware Fund/
Devon Fund
Convertible Securities. Each Fund may invest in convertible
securities; however, we will not invest more than 5% of net assets
in convertible securities that are rated below investment grade by
an NRSRO in securities that are unrated but deemed equivalent to
non-investment grade.
Mortgage-backed securities. There is no limit on government-related
mortgage-backed securities or on fully collateralized privately
issued mortgage-backed securities.
Collateralized mortgage obligations (CMOs). We may invest up to 20%
of net assets in mortgage-backed securities issued by private
companies whether or not the securities are 100% collateralized.
However, these securities must be rated at the time of purchase in
one of the four highest categories by an NRSRO. The privately issued
securities we invest in are either CMOs or REMICs (see below).
Real estate mortgage investment conduits (REMICs). See mortgage-backed
securities above.
Devon Fund
Common stocks. Generally, 90% to 100% of the Fund's assets will be
invested in common stocks. Under normal market conditions we will
invest at least 65% of net assets in dividend-paying stocks.
Mortgage-backed securities. There is no limit on government-related
mortgage-backed securities; however, the Fund typically holds none or
only a small percentage of its net assets in fixed income securities.
Collateralized mortgage obligations (CMOs). We may purchase privately
issued obligations only if they are 100% collateralized and rated in
one of the four highest categories by an NRSRO. The privately issued
securities we would invest in would be either CMOs or REMICs (see below).
Real estate mortgage investment conduits (REMICs). See mortgage-backed
securities above.
Average maturity
- ------------------------------------------------------------------------
An average of when the individual bonds and other debt securities held
in a portfolio will mature.
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 prior to
maturity changes and is inversely related to current interest rates.
When interest rates rise, prices fall, and when interest rates fall,
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.
How we manage the Funds (continued)
Securities we typically invest in (continued)
Securities
Asset-backed securities: Bonds or notes backed by accounts receivables
including home equity, automobile or credit loans.
Corporate bonds: Debt obligations issued by a corporation.
Repurchase agreements: An agreement between a buyer and seller of
securities in which the seller agrees to buy the securities back within
a specified time at the same price the buyer paid for them, plus an
amount equal to an agreed upon interest rate. Repurchase agreements are
often viewed as equivalent to cash.
American Depositary Receipts (ADRs): Certificates issued by a U.S. bank
that represent a stated number of shares of a foreign corporation that
the bank holds in its vault. An ADR entitles the holder to all dividends
and capital gains earned by the underlying foreign shares. An ADR
is bought and sold the same as U.S. securities.
Restricted securities: Privately placed securities whose resale is
restricted under securities law.
Illiquid Securities: Securities that do not have a ready market, and
cannot be easily sold, if at all, at approximately the price that the
Fund has valued them.
How we use them
Delaware Fund
Asset-backed securities. We invest only in asset-backed securities
rated in one of the four highest categories by an NRSRO.
Corporate bonds. We focus on bonds rated in one of the four highest
categories by an NRSRO (or deemed equivalent), with maturities between
five and 30 years.
Delaware Fund/
Devon Fund
Repurchase agreements. Typically, we use repurchase agreements as a
short-term investment for a Fund's cash position. In order to enter
into these repurchase agreements, the Fund must have collateral of at
least 102% of the repurchase price. (Neither Fund may have more than
10% of its total assets in repurchase agreements with maturities of over
seven days.)
Delaware Fund/
Devon Fund
American Depositary Receipts. We may invest without limitation in ADRs.
Delaware Fund/
Devon Fund
Restricted Securities. We may invest without limitation in privately
placed securities that are eligible for resale among certain institutional
buyers. Other restricted securities must be limited to 5% of total fund
assets.
Delaware Fund/
Devon Fund
Illiquid Securities. We may invest up to 10% of total assets in illiquid
securities.
Devon Fund
Devon Fund doesn't typically invest in asset-backed securities.
When we do, we are allowed to invest only in asset-backed
securities rated in one of the four highest categories by an NRSRO.
Although Devon is allowed to invest in corporate bonds, we do not
typically invest in them.
The Funds may also invest in other securities including real estate
investment trusts, rights and warrants to purchase common stock, futures
contracts, options, U.S. Treasury securities, Yankee and Euro bonds.
Please see the Statement of Additional Information for additional
descriptions and risk information on these securities as well as those
listed in the table above.
Lending securities Each Fund may lend up to 25% of its assets to
qualified 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.
C-C
Capital
- ------------------------------------------------------------------------
The amount of money you invest.
Capital gains distributions
- ------------------------------------------------------------------------
Payments to mutual fund shareholders of profits (realized gains) from
the sale of a fund's portfolio securities. Usually paid once a year; may
be either short-term gains or long-term gains.
Commission
- ------------------------------------------------------------------------
The fee an investor pays to a financial adviser for investment advice
and help in buying or selling mutual funds, stocks, bonds or other
securities.
Compounding
- ------------------------------------------------------------------------
Earnings on an investment's previous earnings.
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 Delaware Fund or Devon Fund. Please see the Statement of
Additional Information for further discussion of these risks and the
other risks not discussed here.
Risks
Market risk is the risk that all or a majority of the securities in a
certain market--like the stock or bond market--will decline in value
because of factors such as economic conditions, future expectations or
investor confidence.
Industry and security risk is the risk that the value of securities in a
particular industry or the value of an individual stock or bond will
decline because of changing expectations for the performance of that
industry or for the individual company issuing the stock or bond.
Interest rate risk is the risk that securities, particularly bonds with
longer maturities, will decrease in value if interest rates rise.
Foreign risk is the risk that foreign securities may be adversely
affected by political instability, changes in currency exchange rates,
foreign economic conditions or inadequate regulatory and accounting
standards.
Liquidity risk is the possibility that securities cannot be readily
sold, or can only be sold at a price significantly lower than their
broadly recognized value.
How we strive to manage them
Delaware Fund/Devon Fund
Market risk. We maintain a long-term investment approach and focus on
stocks we believe can appreciate over an extended time frame regardless
of interim market fluctuations. We do not try to predict overall stock
market movements and do not trade for short-term purposes.
Market risk. We may hold a substantial part of each Fund's assets in
cash or cash equivalents as a temporary defensive strategy.
Delaware Fund
Market risk. We diversify the Fund's assets among two major categories
of investments--stocks and bonds--which tend to increase and decline
in value in different economic or investment conditions.
Delaware Fund/Devon Fund
Industry and security risk. We limit the amount of each Fund's assets
invested in any one industry and in any individual security. We also
follow a rigorous selection process before choosing securities for the
portfolio.
Delaware Fund
Interest rate risk. Within Delaware Fund's fixed-income component, we do
not try to increase return by predicting and aggressively capitalizing on
interest rate moves. Instead, we aim to keep the interest rate risk
similar to the Lehman Brothers Aggregate Bond Index.
Delaware Fund/Devon Fund
Foreign risk. We typically invest only a small portion of each Fund's
portfolio in foreign securities. When we do purchase foreign securities,
they are often denominated in U.S. dollars. We also tend to avoid
markets where we believe accounting principles or the regulatory
structure are underdeveloped.
Delaware Fund/Devon Fund
Liquidity risk. We limit exposure to illiquid securities.
Devon Fund
Interest rate risk. Devon does not generally hold a significant portion of
assets in fixed-income securities, so interest rate risk is not a major
risk with this fund.
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.
Corporate bond
- ------------------------------------------------------------------------
A debt security issued by a corporation. See "bond."
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
Delaware Devon
As a percentage of average daily net assets 0.52% 0.60%
Portfolio
Managers
George H. Burwell and Gary A. Reed have primary responsibility for
making day-to-day investment decisions for Delaware Fund. Mr. Burwell
has responsibility for making the day-to-day investment decisions for
Devon Fund. When making decisions for the Funds, Mr. Burwell and Mr.
Reed regularly consult with Andrea Giles and Christopher Driver.
George H. Burwell, CFA, holds a BA from the University of Virginia and
is a Chartered Financial Analyst (CFA). He has been Senior Portfolio
Manager for equities since 1992 when he joined Delaware Investments.
Previously he worked for Midlantic Bank in New Jersey where he managed
an equity mutual fund and three commingled funds.
Gary A. Reed holds an AB in Economics from the University of Chicago and
an MA in Economics from Columbia University. He has been Senior
Portfolio Manager for fixed income since 1989. Before joining Delaware
Investments in 1989, Mr. Reed was Vice President and Manager of the
fixed income department of the Irving Trust Company in New York.
Andrea Giles, Research Analyst for the Fund, holds a BSAD from the
Massachusetts Institute of Technology and an MBA in Finance from
Columbia University. Prior to joining Delaware Investments in 1996, she
was an account officer in the Leveraged Capital Group with Citibank.
Christopher Driver, Research Analyst for the Fund, holds a BS in Finance
from the University of Delaware. Prior to joining Delaware Investments
in 1998, he was a Research Analyst in the Equity Value group at
Blackrock, Inc. Prior to Blackrock, he was a partner at Cashman Farrell
& Associates. Mr. Driver is a CFA charterholder.
C-E
Cost basis
- ------------------------------------------------------------------------
The original purchase price of an investment, used in determining
capital gains and losses.
Currency exchange rates
- ------------------------------------------------------------------------
The price at which one country's currency can be converted into
another's. This exchange rate varies almost daily according to a wide
range of political, economic and other factors.
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'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
The Funds
Investment manager
Delaware Management Company
One Commerce Square
Philadelphia, PA 19103
Custodian
The Chase Manhattan Bank
4 Chase Metrotech Center
Brooklyn, NY 11245
Portfolio managers
(see page 10 for details)
Distributor
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
Service agent
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 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 are expected to exercise sound business
judgement, 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.
Custodian Mutual funds are legally required to protect their portfolio
securities by placing them with a custodian--typically a qualified bank
custodian who segregates fund securities from other bank assets.
Investment manager An investment manager is a company responsible for
selecting portfolio investments consistent with objectives 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 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.
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 provide customer service to shareholders, as well.
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.
Financial advisers Financial advisers provide investment 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.
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. They
are paid from the fund's assets before any earnings are distributed
to shareholders.
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 shareholder 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%.
[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
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
returned to you at a prespecified maturity date. These securities, which
include government, corporate or municipal bonds, as well as money
market securities, typically pay a fixed rate of return.
Government securities
- ------------------------------------------------------------------------
Securities issued by U.S. Government or its agencies. They include
Treasuries as well as agency-backed securities such as FANNIE MAEs.
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.
<TABLE>
<CAPTION>
Class A Sales Charges
Sales charge as %
Sales charge as % of amount invested Dealer's commission
Amount of purchase of offering price Delaware Fund Devon Fund as % of offering price
<S> <C> <C> <C> <C>
Less than $50,000 5.75% X.XX% X.XX% 5.00%
$50,000 but 4.75% X.XX% X.XX% 4.00%
under $100,000
$100,000 but
under $250,000 3.75% X.XX% X.XX% 3.00%
$250,000 but
under $500,000 2.50% X.XX% X.XX% 2.00%
$500,000 but
under $1 million 2.00% X.XX% X.XX% 1.60%
</TABLE>
As shown below, there is no front-end sales charge when you purchase $1
million or more of Class A shares. However, if your financial adviser is
paid a commission on your purchase, you may have to pay a limited
contingent deferred sales charge of 2% if you redeem these shares within
the first year and 1% if you redeem them within the second year.
<TABLE>
<CAPTION>
Sales charge as
Sales charge as % of amount invested Dealer's commission as %
Amount of purchase of offering price Delaware Fund Devon Fund of offering price
<S> <C> <C> <C> <C>
Amount up to $5 million (1) 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>
1 [TBD if footnote is needed here]
Inflation
- ------------------------------------------------------------------------
The increase in the cost of goods and services over time. U.S. inflation
is measured by the Consumer Price Index (CPI).
Investment goal
- ------------------------------------------------------------------------
The objective, such as long-term capital growth or high current income,
that a mutual fund pursues.
Lehman Brothers Aggregate Bond Index
- ------------------------------------------------------------------------
An index that measures
the total returns of about 6,500 U.S. corporate and government bonds.
Management fee
- ------------------------------------------------------------------------
The amount paid by a mutual fund to the investment adviser for
management services, expressed as a percentage of the fund's
net assets.
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>
Share class
Program How it works A B C
<S> <C> <C> <C> <C>
Letter of Intent
Through a Letter of X Although the Letter of Intent and Rights of
Intent you agree to Accumulation do not apply to the purchase of Class
invest a certain amount B and C shares, you can combine your purchase of
in Delaware Investment Class A shares with your purchase of B and C shares
Funds (except money market to fulfill your Letter of Intent or qualify for
funds with no sales charge) Rights of Accumulation.
over a 13-month period to
qualify for reduced
front-end sales charges.
Rights of Accumulation
You can combine your holdings X
of all funds in the Delaware
Investments family (except
money market funds with no
sales charge) as well as the
holdings of your spouse and
children under 21 to qualify
for reduced front-end sales
charges.
Reinvestment of redeemed shares
Up to 12 months after you X
redeem shares, you can reinvest
the proceeds without paying a
front-end sales charge.
SIMPLE IRA, SEP These investment plans may X
IRA, SARSEP, qualify for reduced sales charges
Prototype Profit by combining the purchases
Sharing, Pension, of all members of the group.
SIMPLE 401(k), 403 Members of these groups may also
(b)(7), and 457 qualify to purchase shares
Retirement Plans without a front-end sales
charge and a waiver of any
contingent deferred sales
charges.
</TABLE>
M-P
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.
NASD (National Association of Securities Dealers)
- ------------------------------------------------------------------------
A self-regulating organization, consisting of brokerage firms (including
distributors of mutual funds), that is responsible for overseeing the
actions of its members.
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 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. 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 _______. 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 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 Class A
shares for Class B or Class C 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.
NAV (Net asset value)
- ------------------------------------------------------------------------
The daily dollar value of one mutual fund share. Equal
to a fund's net assets divided by the number of shares outstanding.
NRSRO
(Nationally recognized statistical rating organization)
- ------------------------------------------------------------------------
A company that assesses the quality and potential performance 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).
Preferred stock
- ------------------------------------------------------------------------
Preferred stock has preference over common stock in the payment of
dividends and liquidation of assets. Preferred stocks also pay dividends
at a fixed rate.
About your account (continued)
How to buy shares (continued)
Once you have completed an application, you can open an account with an
initial investment of $1,000--and make additional investments at any
time for as little as $100. If you are buying shares in an IRA, Roth IRA
or Education 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 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 receives 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. 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 the 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 debt securities on the basis of valuations
provided to us by an independent pricing service that uses methods
approved by the board of directors. Any investments 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 of $5 has a P/E of 20.
Principal
- ------------------------------------------------------------------------
Amount of money you invest. 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.
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 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. 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 anyone other than the account holder(s) of record.
[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 department at 800-523-1918.
Redeem
- ------------------------------------------------------------------------
To cash in your shares by selling them back to the mutual fund.
Risk
- ------------------------------------------------------------------------
Generally defined as variability of value; also credit risk,
inflation risk, currency and interest rate risk. Different investments
involve different types and degrees of risk.
S&P 500 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 of fund shares sold through financial advisers.
May vary with the amount invested. Typically used to compensate advisers
for advice and service provided.
About your account continued
How to redeem shares (cont.)
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 honor your request to sell these shares.
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, and 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 rather than
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) 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-S
SEC (Securities and Exchange Commission)
- ------------------------------------------------------------------------
Federal agency established by Congress to administer the laws governing
the securities industry, including mutual fund companies.
Share classes
- ------------------------------------------------------------------------
Different classifications of shares; mutual fund share
classes offer a variety of sales charge choices.
Signature guarantee
- ------------------------------------------------------------------------
Certification by a bank, brokerage firm or other financial institution
that a customer's signature is valid.
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 or direct transfers from your bank account.
Wealth Builder Option
With the Wealth Builder Option you can arrange automatic monthly
exchanges from your shares in one or more Delaware Investments funds
into any other Delaware Investments fund. Wealth Builder Exchanges are
subject to the same rules as regular exchanges 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.
Standard deviation
- ------------------------------------------------------------------------
A measure of an investment's volatility; for mutual funds, measures how
much a fund's total return varies from its historical average.
Statement of Additional Information (SAI)
- ------------------------------------------------------------------------
The document serving as "Part B" of a fund's prospectus
that provides more detailed information about the fund's organization,
investments, policies and risks.
Stock
- ------------------------------------------------------------------------
An investment that represents a share of ownership (equity) in a
corporation. Stocks are often referred to as "equities."
About your account (continued)
Special services
(continued)
- ------------------------------------------------------------------------
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 on the shares of the
fund from which you make your 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. 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 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. 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.
MoneyLineSM On Demand Service
Through our MoneylineSM On Demand Service, you or your financial adviser
may transfer money from your Fund account to your predesignated bank
account by telephone request. This service is not available for
retirement plans.
MoneyLineSM Direct Deposit Service
Through our MoneylineSM 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.
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.
T-V
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.
Treasury bills
- ------------------------------------------------------------------------
Securities issued by the U.S. Treasury with maturities of
one year or less.
Treasury bonds
- ------------------------------------------------------------------------
Securities issued by the U.S. Treasury with maturities of
10 years or longer.
Treasury notes
- ------------------------------------------------------------------------
Securities issued by the U.S. Treasury with maturities of one to 10
years.
Dividends, distributions and taxes
For each 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.
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.
Uniform Gift to Minors Act and Uniform Transfers to Minors Act
- ------------------------------------------------------------------------
Federal and state laws that provide a simple way to transfer property to
a minor with special tax advantages.
Volatility
- ------------------------------------------------------------------------
The tendency of an investment to go up or down in value by different
magnitudes. There are "low volatility" and "high volatility"
investments.
<TABLE>
<CAPTION>
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.
Class A
- ----------------------------------------------------------------------------------------
Year ended 10/31
Delaware Fund 1998 (1) 1997 (1) 1996 (1) 1995 (1) 1994 (1)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income from Investment Operations
Net investment income ($) 0.00 0.00 0.00 0.00 0.00
Net realized & unrealized
gains (losses) on securities ($) 0.00 0.00 0.00 0.00 0.00
Total from investment operations ($) 0.00 0.00 0.00 0.00 0.00
Less Distributions
Dividends from net investment
income ($) 0.00 0.00 0.00 0.00 0.00
Distributions from capital gains ($) 0.00 0.00 0.00 0.00 0.00
Total distributions ($) 0.00 0.00 0.00 0.00 0.00
Net asset value, end of period ($) 0.00 0.00 0.00 0.00 0.00
Total Return (%) 0.00 (2) 0.00 (2) 0.00 (2) 0.00 (2) 0.00 (2)
Ratios/Supplemental Data:
Net asset value, end of period
(000's omitted) 0.00 0.00 0.00 0.00 0.00
Ratio of expenses to average daily
net assets 0.00 0.00 0.00 0.00 0.00
Ratio of net investment income to
average daily net assets 0.00 0.00 0.00 0.00 0.00
Portfolio turnover rate (%) 0.00 0.00 0.00 0.00 0.00
Volatility, as indicated by
year-by-year total return 0.00% -0.00% 0.00% -0.00% 0.00%
Class B
- ---------------------------------------------------------------------------------------
Year ended 10/31 9/6 (3)-10/31
Delaware Fund 1998 1997 1996 1995 1994
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income from Investment Operations
Net investment income ($) 0.00 0.00 0.00 0.00
Net realized & unrealized gains
(losses) on securities ($) 0.00 0.00 0.00 0.00
Total from investment operations ($) 0.00 0.00 0.00 0.00
Less Distributions
Dividends from net investment
income ($) 0.00 0.00 0.00 0.00
Distributions from capital gains ($) 0.00 0.00 0.00 0.00
Total distributions ($) 0.00 0.00 0.00 0.00
Net asset value, end of period ($) 0.00 0.00 0.00 0.00
Total Return (%) 0.00 0.00 0.00 0.00
Ratios/Supplemental Data:
Net asset value, end of period
(000's omitted) 0.00 0.00 0.00 0.00
Ratio of expenses to average
daily net assets 0.00 0.00 0.00 0.00
Ratio of net investment income
to average daily net assets 0.00 0.00 0.00 0.00
Portfolio turnover rate (%) 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
Volatility, as indicated by
year-by-year total return 0.00% 0.00% 0.00% -0.00%
Class C
- ---------------------------------------------------------------------------------------
Year ended 11/29/95 (3)-
10/31 10/31
Delaware Fund 1998 1997 1996
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income from Investment Operations
Net investment income ($) 0.00 0.00
Net realized & unrealized gains
(losses) on securities ($) 0.00 0.00
Total from investment operations ($) 0.00 0.00
Less Distributions
Dividends from net investment
income ($) 0.00 0.00
Distributions from capital gains ($) 0.00 0.00
Total distributions ($) 0.00 0.00
Net asset value, end of period ($) 0.00 0.00
Total Return (%) 0.00 0.00
Ratios/Supplemental Data:
Net asset value, end of period
(000's omitted) 0.00 0.00
Ratio of expenses to average daily
net assets 0.00 0.00
Ratio of net investment income to
average daily net assets 0.00 0.00
Portfolio turnover rate (%) 0.00 0.00
0.00 0.00
Volatility, as indicated by
year-by-year total return -0.00% 0.00%
1 Reflects 12b-1 distribution expenses beginning June 1, 1992.
2 Does not reflect any maximum sales charge that is or was in effect nor
the 1% limited contingent deferred sales charge that would apply to
certain redemptions made within 2 years of purchase. See page ____ .
3 Date of initial public offering; ratios have been annualized but total
return has not been annualized. Total return for such a short period may
not be representative of longer term results.
4 Does not include any contingent deferred sales charge which varies
from 1% to 5%, depending upon the holding period for Delaware Fund B
Class, and 1% for Delaware Fund C Class for 12 months from the date of
purchase.
</TABLE>
How to read the
financial highlights
Net investment income
- ------------------------------------------------------------------------
Net investment income includes dividend and interest income earned from
the Fund's securities; is expenses have been deducted.
Net gains (losses) on investments (both realized and unrealized)
- ------------------------------------------------------------------------
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 Distributions-
Distributions from realized gains."
Realized gains
- ------------------------------------------------------------------------
Profits realized from the sale of securities.
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 percentage increase or decrease in the value of a
share of a fund during specific periods, in this case, annual periods.
In calculating this figure for the financial highlights table, we
include 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)
<TABLE>
<CAPTION>
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.
Class A
- ----------------------------------------------------------------------------------
Year ended 10/31 Period 12/29/93 (1) through 10/31
Devon Fund 1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Income From Investment
Operations
Net investment income ($) 0.00 0.00 0.00 0.00 2
Net realized & unrealized
gains (losses) on
securities ($) 0.00 0.00 0.00 0.00
Total from investment
operations ($) 0.00 0.00 0.00 0.00
Less Distributions
Dividends from net
investment income ($) 0.00 0.00 0.00 0.00
Distributions from capital
gains ($) 0.00 0.00 0.00 0.00
Total distributions ($) 0.00 0.00 0.00 0.00
Net asset value, end of
period ($) 0.00 0.00 0.00 0.00
Total Return (%) 0.00 (3) 0.00 (3) 0.00 (3) 0.00 (2)
Ratios/Supplemental Data:
Net asset value, end of
period (000's omitted) 0.00 0.00 0.00 0.00
Ratio of expenses to average
daily net assets 0.00 0.00 0.00 0.00
Ratio of net investment income
to average daily net assets 0.00 0.00 0.00 0.00
Portfolio turnover rate (%) 0.00 0.00 0.00 0.00
Average commission rate paid (4) ($) 0.00 0.00 0.00 0.00
Volatility, as indicated by
year-by-year total return 0.00% 0.00% 0.00% -0.00%
Class B
- ----------------------------------------------------------------------------------
Year ended 10/31 9/6 (4)-10/31
Devon Fund 1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Income From Investment
Operations
Net investment income ($) 0.00 0.00 0.00 0.00
Net realized & unrealized
gains (losses) on
securities ($) 0.00 0.00 0.00 0.00
Total from investment
operations ($) 0.00 0.00 0.00 0.00
Less Distributions
Dividends from net
investment income ($) 0.00 0.00 0.00 0.00
Distributions from capital
gains ($) 0.00 0.00 0.00 0.00
Total distributions ($) 0.00 0.00 0.00 0.00
Net asset value, end of
period ($) 0.00 0.00 0.00 0.00
Total Return (%) 0.00 0.00 (7) 0.00 (7) 0.00 (7)
Ratios/Supplemental Data:
Net asset value, end of
period (000's omitted) 0.00 0.00 0.00 0.00
Ratio of expenses to average
daily net assets 0.00 0.00 0.00 0.00
Ratio of net investment income
to average daily net assets 0.00 0.00 0.00 0.00
Portfolio turnover rate (%) 0.00 0.00 0.00 0.00
Average commission rate paid (4)($) 0.00 0.00 0.00 0.00
Volatility, as indicated by
year-by-year total return 0.00% 0.00% 0.00% -0.00%
Class C
- ----------------------------------------------------------------
Year ended 10/31 11/29/95 (4)-
10/31
Devon Fund 1998 1997 1996
- ----------------------------------------------------------------
<S> <C> <C>
Income From Investment
Operations
Net investment income ($) 0.00 0.00
Net realized & unrealized
gains (losses) on
securities ($) 0.00 0.00
Total from investment
operations ($) 0.00 0.00
Less Distributions
Dividends from net
investment income ($) 0.00 0.00
Distributions from capital
gains ($) 0.00 0.00
Total distributions ($) 0.00 0.00
Net asset value, end of
period ($) 0.00 0.00
Total Return (%) 0.00 (7) 0.00 (7)
Ratios/Supplemental Data:
Net asset value, end of
period (000's omitted) 0.00 0.00
Ratio of expenses to average
daily net assets 0.00 0.00
Ratio of net investment income
to average daily net assets 0.00 0.00
Portfolio turnover rate (%) 0.00 0.00
Average commission rate paid (4) ($) 0.00 0.00
Volatility, as indicated by
year-by-year total return -0.00% 0.00%
1 Date of initial sale of Devon Fund A Class; ratios and total return
have been annualized. Total return for such a short period may not be
representative of longer term results.
2 1995 per share information was based on the average shares outstanding
method.
3 Total return does not include any maximum sales charge that is or was
in effect nor the limited contingent deferred sales charge that would
apply to certain redemptions within 2 years of purchase. See page __.
Total return reflects expense limitation referenced under Summary
of Expenses.
4 Computed by dividing the amount of commission paid by the total number
of shares purchased and sold during the period of which there
was a commission charged.
5 Date of initial sale of Devon Fund B Class; ratios have been
annualized but total return has not. Total return for such a short
period may not be representative of longer term results.
6 Date of initial sale of Devon Fund C Class; ratios have been
annualized but total return has not.
7 Total return does not include any contingent deferred sales charge,
which varies from 1% to 5%, depending upon the holding period for
Devon Fund B Class, and 1% for Devon Fund C Class for 12 months from the
date of purchase. Total return reflects the expense limitation
referenced under Summary of Expenses.
How to read the
financial highlights
(begins on page 22)
Ratio of expenses to average daily net assets
- ------------------------------------------------------------------------
The expense ratio is the percentage of total investment
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 daily 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.
Delaware Fund
Devon Fund
Additional information about the Funds' investments is available
in the Funds' annual and semi-annual reports to shareholders. In the
Funds' annual report, you will find a discussion of the market
conditions and investment strategies that significantly affected the
Funds' performance during their last fiscal year. 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, 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.
For fund information; literature; price, yield and performance figures.
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)
For convenient access to account information or current performance
information on all Delaware Investment Funds seven days a week, 24 hours
a day, use this Touch-Tone(registered trademark) service.
[Registrant's Investment Company Act file number]
[GRAPHIC OMITTED: LOGO OF DELAWARE INVESTMENTS
----------------------------
Philadelphia * London]
P-002 [--] PP 12/98
[GRAPHIC OMITTED: LOGO OF DELAWARE INVESTMENTS
----------------------------
Philadelphia * London]
DELAWARE FUND
DEVON FUND
Institutional Class
Prospectus December 30, 1998
[GRAPHIC OMITTED: ILLUSTRATION OF A MAN AND A WOMAN HOLDING A PORTRAIT
WHICH IS BROKEN IN HALF]
Total Return Funds
The Securities and Exchange Commission has not approved or disapproved
these securities or passed upon the accuracy of this prospectus, and any
representation to the contrary is a criminal offense.
Table of Contents
Fund profiles page 2
Delaware Fund 2
Devon 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
Who's Who? 10
About your account page 12
Investing in the Funds 12
Institutional class shares 12
How to buy shares 15
How to redeem shares 17
Dividends, distributions and taxes 21
Retirement plans 21
Financial highlights page 22
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 throughout the prospectus.
Investing for total return...
Investors with long-term goals often choose mutual funds designed to
provide total return. These funds 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.
with Delaware Investments
Your personal financial adviser, working with Delaware Investments, can
help you define, evaluate and set your personal investment objectives.
Your adviser can also explain the role total return funds like Delaware
Fund and Devon Fund can play in a long-term investment program designed
to meet your goals.
The Delaware Investments family includes a full range of mutual funds--
including total return funds--designed to fit your particular investment
needs. With nearly 70 years of investment management experience, we
follow time-tested strategies that emphasize long-term performance and
consistent application of investment disciplines. Today, as part of the
Lincoln Financial Group, a $105 billion financial services complex,
Delaware Investments has access to a variety of experienced and talented
investment managers. We are dedicated to working closely with financial
advisers to bring investors the highest quality investment management
and services.
[GRAPHIC OF A HOUSE]
Building Blocks of Asset Allocation
Aggressive Growth Equity Funds
Growth Equity Funds
International and Global Funds
Asset Allocation Funds
[Table Highlighted] Moderate Growth Equity Funds for...
Total Return
These stock-oriented funds provide moderate growth potential as well as
some current income, with 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: Delaware Fund
What are the Fund's goals?
Delaware Fund seeks a balance of capital appreciation, income and
preservation of capital. Although the Fund will strive to achieve
its goal, there is no assurance that it will.
Who should invest in the Fund
[bullet] Investors with long-term financial goals.
[bullet] Investors looking for stocks and bonds combined in a single
investment.
[bullet] Investors seeking modest quarterly income.
[bullet] Investors seeking a measure of capital preservation.
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.
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.
What are the Fund's main investment strategies? We invest primarily in
common stocks of established companies we believe have the potential for
long-term capital appreciation. In addition, we invest at least 25% of
the Fund's assets in various types of fixed-income securities, including
U.S. government securities and corporate bonds. This mix of stocks and
bonds makes Delaware Fund what is commonly known as a balanced fund.
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 changes in stock and bond prices. An
investment in the Fund is not a deposit of any bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. For a more complete discussion of risk, please turn
to page 9.
How has the Fund performed?
This bar chart and table can help you evaluate the potential risks and
rewards of investing in the Fund. We show how returns for the Fund's
Institutional Class shares have varied over the past ten calendar years.
Delaware Fund's Institutional Class commenced operations on November 9,
1992. Return information for the Class for the periods prior to the time
the Class commenced operations is calculated by taking the performance
of Delaware Fund A Class and eliminating all sales charges that apply to
Class A shares. However, for those peroiods, Class A 12b-1 payments were
not eliminated, and performance would have been affected if this adjustment
had been made. We also show the average annual returns of all shares for
one, five, and ten years compared to the performance of the S&P 500 Index
and the Lehman Brothers Aggregate Bond Index. You should remember that
unlike the Fund, the indexes are unmanaged and don't include the actual
costs of buying, selling, and holding securities. Neither index is a
perfect comparison to Delaware Fund since the S&P 500 does not include
fixed-income securities and the Lehman Brothers Aggregate Bond Index does
not include stocks. The Fund's past performance does not necessarily
indicate how it will perform in the future.
Delaware Fund
S&P 500
Lehman Brothers Aggregate Bond Index
[GRAPHIC OMITTED: BAR CHART SHOWING YEAR BY YEAR TOTAL RETURN
(INSTITUTIONAL CLASS) FPO]
Year-by-year total return (Institutional Class)
Lehman Brothers
Aggregate
Delaware Fund S & P 500 Bond Index
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
As of September 30, 1998, the Fund had a year-to-date return of XX%.
During the ten years illustrated in this bar chart, the Fund's highest
return in any quarter was XX% and its lowest return in any quarter was
XX%.
Average annual return as of 12/31/97
</TABLE>
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS Lehman Bros. Agg. Bond Index S&P 500
<S> <C> <C> <C>
1 year 00.0% 00.0% 00.0%
5 years 00.0% 00.0% 00.0%
10 years 00.0% 00.0% 00.0%
</TABLE>
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 income or
assets before it pays dividends and before its total return is
calculated. We will not charge you separately for these expenses.
Management fees 00.0%
Distribution and service (12b-1) fees none
Other expenses 00.0%
Total operating expenses 00.0%
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 00.0%
3 years 00.0%
5 years 00.0%
10 years 00.0%
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 for another fund.
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: Devon Fund
What are the Fund's goals?
Devon Fund seeks current income and capital appreciation.
Although the Fund will strive to achieve its goal, there is no
assurance that it will.
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.
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.
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.
What are the Fund's main investment strategies? We invest primarily in
income-producing common stocks of companies. We focus on common stocks
that we believe have the potential for above-average dividend increases
over time.
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 particularly affected by changes in
stock prices, which tend to fluctuate more than bond prices. Moreover,
an investment in the Fund is not a deposit of the bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency. For a more complete discussion of risk,
please turn to page 9.
How has the Fund performed?
This bar chart and table can help you evaluate the risks and rewards of
investing in the Fund. We show how returns for the Fund's Institutional
Class shares have varied over the four calendar years since its inception,
as well as the average annual returns of these shares for the past year
and since inception--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 buying, selling, and holding the
securities. The Fund's past performance is not necessarily an indication
of how it will perform in the future.
Devon Fund
S&P 500
Year-by-year total return (Institutional Class)
[GRAPHIC OMITTED: BARCHART SHOWING YEAR BY YEAR TOTAL RETURN
(INSTITUTIONAL CLASS) FPO]
Devon Fund S & P 500
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
As of September 30, 1998, the Fund had a year-to-date return of XX%.
During the four years illustrated in this bar chart, the Fund's highest
return in any one quarter was XX% and its lowest return in any one
quarter was XX%.
Average annual return as of 12/31/97
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS S&P 500
<S> <C> <C>
1 year 00.0% 0.00%
Since
inception
(12/29/93) 00.0% 0.00%
</TABLE>
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 Fund.
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 income or
assets before it pays dividends and before its total return is
calculated. We will not charge you separately for these expenses.
Management fees 00.0%
Distribution and service (12b-1) fees none
Other expense 00.0%
Total operating expenses (2) 00.0%
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. 3 This is an example only, and does not represent future
expenses, which may be greater or less than those shown here.
1 year 00.0%
3 years 00.0%
5 years 00.0%
10 years 00.0%
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 for another fund.
2 The investment manager has agreed to waive fees and reimburse expenses
of 1.00% through _____________ in order to prevent total operating
expenses (excluding any taxes, interest, brokerage fees and extraordinary
expenses) from exceeding 1.00% of average daily net assets.
3 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 in this example.
How we manage the Funds
Our investment strategies
We research individual companies and analyze economic and market
conditions, seeking to identify the securities or market sectors that we
think are the best investments for a particular Fund. Following are
descriptions of how the portfolio managers pursue 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.
Delaware Fund
Delaware Fund is a balanced fund--a type of total return fund that
invests in both stocks and bonds to pursue a three-pronged investment
objective: capital appreciation, current income and preservation of
principal. We blend several investment strategies to manage this Fund.
We seek capital appreciation by investing primarily in the common stocks
of established companies that we believe have long-term capital growth
potential. We focus on dividend-paying, undervalued stocks.
To seek current income and help preserve capital, we generally invest at
least 25% of the Fund in various types of fixed-income securities,
including U.S. government and government agency securities and corporate
bonds. We generally invest in bonds that have bond ratings in the top
four grades by a nationally recognized statistical rating organization
(NRSRO) at the time we buy them. We buy unrated bonds only if we
determine them to be equivalent to one of the top four grades. Each bond
in the portfolio will have a maturity between five and 30 years, and the
average maturity of the portfolio will typically be between five and ten
years.
We conduct ongoing analysis of the different markets to determine the
appropriate mix of stocks and bonds for the current economic and
investment environment.
Devon Fund
Devon Fund is also a total return fund, but it invests the majority of
its assets in stocks. This Fund has a dual objective of capital
appreciation and current income, but since it invests only in
stocks its shareholders are comfortable accepting somewhat greater
fluctuation of principal than with Delaware Fund.
For Devon Fund, we invest primarily in common stocks that we believe
have the potential for above-average dividend increases over time.
Generally, at least 65% of the Fund's assets will be in dividend-paying
stocks.
In selecting stocks for both Devon Fund and Delaware Fund, we consider
factors such as how much the stock's dividend has grown in the past, the
frequency of the stock's prior dividend increases, the company's
potential for strong positive cash flow, and the price/earnings ratio of
the stock compared to other stocks in the market. We avoid stocks that
we think are overvalued. We seek stocks that we believe have the
potential for above-average dividend growth.
How to use
this glossary
Words found in the glossary are printed in boldface 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
- ------------------------------------------------------------------------
Similar to depreciated value, amortized cost reflects the
value of a fixed-income security adjusted to account for
any premium that was paid above the par value when the security was
purchased. The purpose of amortization is to reflect resale or
redemption value.
Appreciation
- ------------------------------------------------------------------------
An increase in the value of an investment.
The securities we typically invest in
Stocks offer investors the potential for capital appreciation, and may
pay dividends as well. Fixed-income securities offer the potential for
greater income payments than stocks, and also may provide capital
appreciation.
Securities
Common stocks: Securities that represent shares of ownership in a
corporation. Stockholders participate in the corporation's profits and
losses, proportionate to the number of shares they own.
Convertible securities: Usually preferred stocks or corporate bonds that
can be exchanged for a set number of shares of common stock at a
predetermined price. These securities offer higher appreciation
potential than nonconvertible bonds and greater income potential than
nonconvertible preferred stocks.
Mortgage-backed securities: Fixed-income securities that represent pools
of mortgages, with investors receiving principal and interest payments
as the underlying mortgage loans are paid back. Many are issued and
guaranteed against default by the U.S. government or its agencies or
instrumentalities, such as the Federal Home Loan Mortgage Corporation,
the Fannie Mae and the Government National Mortgage Association. Others
are issued by private financial institutions, with some fully
collateralized by certificates issued or guaranteed by the government or
its agencies or instrumentalities.
Collateralized mortgage obligations (CMOs): Privately issued mortgage-
backed bonds whose underlying value is the mortgages that are collected
into different pools according to their maturity.
Real estate mortgage investment conduits (REMICs): Privately issued
mortgage-backed bonds whose underlying value is a fixed pool of
mortgages secured by an interest in real property. Like CMOs, REMICs
offer different pools.
How we use them
Delaware Fund
Common stocks. Generally, we invest up to 75% of net assets in
dividend-paying stocks.
Delaware Fund/Devon Fund
Convertible securities. Each Fund may invest in convertible
securities; however, we will not invest more than 5% of net assets
in convertible securities that are rated below investment grade by
an NRSRO in securities that are unrated but deemed equivalent to
non-investment grade.
Mortgage-backed securities. There is no limit on government-related
mortgage-backed securities or on fully collateralized privately
issued mortgage-backed securities.
Collateralized mortgage obligations (CMOs). We may invest up to 20%
of net assets in mortgage-backed securities issued by private
companies whether or not the securities are 100% collateralized.
However, these securities must be rated at the time of purchase in
one of the four highest categories by an NRSRO. The privately
issued securities we invest in are either CMOs or REMICs (see
below).
Real estate mortgage investment conduits (REMICs). See mortgage-
backed securities above.
Devon Fund
Common stocks. Generally, 90% to 100% of the Fund's assets will be
invested in common stocks. Under normal market conditions we will
invest at least 65% of net assets in dividend-paying stocks.
Mortgage-backed securities. There is no limit on government-related
mortgage-backed securities; however, the Fund typically holds none
or only a small percentage of its net assets in fixed income
securities.
Collateralized mortgage obligations (CMOs). We may purchase
privately issued obligations only if they are 100% collateralized
and rated in of the four highest categories by an NRSRO. The
privately issued securities we would invest in would be either CMOs
or REMICs (see below).
Real estate mortgage investment conduits (REMICS). See mortgage-
backed securities above.
Average maturity
- ------------------------------------------------------------------------
An average of when the individual bonds and other debt securities held
in a portfolio will mature.
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 prior to
maturity changes and is inversely related to current interest rates.
When interest rates rise, prices fall, and when interest rates fall,
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.
How we manage the Funds (continued)
Securities we typically invest in (continued)
Securities
Asset-backed securities: Bonds or notes backed by accounts receivables
including home equity, automobile or credit loans.
Corporate bonds: Debt obligations issued by a corporation.
Repurchase agreements: An agreement between a buyer and seller of
securities in which the seller agrees to buy the securities back within
a specified time at the same price the buyer paid for them, plus an
amount equal to an agreed upon interest rate. Repurchase agreements are
often viewed as equivalent to cash.
American Depositary Receipts (ADRs): Certificates issued by a U.S. bank
that represent a stated number of shares of a foreign corporation that
the bank holds in its vault. An ADR entitles the holder to all dividends
and capital gains earned by the underlying foreign shares. An ADR
is bought and sold the same as U.S. securities.
Restricted securities: Privately placed securities whose resale is
restricted under securities law.
Illiquid Securities: Securities that do not have a ready market, and
cannot be easily sold, if at all, at approximately the price that the
Fund has valued them.
How we use them
Delaware Fund
Asset-backed securities. We invest only in asset-backed securities
rated in one of the four highest categories by an NRSRO.
Corporate bonds. We focus on bonds rated in one of the four highest
categories by an NRSRO (or deemed equivalent), with maturities
between five and 30 years.
Delaware Fund/Devon Fund
Repurchase agreements. Typically, we use repurchase agreements as a
short-term investment for a Fund's cash position. In order to enter
into these repurchase agreements, the Fund must have collateral of
at least 102% of the repurchase price. (Neither Fund may have more
than 10% of its total assets in repurchase agreements with
maturities of over seven days.)
Delaware Fund/Devon Fund
American depository receipts. We may invest without limitation
in ADRs.
Delaware Fund/Devon Fund
Restricted securities. We may invest without limitation in privately
placed securities that are eligible for resale among certain
institutional buyers. Other restricted securities must be limited to
5% of total fund assets.
Delaware Fund/Devon Fund
Illiquid securities. We may invest up to 10% of total assets in
illiquid securities.
Devon Fund
Devon Fund doesn't typically invest in asset-backed securities.
When we do, we are allowed to invest only in asset-backed
securities rated in one of the four highest categories by an NRSRO.
Although Devon is allowed to invest in corporate bonds, we do not
typically invest in them.
The Funds may also invest in other securities including real estate
investment trusts, rights and warrants to purchase common stock, futures
contracts, options, U.S. Treasury securities, Yankee and Euro bonds.
Please see the Statement of Additional Information for additional
descriptions and risk information on these securities as well as those
listed in the table above.
Lending securities Each Fund may lend up to 25% of its assets to
qualified 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.
C-C
Capital
- ------------------------------------------------------------------------
The amount of money you invest.
Capital gains distributions
- ------------------------------------------------------------------------
Payments to mutual fund shareholders of profits (realized gains) from
the sale of a fund's portfolio securities. Usually paid once a year; may
be either short-term gains or long-term gains.
Commission
- ------------------------------------------------------------------------
The fee an investor pays to a financial adviser for investment advice
and help in buying or selling mutual funds, stocks, bonds or other
securities.
Compounding
- ------------------------------------------------------------------------
Earnings on an investment's previous earnings.
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 Delaware Fund or Devon Fund. Please see the Statement of
Additional Information for further discussion of these risks and the
other risks not discussed here.
Risks
Market risk is the risk that all or a majority of the securities in a
certain market--like the stock or bond market--will decline in value
because of factors such as economic conditions, future expectations or
investor confidence.
Industry and security risk is the risk that the value of securities in a
particular industry or the value of an individual stock or bond will
decline because of changing expectations for the performance of that
industry or for the individual company issuing the stock or bond.
Interest rate risk is the risk that securities, particularly bonds with
longer maturities, will decrease in value if interest rates rise.
Foreign risk is the risk that foreign securities may be adversely
affected by political instability, changes in currency exchange rates,
foreign economic conditions or inadequate regulatory and accounting
standards.
Liquidity risk is the possibility that securities cannot be readily
sold, or can only be sold at a price significantly lower than their
broadly recognized value.
How we strive to manage them
Delaware Fund/Devon Fund
Market risk. We maintain a long-term investment approach and focus
on stocks we believe can appreciate over an extended time frame
regardless of interim market fluctuations. We do not try to predict
overall stock market movements and do not trade for short-term
purposes.
Market risk. We may hold a substantial part of each Fund's assets
in cash or cash equivalents as a temporary defensive strategy.
Delaware Fund
Market risk. We diversify the Fund's assets among two major
categories of investments--stocks and bonds--which tend to increase
and decline in value in different economic or investment
conditions.
Delaware Fund/Devon Fund
Industry and security risk. We limit the amount of each Fund's
assets invested in any one industry and in any individual security.
We also follow a rigorous selection process before choosing
securities for the portfolio.
Delaware Fund
Interest rate risk. Within Delaware Fund's fixed-income component,
we do not try to increase return by predicting and aggressively
capitalizing on interest rate moves. Instead, we aim to keep the
interest rate risk similar to the Lehman Brothers Aggregate Bond
Index.
Delaware Fund/Devon Fund
Foreign risk. We typically invest only a small portion of each
Fund's portfolio in foreign securities. When we do purchase foreign
securities, they are often denominated in U.S. dollars. We also
tend to avoid markets where we believe accounting principles or the
regulatory structure are underdeveloped.
Delaware Fund/Devon Fund
Liquidity risk. We limit exposure to illiquid securities.
Devon Fund
Interest rate risk. Devon does not generally hold a significant
portion of assets in fixed-income securities, so interest rate risk
is not a major risk with this fund.
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.
Corporate bond
- ------------------------------------------------------------------------
A debt security issued by a corporation. See "bond."
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
Delaware Devon
As a percentage of average daily net assets 0.52% 0.60%
Portfolio
Managers
George H. Burwell and Gary A. Reed have primary responsibility for
making day-to-day investment decisions for Delaware Fund. Mr. Burwell
has responsibility for making the day-to-day investment decisions for
Devon Fund. When making decisions for the Funds, Mr. Burwell and Mr.
Reed regularly consult with Andrea Giles and Christopher Driver.
George H. Burwell, CFA, holds a BA from the University of Virginia and
is a Chartered Financial Analyst (CFA). He has been Senior Portfolio
Manager for equities since 1992 when he joined Delaware Investments.
Previously he worked for Midlantic Bank in New Jersey where he managed
an equity mutual fund and three commingled funds.
Gary A. Reed holds an AB in Economics from the University of Chicago and
an MA in Economics from Columbia University. He has been Senior
Portfolio Manager for fixed income since 1989. Before joining Delaware
Investments in 1989, Mr. Reed was Vice President and Manager of the
fixed income department of the Irving Trust Company in New York.
Andrea Giles, Research Analyst for the Fund, holds a BSAD from the
Massachusetts Institute of Technology and an MBA in Finance from
Columbia University. Prior to joining Delaware Investments in 1996, she
was an account officer in the Leveraged Capital Group with Citibank.
Christopher Driver, Research Analyst for the Fund, holds a BS in Finance
from the University of Delaware. Prior to joining Delaware Investments
in 1998, he was a Research Analyst in the Equity Value group at
Blackrock, Inc. Prior to Blackrock, he was a partner at Cashman Farrell
& Associates. Mr. Driver is a CFA charterholder.
C-E
Cost basis
- ------------------------------------------------------------------------
The original purchase price of an investment, used in determining
capital gains and losses.
Currency exchange rates
- ------------------------------------------------------------------------
The price at which one country's currency can be converted into
another's. This exchange rate varies almost daily according to a wide
range of political, economic and other factors.
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'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
The Funds
Investment manager
Delaware Management Company
One Commerce Square
Philadelphia, PA 19103
Custodian
The Chase Manhattan Bank
4 Chase Metrotech Center
Brooklyn, NY 11245
Portfolio managers
(see page 10 for details)
Distributor
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
Service agent
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 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 are expected to exercise sound business
judgement, 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.
Custodian Mutual funds are legally required to protect their portfolio
securities by placing them with a custodian--typically a qualified bank
custodian who segregates fund securities from other bank assets.
Investment manager An investment manager is a company responsible for
selecting portfolio investments consistent with objectives 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 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.
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 provide customer service to shareholders, as well.
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.
Financial advisers Financial advisers provide investment 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.
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. They
are paid from the fund's assets before any earnings are distributed
to shareholders.
About your account
Investing in
the Funds
Institutional Class shares are available for purchase only by: (a)
retirement plans introduced by persons not associated with brokers or
dealers that are primarily engaged in the retail securities business and
rollover individual retirement accounts from such plans; (b) tax-exempt
employee benefit plans of the Manager, or its affiliates and securities
dealer firms with a selling agreement with Distributor; (c)
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; (d) a bank, trust company and similar financial institution
investing for its own account or for the account of its trust customers
for whom such financial institution is exercising investment discretion
in purchasing shares of the Class, except where the investment is part
of a program that requires payment to the financial institution of a
Rule 12b-1 Plan fee; and (e) registered investment advisers investing on
behalf of clients that consist solely of institutions and high net-worth
individuals having at least $1,000,000 entrusted to the adviser for
investment purposes, but only if the adviser is not affiliated or
associated with a broker or dealer and derives compensation for its
services exclusively from its clients for such advisory services.
F-M
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
returned to you at a prespecified maturity date. These securities, which
include government, corporate or municipal bonds, as well as money
market securities, typically pay a fixed rate of return.
Government securities
- ------------------------------------------------------------------------
Securities issued by U.S. Government or its agencies. They include
Treasuries as well as agency-backed securities such as FANNIE MAEs.
Inflation
- ------------------------------------------------------------------------
The increase in the cost of goods and services over time. U.S. inflation
is measured by the Consumer Price Index (CPI).
Investment goal
- ------------------------------------------------------------------------
The objective, such as long-term capital growth or high current income,
that a mutual fund pursues.
Lehman Brothers Aggregate Bond Index
- ------------------------------------------------------------------------
An index that measures
the total returns of about 6,500 U.S. corporate and government bonds.
Management fee
- ------------------------------------------------------------------------
The amount paid by a mutual fund to the investment adviser for
management services, expressed as a percentage of the fund's
net assets.
M-P
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.
NASD (National Association of Securities Dealers)
- ------------------------------------------------------------------------
A self-regulating organization, consisting of brokerage firms (including
distributors of mutual funds), that is responsible for overseeing the
actions of its members.
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. 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 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 fee for
this service.
[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 _______. 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_____________ so we
can assign 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.
You may be required to pay a sales charge on the shares that you acquire.
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. 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 the Shareholder Service
Center at 800_____________.
[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_____________.]
NAV (Net asset value)
- ------------------------------------------------------------------------
The daily dollar value of one mutual fund share. Equal
to a fund's net assets divided by the number of shares outstanding.
NRSRO
(Nationally recognized statistical rating organization)
- ------------------------------------------------------------------------
A company that assesses the quality and potential performance 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).
Preferred stock
- ------------------------------------------------------------------------
Preferred stock has preference over common stock in the payment of
dividends and liquidation of assets. Preferred stocks also pay dividends
at a fixed rate.
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 receives 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. 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 the 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 debt securities on the basis of valuations
provided to us by an independent pricing service that uses methods
approved by the board of directors. Any investments 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 of $5 has a P/E of 20.
Principal
- ------------------------------------------------------------------------
Amount of money you invest. 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.
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. 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 anyone other than the account holder(s) of record.
[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 fee for this service.
[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 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 department at 800_____________.]
Redeem
- ------------------------------------------------------------------------
To cash in your shares by selling them back to the mutual fund.
Risk
- ------------------------------------------------------------------------
Generally defined as variability of value; also credit risk,
inflation risk, currency and interest rate risk. Different investments
involve different types and degrees of risk.
S&P 500 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 of fund shares sold through financial advisers.
May vary with the amount invested. Typically used to compensate advisers
for advice and service provided.
About your account continued
How to redeem shares (cont.)
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. 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 honor your request to sell these shares.
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.
S-S
SEC (Securities and Exchange Commission)
- ------------------------------------------------------------------------
Federal agency established by Congress to administer the laws governing
the securities industry, including mutual fund companies.
Share classes
- ------------------------------------------------------------------------
Different classifications of shares; mutual fund share
classes offer a variety of sales charge choices.
Signature guarantee
- ------------------------------------------------------------------------
Certification by a bank, brokerage firm or other financial institution
that a customer's signature is valid.
Standard deviation
- ------------------------------------------------------------------------
A measure of an investment's volatility; for mutual funds, measures how
much a fund's total return varies from its historical average.
Statement of Additional Information (SAI)
- ------------------------------------------------------------------------
The document serving as "Part B" of a fund's prospectus
that provides more detailed information about the fund's organization,
investments, policies and risks.
Stock
- ------------------------------------------------------------------------
An investment that represents a share of ownership (equity) in a
corporation. Stocks are often referred to as "equities."
T-V
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.
Treasury bills
- ------------------------------------------------------------------------
Securities issued by the U.S. Treasury with maturities of
one year or less.
Treasury bonds
- ------------------------------------------------------------------------
Securities issued by the U.S. Treasury with maturities of
10 years or longer.
Treasury notes
- ------------------------------------------------------------------------
Securities issued by the U.S. Treasury with maturities of one to 10
years.
Dividends, distributions and taxes
For each 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.
Uniform Gift to Minors Act and Uniform Transfers to Minors Act
- ------------------------------------------------------------------------
Federal and state laws that provide a simple way to transfer property to
a minor with special tax advantages.
Volatility
- ------------------------------------------------------------------------
The tendency of an investment to go up or down in value by different
magnitudes. There are "low volatility" and "high volatility"
investments.
<TABLE>
<CAPTION>
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-_____________.
Institutional Class
- --------------------------------------------------------------------------------------
Year ended 10/31
Delaware Fund 1998 1997 1996 1995 1994
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income from Investment Operations
Net investment income ($) 0.00 0.00 0.00 0.00 0.00
Net realized & unrealized
gains (losses) on securities ($) 0.00 0.00 0.00 0.00 0.00
Total from investment operations ($) 0.00 0.00 0.00 0.00 0.00
Less Distributions
Dividends from net investment
income ($) 0.00 0.00 0.00 0.00 0.00
Distributions from capital gains ($) 0.00 0.00 0.00 0.00 0.00
Total distributions ($) 0.00 0.00 0.00 0.00 0.00
Net asset value, end of period ($) 0.00 0.00 0.00 0.00 0.00
Total Return (%) 0.00 0.00 0.00 0.00 0.00
Ratios/Supplemental Data:
Net asset value, end of period
(000's omitted) 0.00 0.00 0.00 0.00 0.00
Ratio of expenses to average daily
net assets 0.00 0.00 0.00 0.00 0.00
Ratio of net investment income to
average daily net assets 0.00 0.00 0.00 0.00 0.00
Portfolio turnover rate (%) 0.00 0.00 0.00 0.00 0.00
Volatility, as indicated by
year-by-year total return 0.00% -0.00% 0.00% -0.00% 0.00%
</TABLE>
How to read the
financial highlights
Net investment income
- ------------------------------------------------------------------------
Net investment income includes dividend and interest income earned from
the Fund's securities; is expenses have been deducted.
Net gains (losses) on investments (both realized and unrealized)
- ------------------------------------------------------------------------
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 Distributions-
Distributions from realized gains."
Realized gains
- ------------------------------------------------------------------------
Profits realized from the sale of securities.
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 percentage increase or decrease in the value of a
share of a fund during specific periods, in this case, annual periods.
In calculating this figure for the financial highlights table, we
include 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)
<TABLE>
<CAPTION>
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-____________.
Institutional Class
- -----------------------------------------------------------------------------------
Year ended 10/31 Period 12/29/93 through 10/31
Devon Fund 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income From Investment
Operations
Net investment income ($) 0.00 0.00 0.00 0.00 0.00 2
Net realized & unrealized
gains (losses) on
securities ($) 0.00 0.00 0.00 0.00 0.00
Total from investment
operations ($) 0.00 0.00 0.00 0.00 0.00
Less Distributions
Dividends from net
investment income ($) 0.00 0.00 0.00 0.00 0.00
Distributions from capital
gains ($) 0.00 0.00 0.00 0.00 0.00
Total distributions ($) 0.00 0.00 0.00 0.00 0.00
Net asset value, end of
period ($) 0.00 0.00 0.00 0.00 0.00
Total Return (%) 0.00 0.00 0.00 0.00 0.00
Ratios/Supplemental Data:
Net asset value, end of
period (000's omitted) 0.00 0.00 0.00 0.00 0.00
Ratio of expenses to average
daily net assets 0.00 0.00 0.00 0.00 0.00
Ratio of net investment income
to average daily net assets 0.00 0.00 0.00 0.00 0.00
Portfolio turnover rate (%) 0.00 0.00 0.00 0.00 0.00
Average commission rate paid ($) 0.00 0.00 0.00 0.00 0.00
Volatility, as indicated by
year-by-year total return 0.00% 0.00% 0.00% 0.00% -0.00%
</TABLE>
How to read the
financial highlights
(begins on page 22)
Ratio of expenses to average daily net assets
- ------------------------------------------------------------------------
The expense ratio is the percentage of total investment
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 daily 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.
Delaware Fund
Devon Fund
Additional information about the Funds' investments is available
in the Funds' annual and semi-annual reports to shareholders. In the
Funds' annual report, you will find a discussion of the market
conditions and investment strategies that significantly affected the
Funds' performance during their last fiscal year. 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, 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.
For fund information; literature; price, yield and performance figures.
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)
For convenient access to account information or current performance
information on all Delaware Investment Funds seven days a week, 24 hours
a day, use this Touch-Tone(registered trademark) service.
[Registrant's Investment Company Act file number]
[GRAPHIC OMITTED: LOGO OF DELAWARE INVESTMENTS
----------------------------
Philadelphia * London]
P-002 [--] PP 12/98
STATEMENT OF ADDITIONAL INFORMATION
DECEMBER 30, 1998
DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE FUND
DEVON FUND
1818 Market Street
Philadelphia, PA 19103
For more information about Delaware Fund Institutional Class
and Devon Fund Institutional Class: 800-510-4015
For Prospectus, Performance and Information on Existing Accounts of
Class A Shares, Class B Shares and Class C Shares: Nationwide
800-523-1918
Dealer Services: (BROKER/DEALERS ONLY)
Nationwide 800-362-7500
Delaware Group Equity Funds I, Inc. ("Equity Funds I, Inc.") is a
professionally-managed mutual fund of the series type which currently
offers two series of shares: Delaware Fund series ("Delaware Fund") and
Devon Fund series ("Devon Fund") (individually, a "Fund", and
collectively, the "Funds").
Delaware Fund and Devon Fund offer, respectively, Delaware Fund A
Class and Devon Fund A Class ("Class A Shares"), Delaware Fund B Class
and Devon Fund B Class ("Class B Shares"), Delaware Fund C Class and
Devon Fund C Class ("Class C Shares") (Class A Shares, Class B Shares
and Class C Shares together referred to as the "Fund Classes"), and
Delaware Fund Institutional Class and Devon Fund Institutional Class
("Institutional Classes"). All references to "shares" in this Part B
refer to all Classes of shares of Equity Funds I, Inc., except where
noted.
This Statement of Additional Information ("Part B" of the
registration statement) supplements the information contained in the
current Prospectus for the Fund Classes dated December 30, 1998 and the
current Prospectus for the Institutional Classes dated December 30,
1998, as they may be amended from time to time. Part B should be read
in conjunction with the respective Class' Prospectus. Part B is not
itself a prospectus but is, in its entirety, incorporated by reference
into each Class' Prospectus. A prospectus relating to the Fund Classes
and a prospectus relating to the Institutional Classes may be obtained
by writing or calling your investment dealer or by contacting each
Fund's national distributor, Delaware Distributors, L.P. (the
"Distributor"), at the above address or by calling the above phone
numbers. The Funds' financial statements, the notes relating thereto,
the financial highlights and the report of independent auditors are
incorporated by reference from the Annual Report into this Part B. The
Annual Report will accompany any request for Part B.
TABLE OF CONTENTS
Cover Page
Investment Restrictions and Policies
Performance Information
Trading Practices and Brokerage
Purchasing Shares
Investment Plans
Determining Offering Price and Net Asset Value
Redemption and Exchange
Dividends and Realized Securities Profits Distributions
Taxes
Investment Management Agreements
Officers and Directors
General Information
Appendix A--Description of Ratings
Appendix B-- Investment Objectives of the Other
Funds in the Delaware Investments Family
Financial Statements
INVESTMENT RESTRICTIONS AND POLICIES
Investment Restrictions--Equity Funds I, Inc. has adopted the
following restrictions for each Fund, except as noted, which, along with
its respective investment objective, cannot be changed without approval
of a majority of the outstanding voting securities of a Fund, which is
more than 50% of the outstanding voting securities of that Fund which
proposes to change its fundamental policy, or 67% of the voting
securities of that Fund which proposes to change its fundamental policy
present at a shareholder meeting if the holders of more than 50% of such
voting securities are present in person or represented by proxy,
whichever is less. The percentage limitations contained in the
restrictions and policies set forth herein apply at the time of purchase
of securities.
1. Not to invest more than 5% of the value of its assets in
securities of any one company (except U.S. government bonds) or purchase
more than 10% of the voting or nonvoting securities of any one company.
2. Not to acquire control of any company. (Equity Funds I,
Inc.'s Certificate of Incorporation permits control of companies to
protect investments already made, but its policy is not to acquire
control.)
3. Not to purchase or retain securities of a company which has
an officer or director who is an officer or director of Equity Funds I,
Inc. or an officer, director or partner of its investment manager if, to
the knowledge of Equity Funds I, Inc., one or more of such persons own
beneficially more than 1/2 of 1% of the shares of the company, and in
the aggregate more than 5% thereof.
4. No long or short positions on shares of Equity Funds I, Inc.
may be taken by its officers, directors or any of its affiliated
persons. Such persons may buy shares of Equity Funds I, Inc. for
investment purposes, however.
5. Not to purchase any security issued by any other investment
company if after such purchase it would: (a) own more than 3% of the
voting stock of such company, (b) own securities of such company having
a value in excess of 5% of Equity Funds I, Inc.'s assets or (c) own
securities of investment companies having an aggregate value in excess
of 10% of Equity Funds I, Inc.'s assets.
6. Not to act as an underwriter of securities of other issuers,
except that Equity Funds I, Inc. may acquire restricted securities and
securities which are not readily marketable under circumstances where,
if such securities are sold, Equity Funds I, Inc. may be deemed an
underwriter for purposes of the Securities Act of 1933 (the "1933 Act").
7. Not to invest in securities of other investment companies
except at customary brokerage commission rates or in connection with
mergers, consolidations or offers of exchange.
8. Not to make any investment in real estate unless necessary
for office space or the protection of investments already made. (This
restriction does not preclude Equity Funds I, Inc.'s purchase of
securities issued by real estate investment trusts.)
9. Not to sell short any security or property.
10. Not to deal in commodities, except that Devon Fund may
invest in financial futures, including futures contracts on stocks and
stock indices, interest rates, and foreign currencies, and other types
of financial futures that may be developed in the future, and may
purchase or sell options on such futures, and enter into closing
transactions with respect to those activities.
11. Not to borrow, except as a temporary measure for extraordinary
or emergency purposes and then not in excess of 10% of gross assets
taken at cost or market, whichever is lower, and not to pledge more than
15% of gross assets taken at cost. Any borrowing will be done from a
bank and to the extent that such borrowing exceeds 5% of the value of
Equity Funds I, Inc.'s assets, asset coverage of at least 300% is
required. In the event that such asset coverage shall at any time
fall below 300%, Equity Funds I, Inc. shall, within three days thereafter
(not including Sunday and holidays) or such longer period as the
Securities and Exchange Commission may prescribe by rules and
regulations, reduce the amount of its borrowings to an extent that the
asset coverage of such borrowings shall be at least 300%. Equity Funds
I, Inc. shall not issue senior securities as defined in the Investment
Company Act of 1940 (the "1940 Act"), except for notes to banks.
12. Not to make loans. However, the purchase of a portion of an
issue of publicly distributed bonds, debentures or other securities,
whether or not the purchase was made upon the original issuance of the
securities, and the entry into "repurchase agreements" are not to be
considered the making of a loan by Equity Funds I, Inc. and Equity Funds
I, Inc. may loan up to 25% of its assets to qualified broker/dealers or
institutional investors for their use relating to short sales or other
security transactions.
13. Not to invest more than 5% of the value of its total assets
in securities of companies less than three years old. Such three-year
period shall include the operation of any predecessor company or
companies.
Investment Policies
All investment policies of the Funds are nonfundamental and may be
changed without shareholder approval, except those identified above as
fundamental restrictions.
Each Fund has made a commitment that it will not invest in
warrants valued at the lower of cost or market exceeding 5% of such
Fund's net assets. Included within that amount, but not to exceed 2% of
each Fund's net assets, may be warrants not listed on the New York Stock
Exchange or American Stock Exchange.
Neither Fund currently invests its assets in real estate limited
partnerships or oil, gas and other mineral leases. Each Fund currently
intends to limit its investments in real estate investment trusts to not
more than 10% of each such Fund's net assets.
While each Fund is permitted under certain circumstances to borrow
money, neither Fund normally does so. Investment securities will not
normally be purchased by a Fund while it has an outstanding borrowing.
Neither Fund may concentrate investments in any industry, which means
that a Fund generally may not invest more than 25% of its assets in any
one industry.
Mortgage-Backed Securities
In addition to mortgage-backed securities issued or guaranteed by
the U.S. government, its agencies or instrumentalities or government
sponsored corporations, each Fund may also invest its assets in
securities issued by certain private, nongovernment corporations, such
as financial institutions. Certain of these private-backed securities
are fully collateralized at the time of issuance by securities or
certificates issued or guaranteed by the U.S. government, its agencies
or instrumentalities. Two principal types of mortgage-backed securities
are collateralized mortgage obligations (CMOs) and real estate mortgage
investment conduits (REMICs).
CMOs are debt securities issued by U.S. government agencies or by
financial institutions and other mortgage lenders and collateralized by
a pool of mortgages held under an indenture. CMOs are issued in a
number of classes or series with different maturities. The classes or
series are retired in sequence as the underlying mortgages are repaid.
Prepayment may shorten the stated maturity of the obligation and can
result in a loss of premium, if any has been paid. Certain of these
securities may have variable or floating interest rates and others may
be stripped (securities which provide only the principal or interest
feature of the underlying security).
REMICs, which were authorized under the Tax Reform Act of 1986,
are private entities formed for the purpose of holding a fixed pool of
mortgages secured by an interest in real property. REMICs are similar
to CMOs in that they issue multiple classes of securities.
CMOs and REMICs issued by private entities are not government
securities and are not directly guaranteed by any government agency.
They are secured by the underlying collateral of the private issuer.
Devon Fund will invest in such private-backed securities only if they
are 100% collateralized at the time of issuance by securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities.
Delaware Fund may invest its assets in CMOs and REMICs issued by private
entities whether or not the securities are 100% collateralized at the
time of issuance by securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities (securities that are not
so collateralized are called "non-agency mortgage-backed securities").
Each Fund currently invests in privately-issued CMOs and REMICs only if
they are rated at the time of purchase in the four highest grades by a
nationally-recognized rating agency.
Asset-Backed Securities
Each Fund may invest a portion of its assets in asset-backed
securities. The rate of principal payment on asset-backed securities
generally depends on the rate of principal payments received on the
underlying assets. Such rate of payments may be affected by economic
and various other factors such as changes in interest rates or the
concentration of collateral in a particular geographic area. Therefore,
the yield may be difficult to predict and actual yield to maturity may
be more or less than the anticipated yield to maturity. The credit
quality of most asset-backed securities depends primarily on the credit
quality of the assets underlying such securities, how well the entities
issuing the securities are insulated from the credit risk of the
originator or affiliated entities, and the amount of credit support
provided to the securities.
Asset-backed securities are often backed by a pool of assets
representing the obligations of a number of different parties. To
lessen the effect of failures by obligors on underlying assets to make
payments, such securities may contain elements of credit support. Such
credit support falls into two categories: (i) liquidity protection, and
(ii) protection against losses resulting from ultimate default by an
obligor on the underlying assets. Liquidity protection refers to the
provision of advances, generally by the entity administering the pool of
assets, to ensure that the receipt of payments due on the underlying
pool is timely. Protection against losses resulting from ultimate
default enhances the likelihood of payments of the obligations on at
least some of the assets in the pool. Such protection may be provided
through guarantees, insurance policies or letters of credit obtained by
the issuer or sponsor from third parties, through various means of
structuring the transaction or through a combination of such approaches.
The Funds will not pay any additional fees for such credit support,
although the existence of credit support may increase the price of a
security.
Examples of credit support arising out of the structure of the
transaction include "senior-subordinated securities" (multiple class
securities with one or more classes subordinate to other classes as to
the payment of principal thereof and interest thereon, with the result
that defaults on the underlying assets are borne first by the holders of
the subordinated class), creation of "reserve funds" (where cash or
investments, sometimes funded from a portion of the payments on the
underlying assets, are held in reserve against future losses) and "over
collateralization" (where the scheduled payments on, or the principal
amount of, the underlying assets exceeds that required to make payments
of the securities and pay any servicing or other fees). The degree of
credit support provided for each issue is generally based on historical
information respecting the level of credit information respecting the
level of credit risk associated with the underlying assets.
Delinquencies or losses in excess of those anticipated could adversely
affect the return on an investment in such issue.
Portfolio Loan Transactions
Each Fund may loan up to 25% of its assets to qualified
broker/dealers or institutional investors for their use relating to
short sales or other security transactions.
It is the understanding of Delaware Management Company (the
"Manager") that the staff of the Securities and Exchange Commission (the
"SEC") permits portfolio lending by registered investment companies if
certain conditions are met. These conditions are as follows: 1) each
transaction must have 100% collateral in the form of cash, short-term
U.S. government securities, or irrevocable letters of credit payable by
banks acceptable to a Fund from the borrower; 2) this collateral must be
valued daily and should the market value of the loaned securities
increase, the borrower must furnish additional collateral to the Fund;
3) the Fund must be able to terminate the loan after notice, at any
time; 4) the Fund must receive reasonable interest on any loan, and any
dividends, interest or other distributions on the lent securities, and
any increase in the market value of such securities; 5) the Fund may pay
reasonable custodian fees in connection with the loan; and 6) the voting
rights on the lent securities may pass to the borrower; however, if the
directors of Equity Funds I, Inc. know that a material event will occur
affecting an investment loan, they must either terminate the loan in
order to vote the proxy or enter into an alternative arrangement with
the borrower to enable the directors to vote the proxy.
The major risk to which a Fund would be exposed on a portfolio
loan transaction is the risk that the borrower would go bankrupt at a
time when the value of the security goes up. Therefore, each Fund will
only enter into loan arrangements after a review of all pertinent facts
by the Manager, under the supervision of the Board of Directors,
including the creditworthiness of the borrowing broker, dealer or
institution and then only if the consideration to be received from such
loans would justify the risk. Creditworthiness will be monitored on an
ongoing basis by the Manager.
Restricted and Illiquid Securities
Most of the privately placed securities acquired by a Fund will be
eligible for resale by the Fund without registration pursuant to Rule
144A ("Rule 144A Securities") under the 1933 Act. While maintaining
oversight, the Board of Directors has delegated to the Manager the day-
to-day function of determining whether individual Rule 144A Securities
are liquid for purposes of each Fund's 10% limitation on investments in
illiquid securities. The Board has instructed the Manager to consider
the following factors in determining the liquidity of a Rule 144A
Security: (i) the frequency of trades and trading volume for the
security; (ii) whether at least three dealers are willing to purchase or
sell the security and the number of potential purchasers; (iii) whether
at least two dealers are making a market in the security; and (iv) the
nature of the security and the nature of the marketplace trades (e.g.,
the time needed to dispose of the security, the method of soliciting
offers, and the mechanics of transfer).
Investing in Rule 144A Securities could have the effect of
increasing the level of a Fund's illiquidity to the extent that
qualified institutional buyers become, for a period of time,
uninterested in purchasing these securities. If the Manager determines
that a Rule 144A Security which was previously determined to be liquid
is no longer liquid and, as a result, a Fund's holdings of illiquid
securities exceed the Fund's 10% limit on investment in such securities,
the Manager will determine what action shall be taken to ensure that the
Fund continues to adhere to such limitation.
Convertible Securities
Each Fund may invest in convertible securities, including
corporate debentures, bonds, notes and preferred stocks that may be
converted into or exchanged for common stock. While providing a fixed-
income stream (generally higher in yield than the income derivable from
a common stock but lower than that afforded by a non-convertible debt
security), a convertible security also affords the investor an
opportunity, through its conversion feature, to participate in the
capital appreciation of the common stock into which it is convertible.
As the market price of the underlying common stock declines, convertible
securities tend to trade increasingly on a yield basis and so may not
experience market declines to the same extent as the underlying common
stock. When the market price of the underlying common stock increases,
the price of a convertible security tends to rise as a reflection of the
value of the underlying common stock. To obtain such a higher yield, a
Fund may be required to pay for a convertible security an amount in
excess of the value of the underlying common stock. Common stock
acquired by a Fund upon conversion of a convertible security will
generally be held for so long as the Manager anticipates such stock will
provide a Fund with opportunities which are consistent with a Fund's
investment objectives and policies.
Each Fund may invest not more than 5% of its assets in convertible
debentures that are rated below investment grade or are unrated but are
determined by the Manager to be of comparable quality. Investing in
convertible debentures that are rated below investment grade or unrated
but of comparable quality entails certain risks, including the risk of
loss of principal, which may be greater than the risks involved in
investing in investment grade convertible debentures. Under rating
agency guidelines, lower rated securities and comparable unrated
securities will likely have some quality and protective characteristics
that are outweighed by large uncertainties or major risk exposures to
adverse conditions.
A Fund may have difficulty disposing of such lower rated
convertible debentures because the trading market for such securities
may be thinner than the market for higher rated convertible debentures.
To the extent a secondary trading market for these securities does
exist, it generally is not as liquid as the secondary trading market for
higher rated securities. The lack of a liquid secondary market as well
as adverse publicity with respect to these securities, may have an
adverse impact on market price and the Fund's ability to dispose of
particular issues in response to a specific economic event such as a
deterioration in the creditworthiness of the issuer. The lack of a
liquid secondary market for certain securities also may make it more
difficult for a Fund to obtain accurate market quotations for purposes
of pricing the Fund's portfolio and calculating its net asset value.
The market behavior of convertible securities in lower rating categories
is often more volatile than that of higher quality securities. Lower
quality convertible securities are judged by Moody's Investors Service,
Inc. ("Moody's") and Standard & Poor's Ratings Group ("S&P") to have
speculative elements or characteristics; their future cannot be
considered as well assured and earnings and asset protection may be
moderate or poor in comparison to investment grade securities.
In addition, such lower quality securities face major ongoing
uncertainties or exposure to adverse business, financial or economic
conditions, which could lead to inadequate capacity to meet timely
payments. The market values of securities rated below investment grade
tend to be more sensitive to company specific developments and changes
in economic conditions than higher rated securities. Issuers of these
securities are often highly leveraged, so that their ability to service
their debt obligations during an economic downturn or during sustained
periods of rising interest rates may be impaired. In addition, such
issuers may not have more traditional methods of financing available to
them, and may be unable to repay debt at maturity by refinancing.
Foreign Securities
Each Fund may invest in securities of foreign companies. However,
neither Fund will invest more than 5% of the value of its total assets,
at the time of purchase, in foreign securities (other than securities of
Canadian issuers registered under the Securities Exchange Act of 1934
(the "1934 Act") or American Depositary Receipts, on which there are no
such limits).
There has been in the past, and there may be again in the future,
an interest equalization tax levied by the United States in connection
with the purchase of foreign securities such as those purchased by a
Fund. Payment of such interest equalization tax, if imposed, would
reduce a Fund's rate of return on its investment. Dividends paid by
foreign issuers may be subject to withholding and other foreign taxes
which may decrease the net return on such investments as compared to
dividends paid to a Fund by United States corporations.
Investors should recognize that investing in foreign corporations
involves certain considerations, including those set forth below, which
are not typically associated with investing in United States
corporations. Foreign corporations are not generally subject to uniform
accounting, auditing and financial standards and requirements comparable
to those applicable to United States corporations. There may also be
less supervision and regulation of foreign stock exchanges, brokers and
listed corporations than exist in the United States. A Fund may be
affected either unfavorably or favorably by fluctuations in the relative
rates of exchange as between the currencies of different nations and
control regulations. Furthermore, there may be the possibility of
expropriation or confiscatory taxation, political, economic or social
instability or diplomatic developments which could affect assets of
either Fund held in foreign countries.
Each Fund will, from time to time, conduct foreign currency
exchange transactions on a spot (i.e., cash) basis at the spot rate
prevailing in the foreign currency exchange market or through entering
into contracts to purchase or sell foreign currencies at a future date
(i.e., a "forward foreign currency" contract or "forward" contract).
Investors should be aware that there are costs and risks associated with
such currency transactions. Each Fund may enter into forward contracts
to "lock in" the price of a security it has agreed to purchase or sell,
in terms of U.S. dollars or other currencies in which the transaction
will be consummated. When the Manager believes that the currency of a
particular foreign country may suffer a decline against the U.S. dollar
or against another currency, each Fund may enter into a forward contract
to sell, for a fixed amount of U.S. dollars or other appropriate
currency, the amount of foreign currency approximating the value of some
or all of a Fund's securities denominated in such foreign currency. It
is impossible to predict precisely the market value of portfolio
securities at the expiration of the forward contract. Accordingly, it
may be necessary for a Fund to purchase or sell additional foreign
currency on the spot market (and bear the expense of such purchase or
sale) if the market value of the security is less than or greater than
the amount of foreign currency the Fund is obligated to deliver.
Each Fund may incur gains or losses from currency transactions.
No type of foreign currency transaction will eliminate fluctuations in
the prices of a Fund's foreign securities or will prevent loss if the
prices of such securities should decline.
Futures Contracts and Options on Futures Contracts
Devon Fund may enter into futures contracts on stocks and stock
indices, purchase and sell options on such futures, and enter into
closing transactions with respect to those activities. The Fund
currently intends to limit such investments to the extent that not more
than 5% of its assets are required as futures contract margin deposits
and premiums on options and only to the extent that obligations under
such contracts and transactions represent not more than 20% of the
Fund's assets. A futures contract may be purchased and sold only on an
exchange, known as a "contract market," designated by the Commodity
Futures Trading Commission for the trading of such contract, and only
through a registered futures commission merchant which is a member of
such contract market. A commission must be paid on each completed
purchase and sale transaction.
When the Fund enters into a futures transaction, it must deliver
to the futures commission merchant selected by the Fund an amount
referred to as "initial margin." This amount is maintained by the
futures commission merchant in an account at the Fund's custodian bank.
Thereafter, a "variation margin" may be paid by the Fund to, or drawn by
the Fund from, such account in accordance with controls set for such
accounts, depending upon changes in the price of the underlying
securities subject to the futures contract.
Although futures contracts by their terms generally call for the
actual delivery or acquisition of underlying securities or the cash
value of the index, in most cases the contractual obligation is
fulfilled before the date of the contract without having to make or take
such delivery. The contractual obligation is offset by buying (or
selling, as the case may be) on a commodities exchange an identical
futures contract calling for delivery in the same month. Such a
transaction, which is effected through a member of an exchange, cancels
the obligation to make or take, as the case may be, delivery of the
securities or cash value of the index underlying the contractual
obligations. At the time such transaction is effected, a final
determination of variation margin is made and any loss experienced by
the Fund must be paid to the contract market clearing house while any
profit due to the Fund must be delivered to it.
Positions taken in futures markets are not normally held to
maturity, but instead liquidated through offsetting transactions which
may result in a profit or a loss. While the Fund's futures contracts on
securities will usually be liquidated in this manner, the Fund may
instead make or take delivery of the underlying securities whenever it
appears economically advantageous to do so. The clearing house
associated with the market on which futures on the securities are traded
guarantees that, if still open, the sale or purchase will be performed
on settlement date.
The Fund may enter into such futures contracts to protect against
the adverse affects of fluctuations in security prices or interest rates
without actually buying or selling the securities. For example, if
interest rates are expected to increase, the Fund might enter into
futures contracts for the sale of debt securities. Such a sale would
have much the same effect as selling an equivalent value of the debt
securities in the portfolio owned by the Fund. If interest rates did
increase, the value of the debt securities in the portfolio would
decline, but the value of the futures contracts to the Fund would
increase at approximately the same rate, thereby keeping the net asset
value of the Fund from declining as much as it otherwise would have.
Similarly, when it is expected that interest rates may decline, futures
contracts may be purchased to hedge in anticipation of subsequent
purchases of securities at higher prices. Since the fluctuations in the
value of futures contracts should be similar to those of debt
securities, the Fund could take advantage of the anticipated rise in
value of debt securities without actually buying them until the market
had stabilized. At that time, the futures contracts could be liquidated
and the Fund could then buy debt securities on the cash market.
With respect to options on futures contracts, when the Fund is not
fully invested, it may purchase a call option on a futures contract to
hedge against a market advance due to declining interest rates. The
purchase of a call option on a futures contract is similar in some
respects to the purchase of a call option on an individual security.
Depending on the pricing of the option compared to either the price of
the futures contract upon which it is based, or the price of the
underlying debt securities, it may or may not be less risky than
ownership of the futures contract or underlying debt securities.
The writing of a call option on a futures contract constitutes a
partial hedge against the declining price of the security which is
deliverable upon exercise of the futures contract. If the futures price
at the expiration of the option is below the exercise price, the Fund
will retain the full amount of the option premium which provides a
partial hedge against any decline that may have occurred in the Fund's
portfolio holdings. The writing of a put option on a futures contract
constitutes a partial hedge against the increasing price of the security
which is deliverable upon exercise of the futures contract. If the
futures price at the expiration of the option is higher than the
exercise price, the Fund will retain the full amount of the option
premium which provides a partial hedge against any increase in the price
of securities which the Fund intends to purchase.
Call and put options on stock index futures are similar to options
on securities except that, rather than the right to purchase or sell
stock at a specified price, options on a stock index future give the
holder the right to receive cash. Upon exercise of the option, the
delivery of the futures position by the writer of the option to the
holder of the option will be accompanied by delivery of the accumulated
balance in the writer's futures margin account which represents the
amount by which the market price of the futures contract, at exercise,
exceeds, in the case of a call, or is less than, in the case of a put,
the exercise price of the futures contract. If an option is exercised
on the last trading day prior to the expiration date of the option, the
settlement will be made entirely in cash equal to the difference between
the exercise price of the option and the closing price of the futures
contract on the expiration date.
If a put or call option the Fund has written is exercised, the
Fund will incur a loss which will be reduced by the amount of the
premium it receives. Depending on the degree of correlation between
changes in the value of its portfolio securities and changes in the
value of its futures positions, the Fund's losses from existing options
on futures may, to some extent, be reduced or increased by changes in
the value of portfolio securities. The purchase of a put option on a
futures contract is similar in some respects to the purchase of
protective puts on portfolio securities. For example, the Fund will
purchase a put option on a futures contract to hedge the Fund's
portfolio against the risk of rising interest rates.
To the extent that interest rates move in an unexpected direction,
the Fund may not achieve the anticipated benefits of futures contracts
or options on futures contracts or may realize a loss. For example, if
the Fund is hedged against the possibility of an increase in interest
rates which would adversely affect the price of securities held in its
portfolio and interest rates decrease instead, the Fund will lose part
or all of the benefit of the increased value of its securities which it
has because it will have offsetting losses in its futures position. In
addition, in such situations, if the Fund had insufficient cash, it may
be required to sell securities from its portfolio to meet daily
variation margin requirements. Such sales of securities may, but will
not necessarily, be at increased prices which reflect the rising market.
The Fund may be required to sell securities at a time when it may be
disadvantageous to do so.
Further, with respect to options on futures contracts, the Fund
may seek to close out an option position by writing or buying an
offsetting position covering the same securities or contracts and have
the same exercise price and expiration date. The ability to establish
and close out positions on options will be subject to the maintenance of
a liquid secondary market, which cannot be assured.
Options
Devon Fund may write call options and purchase put options on a
covered basis only and will not engage in option writing strategies for
speculative purposes.
A. Covered Call Writing--The Fund may write covered call
options from time to time on such portion of its portfolio, without
limit, as the Manager determines is appropriate in seeking to obtain the
investment objective. A call option gives the purchaser of such option
the right to buy, and the writer, in this case the Fund, has the
obligation to sell the underlying security at the exercise price during
the option period. The advantage to the Fund of writing covered calls
is that the Fund receives additional income, in the form of a premium,
which may offset any capital loss or decline in market value of the
security. However, if the security rises in value, the Fund may not
fully participate in the market appreciation.
During the option period, a covered call option writer may be
assigned an exercise notice by the broker/dealer through whom such call
option was sold requiring the writer to deliver the underlying security
against payment of the exercise price. This obligation is terminated
upon the expiration of the option period or at such earlier time in
which the writer effects a closing purchase transaction. A closing
purchase transaction cannot be effected with respect to an option once
the option writer has received an exercise notice for such option.
With respect to both options on actual portfolio securities owned
by the Fund and options on stock indices, the Fund may enter into
closing purchase transactions. A closing purchase transaction is one in
which the Fund, when obligated as a writer of an option, terminates its
obligation by purchasing an option of the same series as the option
previously written.
Closing purchase transactions will ordinarily be effected to
realize a profit on an outstanding call option, to prevent an underlying
security from being called, to permit the sale of the underlying
security or to enable the Fund to write another call option on the
underlying security with either a different exercise price or expiration
date or both. The Fund may realize a net gain or loss from a closing
purchase transaction depending upon whether the net amount of the
original premium received on the call option is more or less than the
cost of effecting the closing purchase transaction. Any loss incurred
in a closing purchase transaction may be partially or entirely offset by
the premium received from a sale of a different call option on the same
underlying security. Such a loss may also be wholly or partially offset
by unrealized appreciation in the market value of the underlying
security. Conversely, a gain resulting from a closing purchase
transaction could be offset in whole or in part by a decline in the
market value of the underlying security.
If a call option expires unexercised, the Fund will realize a
short-term capital gain in the amount of the premium on the option, less
the commission paid. Such a gain, however, may be offset by
depreciation in the market value of the underlying security during the
option period. If a call option is exercised, the Fund will realize a
gain or loss from the sale of the underlying security equal to the
difference between the cost of the underlying security, and the proceeds
of the sale of the security plus the amount of the premium on the
option, less the commission paid.
The market value of a call option generally reflects the market
price of an underlying security. Other principal factors affecting
market value include supply and demand, interest rates, the price
volatility of the underlying security and the time remaining until the
expiration date.
Devon Fund will write call options only on a covered basis, which
means that the Fund will own the underlying security subject to a call
option at all times during the option period. Unless a closing purchase
transaction is effected, the Fund would be required to continue to hold
a security which it might otherwise wish to sell, or deliver a security
it would want to hold. Options written by the Fund will normally have
expiration dates between one and nine months from the date written. The
exercise price of a call option may be below, equal to or above the
current market value of the underlying security at the time the option
is written.
B. Purchasing Put Options--Devon Fund may invest up to 2% of
its total assets in the purchase of put options. The Fund will, at all
times during which it holds a put option, own the security covered by
such option.
The Fund intends to purchase put options in order to protect
against a decline in the market value of the underlying security below
the exercise price less the premium paid for the option ("protective
puts"). The ability to purchase put options will allow the Fund to
protect unrealized gain in an appreciated security in its portfolio
without actually selling the security. If the security does not drop in
value, the Fund will lose the value of the premium paid. The Fund may
sell a put option which it has previously purchased prior to the sale of
the securities underlying such option. Such sales will result in a net
gain or loss depending on whether the amount received on the sale is
more or less than the premium and other transaction costs paid on the
put option which is sold.
The Fund may sell a put option purchased on individual portfolio
securities or stock indices. Additionally, the Fund may enter into
closing sale transactions. A closing sale transaction is one in which
the Fund, when it is the holder of an outstanding option, liquidates its
position by selling an option of the same series as the option
previously purchased.
Options on Stock Indices
A stock index assigns relative values to the common stocks
included in the index with the index fluctuating with changes in the
market values of the underlying common stock.
Options on stock indices are similar to options on stocks but have
different delivery requirements. Stock options provide the right to
take or make delivery of the underlying stock at a specified price. A
stock index option gives the holder the right to receive a cash
"exercise settlement amount" equal to (i) the amount by which the fixed
exercise price of the option exceeds (in the case of a put) or is less
than (in the case of a call) the closing value of the underlying index
on the date of exercise, multiplied by (ii) a fixed "index multiplier."
Receipt of this cash amount will depend upon the closing level of the
stock index upon which the option is based being greater than (in the
case of a call) or less than (in the case of a put) the exercise price
of the option. The amount of cash received will be equal to such
difference between the closing price of the index and exercise price of
the option expressed in dollars times a specified multiple. The writer
of the option is obligated, in return for the premium received, to make
delivery of this amount. Gain or loss to the Fund on transactions in
stock index options will depend on price movements in the stock market
generally (or in a particular industry or segment of the market) rather
than price movements of individual securities.
As with stock options, Devon Fund may offset its position in stock
index options prior to expiration by entering into a closing transaction
on an Exchange or it may let the option expire unexercised.
A stock index fluctuates with changes in the market values of the
stock so included. Some stock index options are based on a broad market
index such as the Standard & Poor's 500 Stock Index ("S&P 500") or the
New York Stock Exchange Composite Index, or a narrower market index such
as the Standard & Poor's 100 Index ("S&P 100"). Indices are also based
on an industry or market segment such as the AMEX Oil and Gas Index or
the Computer and Business Equipment Index. Options on stock indices are
currently traded on the following Exchanges among others: The Chicago
Board Options Exchange, New York Stock Exchange and American Stock
Exchange.
The effectiveness of purchasing or writing stock index options as
a hedging technique will depend upon the extent to which price movements
in the Fund's portfolio correlate with price movements of the stock
index selected. Because the value of an index option depends upon
movements in the level of the index rather than the price of a
particular stock, whether the Fund will realize a gain or loss from the
purchase or writing of options on an index depends upon movements in the
level of stock prices in the stock market generally or, in the case of
certain indices, in an industry or market segment, rather than movements
in the price of a particular stock. Since the Fund's portfolio will not
duplicate the components of an index, the correlation will not be exact.
Consequently, the Fund bears the risk that the prices of the securities
being hedged will not move in the same amount as the hedging instrument.
It is also possible that there may be a negative correlation between the
index or other securities underlying the hedging instrument and the
hedged securities which would result in a loss on both such securities
and the hedging instrument. Accordingly, successful use by the Fund of
options on stock indices will be subject to the Manager's ability to
predict correctly movements in the direction of the stock market
generally or of a particular industry. This requires different skills
and techniques than predicting changes in the price of individual
stocks.
Positions in stock index options may be closed out only on an
Exchange which provides a secondary market. There can be no assurance
that a liquid secondary market will exist for any particular stock index
option. Thus, it may not be possible to close such an option. The
inability to close options positions could have an adverse impact on the
Fund's ability to effectively hedge its securities. Devon Fund will
enter into an option position only if there appears to be a liquid
secondary market for such options.
The Fund will not engage in transactions in options on stock
indices for speculative purposes but only to protect appreciation
attained, to offset capital losses and to take advantage of the
liquidity available in the option markets.
When-Issued and Delayed Delivery Securities
Each Fund may purchase securities on a when-issued or delayed
delivery basis. In such transactions, instruments are purchased with
payment and delivery taking place in the future in order to secure what
is considered to be an advantageous yield or price at the time of the
transaction. Delivery of and payment for these securities may take as
long as a month or more after the date of the purchase commitment. A
Fund will maintain with its custodian a separate account with a
segregated portfolio of securities in an amount at least equal to these
commitments. The payment obligation and the interest rates that will be
received are each fixed at the time a Fund enters into the commitment
and no interest accrues to the Fund until settlement. Thus, it is
possible that the market value at the time of settlement could be higher
or lower than the purchase price if the general level of interest rates
has changed. It is a current policy of each Fund not to enter into
when-issued commitments exceeding in the aggregate 5% of the market
value of such Fund's total assets less liabilities other than the
obligations created by these commitments.
PERFORMANCE INFORMATION
From time to time, each Fund may state its Classes' total return
and yield in advertisements and other types of literature. Any
statements of total return or yield performance data for a Class will be
accompanied by information on the average annual compounded rate of
return for that Class over the most recent one-, five- and ten-year or
life- of-fund periods, as applicable. Each Fund may also advertise
aggregate and average total return information for its Classes over
additional periods of time. Each Fund may also advertise yield
information for its Classes for various periods of time.
The average annual total rate of return for each Class is based on
a hypothetical $1,000 investment that includes capital appreciation and
depreciation during the stated periods. The following formula will be
used for the actual computations:
n
P(1+T) = ERV
Where: P = a hypothetical initial purchase order of
$1,000 from which, in the case of only Class
A Shares, the maximum front-end sales charge
is deducted;
T = average annual total return;
n = number of years;
ERV = redeemable value of the hypothetical $1,000
purchase at the end of the period after the
deduction of the applicable CDSC, if any,
with respect to Class B Shares and Class C
Shares.
In presenting performance information for Class A Shares, the
Limited CDSC, applicable to only certain redemptions of those shares,
will not be deducted from any computations of total return. See the
Prospectus for the Fund Classes for a description of the Limited CDSC
and the limited instances in which it applies. All references to a CDSC
in this Performance Information section will apply to Class B Shares or
Class C Shares.
Aggregate or cumulative total return is calculated in a similar
manner, except that the results are not annualized. Each calculation
assumes the maximum front-end sales charge, if any, is deducted from the
initial $1,000 investment at the time it is made with respect to Class A
Shares, and that all distributions are reinvested at net asset value,
and, with respect to Class B Shares and Class C Shares, reflects the
deduction of the CDSC that would be applicable upon complete redemption
of such shares. In addition, each Fund may present total return
information that does not reflect the deduction of the maximum front-end
sales charge or any applicable CDSC.
Each Fund may also state total return performance of its Classes
in the form of an average total return. This average annual return will
be computed by taking the sum of annual returns, then dividing that
figure by the number of years in the overall period indicated. The
computation will reflect the impact of the maximum front-end sales
charge or CDSC, if any, paid on the illustrated investment amount
against the first year's return. The performance of Class B Shares and
Class C Shares may also be computed without taking into account any
applicable CDSC. From time to time, each Fund may quote actual total
return performance in advertising and other types of literature compared
to indices or averages of alternative financial products available to
prospective investors. For example, the performance comparisons may
include the average return of various bank instruments, some of which
may carry certain return guarantees offered by leading banks and thrifts
as monitored by Bank Rate Monitor, and those of generally-accepted
corporate bond and government security price indices of various
durations prepared by Lehman Brothers and Salomon Brothers, Inc. These
indices are not managed for any investment goal.
The performance of Class A Shares and the Institutional Class of
Delaware Fund and Devon Fund, as shown below, is the average annual
total return quotations through October 31, 1998. The average annual
total return for Class A Shares at offer reflects the maximum front-end
sales charge of 5.75% paid on the purchase of shares. The average
annual total return for Class A Shares at net asset value (NAV) does not
reflect the payment of any front-end sales charge. Pursuant to
applicable regulation, total return shown for Delaware Fund
Institutional Class for the periods prior to the commencement of
operations of such Class is calculated by taking the performance of
Delaware Fund A Class and adjusting it to reflect the elimination of all
sales charges. However, for those periods, no adjustment has been made
to eliminate the impact of 12b-1 payments, and performance would have
been affected had such an adjustment been made.
Securities prices fluctuated during the periods covered and past
results should not be considered as representative of future
performance. On June 14, 1988, Delaware Fund's investment objective was
changed from growth with income to a balance of capital appreciation,
income and preservation of capital.
Average Annual Total Return
Delaware Fund Delaware Fund Delaware Fund
Class A Shares(1)(2) Class A Shares(1) Institutional
(at Offer) (at NAV) Class(3)
1 year ended
10/31/98
3 years ended
10/31/98
5 years ended
10/31/98
10 years ended
10/31/98
15 years ended
10/31/98
Period 4/25/38(4)
through 10/31/98
(1) Delaware Fund A Class began paying 12b-1 payments on June 1, 1992
and performance prior to that date does not reflect such payments.
(2) Prior to November 2, 1998, the maximum front-end sales charge was
4.75%. Effective November 2, 1998, the maximum front- end sales
charge was increased to 5.75% and the above performance numbers are
calculated using 5.75% as the applicable sales charge.
(3) Date of initial public offering of Institutional Class shares was
November 9, 1992.
(4) Date of initial public offering of Delaware Fund A Class.
Average Annual Total Return(1)
Devon Fund Devon Fund Devon Fund
Class A Shares Class A Shares Institutional
(at Offer)(2) (at NAV) Class
1 year ended
10/31/98
3 years ended
10/31/98
Period 12/29/93(3)
through 10/31/98
(1) Certain expenses of this Fund have been waived and reimbursed by
the Manager. In the absence of such waiver and reimbursement,
performance would have been affected negatively.
(2) Prior to November 2, 1998, the maximum front-end sales charge was
4.75%. Effective November 2, 1998, the maximum front- end sales
charge was increased to 5.75% and the above performance numbers are
calculated using 5.75% as the applicable sales charge.
(3) Date of initial public offering of Devon Fund A Class.
The performance of Delaware Fund B Class and Devon Fund B Class,
as shown below, is the average annual total return quotation through
October 31, 1998. The average annual total return for Class B Shares
including deferred sales charge reflects the deduction of the applicable
CDSC that would be paid if the shares were redeemed at October 31, 1998.
The average annual total return for Class B Shares excluding deferred
sales charge assumes the shares were not redeemed at October 31, 1998
and therefore does not reflect the deduction of a CDSC.
Average Annual Total Return
Delaware Fund Delaware Fund
Class B Shares Class B Shares
(Including Deferred (Excluding Deferred
Sales Charge)(2) Sales Charge)
1 year ended
10/31/98
3 years ended
10/31/98
Period 9/6/94(1)
through 10/31/98
(1) Date of initial public offering of Delaware Fund B Class.
(2) Effective November 2, 1998, the CDSC schedule for Class B Shares
increased as follows: (i) 5% if shares are redeemed within one
year of purchase (ii) 4% if shares are redeemed with two years of
purchase; (iii) 3% if shares are redeemed during the third or
fourth year following purchase; (iv) 2% if shares are redeemed
during the fifth year following purchase; (v) 1% if shares are
redeemed during the sixth year following purchase; and (v) 0%
thereafter. The above figures have been calculated using this new
schedule.
Average Annual Total Return(1)
Devon Fund Devon Fund
Class B Shares Class B Shares
(Including Deferred (Excluding Deferred
Sales Charge)(3) Sales Charge)
1 year ended
10/31/98
3 years ended
10/31/98
Period 9/6/94(2)
through 10/31/98
(1) Certain expenses of this Fund have been waived and reimbursed by
the Manager. In the absence of such waiver and reimbursement,
performance would have been affected negatively.
(2) Date of initial public offering of Devon Fund B Class.
(3) Effective November 2, 1998, the CDSC schedule for Class B Shares
increased as follows: (i) 5% if shares are redeemed within one
year of purchase (ii) 4% if shares are redeemed with two years of
purchase; (iii) 3% if shares are redeemed during the third or
fourth year following purchase; (iv) 2% if shares are redeemed
during the fifth year following purchase; (v) 1% if shares are
redeemed during the sixth year following purchase; and (v) 0%
thereafter. The above figures have been calculated using this new
schedule.
The performance of Delaware Fund C Class and Devon Fund C Class,
as shown below, is the average annual total return quotation through
October 31, 1998. The average annual total return for Class C Shares
including deferred sales charge reflects the deduction of the applicable
CDSC that would be paid if the shares were redeemed at October 31, 1998.
The average annual total return for Class C Shares excluding deferred
sales charge assumes the shares were not redeemed at October 31, 1998
and therefore does not reflect the deduction of a CDSC.
Average Annual Total Return
Delaware Fund Delaware Fund
Class C Shares Class C Shares
(Including Deferred (Excluding Deferred
Sales Charge) Sales Charge)
1 year ended
10/31/98
Period 11/29/95(1)
through 10/31/98
(1) Date of initial public offering of Delaware Fund C Class.
Average Annual Total Return(1)
Devon Fund Devon Fund
Class C Shares Class C Shares
(Including Deferred (Excluding Deferred
Sales Charge) Sales Charge)
1 year ended
10/31/98
Period 11/29/95(2)
through 10/31/98
(1) Certain expenses of this Fund have been waived and reimbursed by
the Manager. In the absence of such waiver and reimbursement,
performance would have been affected negatively.
(2) Date of initial public offering of Devon Fund C Class.
Total return performance for the Classes will be computed by
adding all reinvested income and realized securities profits
distributions plus the change in net asset value during a specific
period and dividing by the offering price at the beginning of the
period. It will also reflect, as applicable, the maximum sales charge,
or CDSC, paid with respect to the illustrated investment amount, but not
any income taxes payable by shareholders on the reinvested distributions
included in the calculation. Because securities prices fluctuate, past
performance should not be considered as a representation of the results
which may be realized from an investment in the Fund in the future.
From time to time, each Fund may also quote its Class' actual
total return performance, dividend results and other performance
information in advertising and other types of literature. This
information may be compared to that of other mutual funds with similar
investment objectives and to stock, bond and other relevant indices or
to rankings prepared by independent services or other financial or
industry publications that monitor the performance of mutual funds. For
example, the performance of the Fund (or Fund Class) may be compared to
data prepared by Lipper Analytical Services, Inc., Morningstar, Inc. or
to the S&P 500 Index or the Dow Jones Industrial Average.
Lipper Analytical Services, Inc. maintains statistical performance
databases, as reported by a diverse universe of independently-managed
mutual funds. Morningstar, Inc. is a mutual fund rating service that
rates mutual funds on the basis of risk-adjusted performance. Rankings
that compare a Fund's performance to another fund in appropriate
categories over specific time periods also may be quoted in advertising
and other types of literature. The S&P 500 Stock Index and the Dow
Jones Industrial Average are industry-accepted unmanaged indices of
generally-conservative securities used for measuring general market
performance. The Russell 2000 Index TR is a total return weighted index
which is comprised of 2,000 of the smallest stocks (on the basis of
capitalization) in the Russell 3000 Index and is calculated on a monthly
basis. The NASDAQ Composite Index is a market capitalization price only
index that tracks the performance of domestic common stocks traded on
the regular NASDAQ market as well as National Market System traded
foreign common stocks and American Depository Receipts. The total
return performance reported for these indices will reflect the
reinvestment of all distributions on a quarterly basis and market price
fluctuations. The indices do not take into account any sales charge or
other fees. A direct investment in an unmanaged index is not possible.
In addition, the performance of multiple indices compiled and
maintained by statistical research firms, such as Salomon Brothers and
Lehman Brothers may be combined to create a blended performance result
for comparative performances. Generally, the indices selected will be
representative of the types of securities in which the Funds may invest
and the assumptions that were used in calculating the blended
performance will be described.
Ibbotson Associates of Chicago, Illinois ("Ibbotson") provides
historical returns of the capital markets in the United States,
including common stocks, small capitalization stocks, long-term
corporate bonds, intermediate-term government bonds, long-term
government bonds, Treasury bills, the U.S. rate of inflation (based on
the Consumer Price Index), and combinations of various capital markets.
The performance of these capital markets is based on the returns of
different indices. A Fund may use the performance of these capital
markets in order to demonstrate general risk-versus-reward investment
scenarios. Performance comparisons may also include the value of a
hypothetical investment in any of these capital markets. The risks
associated with the security types in any capital market may or may not
correspond directly to those of the Fund. A Fund may also compare
performance to that of other compilations or indices that may be
developed and made available in the future.
Each Fund may include discussions or illustrations of the
potential investment goals of a prospective investor (including
materials that describe general principles of investing, such as asset
allocation, diversification, risk tolerance, and goal setting,
questionnaires designed to help create a personal financial profile,
worksheets used to project savings needs based on assumed rates of
inflation and hypothetical rates of return and action plans offering
investment alternatives), investment management techniques, policies or
investment suitability of the Fund (such as value investing, market
timing, dollar cost averaging, asset allocation, constant ratio
transfer, automatic account rebalancing, the advantages and
disadvantages of investing in tax-deferred and taxable investments),
economic and political conditions, the relationship between sectors of
the economy and the economy as a whole, the effects of inflation and
historical performance of various asset classes, including but not
limited to, stocks, bonds and Treasury bills. From time to time
advertisements, sales literature, communications to shareholders or
other materials may summarize the substance of information contained in
shareholder reports (including the investment composition of a Fund), as
well as the views as to current market, economic, trade and interest
rate trends, legislative, regulatory and monetary developments,
investment strategies and related matters believed to be of relevance to
the Fund. In addition, selected indices may be used to illustrate
historic performance of selected asset classes. A Fund may also include
in advertisements, sales literature, communications to shareholders or
other materials, charts, graphs or drawings which illustrate the
potential risks and rewards of investment in various investment
vehicles, including but not limited to, stocks, bonds, treasury bills
and shares of the Fund. In addition, advertisements, sales literature,
communications to shareholders or other materials may include a
discussion of certain attributes or benefits to be derived by an
investment in the Fund and/or other mutual funds, shareholder profiles
and hypothetical investor scenarios, timely information on financial
management, tax and retirement planning (such as information on Roth
IRAs and Education IRAs) and investment alternative to certificates of
deposit and other financial instruments. Such sales literature,
communications to shareholders or other materials may include symbols,
headlines or other material which highlight or summarize the information
discussed in more detail therein.
Materials may refer to the CUSIP numbers of the Funds and may
illustrate how to find the listings of the Funds in newspapers and
periodicals. Materials may also include discussions of other funds,
products, and services.
Each Fund may quote various measures of volatility and benchmark
correlation in advertising. In addition, each Fund may compare these
measures to those of other funds. Measures of volatility seek to
compare the historical share price fluctuations or total returns to
those of a benchmark. Measures of benchmark correlation indicate how
valid a comparative benchmark may be. Measures of volatility and
correlation may be calculated using averages of historical data. A Fund
may advertise its current interest rate sensitivity, duration, weighted
average maturity or similar maturity characteristics. Advertisements
and sales materials relating to the Funds may include information
regarding the background and experience of its portfolio managers.
The following tables present examples, for purposes of
illustration only, of cumulative total return performance for each Class
through October 31, 1998. For these purposes, the calculations assume
the reinvestment of any capital gains distributions and income dividends
paid during the indicated periods. The performance of each Class, as
shown below, does not reflect any income taxes payable by shareholders
on the reinvested distributions included in the calculations. The
performance of Class A Shares reflects the maximum front-end sales
charge paid on the purchase of shares but may also be shown without
reflecting the impact of any front-end sales charge. The performance of
Class B Shares and Class C Shares is calculated both with the applicable
CDSC included and excluded. On June 14, 1988, Delaware Fund's
investment objective was changed from growth with income to a balance of
capital appreciation, income and preservation of capital. The net asset
values of each Fund fluctuate so shares, when redeemed, may be worth
more or less than the original investment and each Fund's results should
not be considered as representative of future performance.
Cumulative Total Return
Delaware Fund Delaware Fund
Class A Shares(1) Institutional
(at Offer) Class(2)
3 months ended
10/31/98
6 months ended
10/31/98
9 months ended
10/31/98
1 year ended
10/31/98
3 years ended
10/31/98
5 years ended
10/31/98
10 years ended
10/31/98
15 years ended
10/31/98
Period 4/25/38(4)
through 10/31/98
(1) Prior to November 2, 1998, the maximum front-end sales charge was
4.75%. Effective November 2, 1998, the maximum front-end sales
charge was increased to 5.75% and the above performance numbers are
calculated using 5.75% as the applicable sales charge.
(2) Date of initial public offering of Delaware Fund Institutional
Class was November 9, 1992. Pursuant to applicable regulation,
total return shown for Delaware Fund Institutional Class for the
periods prior to the commencement of operations of such Class is
calculated by taking the performance of Delaware Fund A Class and
adjusting it to reflect the elimination of all sales charges.
However, for those periods no adjustment has been made to eliminate
the impact of 12b-1 payments, and performance would have been
affected had such an adjustment been made.
(3) For the six months ended October 31, 1998, cumulative total return
for Delaware Fund A Class at net asset value was .
(4) Date of initial public offering of Delaware Fund A Class.
Cumulative Total Return
Delaware Fund Delaware Fund
Class B Shares Class B Shares
(Including (Excluding
Deferred Deferred
Sales Charge)(1) Sales Charge)
3 months ended
10/31/98
6 months ended
10/31/98
9 months ended
10/31/98
1 year ended
10/31/98
3 years ended
10/31/98
Period 9/6/94(2)
through 10/31/98
(1) Effective November 2, 1998, the CDSC schedule for Class B Shares
increased as follows: (i) 5% if shares are redeemed within one
year of purchase (ii) 4% if shares are redeemed with two years of
purchase; (iii) 3% if shares are redeemed during the third or
fourth year following purchase; (iv) 2% if shares are redeemed
during the fifth year following purchase; (v) 1% if shares are
redeemed during the sixth year following purchase; and (v) 0%
thereafter. The above figures have been calculated using this new
schedule.
(2) Date of initial public offering of Delaware Fund B Class.
Cumulative Total Return
Delaware Fund Delaware Fund
Class C Shares Class C Shares
(Including (Excluding
Deferred Deferred
Sales Charge) Sales Charge)
3 months ended
10/31/98
6 months ended
10/31/98
9 months ended
10/31/98
1 year ended
10/31/98
Period 11/29/95(1)
through 10/31/98
(1) Date of initial public offering of Delaware Fund C Class.
Cumulative Total Return
Devon Fund Devon Fund
Class A Shares(1)(2) Institutional
(at Offer) Class(1)
3 months ended
10/31/98
6 months ended
10/31/98
9 months ended
10/31/98
1 year ended
10/31/98
3 years ended
10/31/98
Period 12/29/93(4)
through 10/31/98
(1) Certain expenses of this Fund have been waived and reimbursed by
the Manager. In the absence of such waiver and reimbursement,
performance would have been affected negatively.
(2) Prior to November 2, 1998, the maximum front-end sales charge was
4.75%. Effective November 2, 1998, the maximum front-end sales
charge was increased to 5.75% and the above performance numbers are
calculated using 5.75% as the applicable sales charge.
(3) For the six months ended October 31, 1998, cumulative total return
for Devon Fund A Class at net asset value was.
(4) Date of initial public offering of Devon Fund A Class.
Cumulative Total Return
Devon Fund Devon Fund
Class B Shares Class B Shares
(Including (Excluding
Deferred Deferred
Sales Charge)(1)(2) Sales Charge)(1)
3 months ended
10/31/98
6 months ended
10/31/98
9 months ended
10/31/98
1 year ended
10/31/98
3 years ended
10/31/98
Period 9/6/94(3)
through 10/31/98
(1) Certain expenses of this Fund have been waived and reimbursed by
the Manager. In the absence of such waiver and reimbursement,
performance would have been affected negatively.
(2) Effective November 2, 1998, the CDSC schedule for Class B Shares
increased as follows: (i) 5% if shares are redeemed within one
year of purchase (ii) 4% if shares are redeemed with two years of
purchase; (iii) 3% if shares are redeemed during the third or
fourth year following purchase; (iv) 2% if shares are redeemed
during the fifth year following purchase; (v) 1% if shares are
redeemed during the sixth year following purchase; and (v) 0%
thereafter. The above figures have been calculated using this new
schedule.
(3) Date of initial public offering of Devon Fund B Class.
Cumulative Total Return
Devon Fund Devon Fund
Class C Shares Class C Shares
(Including (Excluding
Deferred Deferred
Sales Charge)(1) Sales Charge)(1)
3 months ended
10/31/98
6 months ended
10/31/98
9 months ended
10/31/98
1 year ended
10/31/98
Period 11/29/95(2)
through 10/31/98
(1) Certain expenses of this Fund have been waived and reimbursed by
the Manager. In the absence of such waiver and reimbursement,
performance would have been affected negatively.
(2) Date of initial public offering of Devon Fund C Class.
Because every investor's goals and risk threshold are different,
the Distributor, as distributor for each Fund and the other mutual funds
in the Delaware Investments family, will provide general information
about investment alternatives and scenarios that will allow investors to
assess their personal goals. This information will include general
material about investing as well as materials reinforcing various
industry-accepted principles of prudent and responsible financial
planning. One typical way of addressing these issues is to compare an
individual's goals and the length of time the individual has to attain
these goals to his or her risk threshold. In addition, the Distributor
will provide information that discusses the Manager's overriding
investment philosophy and how that philosophy impacts a Fund's, and
other Delaware Investments funds', investment disciplines employed in
seeking their objectives. The Distributor may also from time to time
cite general or specific information about the institutional clients of
the Manager, including the number of such clients serviced by the
Manager.
Dollar-Cost Averaging
For many people, deciding when to invest can be a difficult
decision. Security prices tend to move up and down over various market
cycles and logic says to invest when prices are low. However, even
experts can't always pick the highs and the lows. By using a strategy
known as dollar-cost averaging, you schedule your investments ahead of
time. If you invest a set amount on a regular basis, that money will
always buy more shares when the price is low and fewer when the price is
high. You can choose to invest at any regular interval--for example,
monthly or quarterly--as long as you stick to your regular schedule.
Dollar-cost averaging looks simple and it is, but there are important
things to remember.
Dollar-cost averaging works best over longer time periods, and it
doesn't guarantee a profit or protect against losses in declining
markets. If you need to sell your investment when prices are low, you
may not realize a profit no matter what investment strategy you utilize.
That's why dollar-cost averaging can make sense for long-term goals.
Since the potential success of a dollar-cost averaging program depends
on continuous investing, even through periods of fluctuating prices, you
should consider your dollar-cost averaging program a long-term
commitment and invest an amount you can afford and probably won't need
to withdraw. You also should consider your financial ability to
continue to purchase shares during periods of high fund share prices.
Delaware Investments offers three services -- Automatic Investing
Program, Direct Deposit Program and the Wealth Builder Option -- that
can help to keep your regular investment program on track. See
Investing by Electronic Fund Transfer - Direct Deposit Purchase Plan and
Automatic Investing Plan under Investment Plans and Wealth Builder
Option under Investment Plans for a complete description of these
services, including restrictions or limitations.
The example below illustrates how dollar-cost averaging can work.
In a fluctuating market, the average cost per share over a period of
time will be lower than the average price per share for the same time
period.
Number
Investment Price Per of Shares
Amount Share Purchased
Month 1 $100 $10.00 10
Month 2 $100 $12.50 8
Month 3 $100 $5.00 20
Month 4 $100 $10.00 10
- ----------------------------------------------------------------
$400 $37.50 48
Total Amount Invested: $400
Total Number of Shares Purchased: 48
Average Price Per Share: $9.38 ($37.50/4)
Average Cost Per Share: $8.33 ($400/48 shares)
This example is for illustration purposes only. It is not
intended to represent the actual performance of any stock or bond fund
in the Delaware Investments family.
THE POWER OF COMPOUNDING
When you opt to reinvest your current income for additional Fund
shares, your investment is given yet another opportunity to grow. It's
called the Power of Compounding. Each Fund may include illustrations
showing the power of compounding in advertisements and other types of
literature
TRADING PRACTICES AND BROKERAGE
Brokers or dealers are selected to execute transactions on behalf
of each Fund for the purchase or sale of portfolio securities on the
basis of its judgment of their professional capability to provide the
service. The primary consideration is to have brokers or dealers
execute transactions at best price and execution. Best price and
execution refers to many factors, including the price paid or received
for a security, the commission charged, the promptness and reliability
of execution, the confidentiality and placement accorded the order and
other factors affecting the overall benefit obtained by the account on
the transaction. A number of trades are made on a net basis where a
Fund either buys securities directly from the dealer or sells them to
the dealer. In these instances, there is no direct commission charged
but there is a spread (the difference between the buy and sell price)
which is the equivalent of a commission. When a commission is paid, a
Fund pays reasonably competitive brokerage commission rates based upon
the professional knowledge of Equity Funds I, Inc.'s trading department
as to rates paid and charged for similar transactions throughout the
securities industry. In some instances, a Fund pays a minimal share
transaction cost when the transaction presents no difficulty.
During the fiscal years ended October 31, 1996, 1997 and 1998, the
aggregate dollar amounts of brokerage commissions paid by Delaware Fund
were $651,024, $718,048 and $_______, respectively. For the fiscal
years ended October 31, 1996, 1997 and 1998, the aggregate dollar
amounts of brokerage commissions paid by Devon Fund were $36,082,
$157,621 and $_______, respectively.
The Manager may allocate out of all commission business generated
by all of the funds and accounts under its management, brokerage
business to brokers or dealers who provide brokerage and research
services. These services include advice, either directly or through
publications or writings, as to the value of securities, the
advisability of investing in, purchasing or selling securities, and the
availability of securities or purchasers or sellers of securities;
furnishing of analyses and reports concerning issuers, securities or
industries; providing information on economic factors and trends;
assisting in determining portfolio strategy; providing computer software
and hardware used in security analyses; and providing portfolio
performance evaluation and technical market analyses. Such services are
used by the Manager in connection with its investment decision-making
process with respect to one or more funds and accounts managed by it,
and may not be used, or used exclusively, with respect to the fund or
account generating the brokerage.
During the fiscal year ended October 31, 1998, portfolio
transactions of Delaware Fund in the amount of $________, resulting in
brokerage commissions of $________, were directed to brokers for
brokerage and research services provided. During the same period,
portfolio transactions of Devon Fund in the amount of $__________,
resulting in brokerage commissions of $_______, were directed to brokers
for brokerage and research services provided.
As provided in the 1934 Act and each Fund's Investment Management
Agreement, higher commissions are permitted to be paid to broker/dealers
who provide brokerage and research services than to broker/dealers who
do not provide such services if such higher commissions are deemed
reasonable in relation to the value of the brokerage and research
services provided. Although transactions are directed to broker/dealers
who provide such brokerage and research services, the Funds believe that
the commissions paid to such broker/dealers are not, in general, higher
than commissions that would be paid to broker/dealers not providing such
services and that such commissions are reasonable in relation to the
value of the brokerage and research services provided. In some
instances, services may be provided to the Manager which constitute in
some part brokerage and research services used by the Manager in
connection with its investment decision-making process and constitute in
some part services used by the Manager in connection with administrative
or other functions not related to its investment decision-making
process. In such cases, the Manager will make a good faith allocation
of brokerage and research services and will pay out of its own resources
for services used by the Manager in connection with administrative or
other functions not related to its investment decision-making process.
In addition, so long as no fund is disadvantaged, portfolio transactions
which generate commissions or their equivalent are allocated to
broker/dealers who provide daily portfolio pricing services to a Fund
and to other funds in the Delaware Investments family. Subject to best
price and execution, commissions allocated to brokers providing such
pricing services may or may not be generated by the funds receiving the
pricing service.
The Manager may place a combined order for two or more accounts or
funds engaged in the purchase or sale of the same security if, in its
judgment, joint execution is in the best interest of each participant
and will result in best price and execution. Transactions involving
commingled orders are allocated in a manner deemed equitable to each
account or fund. When a combined order is executed in a series of
transactions at different prices, each account participating in the
order may be allocated an average price obtained from the executing
broker. It is believed that the ability of the accounts to participate
in volume transactions will generally be beneficial to the accounts and
funds. Although it is recognized that, in some cases, the joint
execution of orders could adversely affect the price or volume of the
security that a particular account or fund may obtain, it is the opinion
of the Manager and Equity Funds I, Inc.'s Board of Directors that the
advantages of combined orders outweigh the possible disadvantages of
separate transactions.
Consistent with the Conduct Rules of the National Association of
Securities Dealers, Inc. (the "NASD"), and subject to seeking best price
and execution, a Fund may place orders with broker/dealers that have
agreed to defray certain expenses of the funds in the Delaware
Investments family of funds such as custodian fees, and may, at the
request of the Distributor, give consideration to sales of shares of
such funds as a factor in the selection of brokers and dealers to
execute Fund portfolio transactions.
Portfolio Turnover
Management frequently transfers investments between securities, or
types of securities, in carrying out its investment policy. As a
result, a Fund may, at times, buy and sell more investment securities
and thereby incur greater brokerage commissions than funds which do not
frequently transfer investments. The rate of portfolio turnover is not
a limiting factor when management deems it desirable to purchase or sell
securities.
The degree of portfolio activity may affect taxes payable by a
Fund's shareholders to the extent of any net realized capital gains. A
turnover rate of 100% would occur, for example, if all the investments
in a Fund's portfolio at the beginning of the year were replaced by the
end of the year. The turnover rate also may be affected by cash
requirements from redemptions and repurchases of Fund shares.
The portfolio turnover of each Fund is calculated by dividing the
lesser of purchases or sales of portfolio securities for the particular
fiscal year by the monthly average of the value of the portfolio
securities owned by the Fund during the particular fiscal year,
exclusive of securities whose maturities at the time of acquisition are
one year or less.
During the past two fiscal years, Delaware Fund's portfolio
turnover rates were approximately 81% for 1997 and __% for 1998. During
the past two fiscal years, Devon Fund's portfolio turnover rates were
approximately 64% for 1997 and __% for 1998.
Should it become necessary to sell investments for monies with
which to redeem shares, the Board of Directors, in its discretion, may
deduct from the net asset value the brokerage commissions and other
costs incurred to determine the redemption price. However, Equity Funds
I, Inc. has never redeemed or repurchased shares other than at net asset
value.
PURCHASING SHARES
The Distributor serves as the national distributor for each Fund's
shares and has agreed to use its best efforts to sell shares of each
Fund. See the Prospectuses for information on how to invest. Shares of
each Fund are offered on a continuous basis and may be purchased through
authorized investment dealers or directly by contacting Equity Funds I,
Inc. or the Distributor.
The minimum initial investment generally is $1,000 for Class A
Shares, Class B Shares and Class C Shares. Subsequent purchases of such
Classes generally must be at least $100. The initial and subsequent
investment minimums for Class A Shares will be waived for purchases by
officers, directors and employees of any Delaware Investments fund, the
Manager or any of the Manager's affiliates if the purchases are made
pursuant to a payroll deduction program. Shares purchased pursuant to
the Uniform Gifts to Minors Act or Uniform Transfers to Minors Act and
shares purchased in connection with an Automatic Investing Plan are
subject to a minimum initial purchase of $250 and a minimum subsequent
purchase of $25. Accounts opened under the Delaware Investments Asset
Planner service are subject to a minimum initial investment of $2,000
per Asset Planner Strategy selected. There are no minimum purchase
requirements for the Institutional Classes, but certain eligibility
requirements must be satisfied.
Each purchase of Class B Shares is subject to a maximum purchase
limitation of $250,000. For Class C Shares, each purchase must be in an
amount that is less than $1,000,000. See Investment Plans for purchase
limitations applicable to retirement plans. Equity Funds I, Inc. will
reject any purchase order for more than $250,000 of Class B Shares and
$1,000,000 or more of Class C Shares. An investor may exceed these
limitations by making cumulative purchases over a period of time. In
doing so, an investor should keep in mind, however, that reduced front-
end sales charges apply to investments of $50,000 or more in Class A
Shares, and that Class A Shares are subject to lower annual 12b-1 Plan
expenses than Class B Shares and Class C Shares and generally are not
subject to a CDSC.
Selling dealers are responsible for transmitting orders promptly.
Equity Funds I, Inc. reserves the right to reject any order for the
purchase of its shares of either Fund if in the opinion of management
such rejection is in such Fund's best interest. If a purchase is
canceled because your check is returned unpaid, you are responsible for
any loss incurred. A Fund can redeem shares from your account(s) to
reimburse itself for any loss, and you may be restricted from making
future purchases in any of the funds in the Delaware Investments family.
Each Fund reserves the right to reject purchase orders paid by third-
party checks or checks that are not drawn on a domestic branch of a
United States financial institution. If a check drawn on a foreign
financial institution is accepted, you may be subject to additional bank
charges for clearance and currency conversion.
Each Fund also reserves the right, following shareholder
notification, to charge a service fee on non-retirement accounts that,
as a result of redemption, have remained below the minimum stated
account balance for a period of three or more consecutive months.
Holders of such accounts may be notified of their insufficient account
balance and advised that they have until the end of the current calendar
quarter to raise their balance to the stated minimum. If the account
has not reached the minimum balance requirement by that time, the Fund
will charge a $9 fee for that quarter and each subsequent calendar
quarter until the account is brought up to the minimum balance. The
service fee will be deducted from the account during the first week of
each calendar quarter for the previous quarter, and will be used to help
defray the cost of maintaining low-balance accounts. No fees will be
charged without proper notice, and no CDSC will apply to such
assessments.
Each Fund also reserves the right, upon 60 days' written notice,
to involuntarily redeem accounts that remain under the minimum initial
purchase amount as a result of redemptions. An investor making the
minimum initial investment may be subject to involuntary redemption
without the imposition of a CDSC or Limited CDSC if he or she redeems
any portion of his or her account.
The NASD has adopted amendments to its Conduct Rules, as amended,
relating to investment company sales charges. Equity Funds I, Inc. and
the Distributor intend to operate in compliance with these rules.
Class A Shares are purchased at the offering price which reflects
a maximum front-end sales charge of 5.75%; however, lower front-end
sales charges apply for larger purchases. See the table in the Fund
Classes' Prospectus. Class A Shares are also subject to annual 12b-1
Plan expenses for the life of the investment.
Class B Shares are purchased at net asset value and are subject to
a CDSC of: (i) 5% if shares are redeemed within one year of purchase;
(ii) 4% if shares are redeemed within two years of purchase; (iii) 3% if
shares are redeemed during the third or fourth year following purchase;
(iv) 2% if shares are redeemed during the fifth year following purchase;
and (v) 1% if shares are redeemed during the sixth year following
purchase. Class B Shares are also subject to annual 12b-1 Plan expenses
which are higher than those to which Class A Shares are subject and are
assessed against Class B Shares for approximately eight years after
purchase. See Automatic Conversion of Class B Shares, below.
Class C Shares are purchased at net asset value and are subject to
a CDSC of 1% if shares are redeemed within 12 months following purchase.
Class C Shares are also subject to annual 12b-1 Plan expenses for the
life of the investment which are equal to those to which Class B Shares
are subject.
Institutional Class shares are purchased at the net asset value
per share without the imposition of a front-end or contingent deferred
sales charge or 12b-1 Plan expenses. See Plans Under Rule 12b-1 for the
Fund Classes under Purchasing Shares, and Determining Offering Price and
Net Asset Value in this Part B.
Class A Shares, Class B Shares, Class C Shares and Institutional
Class shares represent a proportionate interest in a Fund's assets and
will receive a proportionate interest in that Fund's income, before
application, as to Class A, Class B and Class C Shares, of any expenses
under that Fund's 12b-1 Plans.
Certificates representing shares purchased are not ordinarily
issued unless, in the case of Class A Shares or Institutional Class
shares, a shareholder submits a specific request. Certificates are not
issued in the case of Class B Shares or Class C Shares or in the case of
any retirement plan account including self-directed IRAs. However,
purchases not involving the issuance of certificates are confirmed to
the investor and credited to the shareholder's account on the books
maintained by Delaware Service Company, Inc. (the "Transfer Agent").
The investor will have the same rights of ownership with respect to such
shares as if certificates had been issued. An investor that is
permitted to obtain a certificate may receive a certificate representing
full share denominations purchased by sending a letter signed by each
owner of the account to the Transfer Agent requesting the certificate.
No charge is assessed by Equity Funds I, Inc. for any certificate
issued. A shareholder may be subject to fees for replacement of a lost
or stolen certificate, under certain conditions, including the cost of
obtaining a bond covering the lost or stolen certificate. Please contact
a Fund for further information. Investors who hold certificates
representing any of their shares may only redeem those shares by written
request. The investor's certificate(s) must accompany such request.
Alternative Purchase Arrangements
The alternative purchase arrangements of Class A Shares, Class B
Shares and Class C Shares permit investors to choose the method of
purchasing shares that is most suitable for their needs given the amount
of their purchase, the length of time they expect to hold their shares
and other relevant circumstances. Investors should determine whether,
given their particular circumstances, it is more advantageous to
purchase Class A Shares and incur a front-end sales charge and annual
12b-1 Plan expenses of up to a maximum of 0.30% of the average daily net
assets of Class A Shares, or to purchase either Class B or Class C
Shares and have the entire initial purchase amount invested in the Fund
with the investment thereafter subject to a CDSC and annual 12b-1 Plan
expenses. Class B Shares are subject to a CDSC if the shares are
redeemed within six years of purchase, and Class C Shares are subject to
a CDSC if the shares are redeemed within 12 months of purchase. Class B
and Class C Shares are each subject to annual 12b-1 Plan expenses of up
to a maximum of 1% (0.25% of which are service fees to be paid to the
Distributor, dealers or others for providing personal service and/or
maintaining shareholder accounts) of average daily net assets of the
respective Class. Class B Shares will automatically convert to Class A
Shares at the end of approximately eight years after purchase and,
thereafter, be subject to annual 12b-1 Plan expenses of up to a maximum
of 0.30% of average daily net assets of such shares. Unlike Class B
Shares, Class C Shares do not convert to another Class.
The higher 12b-1 Plan expenses on Class B Shares and Class C
Shares will be offset to the extent a return is realized on the
additional money initially invested upon the purchase of such shares.
However, there can be no assurance as to the return, if any, that will
be realized on such additional money. In addition, the effect of any
return earned on such additional money will diminish over time. In
comparing Class B Shares to Class C Shares, investors should also
consider the duration of the annual 12b-1 Plan expenses to which each of
the classes is subject and the desirability of an automatic conversion
feature, which is available only for Class B Shares.
For the distribution and related services provided to, and the
expenses borne on behalf of, the Funds, the Distributor and others will
be paid, in the case of Class A Shares, from the proceeds of the front-
end sales charge and 12b-1 Plan fees and, in the case of Class B Shares
and Class C Shares, from the proceeds of the 12b-1 Plan fees and, if
applicable, the CDSC incurred upon redemption. Financial advisers may
receive different compensation for selling Class A Shares, Class B
Shares and Class C Shares. Investors should understand that the
purpose and function of the respective 12b-1 Plans and the CDSCs
applicable to Class B Shares and Class C Shares are the same as those of
the 12b-1 Plan and the front-end sales charge applicable to Class A
Shares in that such fees and charges are used to finance the
distribution of the respective Classes. See Plans Under Rule 12b-1 for
the Fund Classes.
Dividends, if any, paid on Class A Shares, Class B Shares and
Class C Shares will be calculated in the same manner, at the same time
and on the same day and will be in the same amount, except that the
additional amount of 12b-1 Plan expenses relating to Class B Shares and
Class C Shares will be borne exclusively by such shares. See
Determining Offering Price and Net Asset Value.
Class A Shares - Delaware Fund and Devon Fund
Purchases of $50,000 or more of Class A Shares at the offering
price carry reduced front-end sales charges as shown in the table in the
Fund Classes' Prospectus, and may include a series of purchases over a
13- month period under a Letter of Intention signed by the purchaser.
See Special Purchase Features - Class A Shares, below for more
information on ways in which investors can avail themselves of reduced
front-end sales charges and other purchase features.
From time to time, upon written notice to all of its dealers, the
Distributor may hold special promotions for specified periods during
which the Distributor may reallow to dealers up to the full amount of
the front-end sales. In addition, certain dealers who enter into an
agreement to provide extra training and information on Delaware
Investments products and services and who increase sales of Delaware
Investments funds may receive an additional commission of up to 0.15% of
the offering price in connection with sales of Class A Shares. Such
dealers must meet certain requirements in terms of organization and
distribution capabilities and their ability to increase sales. The
Distributor should be contacted for further information on these
requirements as well as the basis and circumstances upon which the
additional commission will be paid. Participating dealers may be deemed
to have additional responsibilities under the securities laws. Dealers
who receive 90% or more of the sales charge may be deemed to be
underwriters under the 1933 Act.
Dealer's Commission
As described in the Prospectus, for initial purchases of Class A
Shares of $1,000,000 or more, a dealer's commission may be paid by the
Distributor to financial advisers through whom such purchases are
effected.
For accounts with assets over $1 million, the dealer commission
resets annually to the highest incremental commission rate on the
anniversary of the first purchase. In determining a financial adviser's
eligibility for the dealer's commission, purchases of Class A Shares of
other Delaware Investments funds as to which a Limited CDSC applies (see
Contingent Deferred Sales Charge for Certain Redemptions of Class A
Shares Purchased at Net Asset Value under Redemption and Exchange) may
be aggregated with those of the Class A Shares of a Fund. Financial
advisers also may be eligible for a dealer's commission in connection
with certain purchases made under a Letter of Intention or pursuant to
an investor's Right of Accumulation. Financial advisers should contact
the Distributor concerning the applicability and calculation of the
dealer's commission in the case of combined purchases.
An exchange from other Delaware Investments funds will not qualify
for payment of the dealer's commission, unless a dealer's commission or
similar payment has not been previously paid on the assets being
exchanged. The schedule and program for payment of the dealer's
commission are subject to change or termination at any time by the
Distributor at its discretion.
Contingent Deferred Sales Charge - Class B Shares and Class C Shares
Class B Shares and Class C Shares are purchased without a front-
end sales charge. Class B Shares redeemed within six years of purchase
may be subject to a CDSC at the rates set forth above, and Class C
Shares redeemed within 12 months of purchase may be subject to a CDSC of
1%. CDSCs are charged as a percentage of the dollar amount subject to
the CDSC. The charge will be assessed on an amount equal to the lesser
of the net asset value at the time of purchase of the shares being
redeemed or the net asset value of those shares at the time of
redemption. No CDSC will be imposed on increases in net asset value
above the initial purchase price, nor will a CDSC be assessed on
redemptions of shares acquired through reinvestment of dividends or
capital gains distributions. For purposes of this formula, the "net
asset value at the time of purchase" will be the net asset value at
purchase of Class B Shares or Class C Shares of a Fund, even if those
shares are later exchanged for shares of another Delaware Investments
fund. In the event of an exchange of the shares, the "net asset value
of such shares at the time of redemption" will be the net asset value of
the shares that were acquired in the exchange. See Waiver of Contingent
Deferred Sales Charge--Class B Shares and Class C Shares under
Redemption and Exchange for the Fund Classes for a list of the instances
in which the CDSC is waived.
During the seventh year after purchase and, thereafter, until
converted automatically into Class A Shares, Class B Shares will still
be subject to the annual 12b-1 Plan expenses of up to 1% of average
daily net assets of those shares. At the end of approximately eight
years after purchase, the investor's Class B Shares will be
automatically converted into Class A Shares of the same Fund. See
Automatic Conversion of Class B Shares under Classes of Shares in the
Fund Classes' Prospectus. Such conversion will constitute a tax-free
exchange for federal income tax purposes. See Taxes. Investors are
reminded that the Class A Shares into which Class B Shares will convert
are subject to ongoing annual 12b-1 Plan expenses of up to a maximum of
0.30% of average daily net assets of such shares.
In determining whether a CDSC applies to a redemption of Class B
Shares, it will be assumed that shares held for more than six years are
redeemed first, followed by shares acquired through the reinvestment of
dividends or distributions, and finally by shares held longest during
the six-year period. With respect to Class C Shares, it will be assumed
that shares held for more than 12 months are redeemed first followed by
shares acquired through the reinvestment of dividends or distributions,
and finally by shares held for 12 months or less.
All investments made during a calendar month, regardless of what
day of the month the investment occurred, will age one month on the last
day of that month and each subsequent month.
Deferred Sales Charge Alternative - Class B Shares
Class B Shares may be purchased at net asset value without a
front-end sales charge and, as a result, the full amount of the
investor's purchase payment will be invested in Fund shares. The
Distributor currently compensates dealers or brokers for selling Class B
Shares at the time of purchase from its own assets in an amount equal to
no more than 5% of the dollar amount purchased. In addition, from time
to time, upon written notice to all of its dealers, the Distributor may
hold special promotions for specified periods during which the
Distributor may pay additional compensation to dealers or brokers for
selling Class B Shares at the time of purchase. As discussed below,
however, Class B Shares are subject to annual 12b-1 Plan expenses and,
if redeemed within six years of purchase, a CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to
the Distributor and others for providing distribution and related
services, and bearing related expenses, in connection with the sale of
Class B Shares. These payments support the compensation paid to dealers
or brokers for selling Class B Shares. Payments to the Distributor and
others under the Class B 12b-1 Plan may be in an amount equal to no more
than 1% annually. The combination of the CDSC and the proceeds of the
12b-1 Plan fees makes it possible for a Fund to sell Class B Shares
without deducting a front-end sales charge at the time of purchase.
Holders of Class B Shares who exercise the exchange privilege
described below will continue to be subject to the CDSC schedule for
Class B Shares described in this Part B, even after the exchange. Such
CDSC schedule may be higher than the CDSC schedule for Class B Shares
acquired as a result of the exchange. See Redemption and Exchange.
Automatic Conversion of Class B Shares
Class B Shares, other than shares acquired through reinvestment of
dividends, held for eight years after purchase are eligible for
automatic conversion into Class A Shares. Conversions of Class B Shares
into Class A Shares will occur only four times in any calendar year, on
the last business day of the second full week of March, June, September
and December (each, a "Conversion Date"). If the eighth anniversary
after a purchase of Class B Shares falls on a Conversion Date, an
investor's Class B Shares will be converted on that date. If the eighth
anniversary occurs between Conversion Dates, an investor's Class B
Shares will be converted on the next Conversion Date after such
anniversary. Consequently, if a shareholder's eighth anniversary falls
on the day after a Conversion Date, that shareholder will have to hold
Class B Shares for as long as three additional months after the eighth
anniversary of purchase before the shares will automatically convert
into Class A Shares.
Class B Shares of a fund acquired through a reinvestment of
dividends will convert to the corresponding Class A Shares of that fund
(or, in the case of Delaware Group Cash Reserve, Inc., the Delaware Cash
Reserve Consultant Class) pro-rata with Class B Shares of that fund not
acquired through dividend reinvestment.
All such automatic conversions of Class B Shares will constitute
tax-free exchanges for federal income tax purposes. See Taxes.
Level Sales Charge Alternative - Class C Shares
Class C Shares may be purchased at net asset value without a
front-end sales charge and, as a result, the full amount of the
investor's purchase payment will be invested in Fund shares. The
Distributor currently compensates dealers or brokers for selling Class C
Shares at the time of purchase from its own assets in an amount equal to
no more than 1% of the dollar amount purchased. As discussed below,
Class C Shares are subject to annual 12b-1 Plan expenses and, if
redeemed within 12 months of purchase, a CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to
the Distributor and others for providing distribution and related
services, and bearing related expenses, in connection with the sale of
Class C Shares. These payments support the compensation paid to dealers
or brokers for selling Class C Shares. Payments to the Distributor and
others under the Class C 12b-1 Plan may be in an amount equal to no more
than 1% annually.
Holders of Class C Shares who exercise the exchange privilege
described below will continue to be subject to the CDSC schedule for
Class C Shares as described in this Part B. See Redemption and
Exchange.
Plans Under Rule 12b-1 for the Fund Classes
Pursuant to Rule 12b-1 under the 1940 Act, Equity Funds I, Inc.
has adopted a separate plan for each of Class A Shares, Class B Shares
and Class C Shares of each Fund (the "Plans"). Each Plan permits a Fund
to pay for certain distribution, promotional and related expenses
involved in the marketing of only the Class of shares to which the Plan
applies. The Plans do not apply to Institutional Classes of shares.
Such shares are not included in calculating the Plans' fees, and the
Plans are not used to assist in the distribution and marketing of shares
of Institutional Classes. Shareholders of Institutional Classes may not
vote on matters affecting the Plans.
The Plans permit a Fund, pursuant to its Distribution Agreement,
to pay out of the assets of Class A Shares, Class B Shares and Class C
Shares monthly fees to the Distributor for its services and expenses in
distributing and promoting sales of shares of such classes. These
expenses include, among other things, preparing and distributing
advertisements, sales literature, and prospectuses and reports used for
sales purposes, compensating sales and marketing personnel, holding
special promotions for specified periods of time and paying distribution
and maintenance fees to brokers, dealers and others. In connection with
the promotion of shares of the Classes, the Distributor may, from time
to time, pay to participate in dealer-sponsored seminars and
conferences, and reimburse dealers for expenses incurred in connection
with preapproved seminars, conferences and advertising. The Distributor
may pay or allow additional promotional incentives to dealers as part of
preapproved sales contests and/or to dealers who provide extra training
and information concerning a Class and increase sales of the Class. In
addition, each Fund may make payments from the 12b-1 Plan fees of its
respective Classes directly to others, such as banks, who aid in the
distribution of Class shares or provide services in respect of a Class,
pursuant to service agreements with Equity Funds I, Inc. The Plan
expenses relating to Class B Shares and Class C Shares are also used to
pay the Distributor for advancing the commission costs to dealers with
respect to the initial sale of such shares.
The maximum aggregate fee payable by a Fund under the Plans, and a
Fund's Distribution Agreement, is on an annual basis, up to 0.30% of
average daily net assets of Class A Shares, and up to 1% (0.25% of which
are service fees to be paid to the Distributor, dealers and others for
providing personal service and/or maintaining shareholder accounts) of
each of the Class B Shares' and Class C Shares' average daily net assets
for the year. Equity Funds I, Inc.'s Board of Directors may reduce
these amounts at any time.
Effective June 1, 1992, Equity Funds I, Inc.'s Board of Directors
has determined that the annual fee, payable on a monthly basis, for
Delaware Fund A Class under its Plan will be equal to the sum of: (i)
the amount obtained by multiplying 0.30% by the average daily net assets
represented by shares of Delaware Fund A Class that were acquired by
shareholders on or after June 1, 1992; and (ii) the amount obtained by
multiplying 0.10% by the average daily net assets represented by shares
of Delaware Fund A Class that were acquired before June 1, 1992. While
this is the method for calculating the 12b-1 fees to be paid by Delaware
Fund A Class, the fee is a Class expense so that all shareholders of
that Class, regardless of when they purchased their shares, will bear
12b-1 expenses at the same per share rate. As Delaware Fund A Class
shares are sold on or after June 1, 1992, the initial rate of at least
0.10% will increase over time. Thus, as the proportion of Delaware Fund
A Class shares purchased on or after June 1, 1992 to Delaware Fund A
Class shares outstanding prior to June 1, 1992 increases, the expenses
attributable to payments under the Plan will also increase (but will not
exceed 0.30% of average daily net assets). While this describes the
current formula for calculating the fees which will be payable under the
Plan, the Plan permits the Fund to pay a full 0.30% on all Delaware Fund
A Class assets at any time.
On September 23, 1993, Equity Funds I, Inc.'s Board of Directors
set the fee for Devon Fund A Class at 0.30% of average daily net assets.
While payments pursuant to the Plans may not exceed 0.30% annually
with respect to Class A Shares, and 1% annually with respect to each of
the Class B Shares and Class C Shares, the Plans do not limit fees to
amounts actually expended by the Distributor. It is therefore possible
that the Distributor may realize a profit in any particular year.
However, the Distributor currently expects that its distribution
expenses will likely equal or exceed payments to it under the Plans.
The Distributor may, however, incur such additional expenses and make
additional payments to dealers from its own resources to promote the
distribution of shares of the Classes. The monthly fees paid to the
Distributor under the Plans are subject to the review and approval of
Equity Funds I, Inc.'s unaffiliated directors, who may reduce the fees
or terminate the Plans at any time.
All of the distribution expenses incurred by the Distributor and
others, such as broker/dealers, in excess of the amount paid on behalf
of Class A Shares, Class B Shares and Class C Shares would be borne by
such persons without any reimbursement from such Fund Classes. Subject
to seeking best price and execution, a Fund may, from time to time, buy
or sell portfolio securities from or to firms which receive payments
under the Plans.
From time to time, the Distributor may pay additional amounts from
its own resources to dealers for aid in distribution or for aid in
providing administrative services to shareholders.
The Plans and the Distribution Agreements, as amended, have all
been approved by the Board of Directors of Equity Funds I, Inc.,
including a majority of the directors who are not "interested persons"
(as defined in the 1940 Act) of Equity Funds I, Inc. and who have no
direct or indirect financial interest in the Plans by vote cast in
person at a meeting duly called for the purpose of voting on the Plans
and such Agreements. Continuation of the Plans and the Distribution
Agreements, as amended, must be approved annually by the Board of
Directors in the same manner as specified above.
Each year, the directors must determine whether continuation of
the Plans is in the best interest of shareholders of, respectively,
Class A Shares, Class B Shares and Class C Shares of each Fund and that
there is a reasonable likelihood of the Plan relating to a Class
providing a benefit to that Class. The Plans and the Distribution
Agreements, as amended, may be terminated with respect to a Class at any
time without penalty by a majority of those directors who are not
"interested persons" or by a majority vote of the relevant Class'
outstanding voting securities. Any amendment materially increasing the
percentage payable under the Plans must likewise be approved by a
majority vote of the relevant Class' outstanding voting securities, as
well as by a majority vote of those directors who are not "interested
persons." With respect to each Class A Shares' Plan, any material
increase in the maximum percentage payable thereunder must also be
approved by a majority of the outstanding voting securities of the
respective Fund's B Class. Also, any other material amendment to the
Plans must be approved by a majority vote of the directors including a
majority of the noninterested directors of Equity Funds I, Inc. having
no interest in the Plans. In addition, in order for the Plans to remain
effective, the selection and nomination of directors who are not
"interested persons" of Equity Funds I, Inc. must be effected by the
directors who themselves are not "interested persons" and who have no
direct or indirect financial interest in the Plans. Persons authorized
to make payments under the Plans must provide written reports at least
quarterly to the Board of Directors for their review.
For the fiscal year ended October 31, 1998, payments from Class A
Shares, Class B Shares and Class C Shares of Delaware Fund amounted to
$________, $_______ and $_________, respectively. Such amounts were
used for the following purposes:
Delaware Fund Delaware Fund Delaware Fund
A Class B Class C Class
Advertising
Annual/Semi-Annual Reports
Broker Trails
Broker Sales Charges
Dealer Service Expenses
Interest on Broker Sales Charges
Commissions to Wholesalers
Promotional-Broker Meetings
Promotional-Other
Prospectus Printing
Telephone
Wholesaler Expenses
Other
For the fiscal year ended October 31, 1998, payments from Class A
Shares, Class B Shares and Class C Shares of Devon Fund amounted to
$______, $______ and $______, respectively. Such amounts were used for
the following purposes:
Devon Fund Devon Fund Devon Fund
A Class B Class C Class
Advertising
Annual/Semi-Annual Reports
Broker Trails
Broker Sales Charges
Dealer Service Expenses
Interest on Broker Sales Charges
Commissions to Wholesalers
Promotional-Broker Meetings
Promotional-Other
Prospectus Printing
Telephone
Wholesaler Expenses
Other
Other Payments to Dealers - Class A Shares, Class B Shares and Class C
Shares
From time to time, at the discretion of the Distributor, all
registered broker/dealers whose aggregate sales of Fund Classes exceed
certain limits as set by the Distributor, may receive from the
Distributor an additional payment of up to 0.25% of the dollar amount of
such sales. The Distributor may also provide additional promotional
incentives or payments to dealers that sell shares of the Delaware
Investments family of funds. In some instances, these incentives or
payments may be offered only to certain dealers who maintain, have sold
or may sell certain amounts of shares. The Distributor may also pay a
portion of the expense of preapproved dealer advertisements promoting
the sale of Delaware Investments fund shares.
Subject to pending amendments to the NASD's Conduct Rules, in
connection with the promotion of Delaware Investments fund shares, the
Distributor may, from time to time, pay to participate in dealer-
sponsored seminars and conferences, reimburse dealers for expenses
incurred in connection with preapproved seminars, conferences and
advertising and may, from time to time, pay or allow additional
promotional incentives to dealers, which shall include non-cash
concessions, such as certain luxury merchandise or a trip to or
attendance at a business or investment seminar at a luxury resort, as
part of preapproved sales contests. Payment of non-cash compensation to
dealers is currently under review by the NASD and the Securities and
Exchange Commission. It is likely that the NASD's Conduct Rules will be
amended such that the ability of the Distributor to pay non-cash
compensation as described above will be restricted in some fashion. The
Distributor intends to comply with the NASD's Conduct Rules as they may
be amended.
Special Purchase Features - Class A Shares
Buying Class A Shares at Net Asset Value
Class A Shares of the Fund may be purchased at net asset value
under the Delaware Investments Dividend Reinvestment Plan and, under
certain circumstances, the Exchange Privilege and the 12-Month
Reinvestment Privilege.
Purchases of Class A Shares may be made at net asset value by
current and former officers, directors and employees (and members of
their families) of the Manager, any affiliate, any of the funds in the
Delaware Investments family, certain of their agents and registered
representatives and employees of authorized investment dealers and by
employee benefit plans for such entities. Individual purchases,
including those in retirement accounts, must be for accounts in the name
of the individual or a qualifying family member. Class A Shares may
also be purchased at net asset value by current and former officers,
directors and employees (and members of their families) of the Dougherty
Financial Group LLC.
Purchases of Class A Shares may also be made by clients of
registered representatives of an authorized investment dealer at net
asset value within 12 months after the registered representative changes
employment, if the purchase is funded by proceeds from an investment
where a front-end sales charge, contingent deferred sales charge or
other sales charge has been assessed. Purchases of Class A Shares may
also be made at net asset value by bank employees who provide services
in connection with agreements between the bank and unaffiliated brokers
or dealers concerning sales of shares of funds in the Delaware
Investments family. Officers, directors and key employees of
institutional clients of the Manager or any of its affiliates may
purchase Class A Shares at net asset value. Moreover, purchases may be
effected at net asset value for the benefit of the clients of brokers,
dealers and registered investment advisers affiliated with a broker or
dealer, if such broker, dealer or investment adviser has entered into an
agreement with the Distributor providing specifically for the purchase
of Class A Shares in connection with special investment products, such
as wrap accounts or similar fee based programs. Investors may be
charged a fee when effecting transactions in Class A Shares through a
broker or agent that offers these special investment products.
Purchases of Class A Shares at net asset value may also be made by
the following: financial institutions investing for the account of
their trust customers if they are not eligible to purchase shares of the
Institutional Class of a Fund; any group retirement plan (excluding
defined benefit pension plans), or such plans of the same employer, for
which plan participant records are maintained on the Retirement
Financial Services, Inc. (formerly known as Delaware Investment &
Retirement Services, Inc.) proprietary record keeping system that (i)
has in excess of $500,000 of plan assets invested in Class A Shares of
funds in the Delaware Investments family and any stable value account
available to investment advisory clients of the Manager or its
affiliates; or (ii) is sponsored by an employer that has at any point
after May 1, 1997 had more than 100 employees while such plan has held
Class A Shares of a fund in the Delaware Investments family and such
employer has properly represented to, and received written confirmation
back from, Retirement Financial Services, Inc. in writing that it has
the requisite number of employees. See Group Investment Plans for
information regarding the applicability of the Limited CDSC.
Purchases of Class A Shares at net asset value may also be made by
bank sponsored retirement plans that are no longer eligible to purchase
Institutional Class Shares or purchase interests in a collective trust
as a result of a change in distribution arrangements.
Investors in Delaware Investments Unit Investment Trusts may
reinvest monthly dividend checks and/or repayment of invested capital
into Class A Shares of any of the funds in the Delaware Investments
family at net asset value.
Investments in Class A Shares made by plan level and/or
participant retirement accounts that are for the purpose of repaying a
loan taken from such accounts will be made at net asset value. Loan
repayments made to a fund account in connection with loans originated
from accounts previously maintained by another investment firm will also
be invested at net asset value.
Equity Funds I, Inc. must be notified in advance that the trade
qualifies for purchase at net asset value.
Allied Plans
Class A Shares are available for purchase by participants in
certain 401(k) Defined Contribution Plans ("Allied Plans") which are
made available under a joint venture agreement between the Distributor
and another institution through which mutual funds are marketed and
which allow investments in Class A Shares of designated Delaware
Investments funds ("eligible Delaware Investments fund shares"), as well
as shares of designated classes of non-Delaware Investments funds
("eligible non-Delaware Investments fund shares"). Class B Shares and
Class C Shares are not eligible for purchase by Allied Plans.
With respect to purchases made in connection with an Allied Plan,
the value of eligible Delaware Investments and eligible non-Delaware
Investments fund shares held by the Allied Plan may be combined with the
dollar amount of new purchases by that Allied Plan to obtain a reduced
front-end sales charge on additional purchases of eligible Delaware
Investments fund shares. See Combined Purchases Privilege, below.
Participants in Allied Plans may exchange all or part of their
eligible Delaware Investments fund shares for other eligible Delaware
Investments fund shares or for eligible non-Delaware Investments fund
shares at net asset value without payment of a front-end sales charge.
However, exchanges of eligible fund shares, both Delaware Investments
and non-Delaware Investments, which were not subject to a front end
sales charge, will be subject to the applicable sales charge if
exchanged for eligible Delaware Investments fund shares to which a sales
charge applies. No sales charge will apply if the eligible fund shares
were previously acquired through the exchange of eligible shares on
which a sales charge was already paid or through the reinvestment of
dividends. See Investing by Exchange.
A dealer's commission may be payable on purchases of eligible
Delaware Investments fund shares under an Allied Plan. In determining a
financial adviser's eligibility for a dealer's commission on net asset
value purchases of eligible Delaware Investments fund shares in
connection with Allied Plans, all participant holdings in the Allied
Plan will be aggregated. See Class A Shares - Delaware Fund and Devon
Fund
The Limited CDSC is applicable to redemptions of net asset value
purchases from an Allied Plan on which a dealer's commission has been
paid. Waivers of the Limited CDSC, as described under Waiver of Limited
Contingent Deferred Sales Charge - Class A Shares under Redemption and
Exchange, apply to redemptions by participants in Allied Plans except in
the case of exchanges between eligible Delaware Investments and non-
Delaware Investments fund shares. When eligible Delaware Investments
fund shares are exchanged into eligible non-Delaware Investments fund
shares, the Limited CDSC will be imposed at the time of the exchange,
unless the joint venture agreement specifies that the amount of the
Limited CDSC will be paid by the financial adviser or selling dealer.
See Contingent Deferred Sales Charge for Certain Redemptions of Class A
Shares Purchased at Net Asset Value under Redemption and Exchange.
Letter of Intention
The reduced front-end sales charges described above with respect
to Class A Shares are also applicable to the aggregate amount of
purchases made within a 13-month period pursuant to a written Letter of
Intention provided by the Distributor and signed by the purchaser, and
not legally binding on the signer or Equity Funds I, Inc. which provides
for the holding in escrow by the Transfer Agent, of 5% of the total
amount of Class A Shares intended to be purchased until such purchase is
completed within the 13-month period. A Letter of Intention may be
dated to include shares purchased up to 90 days prior to the date the
Letter is signed. The 13-month period begins on the date of the
earliest purchase. If the intended investment is not completed, except
as noted below, the purchaser will be asked to pay an amount equal to
the difference between the front-end sales charge on Class A Shares
purchased at the reduced rate and the front-end sales charge otherwise
applicable to the total shares purchased. If such payment is not made
within 20 days following the expiration of the 13-month period, the
Transfer Agent will surrender an appropriate number of the escrowed
shares for redemption in order to realize the difference. Such
purchasers may include the value (at offering price at the level
designated in their Letter of Intention) of all their shares of the
Funds and of any class of any of the other mutual funds in Delaware
Investments (except shares of any Delaware Investments fund which do not
carry a front-end sales charge, CDSC or Limited CDSC other than shares
of Delaware Group Premium Fund, Inc. beneficially owned in connection
with the ownership of variable insurance products, unless they were
acquired through an exchange from a Delaware Investments fund which
carried a front-end sales charge, CDSC or Limited CDSC) previously
purchased and still held as of the date of their Letter of Intention
toward the completion of such Letter.
Employers offering a Delaware Investments retirement plan may also
complete a Letter of Intention to obtain a reduced front-end sales
charge on investments of Class A Shares made by the plan. The aggregate
investment level of the Letter of Intention will be determined and
accepted by the Transfer Agent at the point of plan establishment. The
level and any reduction in front-end sales charge will be based on
actual plan participation and the projected investments in Delaware
Investments funds that are offered with a front-end sales charge, CDSC
or Limited CDSC for a 13-month period. The Transfer Agent reserves the
right to adjust the signed Letter of Intention based on this acceptance
criteria. The 13-month period will begin on the date this Letter of
Intention is accepted by the Transfer Agent. If actual investments
exceed the anticipated level and equal an amount that would qualify the
plan for further discounts, any front-end sales charges will be
automatically adjusted. In the event this Letter of Intention is not
fulfilled within the 13-month period, the plan level will be adjusted
(without completing another Letter of Intention) and the employer will
be billed for the difference in front-end sales charges due, based on
the plan's assets under management at that time. Employers may also
include the value (at offering price at the level designated in their
Letter of Intention) of all their shares intended for purchase that are
offered with a front-end sales charge, CDSC or Limited CDSC of any
class. Class B Shares and Class C Shares of a Fund and other Delaware
Investments funds which offer corresponding classes of shares may also
be aggregated for this purpose.
Combined Purchases Privilege
In determining the availability of the reduced front-end sales
charge previously set forth with respect to Class A Shares, purchasers
may combine the total amount of any combination of Class A Shares, Class
B Shares and/or Class C Shares of the Funds, as well as shares of any
other class of any of the other Delaware Investments funds (except
shares of any Delaware Investments fund which do not carry a front-end
sales charge, CDSC or Limited CDSC, other than shares of Delaware Group
Premium Fund, Inc. beneficially owned in connection with the ownership
of variable insurance products, unless they were acquired through an
exchange from a Delaware Investments fund which carried a front-end
sales charge, CDSC or Limited CDSC). In addition, assets held by
investment advisory clients of the Manager or its affiliates in a stable
value account may be combined with other Delaware Investments fund
holdings.
The privilege also extends to all purchases made at one time by an
individual; or an individual, his or her spouse and their children under
21; or a trustee or other fiduciary of trust estates or fiduciary
accounts for the benefit of such family members (including certain
employee benefit programs).
Right of Accumulation
In determining the availability of the reduced front-end sales
charge with respect to the Class A Shares, purchasers may also combine
any subsequent purchases of Class A Shares, Class B Shares and Class C
Shares of a Fund, as well as shares of any other class of any of the
other Delaware Investments funds which offer such classes (except shares
of any Delaware Investments fund which do not carry a front-end sales
charge, CDSC or Limited CDSC, other than shares of Delaware Group
Premium Fund, Inc. beneficially owned in connection with the ownership
of variable insurance products, unless they were acquired through an
exchange from a Delaware Investments fund which carried a front-end
sales charge, CDSC or Limited CDSC). If, for example, any such
purchaser has previously purchased and still holds Class A Shares and/or
shares of any other of the classes described in the previous sentence
with a value of $40,000 and subsequently purchases $10,000 at offering
price of additional shares of Class A Shares, the charge applicable to
the $10,000 purchase would currently be ____. For the purpose of this
calculation, the shares presently held shall be valued at the public
offering price that would have been in effect were the shares purchased
simultaneously with the current purchase. Investors should refer to the
table of sales charges for Class A Shares to determine the applicability
of the Right of Accumulation to their particular circumstances.
12-Month Reinvestment Privilege
Holders of Class A Shares of a Fund (and of Institutional Classes
holding shares which were acquired through an exchange from one of the
other mutual funds in Delaware Investments offered with a front-end
sales charge) who redeem such shares have one year from the date of
redemption to reinvest all or part of their redemption proceeds in Class
A Shares of that Fund or in Class A Shares of any of the other funds in
the Delaware Investments family, subject to applicable eligibility and
minimum purchase requirements, in states where shares of such other
funds may be sold, at net asset value without the payment of a front-end
sales charge. This privilege does not extend to Class A Shares where
the redemption of the shares triggered the payment of a Limited CDSC.
Persons investing redemption proceeds from direct investments in mutual
funds in the Delaware Investments family offered without a front-end
sales charge will be required to pay the applicable sales charge when
purchasing Class A Shares. The reinvestment privilege does not extend
to a redemption of either Class B Shares or Class C Shares.
Any such reinvestment cannot exceed the redemption proceeds (plus
any amount necessary to purchase a full share). The reinvestment will
be made at the net asset value next determined after receipt of
remittance. A redemption and reinvestment could have income tax
consequences. It is recommended that a tax adviser be consulted with
respect to such transactions. Any reinvestment directed to a fund in
which the investor does not then have an account will be treated like
all other initial purchases of a fund's shares. Consequently, an
investor should obtain and read carefully the prospectus for the fund in
which the investment is intended to be made before investing or sending
money. The prospectus contains more complete information about the
fund, including charges and expenses.
Investors should consult their financial advisers or the Transfer
Agent, which also serves as the Funds' shareholder servicing agent,
about the applicability of the Limited CDSC (see Contingent Deferred
Sales Charge for Certain Redemptions of Class A Shares Purchased at Net
Asset Value under Redemption and Exchange) in connection with the
features described above.
Group Investment Plans
Group Investment Plans which are not eligible to purchase shares
of the Institutional Classes may also benefit from the reduced front-end
sales charges for investments in Class A Shares set forth in the table
on page 00, based on total plan assets. If a company has more than one
plan investing in the Delaware Investments family of funds, then the
total amount invested in all plans would be used in determining the
applicable front-end sales charge reduction upon each purchase, both
initial and subsequent, upon notification to the Fund in which the
investment is being made at the time of each such purchase. Employees
participating in such Group Investment Plans may also combine the
investments made in their plan account when determining the applicable
front-end sales charge on purchases to non-retirement Delaware
Investments investment accounts if they so notify the Fund in which they
are investing in connection with each purchase. See Retirement Plans
for the Fund Classes under Investment Plans for information about
Retirement Plans.
The Limited CDSC is applicable to any redemptions of net asset
value purchases made on behalf of any group retirement plan on which a
dealer's commission has been paid only if such redemption is made
pursuant to a withdrawal of the entire plan from a fund in the Delaware
Investments family. See Contingent Deferred Sales Charge for Certain
Redemptions of Class A Shares Purchased at Net Asset Value under
Redemption and Exchange.
Institutional Classes
The Institutional Class of each Fund is available for purchase
only by: (a) retirement plans introduced by persons not associated with
brokers or dealers that are primarily engaged in the retail securities
business and rollover individual retirement accounts from such plans;
(b) tax-exempt employee benefit plans of the Manager or its affiliates
and securities dealer firms with a selling agreement with the
Distributor; (c) institutional advisory accounts of the Manager or its
affiliates and those having client relationships with Delaware
Investment Advisers, an affiliate of the Manager, or its other
affiliates and their corporate sponsors, as well as subsidiaries and
related employee benefit plans and rollover individual retirement
accounts from such institutional advisory accounts; (d) a bank, trust
company and similar financial institution investing for its own account
or for the account of its trust customers for whom such financial
institution is exercising investment discretion in purchasing shares of
the Class, except where the investment is part of a program that
requires payment of the financial institution of a Rule 12b-1 Plan fee;
and (e) registered investment advisers investing on behalf of clients
that consist solely of institutions and high net-worth individuals
having at least $1,000,000 entrusted to the adviser for investment
purposes, but only if the adviser is not affiliated or associated with a
broker or dealer and derives compensation for its services exclusively
from its clients for such advisory services.
Shares of Institutional Classes are available for purchase at net
asset value, without the imposition of a front-end or contingent
deferred sales charge and are not subject to Rule 12b-1 expenses.
INVESTMENT PLANS
Reinvestment Plan/Open Account
Unless otherwise designated by shareholders in writing, dividends
from net investment income and distributions from realized securities
profits, if any, will be automatically reinvested in additional shares
of the respective Fund Class in which an investor has an account (based
on the net asset value in effect on the reinvestment date) and will be
credited to the shareholder's account on that date. All dividends and
distributions of Institutional Classes are reinvested in the accounts of
the holders of such shares (based on the net asset value in effect on
the reinvestment date). A confirmation of each dividend payment from
net investment income will be mailed to shareholders quarterly. A
confirmation of any distributions from realized securities profits will
be mailed to shareholders in the first quarter of the fiscal year.
Under the Reinvestment Plan/Open Account, shareholders may
purchase and add full and fractional shares to their plan accounts at
any time either through their investment dealers or by sending a check
or money order to the specific Fund and Class in which shares are being
purchased. Such purchases, which must meet the minimum subsequent
purchase requirements set forth in the Prospectuses and this Part B, are
made for Class A Shares at the public offering price, and for Class B
Shares, Class C Shares and Institutional Classes at the net asset value,
at the end of the day of receipt. A reinvestment plan may be terminated
at any time. This plan does not assure a profit nor protect against
depreciation in a declining market.
Reinvestment of Dividends in Other Delaware Investments Family of Funds
Subject to applicable eligibility and minimum initial purchase
requirements and the limitations set forth below, holders of Class A
Shares, Class B Shares and Class C Shares may automatically reinvest
dividends and/or distributions in any of the mutual funds in the
Delaware Investments, including the Funds, in states where their shares
may be sold. Such investments will be at net asset value at the close
of business on the reinvestment date without any front-end sales charge
or service fee. The shareholder must notify the Transfer Agent in
writing and must have established an account in the fund into which the
dividends and/or distributions are to be invested. Any reinvestment
directed to a fund in which the investor does not then have an account
will be treated like all other initial purchases of a fund's shares.
Consequently, an investor should obtain and read carefully the
prospectus for the fund in which the investment is intended to be made
before investing or sending money. The prospectus contains more
complete information about the fund, including charges and expenses.
Subject to the following limitations, dividends and/or
distributions from other funds in Delaware Investments may be invested
in shares of the Funds, provided an account has been established.
Dividends from Class A Shares may not be directed to Class B Shares or
Class C Shares. Dividends from Class B Shares may only be directed to
other Class B Shares and dividends from Class C Shares may only be
directed to other Class C Shares.
Capital gains and/or dividend distributions for participants in
the following retirement plans are automatically reinvested into the
same Delaware Investments fund in which their investments are held:
SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money
Purchase Pension Plans, 401(k) Defined Contribution Plans, or 403(b)(7)
or 457 Deferred Compensation Plans.
Investing by Exchange
If you have an investment in another mutual fund in the Delaware
Investments family, you may write and authorize an exchange of part or
all of your investment into shares of a Fund. If you wish to open an
account by exchange, call the Shareholder Service Center for more
information. All exchanges are subject to the eligibility and minimum
purchase requirements set forth in each fund's prospectus and a sales
charge may apply. See Redemption and Exchange for more complete
information concerning your
exchange privileges.
Holders of Class B Shares of a Fund are permitted to exchange all
or part of their Class
B Shares only into Class B Shares of other
Delaware Investments funds.
Similarly, holders of Class C Shares of a
Fund are permitted to exchange
all or part of their Class C Shares only
into Class C Shares of other
Delaware Investments funds. Class B
Shares of a Fund and Class C Shares
of a Fund acquired by exchange
will continue to carry the CDSC and, in the case of Class B Shares,
the automatic conversion schedule of the
fund from which the exchange
is made. The holding period of Class B
Shares of a Fund acquired by
exchange will be added to that of the shares that were exchanged for
purposes of determining the time of the automatic conversion into
Class A Shares of that Fund.
Permissible exchanges into Class A Shares of a Fund will be made
without a front-end sales charge, except for exchanges of shares that
were not previously subject to a front-end sales charge (unless such
shares were acquired through the reinvestment of dividends).
Permissible exchanges into Class B Shares or Class C Shares of a Fund
will be made without the imposition of a CDSC by the fund from which the
exchange is being made at the time of the exchange.
Investing by Electronic Fund Transfer
Direct Deposit Purchase Plan--Investors may arrange for either
Fund to accept for investment in Class A Shares, Class B Shares or Class
C Shares, through an agent bank, preauthorized government or private
recurring payments. This method of investment assures the timely credit
to the shareholder's account of payments such as social security,
veterans' pension or compensation benefits, federal salaries, Railroad
Retirement benefits, private payroll checks, dividends, and disability
or pension fund benefits. It also eliminates lost, stolen and delayed
checks.
Automatic Investing Plan--Shareholders of Class A Shares, Class B
Shares and Class C Shares may make automatic investments by authorizing,
in advance, monthly payments directly from their checking account for
deposit into their Fund account. This type of investment will be
handled in either of the following ways. (1) If the shareholder's bank
is a member of the National Automated Clearing House Association
("NACHA"), the amount of the investment will be electronically deducted
from his or her account by Electronic Fund Transfer ("EFT"). The
shareholder's checking account will reflect a debit each month at a
specified date although no check is required to initiate the
transaction. (2) If the shareholder's bank is not a member of NACHA,
deductions will be made by preauthorized checks, known as Depository
Transfer Checks. Should the shareholder's bank become a member of NACHA
in the future, his or her investments would be handled electronically
through EFT.
This option is not available to participants in the following
plans: SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and
Money Purchase Pension Plans, 401(k) Defined Contribution Plans, or
403(b)(7) or 457 Deferred Compensation Plans.
* * *
Initial investments under the Direct Deposit Purchase Plan and the
Automatic Investing Plan must be for $250 or more and subsequent
investments under such plans must be for $25 or more. An investor
wishing to take advantage of either service must complete an
authorization form. Either service can be discontinued by the
shareholder at any time without penalty by giving written notice.
Payments to a Fund from the federal government or its agencies on
behalf of a shareholder may be credited to the shareholder's account
after such payments should have been terminated by reason of death or
otherwise. Any such payments are subject to reclamation by the federal
government or its agencies. Similarly, under certain circumstances,
investments from private sources may be subject to reclamation by the
transmitting bank. In the event of a reclamation, a Fund may liquidate
sufficient shares from a shareholder's account to reimburse the
government or the private source. In the event there are insufficient
shares in the shareholder's account, the shareholder is expected to
reimburse the Fund.
Direct Deposit Purchases by Mail
Shareholders may authorize a third party, such as a bank or
employer, to make investments directly to their Fund accounts. Either
Fund will accept these investments, such as bank-by-phone, annuity
payments and payroll allotments, by mail directly from the third party.
Investors should contact their employers or financial institutions who
in turn should contact Equity Funds I, Inc. for proper instructions.
MoneyLine (SM) On Demand
You or your investment dealer may request purchases of Fund shares
by phone using MoneyLine (SM) On Demand. When you authorize a Fund to
accept such requests from you or your investment dealer, funds will be
withdrawn from (for share purchases) your predesignated bank account.
Your request will be processed the same day if you call prior to 4 p.m.,
Eastern time. There is a $25 minimum and $50,000 maximum limit for
MoneyLine (SM) On Demand transactions.
It may take up to four business days for the transactions to be
completed. You can initiate this service by completing an Account
Services form. If your name and address are not identical to the name
and address on your Fund account, you must have your signature
guaranteed. The Funds do not charge a fee for this service; however,
your bank may charge a fee. This service is available for Class A, B and
C shares.
Wealth Builder Option
Shareholders can use the Wealth Builder Option to invest in the
Fund Classes through regular liquidations of shares in their accounts in
other mutual funds in the Delaware Investments family. Shareholders of
the Fund Classes may elect to invest in one or more of the other mutual
funds in Delaware Investments family through the Wealth Builder Option.
If in connection with the election of the Wealth Builder Option, you
wish to open a new account to receive the automatic investment, such new
account must meet the minimum initial purchase requirements described in
the prospectus of the fund that you select. All investments under this
option are exchanges and are therefore subject to the same conditions
and limitations as other exchanges noted above.
Under this automatic exchange program, shareholders can authorize
regular monthly investments (minimum of $100 per fund) to be liquidated
from their account and invested automatically into other mutual funds in
the Delaware Investments family, subject to the conditions and
limitations set forth in the Fund Classes' Prospectus. The investment
will be made on the 20th day of each month (or, if the fund selected is
not open that day, the next business day) at the public offering price
or net asset value, as applicable, of the fund selected on the date of
investment. No investment will be made for any month if the value of
the shareholder's account is less than the amount specified for
investment.
Periodic investment through the Wealth Builder Option does not
insure profits or protect against losses in a declining market. The
price of the fund into which investments are made could fluctuate.
Since this program involves continuous investment regardless of such
fluctuating value, investors selecting this option should consider their
financial ability to continue to participate in the program through
periods of low fund share prices. This program involves automatic
exchanges between two or more fund accounts and is treated as a purchase
of shares of the fund into which investments are made through the
program. See Exchange Privilege for a brief summary of the tax
consequences of exchanges. Shareholders can terminate their
participation in Wealth Builder at any time by giving written notice to
the fund from which exchanges are made.
This option is not available to participants in the following
plans: SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and
Money Purchase Pension Plans, 401(k) Defined Contribution Plans, or
403(b)(7) or 457 Deferred Compensation Plans. This option also is not
available to shareholders of the Institutional Classes.
Asset Planner
To invest in Delaware Investments funds using the Asset Planner
asset allocation service, you should complete an Asset Planner Account
Registration Form, which is available only from a financial adviser or
investment dealer. Effective September 1, 1997, the Asset Planner
Service is only available to financial advisers or investment dealers
who have previously used this service. The Asset Planner service offers
a choice of four predesigned asset allocation strategies (each with a
different risk/reward profile) in predetermined percentages in Delaware
Investments funds. With the help of a financial adviser, you may also
design a customized asset allocation strategy.
The sales charge on an investment through the Asset Planner
service is determined by the individual sales charges of the underlying
funds and their percentage allocation in the selected Strategy.
Exchanges from existing Delaware Investments accounts into the Asset
Planner service may be made at net asset value under the circumstances
described under Investing by Exchange. Also see Buying Class A Shares
at Net Asset Value. The minimum initial investment per Strategy is
$2,000; subsequent investments must be at least $100. Individual fund
minimums do not apply to investments made using the Asset Planner
service. Class A, Class B and Class C Shares are available through the
Asset Planner service. Generally, only shares within the same class may
be used within the same Strategy. However, Class A Shares of a Fund
and of other funds in the Delaware Investments family may be used in the
same Strategy with consultant class shares that are offered by certain
other Delaware Investments funds.
An annual maintenance fee, currently $35 per Strategy, is due at
the time of initial investment and by September 30 of each subsequent
year. The fee, payable to Delaware Service Company, Inc. to defray
extra costs associated with administering the Asset Planner service,
will be deducted automatically from one of the funds within your Asset
Planner account if not paid by September 30. However, effective
November 1, 1996, the annual maintenance fee is waived until further
notice. Investors who utilize the Asset Planner for an IRA will
continue to pay an annual IRA fee of $15 per Social Security number.
Investors will receive a customized quarterly Strategy Report
summarizing all Asset Planner investment performance and account
activity during the prior period. Confirmation statements will be sent
following all transactions other than those involving a reinvestment of
distributions.
Certain shareholder services are not available to investors using
the Asset Planner service, due to its special design. These include
Delaphone, Checkwriting, Wealth Builder Option and Letter of Intention.
Systematic Withdrawal Plans are available after the account has been
open for two years.
Retirement Plans for the Fund Classes
An investment in the Funds may be suitable for tax-deferred
retirement plans. Delaware Investments offers a full spectrum of
retirement plans, including the 401(k) Defined Contribution Plan,
Individual Retirement Account ("IRA") and the new Roth IRA and Education
IRA.
Among the retirement plans that Delaware Investments offers, Class
B Shares are available only by Individual Retirement Accounts, SIMPLE
IRAs, Roth IRAs, Education IRAs, Simplified Employee Pension Plans,
Salary Reduction Simplified Employee Pension Plans, and 403(b)(7) and
457 Deferred Compensation Plans. The CDSC may be waived on certain
redemptions of Class B Shares and Class C Shares. See Waiver of
Contingent Deferred Sales Charge - Class B Shares and Class C Shares
under Redemption and Exchange in the Prospectus for the Fund Classes for
a list of the instances in which the CDSC is waived.
Purchases of Class B Shares are subject to a maximum purchase
limitation of $250,000 for retirement plans. Purchases of Class C
Shares must be in an amount that is less than $1,000,000 for such plans.
The maximum purchase limitations apply only to the initial purchase of
shares by the retirement plan.
Minimum investment limitations generally applicable to other
investors do not apply to retirement plans other than Individual
Retirement Accounts, for which there is a minimum initial purchase of
$250 and a minimum subsequent purchase of $25, regardless of which Class
is selected. Retirement plans may be subject to plan establishment
fees, annual maintenance fees and/or other administrative or trustee
fees. Fees are based upon the number of participants in the plan as
well as the services selected. Additional information about fees is
included in retirement plan materials. Fees are quoted upon request.
Annual maintenance fees may be shared by Delaware Management Trust
Company, the Transfer Agent, other affiliates of the Manager and others
that provide services to such Plans.
Certain shareholder investment services available to non-
retirement plan shareholders may not be available to retirement plan
shareholders. Certain retirement plans may qualify to purchase shares
of the Institutional Class shares. See Institutional Classes, above.
For additional information on any of the plans and Delaware's retirement
services, call the Shareholder Service Center telephone number.
It is advisable for an investor considering any one of the
retirement plans described below to consult with an attorney, accountant
or a qualified retirement plan consultant. For further details,
including applications for any of these plans, contact your investment
dealer or the Distributor.
Taxable distributions from the retirement plans described below
may be subject to withholding.
Please contact your investment dealer or the Distributor for the
special application forms required for the Plans described below.
Prototype Profit Sharing or Money Purchase Pension Plans
Prototype Plans are available for self-employed individuals,
partnerships, corporations and other eligible forms of organizations.
These plans can be maintained as Section 401(k), profit sharing or money
purchase pension plans. Contributions may be invested only in Class A
Shares and Class C Shares.
Individual Retirement Account ("IRA")
A document is available for an individual who wants to establish
an IRA and make contributions which may be tax-deductible, even if the
individual is already participating in an employer-sponsored retirement
plan. Even if contributions are not deductible for tax purposes, as
indicated below, earnings will be tax-deferred. In addition, an
individual may make contributions on behalf of a spouse who has no
compensation for the year; however, participation may be restricted
based on certain income limits.
IRA Disclosures
The Taxpayer Relief Act of 1997 provides new opportunities for
investors. Individuals have five types of tax-favored IRA accounts that
can be utilized depending on the individual's circumstances. A new Roth
IRA and Education IRA are available in addition to the existing
deductible IRA and non-deductible IRA.
Deductible and Non-deductible IRAs
An individual can contribute up to $2,000 in his or her IRA each
year. Contributions may or may not be deductible depending upon the
taxpayer's adjusted gross income ("AGI") and whether the taxpayer is an
active participant in an employer sponsored retirement plan. Even if a
taxpayer is an active participant in an employer sponsored retirement
plan, the full $2,000 is still available if the taxpayer's AGI is below
$30,000 ($50,000 for taxpayers filing joint returns) for years beginning
after December 31, 1997. A partial deduction is allowed for married
couples with income between $50,000 and $60,000, and for single
individuals with incomes between $30,000 and $40,000. These income
phase-out limits reach $80,000-$100,000 in 2007 for joint filers and
$50,000-$60,000 in 2005 for single filers. No deductions are available
for contributions to IRAs by taxpayers whose AGI after IRA deductions
exceeds the maximum income limit established for each year and who are
active participants in an employer sponsored retirement plan.
Taxpayers who are not allowed deductions on IRA contributions
still can make non-deductible IRA contributions of as much as $2,000 for
each working spouse and defer taxes on interest or other earnings from
the IRAs.
Under the new law, a married individual is not considered an
active participant in an employer sponsored retirement plan merely
because the individual's spouse is an active participant if the couple's
combined AGI is below $150,000. The maximum deductible IRA contribution
for a married individual who is not an active participant, but whose
spouse is, is phased out for combined AGI between $150,000 and $160,000.
Conduit (Rollover) IRAs
Certain individuals who have received or are about to receive
eligible rollover distributions from an employer-sponsored retirement
plan or another IRA may rollover the distribution tax-free to a Conduit
IRA. The rollover of the eligible distribution must be completed by the
60th day after receipt of the distribution; however, if the rollover is
in the form of a direct trustee-to-trustee transfer without going
through the distributee's hand, the 60-day limit does not apply.
A distribution qualifies as an "eligible rollover distribution" if
it is made from a qualified retirement plan, a 403(b) plan or another
IRA and does not constitute one of the following:
(1) Substantially equal periodic payments over the employee's
life or life expectancy or the joint lives or life expectancies of the
employee and his/her designated beneficiary;
(2) Substantially equal installment payments for a period
certain of 10 or more years;
(3) A distribution, all of which represents a required minimum
distribution after attaining
age 70 1/2;
(4) A distribution due to a Qualified Domestic Relations Order
to an alternate payee who is not the spouse (or former spouse) of the
employee; and
(5) A distribution of after-tax contributions which is not
includable in income.
Roth IRAs
For taxable years beginning after December 31, 1997, non-
deductible contributions of up to $2,000 per year can be made to a new
Roth IRA. As a result of the Internal Revenue Service Restructuring and
Reform Act of 1998 (the "1998 Act"), the $2,000 annual limit will not be
reduced by any contributions to a deductible or nondeductible IRA for
the same year. The maximum contribution that can be made to a Roth IRA
is phased out for single filers with AGI between $95,000 and $110,000,
and for couples filing jointly with AGI between $150,000 and $160,000.
Qualified distributions from a Roth IRA would be exempt from federal
taxes. Qualified distributions are distributions (1) made after the
five-taxable year period beginning with the first taxable year for which
a contribution was made to a Roth IRA and (2) that are (a) made on or
after the date on which the individual attains age 59 1/2, (b) made to a
beneficiary on or after the death of the individual, (c) attributed to
the individual being disabled, or (d) for a qualified special purpose
(e.g., first time homebuyer expenses).
Distributions that are not qualified distributions would always be
tax-free if the taxpayer is withdrawing contributions, not accumulated
earnings.
Taxpayers with AGI of $100,000 or less are eligible to convert an
existing IRA (deductible, nondeductible and conduit) to a Roth IRA.
Earnings and contributions from a deductible IRA are subject to a tax upon
conversion; however, no 10% excise tax for early withdrawal would apply.
If the conversion is done prior to January 1, 1999, then the income from
the conversion can be included in income ratably over a four-year period
beginning with the year of conversion.
Education IRAs
For taxable years beginning after December 31, 1997, an Education
IRA has been created exclusively for the purpose of paying qualified
higher education expenses. Taxpayers can make non-deductible
contributions up to $500 per year per beneficiary. The $500 annual
limit is in addition to the $2,000 annual contribution limit applicable
to IRAs and Roth IRAs. Eligible contributions must be in cash and made
prior to the date the beneficiary reaches age 18. Similar to the Roth
IRA, earnings would accumulate tax-free. There is no requirement that
the contributor be related to the beneficiary, and there is no limit on
the number of beneficiaries for whom one contributor can establish
Education IRAs. In addition, multiple Education IRAs can be created for
the same beneficiaries, however, the contribution limit of all
contributions for a single beneficiary cannot exceed $500 annually.
This $500 annual contribution limit for Education IRAs is phased
out ratably for single contributors with modified AGI between $95,000
and $110,000, and for couples filing jointly with modified AGI of
between $150,000 and $160,000. Individuals with modified AGI above the
phase-out range are not allowed to make contributions to an Education
IRA established on behalf of any other individual.
Distributions from an Education IRA are excludable from gross
income to the extent that the distribution does not exceed qualified higher \
education expenses incurred by the beneficiary during the year the
distribution is made regardless of whether the beneficiary is enrolled at
an eligible educational institution on a full-time, half-time, or less
than half-time basis.
Any balance remaining in an Education IRA at the time a
beneficiary becomes 30 years old must be distributed, and the earnings
portion of such a distribution will be includible in gross income of the
beneficiary and subject to an additional 10% penalty tax if the
distribution is not for qualified higher educations expenses. Tax-free
(and penalty-free) transfers and rollovers of account balances from one
Education IRA benefiting one beneficiary to another Education IRA
benefiting a different beneficiary (as well as redesignations of the
named beneficiary) is permitted, provided that the new beneficiary is a
member of the family of the old beneficiary and that the transfer or
rollover is made before the time the old beneficiary reaches age 30 and
the new beneficiary reaches age 18.
A company or association may establish a Group IRA or Group Roth
IRA for employees or members who want to purchase shares of the Fund.
Investments generally must be held in the IRA until age 59 1/2 in
order to avoid premature distribution penalties, but distributions
generally must commence no later than April 1 of the calendar year
following the year in which the participant reaches age 70 1/2.
Individuals are entitled to revoke the account, for any reason and
without penalty, by mailing written notice of revocation to Delaware
Management Trust Company within seven days after the receipt of the IRA
Disclosure Statement or within seven days after the establishment of the
IRA, except, if the IRA is established more than seven days after
receipt of the IRA Disclosure Statement, the account may not be revoked.
Distributions from the account (except for the pro-rata portion of any
nondeductible contributions) are fully taxable as ordinary income in the
year received. Excess contributions removed after the tax filing
deadline, plus extensions, for the year in which the excess
contributions were made are subject to a 6% excise tax on the amount of
excess. Premature distributions (distributions made before age 59 1/2,
except for death, disability and certain other limited circumstances)
will be subject to a 10% excise tax on the amount prematurely
distributed, in addition to the income tax resulting from the
distribution. For information concerning the applicability of a CDSC
upon redemption of Class B Shares and Class C Shares, see Contingent
Deferred Sales Charge - Class B Shares and Class C Shares.
Effective January 1, 1997, the 10% premature distribution penalty
will not apply to distributions from an IRA that are used to pay medical
expenses in excess of 7.5% of adjusted gross income or to pay health
insurance premiums by an individual who has received unemployment
compensation for 12 consecutive weeks. In addition, effective January
1, 1998, the new law allows for premature distribution without a 10%
penalty if (i) the amounts are used to pay qualified higher education
expenses (including graduate level courses) of the taxpayer, the
taxpayer's spouse or any child or grandchild of the taxpayer or the
taxpayer's spouse, or (ii) used to pay acquisition costs of a principle
residence for the purchase of a first-time home by the taxpayer,
taxpayer's spouse or any child or grandchild of the taxpayer or the
taxpayer's spouse. A qualified first-time homebuyer is someone who has
had no ownership interest in a residence during the past two years. The
aggregate amount of distribution for first-time home purchases cannot
exceed a lifetime cap of $10,000.
Simplified Employee Pension Plan ("SEP/IRA")
A SEP/IRA may be established by an employer who wishes to sponsor
a tax-sheltered retirement program by making contributions on behalf of
all eligible employees. Each of the Classes is available for investment
by a SEP/IRA.
Salary Reduction Simplified Employee Pension Plan ("SAR/SEP")
Although new SAR/SEP plans may not be established after December
31, 1996, existing plans may continue to be maintained by employers
having 25 or fewer employees. An employer may elect to make additional
contributions to such existing plans.
Prototype 401(k) Defined Contribution Plan
Section 401(k) of the Code permits employers to establish
qualified plans based on salary deferral contributions. Effective
January 1, 1997, non-governmental tax-exempt organizations may establish
401(k) plans. Plan documents are available to enable employers to
establish a plan. An employer may also elect to make profit sharing
contributions and/or matching contributions with investments in only
Class A Shares and Class C Shares or certain other funds in the Delaware
Investments family. Purchases under the Plan may be combined for
purposes of computing the reduced front-end sales charge applicable to
Class A Shares as set forth in the table the Prospectus for the Fund
Classes.
Deferred Compensation Plan for Public Schools and Non-Profit
Organizations ("403(b)(7)")
Section 403(b)(7) of the Code permits public school systems and
certain non-profit organizations to use mutual fund shares held in a
custodial account to fund deferred compensation arrangements for their
employees. A custodial account agreement is available for those
employers who wish to purchase shares of any of the Classes in
conjunction with such an arrangement. Purchases under the Plan may be
combined for purposes of computing the reduced front-end sales charge
applicable to Class A Shares as set forth in the table the Prospectus
for the Fund Classes.
Deferred Compensation Plan for State and Local Government Employees
("457")
Section 457 of the Code permits state and local governments, their
agencies and certain other entities to establish a deferred compensation
plan for their employees who wish to participate. This enables
employees to defer a portion of their salaries and any federal (and
possibly state) taxes thereon. Such plans may invest in shares of the
Fund. Although investors may use their own plan, there is available a
Delaware Investments 457 Deferred Compensation Plan. Interested
investors should contact the Distributor or their investment dealers to
obtain further information. Purchases under the Plan may be combined
for purposes of computing the reduced front-end sales charge applicable
to Class A Shares as set forth in the table in the Prospectus for the
Fund Classes.
SIMPLE IRA
A SIMPLE IRA combines many of the features of an IRA and a 401(k)
Plan but is easier to administer than a typical 401(k) Plan. It
requires employers to make contributions on behalf of their employees
and also has a salary deferral feature that permits employees to defer a
portion of their salary into the plan on a pre-tax basis. A SIMPLE IRA
is available only to plan sponsors with 100 or fewer employees.
SIMPLE 401(k)
A SIMPLE 401(k) is like a regular 401(k) except that it is
available only to plan sponsors 100 or fewer employees and, in exchange
for mandatory plan sponsor contributions, discrimination testing is no
longer required. Class B Shares are not available for purchase by such
plans.
DETERMINING OFFERING PRICE AND NET ASSET VALUE
Orders for purchases of Class A Shares are effected at the
offering price next calculated by the Fund in which shares are being
purchased after receipt of the order by the Fund or its agent. Orders
for purchases of Class B Shares, Class C Shares and the Institutional
Classes are effected at the net asset value per share next calculated
after receipt of the order by the Fund in which shares are being
purchased or its agent. See Distribution and Service under Investment
Management Agreement. Selling dealers have the responsibility of
transmitting orders promptly.
The offering price for Class A Shares consists of the net asset
value per share plus any applicable sales charges. Offering price and
net asset value are computed as of the close of regular trading on the
New York Stock Exchange (ordinarily, 4 p.m., Eastern time) on days when
the Exchange is open. The New York Stock Exchange is scheduled to be
open Monday through Friday throughout the year except for days 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. When the New York Stock
Exchange is closed, the Funds will generally be closed, pricing
calculations will not be made and purchase and redemption orders will
not be processed.
An example showing how to calculate the net asset value per share
and, in the case of Class A Shares, the offering price per share, is
included in each Fund's financial statements which are incorporated by
reference into this Part B.
Each Fund's net asset value per share is computed by adding the
value of all securities and other assets in the portfolio, deducting any
liabilities and dividing by the number of shares outstanding. Expenses
and fees are accrued daily. In determining a Fund's total net assets,
portfolio securities listed or traded on a national securities exchange,
except for bonds, are valued at the last sale price on the exchange upon
which such securities are primarily traded. For valuation purposes,
foreign currencies and foreign securities denominated in foreign
currency values will be converted into U.S. dollars values at the mean
between the bid and offered quotations of such currencies against U.S.
dollars based on rates in effect that day. Securities not traded on a
particular day, over-the-counter securities, and government and agency
securities are valued at the mean value between bid and asked prices.
Money market instruments having a maturity of less than 60 days are
valued at amortized cost. Debt securities (other than short-term
obligations) are valued on the basis of valuations provided by a pricing
service when such prices are believed to reflect the fair value of such
securities. Use of a pricing service has been approved by the Board of
Directors. Prices provided by a pricing service take into account
appropriate factors such as institutional trading in similar groups of
securities, yield, quality, coupon rate, maturity, type of issue,
trading characteristics and other market data. If no quotations are
available, all other securities and assets are valued at fair value as
determined in good faith and in a method approved by the Board of
Directors.
Each Class of a Fund will bear, pro-rata, all of the common
expenses of that Fund. The net asset values of all outstanding shares
of each Class of a Fund will be computed on a pro-rata basis for each
outstanding share based on the proportionate participation in that Fund
represented by the value of shares of that Class. All income earned and
expenses incurred by a Fund, will be borne on a pro-rata basis by each
outstanding share of a Class, based on each Class' percentage in that
Fund represented by the value of shares of such Classes, except that
Institutional Classes will not incur any of the expenses under Equity
Funds I, Inc.'s 12b-1 Plans and Class A Shares, Class B Shares and Class
C Shares alone will bear the 12b-1 Plan expenses payable under their
respective Plans. Due to the specific distribution expenses and other
costs that will be allocable to each Class, the net asset value of each
Class of a Fund will vary.
REDEMPTION AND EXCHANGE
You can redeem or exchange your shares in a number of different
ways. The exchange service is useful if your investment requirements
change and you want an easy way to invest in other equity funds, tax-
advantaged funds, bond funds or money market funds. This service is
also useful if you are anticipating a major expenditure and want to move
a portion of your investment into a fund that has the checkwriting
feature. Exchanges are subject to the requirements of each fund and all
exchanges of shares constitute taxable events. See Taxes. Further,
in order for an exchange to be processed, shares of the fund being
acquired must be registered in the state where the acquiring shareholder
resides. You may want to consult your financial adviser or investment
dealer to discuss which funds in Delaware Investments will best meet
your changing objectives, and the consequences of any exchange
transaction. You may also call the Delaware Investments directly for
fund information.
Your shares will be redeemed or exchanged at a price based on the
net asset value next determined after a Fund receives your request in
good order, subject, in the case of a redemption, to any applicable CDSC
or Limited CDSC. For example, redemption or exchange requests received
in good order after the time the offering price and net asset value of
shares are determined will be processed on the next business day. See
Purchase Price and Effective Date under How to Buy Shares. A
shareholder submitting a redemption request may indicate that he or she
wishes to receive redemption proceeds of a specific dollar amount. In
the case of such a request, and in the case of certain redemptions from
retirement plan accounts, a Fund will redeem the number of shares
necessary to deduct the applicable CDSC in the case of Class B Shares
and Class C Shares, and, if applicable, the Limited CDSC in the case of
Class A Shares and tender to the shareholder the requested amount,
assuming the shareholder holds enough shares in his or her account for
the redemption to be processed in this manner. Otherwise, the amount
tendered to the shareholder upon redemption will be reduced by the
amount of the applicable CDSC or Limited CDSC. Redemption proceeds will
be distributed promptly, as described below, but not later than seven
days after receipt of a redemption request.
Except as noted below, for a redemption request to be in "good
order," you must provide your account number, account registration, and
the total number of shares or dollar amount of the transaction. For
exchange requests, you must also provide the name of the fund in which
you want to invest the proceeds. Exchange instructions and redemption
requests must be signed by the record owner(s) exactly as the shares are
registered. You may request a redemption or an exchange by calling the
Shareholder Service Center at 800-523-1918. Each Fund may suspend,
terminate, or amend the terms of the exchange privilege upon 60 days'
written notice to shareholders.
In addition to redemption of Fund shares, the Distributor, acting
as agent of the Funds, offers to repurchase Fund shares from
broker/dealers acting on behalf of shareholders. The redemption or
repurchase price, which may be more or less than the shareholder's cost,
is the net asset value per share next determined after receipt of the
request in good order by the respective Fund, its agent, or certain
authorized persons, subject to applicable CDSC or Limited CDSC. This is
computed and effective at the time the offering price and net asset
value are determined. See Determining Offering Price and Net Asset
Value. The Funds and the Distributor end their business days at 5 p.m.,
Eastern time. This offer is discretionary and may be completely
withdrawn without further notice by the Distributor.
Orders for the repurchase of Fund shares which are submitted to
the Distributor prior to the close of its business day will be executed
at the net asset value per share computed that day (subject to the
applicable CDSC or Limited CDSC), if the repurchase order was received
by the broker/dealer from the shareholder prior to the time the offering
price and net asset value are determined on such day. The selling
dealer has the responsibility of transmitting orders to the Distributor
promptly. Such repurchase is then settled as an ordinary transaction
with the broker/dealer (who may make a charge to the shareholder for
this service) delivering the shares repurchased.
Payment for shares redeemed will ordinarily be mailed the next
business day, but in no case later than seven days, after receipt of a
redemption request in good order by the Fund or certain other authorized
persons (see Distribution and Service under Investment Management
Agreements); provided, however, that each commitment to mail or wire
redemption proceeds by a certain time, as described below, is modified
by the qualifications described in the next paragraph.
Each Fund will process written and telephone redemption requests
to the extent that the purchase orders for the shares being redeemed
have already settled. Each Fund will honor redemption requests as to
shares for which a check was tendered as payment, but a Fund will not
mail or wire the proceeds until it is reasonably satisfied that the
purchase check has cleared, which may take up to 15 days from the
purchase date. You can avoid this potential delay if you purchase
shares by wiring Federal Funds. Each Fund reserves the right to reject
a written or telephone redemption request or delay payment of redemption
proceeds if there has been a recent change to the shareholder's address
of record.
If a shareholder has been credited with a purchase by a check
which is subsequently returned unpaid for insufficient funds or for any
other reason, the Fund involved will automatically redeem from the
shareholder's account the shares purchased by the check plus any
dividends earned thereon. Shareholders may be responsible for any
losses to a Fund or to the Distributor.
In case of a suspension of the determination of the net asset
value because the New York Stock Exchange is closed for other than
weekends or holidays, or trading thereon is restricted or an emergency
exists as a result of which disposal by a Fund of securities owned by it
is not reasonably practical, or it is not reasonably practical for a
Fund fairly to value its assets, or in the event that the SEC has
provided for such suspension for the protection of shareholders, a Fund
may postpone payment or suspend the right of redemption or repurchase.
In such case, the shareholder may withdraw the request for redemption or
leave it standing as a request for redemption at the net asset value
next determined after the suspension has been terminated.
Payment for shares redeemed or repurchased may be made either in
cash or kind, or partly in cash and partly in kind. Any portfolio
securities paid or distributed in kind would be valued as described in
Determining Offering Price and Net Asset Value. Subsequent sale by an
investor receiving a distribution in kind could result in the payment of
brokerage commissions. However, Equity Funds I, Inc. has elected to be
governed by Rule 18f-1 under the 1940 Act pursuant to which each Fund is
obligated to redeem shares solely in cash up to the lesser of $250,000
or 1% of the net asset value of such Fund during any 90-day period for
any one shareholder.
The value of a Fund's investments is subject to changing market
prices. Thus, a shareholder reselling shares to a Fund may sustain
either a gain or loss, depending upon the price paid and the price
received for such shares.
Certain redemptions of Class A Shares purchased at net asset value
may result in the imposition of a Limited CDSC. See Contingent Deferred
Sales Charge for Certain Redemptions of Class A Shares Purchased at Net
Asset Value, below. Class B Shares are subject to a CDSC of: (i) 4% if
shares are redeemed within two years of purchase; (ii) 3% if shares are
redeemed during the third or fourth year following purchase; (iii) 2% if
shares are redeemed during the fifth year following purchase; and (iv)
1% if shares are redeemed during the sixth year following purchase.
Class C Shares are subject to a CDSC of 1% if shares are redeemed within
12 months following purchase. See Contingent Deferred Sales Charge -
Class B Shares and Class C Shares under Purchasing Shares. Except for
the applicable CDSC or Limited CDSC and, with respect to the expedited
payment by wire described below for which, in the case of the Fund
Classes, there is currently a $7.50 bank wiring cost, neither the Funds
nor the Distributor charges a fee for redemptions or repurchases, but
such fees could be charged at any time in the future.
Holders of Class B Shares or Class C Shares that exchange their
shares ("Original Shares") for shares of other funds in the Delaware
Investments (in each case, "New Shares") in a permitted exchange, will
not be subject to a CDSC that might otherwise be due upon redemption of
the Original Shares. However, such shareholders will continue to be
subject to the CDSC and, in the case of Class B Shares, the automatic
conversion schedule of the Original Shares as described in this Part B
and any CDSC assessed upon redemption will be charged by the fund from
which the Original Shares were exchanged. In an exchange of Class B
Shares from a Fund, the Fund's CDSC schedule may be higher than the CDSC
schedule relating to the New Shares acquired as a result of the
exchange. For purposes of computing the CDSC that may be payable upon a
disposition of the New Shares, the period of time that an investor held
the Original Shares is added to the period of time that an investor held
the New Shares. With respect to Class B Shares, the automatic
conversion schedule of the Original Shares may be longer than that of
the New Shares. Consequently, an investment in New Shares by exchange
may subject an investor to the higher 12b-1 fees applicable to Class B
Shares of a Fund for a longer period of time than if the investment in
New Shares were made directly.
Written Redemption
You can write to each Fund at 1818 Market Street, Philadelphia, PA
19103 to redeem some or all of your shares. The request must be signed
by all owners of the account or your investment dealer of record. For
redemptions of more than $50,000, or when the proceeds are not sent to
the shareholder(s) at the address of record, the Funds require a
signature by all owners of the account and a signature guarantee for
each owner. A signature guarantee can be obtained from a commercial
bank, a trust company or a member of a Securities Transfer Association
Medallion Program ("STAMP"). Each Fund reserves the right to reject a
signature guarantee supplied by an eligible institution based on its
creditworthiness. The Funds may require further documentation from
corporations, executors, retirement plans, administrators, trustees or
guardians.
Payment is normally mailed the next business day after receipt of
your redemption request. If your Class A Shares are in certificate
form, the certificate(s) must accompany your request and also be in good
order. Certificates are issued for Class A Shares only if a shareholder
submits a specific request. Certificates are not issued for Class B
Shares or Class C Shares.
Written Exchange
You may also write to each Fund (at 1818 Market Street,
Philadelphia, PA 19103) to request an exchange of any or all of your
shares into another mutual fund in Delaware Investments, subject to the
same conditions and limitations as other exchanges noted above.
Telephone Redemption and Exchange
To get the added convenience of the telephone redemption and
exchange methods, you must have the Transfer Agent hold your shares
(without charge) for you. If you choose to have your Class A Shares in
certificate form, you may redeem or exchange only by written request and
you must return your certificates.
The Telephone Redemption - Check to Your Address of Record service
and the Telephone Exchange service, both of which are described below,
are automatically provided unless you notify the Fund in which you have
your account in writing that you do not wish to have such services
available with respect to your account. Each Fund reserves the right to
modify, terminate or suspend these procedures upon 60 days' written
notice to shareholders. It may be difficult to reach the Funds by
telephone during periods when market or economic conditions lead to an
unusually large volume of telephone requests.
Neither the Funds nor their Transfer Agent is responsible for any
shareholder loss incurred in acting upon written or telephone
instructions for redemption or exchange of Fund shares which are
reasonably believed to be genuine. With respect to such telephone
transactions, each Fund will follow reasonable procedures to confirm
that instructions communicated by telephone are genuine (including
verification of a form of personal identification) as, if it does not,
such Fund or the Transfer Agent may be liable for any losses due to
unauthorized or fraudulent transactions. Telephone instructions
received by the Fund Classes are generally tape recorded, and a written
confirmation will be provided for all purchase, exchange and redemption
transactions initiated by telephone. By exchanging shares by telephone,
you are acknowledging prior receipt of a prospectus for the fund into
which your shares are being exchanged.
Telephone Redemption--Check to Your Address of Record
The Telephone Redemption feature is a quick and easy method to
redeem shares. You or your investment dealer of record can have
redemption proceeds of $50,000 or less mailed to you at your address of
record. Checks will be payable to the shareholder(s) of record.
Payment is normally mailed the next business day after receipt of the
redemption request. This service is only available to individual, joint
and individual fiduciary-type accounts.
Telephone Redemption--Proceeds to Your Bank
Redemption proceeds of $1,000 or more can be transferred to your
predesignated bank account by wire or by check. You should authorize
this service when you open your account. If you change your
predesignated bank account, you must complete an Authorization Form and
have your signature guaranteed. For your protection, your authorization
must be on file. If you request a wire, your funds will normally be
sent the next business day. If the proceeds are wired to the
shareholder's account at a bank which is not a member of the Federal
Reserve System, there could be a delay in the crediting of the funds to
the shareholder's bank account. First Union National Bank's fee
(currently $7.50) will be deducted from Fund Class redemption proceeds.
If you ask for a check, it will normally be mailed the next business day
after receipt of your redemption request to your predesignated bank
account. There are no separate fees for this redemption method, but the
mail time may delay getting funds into your bank account. Simply call
the Shareholder Service Center prior to the time the offering price and
net asset value are determined, as noted above.
Telephone Exchange
The Telephone Exchange feature is a convenient and efficient way
to adjust your investment holdings as your liquidity requirements and
investment objectives change. You or your investment dealer of record
can exchange your shares into other funds in Delaware Investments under
the same registration, subject to the same conditions and limitations as
other exchanges noted above. As with the written exchange service,
telephone exchanges are subject to the requirements of each fund, as
described above. Telephone exchanges may be subject to limitations as
to amounts or frequency.
The telephone exchange privilege is intended as a convenience to
shareholders and is not intended to be a vehicle to speculate on short-
term swings in the securities market through frequent transactions in
and out of the funds in the Delaware Investments family. Telephone
exchanges may be subject to limitations as to amounts or frequency. The
Transfer Agent and each Fund reserve the right to record exchange
instructions received by telephone and to reject exchange requests at
any time in the future.
MoneyLine (SM) On Demand
You or your investment dealer may request redemptions of Fund
shares by phone using MoneyLine (SM) On Demand. When you authorize a
Fund to accept such requests from you or your investment dealer, funds
will be deposited to (for share redemptions) your predesignated bank
account. Your request will be processed the same day if you call prior
to 4 p.m., Eastern time. There is a $25 minimum and $50,000 maximum
limit for MoneyLine (SM) On Demand transactions. See MoneyLine (SM) On
Demand under Investment Plans.
Right to Refuse Timing Accounts
With regard to accounts that are administered by market timing
services ("Timing Firms") to purchase or redeem shares based on changing
economic and market conditions ("Timing Accounts"), the Funds will
refuse any new timing arrangements, as well as any new purchases (as
opposed to exchanges) in Delaware Investments funds from Timing Firms.
A Fund reserves the right to temporarily or permanently terminate the
exchange privilege or reject any specific purchase order for any person
whose transactions seem to follow a timing pattern who: (i) makes an
exchange request out of the Fund within two weeks of an earlier exchange
request out of the Fund, or (ii) makes more than two exchanges out of
the Fund per calendar quarter, or (iii) exchanges shares equal in value
to at least $5 million, or more than 1/4 of 1% of the Fund's net assets.
Accounts under common ownership or control, including accounts
administered so as to redeem or purchase shares based upon certain
predetermined market indicators, will be aggregated for purposes of the
exchange limits.
Restrictions on Timed Exchanges
Timing Accounts operating under existing timing agreements may
only execute exchanges between the following eight Delaware Investments
funds: (1) Decatur Income Fund, (2) Decatur Total Return Fund, (3)
Delaware Fund, (4) Limited-Term Government Fund, (5) USA Fund, (6)
Delaware Cash Reserve, (7) Delchester Fund and (8) Tax-Free Pennsylvania
Fund. No other Delaware Investments funds are available for timed
exchanges. Assets redeemed or exchanged out of Timing Accounts in
Delaware Investments funds not listed above may not be reinvested back
into that Timing Account. Each Fund reserves the right to apply these
same restrictions to the account(s) of any person whose transactions
seem to follow a time pattern (as described above).
Each Fund also reserves the right to refuse the purchase side of
an exchange request by any Timing Account, person, or group if, in the
Manager's judgment, the Fund would be unable to invest effectively in
accordance with its investment objectives and policies, or would
otherwise potentially be adversely affected. A shareholder's purchase
exchanges may be restricted or refused if a Fund receives or anticipates
simultaneous orders affecting significant portions of the Fund's assets.
In particular, a pattern of exchanges that coincide with a "market
timing" strategy may be disruptive to a Fund and therefore may be
refused.
Except as noted above, only shareholders and their authorized
brokers of record will be permitted to make exchanges or redemptions.
Systematic Withdrawal Plans
Shareholders of Class A Shares, Class B Shares and Class C Shares
who own or purchase $5,000 or more of shares at the offering price, or
net asset value, as applicable, for which certificates have not been
issued may establish a Systematic Withdrawal Plan for monthly
withdrawals of $25 or more, or quarterly withdrawals of $75 or more,
although the Funds do not recommend any specific amount of withdrawal.
This is particularly useful to shareholders living on fixed incomes,
since it can provide them with a stable supplemental amount. This
$5,000 minimum does not apply for a Fund's prototype retirement plans.
Shares purchased with the initial investment and through reinvestment of
cash dividends and realized securities profits distributions will be
credited to the shareholder's account and sufficient full and fractional
shares will be redeemed at the net asset value calculated on the third
business day preceding the mailing date.
Checks are dated either the 1st or the 15th of the month, as
selected by the shareholder (unless such date falls on a holiday or a
weekend), and are normally mailed within two business days. Both
ordinary income dividends and realized securities profits distributions
will be automatically reinvested in additional shares of the Class at
net asset value. This plan is not recommended for all investors and
should be started only after careful consideration of its operation and
effect upon the investor's savings and investment program. To the
extent that withdrawal payments from the plan exceed any dividends
and/or realized securities profits distributions paid on shares held
under the plan, the withdrawal payments will represent a return of
capital, and the share balance may in time be depleted, particularly in
a declining market. Shareholders should not purchase additional shares
while participating in a Systematic Withdrawal Plan.
The sale of shares for withdrawal payments constitutes a taxable
event and a shareholder may incur a capital gain or loss for federal
income tax purposes. This gain or loss may be long-term or short-term
depending on the holding period for the specific shares liquidated.
Premature withdrawals from retirement plans may have adverse tax
consequences.
Withdrawals under this plan made concurrently with the purchases
of additional shares may be disadvantageous to the shareholder.
Purchases of Class A Shares through a periodic investment program in a
fund managed by the Manager must be terminated before a Systematic
Withdrawal Plan with respect to such shares can take effect, except if
the shareholder is a participant in one of our retirement plans or is
investing in Delaware Investments funds which do not carry a sales
charge. Redemptions of Class A Shares pursuant to a Systematic
Withdrawal Plan may be subject to a Limited CDSC if the purchase was
made at net asset value and a dealer's commission has been paid on that
purchase. The applicable CDSC for Class B Shares and Class C Shares
redeemed via a Systematic Withdrawal Plan will be waived if, on the date
that the Plan is established, the annual amount selected to be withdrawn
is less than 12% of the account balance. If the annual amount selected
to be withdrawn exceeds 12% of the account balance on the date that the
Systematic Withdrawal Plan is established, all redemptions under the
Plan will be subject to the applicable CDSC. Whether a waiver of the
CDSC is available or not, the first shares to be redeemed for each
Systematic Withdrawal Plan payment will be those not subject to a CDSC
because they have either satisfied the required holding period or were
acquired through the reinvestment of distributions. The 12% annual
limit will be reset on the date that any Systematic Withdrawal Plan is
modified (for example, a change in the amount selected to be withdrawn
or the frequency or date of withdrawals), based on the balance in the
account on that date. See Waiver of Contingent Deferred Sales Charge -
Class B Shares and Class C Shares, below.
An investor wishing to start a Systematic Withdrawal Plan must
complete an authorization form. If the recipient of Systematic
Withdrawal Plan payments is other than the registered shareholder, the
shareholder's signature on this authorization must be guaranteed. Each
signature guarantee must be supplied by an eligible guarantor
institution. The Funds reserve the right to reject a signature
guarantee supplied by an eligible institution based on its
creditworthiness. This plan may be terminated by the shareholder or the
Transfer Agent at any time by giving written notice.
Systematic Withdrawal Plan payments are normally made by check.
In the alternative, you may elect to have your payments transferred from
your Fund account to your predesignated bank account through the
MoneyLine (SM) Direct Deposit Service. Your funds will normally be
credited to your bank account up to four business days after the payment
date. There are no separate fees for this redemption method. It may
take up to four business days for the transactions to be completed. You
can initiate this service by completing an Account Services form. If
your name and address are not identical to the name and address on your
Fund account, you must have your signature guaranteed. The Funds do not
charge a fee for any this service; however, your bank may charge a fee.
This service is not available for retirement plans.
The Systematic Withdrawal Plan is not available for Institutional
Classes. Shareholders should consult with their financial advisers to
determine whether a Systematic Withdrawal Plan would be suitable for
them.
Contingent Deferred Sales Charge for Certain Redemptions of Class A
Shares Purchased at Net Asset Value
For purchases of $1,000,000 or more made on or after July 1, 1998,
a Limited CDSC will be imposed on certain redemptions of Class A Shares
(or shares into which such Class A Shares are exchanged) according to
the following schedule: (1) 1.00% if shares are redeemed during the
first year after the purchase; and (2) 0.50% if such shares are redeemed
during the second year after the purchase, if such purchases were made
at net asset value and triggered the payment by the Distributor of the
dealer's commission described above.
The Limited CDSC will be paid to the Distributor and will be
assessed on an amount equal to the lesser of : (1) the net asset value
at the time of purchase of the Class A Shares being redeemed or (2) the
net asset value of such Class A Shares at the time of redemption. For
purposes of this formula, the "net asset value at the time of purchase"
will be the net asset value at purchase of the Class A Shares even if
those shares are later exchanged for shares of another Delaware
Investments fund and, in the event of an exchange of Class A Shares, the
"net asset value of such shares at the time of redemption" will be the
net asset value of the shares acquired in the exchange.
Redemptions of such Class A Shares held for more than two years
will not be subjected to the Limited CDSC and an exchange of such Class
A Shares into another Delaware Investments fund will not trigger the
imposition of the Limited CDSC at the time of such exchange. The period
a shareholder owns shares into which Class A Shares are exchanged will
count towards satisfying the two-year holding period. The Limited CDSC
is assessed if such two year period is not satisfied irrespective of
whether the redemption triggering its payment is of Class A Shares of a
Fund or Class A Shares acquired in the exchange.
In determining whether a Limited CDSC is payable, it will be
assumed that shares not subject to the Limited CDSC are the first
redeemed followed by other shares held for the longest period of time.
The Limited CDSC will not be imposed upon shares representing reinvested
dividends or capital gains distributions, or upon amounts representing
share appreciation. All investments made during a calendar month,
regardless of what day of the month the investment occurred, will age
one month on the last day of that month and each subsequent month.
Waiver of Limited Contingent Deferred Sales Charge - Class A Shares
The Limited CDSC for Class A Shares on which a dealer's commission
has been paid will be waived in the following instances: (i)
redemptions that result from a Fund's right to liquidate a shareholder's
account if the aggregate net asset value of the shares held in the
account is less than the then-effective minimum account size; (ii)
distributions to participants from a retirement plan qualified under
section 401(a) or 401(k) of the Internal Revenue Code of 1986, as
amended (the "Code"), or due to death of a participant in such a plan;
(iii) redemptions pursuant to the direction of a participant or
beneficiary of a retirement plan qualified under section 401(a) or
401(k) of the Code with respect to that retirement plan; (iv) periodic
distributions from an IRA, SIMPLE IRA, or 403(b)(7) or 457 Deferred
Compensation Plan due to death, disability, or attainment of age 59 1/2,
and IRA distributions qualifying under Section 72(t) of the Internal
Revenue Code; (v) returns of excess contributions to an IRA; (vi)
distributions by other employee benefit plans to pay benefits; (vii)
distributions described in (ii), (iv), and (vi) above pursuant to a
systematic withdrawal plan; and (viii) redemptions by the classes of
shareholders who are permitted to purchase shares at net asset value,
regardless of the size of the purchase (see Buying Class A Shares at Net
Asset Value under Purchasing Shares).
Waiver of Contingent Deferred Sales Charge - Class B Shares and Class C
Shares
The CDSC is waived on certain redemptions of Class B Shares in
connection with the following redemptions: (i) redemptions that result
from a Fund's right to liquidate a shareholder's account if the
aggregate net asset value of the shares held in the account is less than
the then-effective minimum account size; (ii) returns of excess
contributions to an IRA, SIMPLE IRA, SEP/IRA, or 403(b)(7) or 457
Deferred Compensation Plan; (iii) periodic distributions from an IRA,
SIMPLE IRA, SAR/SEP, SEP/IRA, or 403(b)(7) or 457 Deferred Compensation
Plan due to death, disability or attainment of age 59 1/2, and IRA
distributions qualifying under Section 72(t) of the Internal Revenue
Code; and (iv) distributions from an account if the redemption results
from the death of all registered owners of the account (in the case of
accounts established under the Uniform Gifts to Minors or Uniform
Transfers to Minors Acts or trust accounts, the waiver applies upon the
death of all beneficial owners) or a total and permanent disability (as
defined in Section 72 of the Code) of all registered owners occurring
after the purchase of the shares being redeemed.
The CDSC on Class C Shares is waived in connection with the
following redemptions: (i) redemptions that result from a Fund's right
to liquidate a shareholder's account if the aggregate net asset value of
the shares held in the account is less than the then-effective minimum
account size; (ii) returns of excess contributions to an IRA, SIMPLE
IRA, 403(b)(7) or 457 Deferred Compensation Plan, Profit Sharing Plan,
Money Purchase Pension Plan, or 401(k) Defined Contribution plan; (iii)
periodic distributions from a 403(b)(7) or 457 Deferred Compensation
Plan upon attainment of age 59 1/2, Profit Sharing Plan, Money Purchase
Plan, 401(k) Defined Contribution Plan upon attainment of age 70 1/2,
and IRA distributions qualifying under Section 72(t) of the Internal
Revenue Code; (iv) distributions from a 403(b)(7) or 457 Deferred
Compensation Plan, Profit Sharing Plan, or 401(k) Defined Contribution
Plan, under hardship provisions of the plan; (v) distributions from a
403(b)(7) or 457 Deferred Compensation Plan, Profit Sharing Plan, Money
Purchase Pension Plan or a 401(k) Defined Contribution Plan upon
attainment of normal retirement age under the plan or upon separation
from service; (vi) periodic distributions from an IRA or SIMPLE IRA on
or after attainment of age 59 1/2; and (vii) distributions from an
account if the redemption results from the death of all registered
owners of the account (in the case of accounts established under the
Uniform Gifts to Minors or Uniform Transfers to Minors Acts or trust
accounts, the waiver applies upon the death of all beneficial owners) or
a total and permanent disability (as defined in Section 72 of the Code)
of all registered owners occurring after the purchase of the shares
being redeemed.
In addition, the CDSC will be waived on Class B Shares and Class C
Shares redeemed in accordance with a Systematic Withdrawal Plan if the
annual amount selected to be withdrawn under the Plan does not exceed
12% of the value of the account on the date that the Systematic
Withdrawal Plan was established or modified.
DIVIDENDS AND REALIZED SECURITIES PROFITS DISTRIBUTIONS
Each Fund will normally make payments from net investment income
on a quarterly basis. Any payments from net realized securities profits
will be made during the first quarter of the next fiscal year.
Each Class of shares of each Fund will share proportionately in
the investment income and expenses of that Fund, except that Class A
Shares, Class B Shares and Class C Shares alone will incur distribution
fees under their respective 12b-1 Plans.
Dividends are automatically reinvested in additional shares at the
net asset value of the ex-dividend date unless, in the case of
shareholders in the Fund Classes, an election to receive dividends in
cash has been made. If you elect to take your dividends and
distributions in cash and such dividends and distributions are in an
amount of $25 or more, you may choose the MoneyLine (SM) Direct Deposit
Service and have such payments transferred from your Fund account to
your predesignated bank account. See Systematic Withdrawal Plans above.
Dividend payments of $1.00 or less will be automatically reinvested,
notwithstanding a shareholder's election to receive dividends in cash.
If such a shareholder's dividends increase to greater than $1.00, the
shareholder would have to file a new election in order to begin
receiving dividends in cash again. Any check in payment of dividends or
other distributions which cannot be delivered by the United States Post
Office or which remains uncashed for a period of more than one year may
be reinvested in the shareholder's account at the then-current net asset
value and the dividend option may be changed from cash to reinvest.
Each Fund may deduct from a shareholder's account the costs of that
Fund's effort to locate a shareholder if a shareholder's mail is
returned by the Post Office or such Fund is otherwise unable to locate
the shareholder or verify the shareholder's mailing address. These
costs may include a percentage of the account when a search company
charges a percentage fee in exchange for their location services.
TAXES
It is the policy of each Fund to pay out substantially all net
investment income and net realized gains to relieve it of federal income
tax liability on that portion of its income paid to shareholders under
the Code. Each Fund has met these requirements in previous years and
intends to meet them this year. Each Fund is treated as a separate tax
entity, and any capital gains and losses for each Fund are calculated
separately.
Distributions representing net investment income or short-term
capital gains are taxable as ordinary income to shareholders. The tax
status of dividends and distributions paid to shareholders will not be
affected by whether they are paid in cash or in additional shares. A
portion of these distributions may be eligible for the dividends-
received deduction for corporations. For the fiscal year ended October
31, 1998, __% and __% of dividends paid from net investment income of
Delaware Fund and Devon Fund, respectively, were eligible for this
deduction. The portion of dividends paid by a Fund that so qualifies
will be designated each year in a notice to that Fund's shareholders,
and cannot exceed the gross amount of dividends received by such Fund
from domestic (U.S.) corporations that would have qualified for the
dividends-received deduction in the hands of that Fund if such Fund was
a regular corporation. The availability of the dividends-received
deduction is subject to certain holding period and debt financing
restrictions imposed under the Code on the corporation claiming the
deduction.
Distributions may also be subject to state and local taxes;
shareholders are advised to consult with their tax advisers in this
regard.
Prior to purchasing shares, you should carefully consider the
impact of dividends or realized securities profits distributions which
have been declared but not paid. Any such dividends or realized
securities profits paid shortly after a purchase of shares by an
investor will have the effect of reducing the per share net asset value
of such shares by the amount of the dividends or realized securities
profits distributions. All or a portion of such dividends or realized
securities profits distributions, although in effect a return of
capital, are subject to taxes which may be at ordinary income tax rates.
The purchase of shares just prior to the ex-dividend date has an adverse
effect for income tax purposes.
The automatic conversion of Class B Shares into Class A Shares at
the end of approximately eight years after purchase will be tax-free for
federal tax purposes. See Automatic Conversion of Class B Shares under
Classes of Shares.
Net long-term gain from the sale of securities when realized and
distributed (actually or constructively) is taxable as capital gain, and
these gains are currently taxed at long-term capital gain rates. If the
net asset value of shares were reduced below a shareholder's cost by
distribution of gain realized on sale of securities, such distribution
would be a return of investment though taxable as stated above. The
portfolio securities of Delaware Fund and Devon Fund had a net
unrealized appreciation for tax purposes of $________ and $______
respectively, as of October 31, 1998.
Under the Taxpayer Relief Act of 1997 (the "1997 Act"), as revised
by the 1998 Act, a Fund is required to track its sales of portfolio
securities and to report its capital gain distributions to you according
to the following categories of holding periods:
"Mid-term capital gains" or "28 percent rate gain": securities sold by
the Fund after July 28, 1997 that were held more than one year but not
more than 18 months. These gains will be taxable to individual
investors at a maximum rate of 28%.
"1997 Act long-term capital gains" or "20 percent rate gain":
securities sold by the Fund between May 7, 1997 and July 28, 1997 that
were held for more than 12 months, and securities sold by the Fund after
July 28, 1997 that were held for more than 18 months. As revised by the
1998 Act, this rate applies to securities held for more than 12 months
for tax years beginning after December 31, 1997. These gains will be
taxable to individual investors at a maximum rate of 20% for investors
in the 28% or higher federal income tax brackets, and at a maximum rate
of 10% for investors in the 15% federal income tax bracket.
"Qualified 5-year gains": For individuals in the 15% bracket, qualified
5-year gains are net gains on securities held for more than 5 years
which are sold after December 31, 2000. For individuals who are subject
to tax at higher rate brackets, qualified 5-year gains are net gains on
securities which are purchased after December 31, 2000 and are held for
more than 5 years. Taxpayers subject to tax at a higher rate brackets
may also make an election for shares held on January 1, 2001 to
recognize gain on their shares (any loss is disallowed) in order to
qualify such shares as qualified 5-year property as though purchased
after December 31, 2000. These gains will be taxable to individual
investors at a maximum rate of 18% for investors in the 28% or higher
federal income tax brackets, and at a maximum rate of 8% for investors
in the 15% federal income tax bracket when sold after the 5 year holding
period.
Shareholders will be notified annually by Equity Funds I, Inc. as
to the federal income tax status of dividends and distributions paid by
a Fund.
Each Fund has qualified, and intends to continue to qualify, as a
regulated investment company under Subchapter M of the Code. As such, a
Fund will not be subject to federal income tax, or to any excise tax, to
the extent its earnings are distributed as provided in the Code and it
satisfies certain other requirements relating to the sources of its
income and diversification of its assets.
In order to qualify as a regulated investment company for federal
income tax purposes, the Funds must meet certain specific requirements,
including:
(i) A Fund must maintain a diversified portfolio of securities,
wherein no security (other than U.S. government securities and
securities of other regulated investment companies) can exceed 25% of a
Fund's total assets, and, with respect to 50% of a Fund's total assets,
no investment (other than cash and cash items, U.S. government
securities and securities of other regulated investment companies) can
exceed 5% of a Fund's total assets;
(ii) A Fund must derive at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, and
gains from the sale or disposition of stock and securities or foreign
currencies, or other income derived with respect to its business of
investing in such stock, securities, or currencies;
(iii) A Fund must distribute to its shareholders at least 90%
of its net investment income and net tax- exempt income for each of its
fiscal years, and
(iv) A Fund must realize less than 30% of its gross income for
each fiscal year from gains from the sale of securities and certain
other assets that have been held by a Fund for less than three months
("short-short income"). The Taxpayer Relief Act of 1997 (the "1997
Act") repealed the 30% short-short income test for tax years of
regulated investment companies beginning after August 5, 1997; however,
this rule may have continuing effect in some states for purposes of
classifying a Fund as a regulated investment company.
The Code requires a Fund to distribute at least 98% of its taxable
ordinary income earned during the calendar year and 98% of its capital
gain net income earned during the 12 month period ending October 31 (in
addition to amounts from the prior year that were neither distributed
nor taxed to a Fund) to you by December 31 of each year in order to
avoid federal excise taxes. Each Fund intends as a matter of policy to
declare and pay sufficient dividends in December or January (which are
treated by you as received in December) but does not guarantee and can
give no assurances that its distributions will be sufficient to
eliminate all such taxes.
The straddle rules of Section 1092 may apply. Generally, the
straddle provisions require the deferral of losses to the extent of
unrecognized gains related to the offsetting positions in the straddle.
Excess losses, if any, can be recognized in the year of loss. Deferred
losses will be carried forward and recognized in the year that
unrealized losses exceed unrealized gains.
The 1997 Act has also added new provisions for dealing with
transactions that are generally called "Constructive Sale Transactions."
Under these rules, a Fund must recognize gain (but not loss) on any
constructive sale of an appreciated financial position in stock, a
partnership interest or certain debt instruments. A Fund will generally
be treated as making a constructive sale when it: 1) enters into a
short sale on the same or substantially identical property; 2) enters
into an offsetting notional principal contract; or 3) enters into a
futures or forward contract to deliver the same or substantially
identical property. Other transactions (including certain financial
instruments called collars) will be treated as constructive sales as
provided in Treasury regulations to be published. There are also
certain exceptions that apply for transactions that are closed before
the end of the 30th day after the close of the taxable year.
Investment in Foreign Currencies and Foreign Securities--The Funds
are authorized to invest certain limited amounts in foreign securities.
Such investments, if made, will have the following additional tax
consequences to each Fund:
Under the Code, gains or losses attributable to fluctuations in
foreign currency exchange rates which occur between the time a Fund
accrues income (including dividends), or accrues expenses which are
denominated in a foreign currency, and the time a Fund actually collects
such income or pays such expenses generally are treated as ordinary
income or loss. Similarly, on the disposition of debt securities
denominated in a foreign currency and on the disposition of certain
options, futures, forward contracts, gain or loss attributable to
fluctuations in the value of foreign currency between the date of
acquisition of the security or contract and the date of its disposition
are also treated as ordinary gain or loss. These gains or losses,
referred to under the Code as "Section 988" gains or losses, may
increase or decrease the amount of a Fund's net investment company
taxable income, which, in turn, will affect the amount of income to be
distributed to you by a Fund.
If a Fund's Section 988 losses exceed a Fund's other net
investment company taxable income during a taxable year, a Fund
generally will not be able to make ordinary dividend distributions to
you for that year, or distributions made before the losses were realized
will be recharacterized as return of capital distributions of federal
income tax purposes, rather than as an ordinary dividend or capital gain
distribution. If a distribution is treated as a return of capital, your
tax basis in your Fund shares will be reduced by a like amount (to the
extent of such basis), and any excess of the distribution over your tax
basis in your Fund shares will be treated as capital gain to you.
The 1997 Act generally requires that foreign income be translated
into U.S. dollars at the average exchange rate for the tax year in which
the transactions are conducted. Certain exceptions apply to taxes paid
more than two years after the taxable year to which they relate. This
new law may require a Fund to track and record adjustments to foreign
taxes paid on foreign securities in which it invests. Under a Fund's
current reporting procedure, foreign security transactions are recorded
generally at the time of each transaction using the foreign currency
spot rate available for the date of each transaction. Under the new
law, a Fund will be required to record a fiscal year end (and at
calendar year end for excise tax purposes) an adjustment that reflects
the difference between the spot rates recorded for each transaction and
the year-end average exchange rate for all of a Fund's foreign
securities transactions. There is a possibility that the mutual fund
industry will be given relief from this new provision, in which case no
year-end adjustments will be required.
The Funds may be subject to foreign withholding taxes on income
from certain of its foreign securities. If more than 50% of the total
assets of a Fund at the end of its fiscal year are invested in
securities of foreign corporations, a Fund may elect to pass-through to
you your pro rata share of foreign taxes paid by a Fund. If this
election is made, you will be: (i) required to include in your gross
income your pro rata share of foreign source income (including any
foreign taxes paid by a Fund); and (ii) entitled to either deduct your
share of such foreign taxes in computing your taxable income or to claim
a credit for such taxes against your U.S. income tax, subject to certain
limitations under the Code. You will be informed by a Fund at the end
of each calendar year regarding the availability of any such foreign tax
credits and the amount of foreign source income (including any foreign
taxes paid by a Fund). If a Fund elects to pass-through to you the
foreign income taxes that it has paid, you will be informed at the end
of the calendar year of the amount of foreign taxes paid and foreign
source income that must be included on your federal income tax return.
If a Fund invests 50% or less of its total assets in securities of
foreign corporations, it will not be entitled to pass-through to you
your pro-rata shares of foreign taxes paid by a Fund. In this case,
these taxes will be taken as a deduction by a Fund, and the income
reported to you will be the net amount after these deductions. The 1997
Act also simplifies the procedures by which investors in funds that
invest in foreign securities can claim tax credits on their individual
income tax returns for the foreign taxes paid by a Fund. These
provisions will allow investors who pay foreign taxes of $300 or less on
a single return or $600 or less on a joint return during any year (all
of which must be reported on IRS Form 1099-DIV from a Fund to the
investor) to claim a tax credit against their U.S. federal income tax
for the amount of foreign taxes paid by a Fund. This process will allow
you, if you qualify, to bypass the burdensome and detailed reporting
requirements on the foreign tax credit schedule (Form 1116) and report
your foreign taxes paid directly on page 2 of Form 1040. You should
note that this simplified procedure will not be available until calendar
year 1998.
Investment in Passive Foreign Investment Company securities--The
Funds may invest in shares of foreign corporations which may be
classified under the Code as passive foreign investment companies
("PFICs"). In general, a foreign corporation is classified as a PFIC if
at least one-half of its assets constitute investment-type assets or 75%
or more of its gross income is investment-type income. If a Fund
receives an "excess distribution" with respect to PFIC stock, that Fund
itself may be subject to U.S. federal income tax on a portion of the
distribution, whether or not the corresponding income is distributed by
a Fund to you. In general, under the PFIC rules, an excess distribution
is treated as having been realized ratably over the period during which
a Fund held the PFIC shares. A Fund itself will be subject to tax on
the portion, if any, of an excess distribution that is so allocated to
prior Fund taxable years, and an interest factor will be added to the
tax, as if the tax had been payable in such prior taxable years. In
this case, you would not be permitted to claim a credit on your own tax
return for the tax paid by a Fund. Certain distributions from a PFIC as
well as gain from the sale of PFIC shares are treated as excess
distributions. Excess distributions are characterized as ordinary
income even though, absent application of the PFIC rules, certain
distribution might have been classified as capital gain. This may have
the effect of increasing Fund distributions to you that are treated as
ordinary dividends rather than long-term capital gain dividends.
A Fund may be eligible to elect alternative tax treatment with
respect to PFIC shares. Under an election that currently is available
in some circumstances, a Fund generally would be required to include in
its gross income its share of the earnings of a PFIC on a current basis,
regardless of whether distributions are received from the PFIC during
such period. If this election were made, the special rules, discussed
above, relating to the taxation of excess distributions, would not
apply. In addition, the 1997 Act provides for another election that
would involve marking-to-market a Fund's PFIC shares at the end of each
taxable year (and on certain other dates as prescribed in the Code),
with the result that unrealized gains would be treated as though they
were realized. A Fund would also be allowed an ordinary deduction for
the excess, if any, of the adjusted basis of its investment in the PFIC
stock over its fair market value at the end of the taxable year. This
deduction would be limited to the amount of any net mark-to-market gains
previously included with respect to that particular PFIC security. If a
Fund were to make this second PFIC election, tax at that Fund's level
under the PFIC rules would generally be eliminated.
The application of the PFIC rules may affect, among other things,
the amount of tax payable by a Fund (if any), the amounts distributable
to you by a Fund, the time at which these distributions must be made,
and whether these distributions will be classified as ordinary income or
capital gain distributions to you.
You should be aware that it is not always possible at the time
shares of a foreign corporation are acquired to ascertain that the
foreign corporation is a PFIC, and that there is always a possibility
that a foreign corporation will become a PFIC after a Fund acquires
shares in that corporation. While a Fund will generally seek to avoid
investing in PFIC shares to avoid the tax consequences detailed above,
there are no guarantees that it will do so and it reserves the right to
make such investments as a matter of its fundamental investment policy.
Most foreign exchange gains are classified as ordinary income
which will be taxable to you as such when distributed. Similarly, you
should be aware that any foreign exchange losses realized by a Fund,
including any losses realized on the sale of foreign debt securities,
are generally treated as ordinary losses for federal income tax
purposes. This treatment could increase or reduce a Fund's income
available for distribution to you, and may cause some or all of a Fund's
previously distributed income to be classified as a return of capital.
INVESTMENT MANAGEMENT AGREEMENTS
The Manager, located at One Commerce Square, Philadelphia, PA
19103, furnishes investment management services to each Fund, subject to
the supervision and direction of Equity Funds I, Inc.'s Board of
Directors.
The Manager and its predecessors have been managing the funds in
the Delaware Investments family since 1938. On October 31, 1998, the
Manager and its affiliates within Delaware Investments, including
Delaware International Advisers Ltd., were managing in the aggregate
more than $00 billion in assets in the various institutional or
separately managed (approximately $___________) and investment company
(approximately $____________) accounts.
Each Fund's Investment Management Agreement is dated April 3, 1995
and was approved by shareholders on March 29, 1995. Each Agreement has
an initial term of two years and may be renewed each year only so long
as such renewal and continuance are specifically approved at least
annually by the Board of Directors or by vote of a majority of the
outstanding voting securities of the Fund to which the Agreement
relates, and only if the terms of and the renewal thereof have been
approved by the vote of a majority of the directors of Equity Funds I,
Inc. who are not parties thereto or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on
such approval. Each Agreement is terminable without penalty on 60 days'
notice by the directors of Equity Funds I, Inc. or by the Manager. Each
Agreement will terminate automatically in the event of its assignment.
The annual compensation paid by each Fund for investment
management services is equal to: for Delaware Fund, 0.60% on the first
$100 million of average daily net assets of the Fund, 0.525% on the next
$150 million, 0.50% on the next $250 million and 0.475% on the average
daily net assets in excess of $500 million, less the Fund's
proportionate share of all directors' fees paid to the unaffiliated
directors by Delaware Fund; and, for Devon Fund, 0.60% on the first $500
million of average daily net assets and 0.50% on the average daily net
assets in excess of $500 million.
On October 31, 1998, the total net assets of Delaware Fund were
$_________ and the total net assets of Devon Fund were $________. Under
the general supervision of the Board of Directors, the Manager makes all
investment decisions which are implemented by each Fund. The Manager
pays the salaries of all directors, officers and employees who are
affiliated with both the Manager and Equity Funds I, Inc. The
investment management fees paid by Delaware Fund for the fiscal years
ended October 31, 1996, 1997 and 1998 were $3,164,486, $3,492,255 and
$________, respectively. Investment management fees incurred by Devon
Fund for the fiscal years ended October 31, 1996, 1997 and 1998 and were
$103,041, $310,229 $________, respectively. However, no fees were paid
by Devon Fund during these years as a result of the waiver described
below.
Except for those expenses borne by the Manager under the
Investment Management Agreements and the Distributor under the
Distribution Agreements, each Fund is responsible for all of its own
expenses. Among others, these include the Funds' proportionate share of
rent and certain other administrative expenses; the investment
management fees; transfer and dividend disbursing agent fees and costs;
custodian expenses; federal and state securities registration fees;
proxy costs; and the costs of preparing prospectuses and reports sent to
shareholders.
Beginning January 1, 1998, the Manager has elected voluntarily to
waive that portion, if any, of the annual management fees payable by
Devon Fund and to pay the Fund to the extent necessary to ensure that
the Total Operating Expenses of this Fund do not exceed 1.00% (exclusive
of taxes, interest, brokerage commissions, extraordinary expenses and
12b-1 expenses). This waiver and expense limitation will extend through
___________. From commencement of the Fund's operations through
December 31, 1997, the Manager voluntarily waived that portion, if any,
of the annual management fees payable by the Fund and paid the Fund's
expenses to the extent necessary to ensure that Total Operating Expenses
of the Fund (excluding 12b-1 expenses) did not exceed 0.95%.
Distribution and Service
The Distributor, Delaware Distributors, L.P. (which formerly
conducted business as Delaware Distributors, Inc.), located at 1818
Market Street, Philadelphia, PA 19103, serves as the national
distributor of each Fund's shares under separate Distribution Agreements
dated April 3, 1995, as amended on November 29, 1995. The Distributor
is an affiliate of the Manager and bears all of the costs of promotion
and distribution, except for payments by each Fund on behalf of Class A
Shares, Class B Shares and Class C Shares under their respective 12b-1
Plans. The Distributor is an indirect, wholly owned subsidiaries of
Delaware Management Holdings, Inc.
The Transfer Agent, Delaware Service Company, Inc., another
affiliate of the Manager located at 1818 Market Street, Philadelphia, PA
19103, serves as each Funds' shareholder servicing, dividend disbursing
and transfer agent of Delaware Fund shares pursuant to a Shareholders
Services Agreement dated June 29, 1988 and of Devon Fund shares pursuant
to a Shareholders Services Agreement dated December 29, 1993. The
Transfer Agent also provides accounting services to the Funds pursuant
to the terms of a separate Fund Accounting Agreement. The Transfer
Agent is also an indirect, wholly owned subsidiary of Delaware
Management Holdings, Inc.
The directors annually review fees paid to the Distributor and the
Transfer Agent.
Each Fund has authorized one or more brokers to accept on its
behalf purchase and redemption orders in addition to the Transfer Agent.
Such brokers are authorized to designate other intermediaries to accept
purchase and redemption orders on the behalf of the Fund. For purposes
of pricing, the Fund will be deemed to have received a purchase or
redemption order when an authorized broker or, if applicable, a broker's
authorized designee, accepts the order. Investors may be charged a fee
when effecting transactions through a broker or agent.
OFFICERS AND DIRECTORS
The business and affairs of Equity Funds I, Inc. are managed under
the direction of its Board of Directors.
Certain officers and directors of Equity Funds I, Inc. hold
identical positions in each of the other funds in Delaware Investments.
As of November 30, 1998, Equity Funds I, Inc.'s officers and directors
owned less than 1% of the outstanding shares of Delaware Fund A Class,
Delaware Fund B Class, Delaware Fund C Class and Delaware Fund
Institutional Class. As of the same date, the Fund's officers and
directors held less than 1% of the outstanding shares of Devon Fund A
Class, Devon Fund B Class, Devon Fund C Class and Devon Fund
Institutional Class.
As of November 30, 1998, management believes the following
accounts held 5% or more of the outstanding shares of Class A Shares,
Class B Shares, Class C Shares and the Institutional Class of each Fund:
Class Name and Address of Account Share Amount Percentage
Delaware Fund B Class Merrill Lynch, Pierce,
Fenner & Smith, Inc.
For the Sole Benefit of its
Customers
Attention: Fund
Administration
4800 Deer Lake Drive East,
3rd Floor
Jacksonville, FL 32246
Delaware Fund C Class Merrill Lynch, Pierce,
Fenner & Smith, Inc.
For the Sole Benefit of
its Customers
Attention: Fund
Administration
4800 Deer Lake Drive East,
3rd Floor
Jacksonville, FL 32246
Donaldson Lufkin Jenrette
Securities Corporation, Inc.
P.O. Box 2052
Jersey City, NJ 07303
(1) Equity Funds I, Inc. believes that these shares are held of record
for the benefit of others
Class Name and Address of Account Share Amount Percentage
Delaware Fund Price Waterhouse LLP Savings
Institutional Class Plan
1410 North Westshore Boulevard
P.O. Box 30004
Tampa, FL 33630
Federated Life Insurance
Company
Separate Sub-Account A
Attention: Tom Koch
P.O Box 328
Owatonna, MN 55060
South Trust Bank of Alabama
Trust Thompson Tractor
Attention: Angela McNac
P.O. Box 830804
Birmingham, AL 35283
Meg & Co.
c/o US National Bank Trust Dept.
P.O. Box 520
Johnstown, PA 15907
Devon Fund B Class Merrill Lynch, Inc.
Mutual Fund Operations
Attention: Book Entry
4800 Deer Lake Drive East,
3rd Floor
Jacksonville, FL 32246
Devon Fund C Class Donaldson Lufkin Jenrette
Securities Corporation, Inc.
P.O. Box 2052
Jersey City, NJ 07303
Merrill Lynch, Pierce, Fenner &
Smith, Inc.
For the Sole Benefit of its
Customers
Attention: Fund Administration
4800 Deer Lake Drive East,
3rd Floor
Jacksonville, FL 32246
Devon Fund Delaware Management Company
Institutional Class Employee Profit Sharing Trust
c/o Rick Seidel
1818 Market Street
Philadelphia, PA 19103
(1) Equity Funds I, Inc. believes that these shares are held of record
for the benefit of others.
Class Name and Address of Account Share Amount Percentage
WCSEL PC Pension Plan
2200 Clarendon Boulevard
13th Floor
Arlington, VA 22201
ISTCO
One South Church Road
P.O. Box 523
Belleville, IL 62222
(1) Equity Funds I, Inc. believes that these shares are held of record
for the benefit of others.
(2) Shares held of record by Delaware Management Company Employee
Profit Sharing Trust are held for the benefit of others.
DMH Corp., Delvoy, Inc., Delaware Management Business Trust,
Delaware Management Company (a series of Delaware Management Business
Trust), Delaware Management Company, Inc., Delaware Investment Advisers
(a series of Delaware Management Business Trust), Delaware Distributors,
L.P., Delaware Distributors, Inc., Delaware Service Company, Inc.,
Delaware Management Trust Company, Delaware International Holdings Ltd.,
Founders Holdings, Inc., Delaware International Advisers Ltd., Delaware
Capital Management, Inc. and Retirement Financial Services, Inc. are
direct or indirect, wholly owned subsidiaries of Delaware Management
Holdings, Inc. ("DMH"). On April 3, 1995, a merger between DMH and a
wholly owned subsidiary of Lincoln National Corporation ("Lincoln
National") was completed. DMH and the Manager are now indirect, wholly
owned subsidiaries, and subject to the ultimate control, of Lincoln
National. Lincoln National, with headquarters in Fort Wayne, Indiana,
is a diversified organization with operations in many aspects of the
financial services industry, including insurance and investment
management.
Directors and principal officers of Equity Funds I, Inc. are noted
below along with their ages and their business experience for the past
five years. Unless otherwise noted, the address of each officer and
director is One Commerce Square, Philadelphia, PA 19103.
*Wayne A. Stork (61)
Chairman and Director and/or Trustee of Equity Funds I, Inc. and
33 other investment companies in the Delaware Investments
family and Delaware Capital Management, Inc.
Chairman, President, Chief Executive Officer and Director of DMH Corp.,
Delaware Distributors, Inc. and Founders Holdings, Inc.
Chairman, President, Chief Executive Officer, Chief Investment Officer
and Director/Trustee of Delaware Management Company, Inc. and Delaware
Management Business Trust
Chairman, President, Chief Executive Officer and Chief Investment
Officer of Delaware Management Company (a series of Delaware Management
Business Trust)
Chairman, Chief Executive Officer and Chief Investment Officer of
Delaware Investment Advisers (a series of Delaware Management Business
Trust)
Chairman, Chief Executive Officer and Director of Delaware International
Advisers Ltd., Delaware International Holdings Ltd. and Delaware
Management Holdings, Inc.
President and Chief Executive Officer of Delvoy, Inc.
Chairman of Delaware Distributors, L.P.
Director of Delaware Service Company, Inc. and Retirement Financial
Services, Inc.
During the past five years, Mr. Stork has served in various executive
capacities at different times within the Delaware organization.
* Jeffrey J. Nick (45)
President, Chief Executive Officer and Director and/or Trustee of Equity
Funds I, Inc. and 33 other investment companies in the Delaware
Investments family
President and Director of Delaware Management Holdings, Inc.
President, Chief Executive Officer and Director of Lincoln National
Investment Companies, Inc.
President of Lincoln Funds Corporation
Director of Delaware International Advisers Ltd.
From 1992 to 1996, Mr. Nick was Managing Director of Lincoln National
UK plc and from 1989 to 1992, he was Senior Vice President responsible
for corporate planning and development for Lincoln National Corporation.
Richard G. Unruh, Jr. (58)
Executive Vice President of Equity Funds I, Inc. and 33 other investment
companies in the Delaware Investments family, Delaware Management
Holdings, Inc., Delaware Management Company (a series of Delaware
Management Business Trust) and Delaware Capital Management, Inc.
President of Delaware Investment Advisers (a series of Delaware
Management Business Trust)
Executive Vice President and Director/Trustee of Delaware Management
Company, Inc. and Delaware Management Business Trust
Director of Delaware International Advisers Ltd.
During the past five years, Mr. Unruh has served in various
executive capacities at different times within the Delaware organization.
______________________
* Director affiliated with the Fund's investment manager and
considered an "interested person" as defined in the 1940 Act.
Paul E. Suckow (51)
Executive Vice President/Chief Investment Officer, Fixed Income of
Equity Funds I, Inc. and 33 other investment companies in the Delaware
Investments family, Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of Delaware Management Business
Trust) and Delaware Management Holdings, Inc.
Executive Vice President and Director of Founders Holdings, Inc.
Executive Vice President of Delaware Capital Management, Inc. and
Delaware Management Business Trust
Director of Founders CBO Corporation
Director of HYPPCO Finance Company Ltd.
Before returning to Delaware Investments in 1993, Mr. Suckow was
Executive Vice President and Director of Fixed Income for Oppenheimer
Management Corporation, New York, NY from 1985 to 1992. Prior to that,
Mr. Suckow was a fixed-income portfolio manager for Delaware Investments.
David K. Downes (58)
Executive Vice President, Chief Operating Officer, Chief Financial
Officer of Equity Funds I, Inc. and 33 other investment companies in the
Delaware Investments family, Delaware Management Holdings, Inc, Founders
CBO Corporation, Delaware Capital Management, Inc., Delaware Management
Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust) and
Delaware Distributors, L.P.
Executive Vice President, Chief Financial Officer, Chief
Administrative Officer and Trustee of Delaware Management Business Trust
Executive Vice President, Chief Operating Officer, Chief Financial
Officer and Director of Delaware Management Company, Inc., DMH Corp.,
Delaware Distributors, Inc., Founders Holdings, Inc. and Delvoy, Inc.
President, Chief Executive Officer, Chief Financial Officer and
Director of Delaware Service Company, Inc.
President, Chief Operating Officer, Chief Financial Officer and
Director of Delaware International Holdings Ltd.
Chairman, Chief Executive Officer and Director of Delaware Management
Trust Company and Retirement Financial Services, Inc.
Director of Delaware International Advisers Ltd.
Vice President of Lincoln Funds Corporation
During the past five years, Mr. Downes has served in various executive
capacities at different times within the Delaware organization.
Walter P. Babich (70)
Director and/or Trustee of Equity Funds I, Inc. and 33 other
investment companies in the Delaware Investment family
460 North Gulph Road, King of Prussia, PA 19406
Board Chairman, Citadel Constructors, Inc.
From 1986 to 1988, Mr. Babich was a partner of Irwin & Leighton
and from 1988 to 1991, he was a partner of I&L Investors.
John H. Durham (61)
Director and/or Trustee of Equity Funds I, Inc. and 18 other
investment companies in the Delaware Investments family
Partner, Complete Care Services
120 Gibraltar Road, Horsham, PA 19044
Mr. Durham served as Chairman of the Board of each fund in the Delaware
Investments family from 1986 to 1991; President of each fund from 1977
to 1990; and Chief Executive Officer of each fund from 1984 to 1990.
Prior to 1992, with respect to Delaware Management Holdings, Inc.,
Delaware Management Company, Delaware Distributors, Inc. and Delaware
Service Company, Inc., Mr. Durham served as a director and in various
executive capacities at different times.
Anthony D. Knerr (59)
Director and/or Trustee of Equity Funds I, Inc. and 33 other investment
companies in the Delaware Investments family
500 Fifth Avenue, New York, NY 10110
Founder and Managing Director, Anthony Knerr & Associates
From 1982 to 1988, Mr. Knerr was Executive Vice President/Finance and
Treasurer of Columbia University, New York. From 1987 to 1989, he was
also a lecturer in English at the University. In addition, Mr. Knerr
was Chairman of The Publishing Group, Inc., New York, from 1988 to 1990.
Mr. Knerr founded The Publishing Group, Inc. in 1988.
Ann R. Leven (57)
Director and/or Trustee of Equity Funds I, Inc. and 33 other investment
companies in the Delaware Investments family
785 Park Avenue, New York, NY 10021
Treasurer, National Gallery of Art
From 1984 to 1990, Ms. Leven was Treasurer and Chief Fiscal Officer of
the Smithsonian Institution, Washington, DC, and from 1975 to 1992, she
was Adjunct Professor of Columbia Business School.
W. Thacher Longstreth (77)
Director and/or Trustee of Equity Funds I, Inc. and 33 other investment
companies in the Delaware Investments family
City Hall, Philadelphia, PA 19107
Philadelphia City Councilman
Thomas F. Madison (62)
Director and/or Trustee of Equity Funds I, Inc. and 33 other investment
companies in the Delaware Investments family
200 South Fifth Street, Suite 2100, Minneapolis, Minnesota 55402
President and Chief Executive Officer, MLM Partners, Inc.
Mr. Madison has also been Chairman of the Board of Communications
Holdings, Inc. since 1996.
From February to September 1994, Mr. Madison served as Vice Chairman--
Office of the CEO of The Minnesota Mutual Life Insurance Company and
from 1988 to 1993, he was President of U.S. WEST Communications--
Markets.
Charles E. Peck (72)
Director and/or Trustee of Equity Funds I, Inc. and 33 other investment
companies in the Delaware Investments family
P.O. Box 1102, Columbia, MD 21044
Retired.
Secretary/Treasurer, Enterprise Homes, Inc.
From 1981 to 1990, Mr. Peck was Chairman and Chief Executive
Officer of The Ryland Group, Inc., Columbia, MD.
George M. Chamberlain, Jr. (51)
Senior Vice President, Secretary and General Counsel of Equity
Funds I, Inc. and 33 other investment companies in the Delaware
Investments
family.
Senior Vice President and Secretary of Delaware Distributors, L.P.,
Delaware Management Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series of Delaware Management
Business Trust) and Delaware Management Holdings, Inc.
Senior Vice President, Secretary and Director/Trustee of DMH Corp.,
Delaware Management Company, Inc., Delaware Distributors, Inc., Delaware
Service Company, Inc., Founders Holdings, Inc., Retirement Financial
Services, Inc. , Delaware Capital Management, Inc., Delvoy, Inc. and
Delaware Management Business Trust
Executive Vice President, Secretary and Director of Delaware Management
Trust Company
Senior Vice President and Director of Delaware International Holdings
Ltd.
Director of Delaware International Advisers Ltd.
Secretary of Lincoln Funds Corporation
Attorney.
During the past five years, Mr. Chamberlain has served in various
executive capacities at different times within the Delaware
organization.
Joseph H. Hastings (48)
Senior Vice President/Corporate Controller of Equity Funds I, Inc.
and 33 other investment companies in the Delaware Investments family and
Founders Holdings, Inc.
Senior Vice President/Corporate Controller and Treasurer of Delaware
Management Holdings, Inc., DMH Corp., Delaware Management Company, Inc.,
Delaware Management Company (a series of Delaware Management Business
Trust), Delaware Distributors, L.P., Delaware Distributors, Inc.,
Delaware Service Company, Inc., Delaware Capital Management, Inc.,
Delaware International Holdings Ltd., Delvoy, Inc. and Delaware
Management Business Trust
Chief Financial Officer/Treasurer of Retirement Financial
Services, Inc.
Executive Vice President/Chief Financial Officer/Treasurer of Delaware
Management Trust Company
Senior Vice President/Assistant Treasurer of Founders CBO Corporation
Treasurer of Lincoln Funds Corporation
During the past five years, Mr. Hastings has served in various executive
capacities at different times within the Delaware organization.
Michael P. Bishof (36)
Senior Vice President/Treasurer of Equity Funds I, Inc. and 33 other
investment companies in the Delaware Investments family and Founders
Holdings, Inc.
Senior Vice President/Investment Accounting of Delaware Management
Company, Inc., Delaware Management Company (a series of Delaware
Management Business Trust) and Delaware Service Company, Inc.
Senior Vice President and Treasurer/Manager of Investment Accounting of
Delaware Distributors, L.P. and Delaware Investment Advisers (a series
of Delaware Management Business Trust)
Senior Vice President and Manager of Investment Accounting of Delaware
International Holdings Ltd.
Senior Vice President and Assistant Treasurer of Founders CBO
Corporation
Before joining Delaware Investments in 1995, Mr. Bishof was a Vice
President for Bankers Trust, New York, NY from 1994 to 1995, a Vice
President for CS First Boston Investment Management, New York, NY from
1993 to 1994 and an Assistant Vice President for Equitable Capital
Management Corporation, New York, NY from 1987 to 1993.
George H. Burwell (37)
Vice President/Senior Portfolio Manager of Equity Funds I, Inc., seven
other investment companies in the Delaware Investments family and
Delaware Management Company, Inc.
Before joining Delaware Investments in 1992, Mr. Burwell was a portfolio
manager for Midlantic Bank, New Jersey. In addition, he was a security
analyst for Balis & Zorn, New York and for First Fidelity Bank, New
Jersey.
Gary A. Reed (44)
Vice President/Senior Portfolio Manager of Equity Funds I, Inc., nine
other investment companies in the Delaware Investments family, Delaware
Management Company, Inc. and Delaware Capital Management, Inc.
During the past five years, Mr. Reed has served in such capacities
within the Delaware organization.
The following is a compensation table listing for each director
entitled to receive compensation, the aggregate compensation received
from the Fund and the total compensation received from all investment
companies in the Delaware Investments family for which he or she serves
as a director or trustee for the fiscal year ended October 31, 1998 and
an estimate of annual benefits to be received upon retirement under the
Delaware Group Retirement Plan for Directors/Trustees as of October 31,
1998. Only the independent directors of the Fund receive compensation
from the Fund.
Pension or
Retirement
Benefits Total
Accrued Estimated Compensation
Aggregate as Part of Annual from
Compensation Equity Benefits Delaware
from Equity Funds I, Inc. Upon Investments
Name Funds I, Inc. Expenses Retirement(1) Companies(2)
John H. Durham(3) $0,000 None $31,000 $00,000
W. Thacher
Longstreth $0,000 None $38,500 $00,000
Ann R. Leven $0,000 None $38,500 $00,000
Walter P. Babich $0,000 None $38,500 $00,000
Anthony D. Knerr $0,000 None $38,500 $00,000
Charles E. Peck $0,000 None $38,500 $00,000
Thomas F. Madison $0,000 None $38,500 $00,000
(1) Under the terms of the Delaware Group Retirement Plan for
Directors/Trustees, each disinterested director/trustee who, at the
time of his or her retirement from the Board, has attained the age
of 70 and served on the Board for at least five continuous years, is
entitled to receive payments from each investment company in the
Delaware Investments family for which he or she serves as a director
or trustee for a period equal to the lesser of the number of years
that such person served as a director or trustee or the remainder of
such person's life. The amount of such payments will be equal, on
an annual basis, to the amount of the annual retainer that is paid
to directors/trustees of each investment company at the time of such
person's retirement. If an eligible director/trustee retired as of
October 31, 1998 he or she would be entitled to annual payments
totaling the amount noted above, in the aggregate, from all of the
investment companies in the Delaware Investments family for which he
or she served as director or trustee, based on the number of
investment companies in the Delaware Investments family as of that
date.
(2) Each independent director/trustee (other than John H. Durham)
currently receives a total annual retainer fee of $38,500 for
serving as a director or trustee for all 34 investment companies in
Delaware Investments, plus $3,145 for each Board Meeting attended.
John H. Durham currently receives a total annual retainer fee of
$31,000 for serving as a director or for 19 investment companies in
Delaware Investments, plus $1,757.50 for each Board Meeting
attended. Ann R. Leven, Walter P. Babich, Anthony D. Knerr and
Thomas F. Madison serve on the Fund's audit committee; Ms. Leven is
the chairperson. Members of the audit committee currently receive
additional annual compensation of $5,000 from all investment
companies, in the aggregate, with the exception of the chairperson,
who receives $6,000.
(3) John H. Durham joined the Board of Directors of the Fund and 18
other investment companies in Delaware Investments on April 16,
1998.
GENERAL INFORMATION
Equity Funds I, Inc. is an open-end management investment company.
Each Funds' portfolio of assets is diversified as defined by the 1940
Act. Equity Funds I, Inc. was first organized as a Delaware corporation
in 1937 and subsequently reorganized as a Maryland corporation on March
4, 1983.
The Manager is the investment manager of the Funds. The Manager
also provides investment management services to certain of the other
funds in the Delaware Investments family. An affiliate of the Manager
also manages private investment accounts. While investment decisions of
the Funds are made independently from those of the other funds and
accounts, investment decisions for such other funds and accounts may be
made at the same time as investment decisions for the Funds.
The Manager also manages the investment options for Delaware
Medallion [SM] III Variable Annuity. Medallion is issued by Allmerica
Financial Life Insurance and Annuity Company (First Allmerica Financial
Life Insurance Company in New York and Hawaii). Delaware Medallion
offers various investment series ranging from domestic equity funds,
international equity and bond funds and domestic fixed income funds.
Each investment series available through Medallion utilizes an
investment strategy and discipline the same as or similar to one of the
Delaware Investments mutual funds available outside the annuity. See
Delaware Group Premium Fund, Inc. in Appendix B.
Access persons and advisory persons of the Delaware Investments
family of funds, as those terms are defined in SEC Rule 17j-1 under the
1940 Act, who provide services to the Manager, Delaware International
Advisers Ltd. or their affiliates, are permitted to engage in personal
securities transactions subject to the exceptions set forth in Rule 17j-
1 and the following general restrictions and procedures: (1) certain
blackout periods apply to personal securities transactions of those
persons; (2) transactions must receive advance clearance and must be
completed on the same day as the clearance is received; (3) certain
persons are prohibited from investing in initial public offerings of
securities and other restrictions apply to investments in private
placements of securities; (4) opening positions may only be closed-out
at a profit after a 60-day holding period has elapsed; and (5) the
Compliance Officer must be informed periodically of all securities
transactions and duplicate copies of brokerage confirmations and account
statements must be supplied to the Compliance Officer.
The Distributor acts as national distributor for each Fund and for
the other mutual funds in the Delaware Investments family. The
Distributor received net commissions from each Fund on behalf of Class A
Shares, after reallowances to dealers, as follows:
Delaware Fund
Class A Shares
Total
Fiscal Amount of Amounts Net
Year Underwriting Reallowed Commission
Ended Commissions to Dealers to Distributor
10/31/98 $ $ $
10/31/97 558,308 464,226 94,082
10/31/96 393,463 329,065 $64,398
Devon Fund
Class A Shares
Total
Fiscal Amount of Amounts Net
Year Underwriting Reallowed Commission
Ended Commissions to Dealers to Distributor
10/31/98 $ $ $
10/31/97 531,475 440,937 90,538
10/31/96 104,547 87,806 16,741
The Distributor received in the aggregate Limited CDSC payments
with respect to Class A Shares of each Fund as follows:
Limited CDSC Payments
Fiscal Year
Ended Delaware Fund A Class Devon Fund A Class
10/31/98 $ $
10/31/97 85,849 -0-
10/31/96 --- ---
The Distributor received in the aggregate CDSC payments with
respect to Class B Shares of each Fund as follows:
CDSC Payments
Fiscal Year
Ended Delaware Fund B Class Devon Fund B Class
10/31/98 $ $
10/31/97 32,664 10,367
10/31/96 13,943 512
The Distributor received CDSC payments with respect to Class C
Shares of each Fund as follows:
CDSC Payments
Fiscal Year
Ended Delaware Fund C Class Devon Fund C Class
10/31/98 $ $
10/31/97 2,595 669
10/31/96* 127 98
*Date of initial public offering was November 29, 1995.
The Transfer Agent, an affiliate of the Manager, acts as
shareholder servicing, dividend disbursing and transfer agent for each
Fund and for the other mutual funds in the Delaware Investments family.
The Transfer Agent is paid a fee by each Fund for providing these
services consisting of an annual per account charge of $5.50 plus
transaction charges for particular services according to a schedule.
Compensation is fixed each year and approved by the Board of Directors,
including a majority of the disinterested directors. The Transfer Agent
also provides accounting services to each Fund. Those services include
performing all functions related to calculating each Fund's net asset
value and providing all financial reporting services, regulatory
compliance testing and the related accounting services. For its
services, the Transfer Agent is paid a fee based on total assets of all
funds in the Delaware Investments family for which it provides such
accounting services. Such fee is equal to 0.25% multiplied by the total
amount of assets in the complex for which the Transfer Agent furnishes
accounting services, where such aggregate complex assets are $10 billion
or less, and 0.20% of assets if such aggregate complex assets exceed $10
billion. The fees are charged to each fund, including each Fund, on an
aggregate pro-rata basis. The asset-based fee payable to the Transfer
Agent is subject to a minimum fee calculated by determining the total
number of investment portfolios and associated classes.
The Manager and its affiliates own the name "Delaware Group."
Under certain circumstances, including the termination of Equity Funds
I, Inc.'s advisory relationship with the Manager or its distribution
relationship with the Distributor, the Manager and its affiliates could
cause Equity Funds I, Inc. to delete the words "Delaware Group" from
Equity Funds I, Inc.'s name.
The Chase Manhattan Bank ("Chase"), 4 Chase Metrotech Center,
Brooklyn, NY 11245 is custodian of each Fund's securities and cash. As
custodian for a Fund, Chase maintains a separate account or accounts for
the Fund; receives, holds and releases portfolio securities on account
of the Fund; receives and disburses money on behalf of the Fund; and
collects and receives income and other payments and distributions on
account of the Fund's portfolio securities.
Capitalization
Equity Funds I, Inc. has a present authorized capitalization of
five hundred million shares of capital stock with a $1 par value per
share. Each Fund currently offers four classes of shares. The Board of
Directors has allocated one hundred million shares to Delaware Fund A
Class, twenty-five million shares to Delaware Fund B Class, twenty-five
million shares to Delaware Fund C Class, fifty million shares to
Delaware Fund Institutional Class, fifty million shares to Devon Fund A
Class, twenty-five million shares to Devon Fund B Class, twenty-five
million to Devon Fund C Class, and twenty-five million shares to Devon
Fund Institutional Class.
Each Class of each Fund represents a proportionate interest in the
assets of that Fund, and each has the same voting and other rights and
preferences as the other classes except that shares of an Institutional
Class may not vote on any matter affecting the Fund Classes' Plans under
Rule 12b-1. Similarly, as a general matter, shareholders of Class A
Shares, Class B Shares and Class C Shares of each Fund may vote only on
matters affecting the 12b-1 Plan that relates to the class of shares
they hold. However, Class B Shares of each Fund may vote on any
proposal to increase materially the fees to be paid by a Fund under the
Rule 12b-1 Plan relating to Class A Shares. General expenses of a Fund
will be allocated on a pro-rata basis to the classes according to asset
size, except that expenses of the Rule 12b-1 Plans of that Fund's Class
A, Class B and Class C Shares will be allocated solely to those classes.
While shares of Equity Funds I, Inc. have equal voting rights on matters
affecting both Funds, each Fund would vote separately on any matter
which it is directly affected by, such as any change in its own
investment objective and policy or action to dissolve the Fund and as
otherwise prescribed by the 1940 Act. Shares of each Fund have a
priority in that Fund's assets, and in gains on and income from the
portfolio of that Fund.
Prior to November 9, 1992, Equity Funds I, Inc. offered only one
series, now known as Delaware Fund and one class of shares, Delaware
Fund A Class. Beginning November 9, 1992, Delaware Fund began offering
Delaware Fund Institutional Class. Beginning December 29, 1993, Equity
Funds I, Inc. offered Devon Fund which offered Devon Fund A Class and
Devon Fund Institutional Class. Class B Shares for each Fund were not
offered prior to September 6, 1994, and beginning as of November 29,
1995, each Fund began offering Class C Shares.
Effective as of the close of business December 27, 1996, the name
of Delaware Group Delaware Fund, Inc. was changed to Delaware Group
Equity Funds I, Inc. Also effective as of the close of business
December 27, 1996, the name of Common Stock series was changed to
Delaware Fund series.
Prior to September 6, 1994, Delaware Fund A Class was known as
Delaware Fund class and Delaware Fund Institutional Class was known as
Delaware Fund (Institutional) class, and, prior to the same date,
Dividend Growth Fund A Class was known as Dividend Growth Fund class and
the Dividend Growth Fund Institutional Class was known as Dividend
Growth Fund (Institutional) class. Effective as of the close of
business on August 28, 1995, the name Dividend Growth Fund was changed
to Devon Fund and the names of Dividend Growth Fund A Class, Dividend
Growth Fund B Class and Dividend Growth Fund Institutional Class were
changed to Devon Fund A Class, Devon Fund B Class and Devon Fund
Institutional Class, respectively.
All shares have no preemptive rights, are fully transferable and,
when issued, are fully paid and nonassessable and, except as described
above, have equal voting rights.
Noncumulative Voting
Equity Funds I, Inc. shares have noncumulative voting rights which
means that the holders of more than 50% of the shares of Equity Funds I,
Inc. voting for the election of directors can elect all the directors if
they choose to do so, and, in such event, the holders of the remaining
shares will not be able to elect any directors.
This Part B does not include all of the information contained in
the Registration Statement which is on file with the SEC.
APPENDIX A--DESCRIPTION OF RATINGS
Commercial Paper
Excerpts from S&P's description of its two highest commercial
paper ratings: A-1--judged to be the highest investment grade category
possessing the highest relative strength; A-2--investment grade category
possessing less relative strength than the highest rating.
Excerpts from Moody's description of its two highest commercial
paper ratings: P-1--the highest grade possessing greatest relative
strength; P-2--second highest grade possessing less relative strength
than the highest grade.
Bonds
Excerpts from Moody's description of its bond ratings: Aaa--
judged to be the best quality. They carry the smallest degree of
investment risk; Aa--judged to be of high quality by all standards; A--
possess favorable attributes and are considered "upper medium" grade
obligations; Baa--considered as medium grade obligations. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time; Ba--judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class; B--
generally lack characteristics of the desirable investment. Assurance
of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small; Caa--are of poor
standing. Such issues may be in default or there may be present
elements of danger with respect to principal or interest; Ca--represent
obligations which are speculative in a high degree. Such issues are
often in default or have other marked shortcomings; C--the lowest rated
class of bonds and issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment standing.
Excerpts from S&P's description of its bond ratings: AAA--highest
grade obligations. They possess the ultimate degree of protection as to
principal and interest; AA--also qualify as high grade obligations, and
in the majority of instances differ from AAA issues only in a small
degree; A--strong ability to pay interest and repay principal although
more susceptible to changes in circumstances; BBB--regarded as having an
adequate capacity to pay interest and repay principal; BB, B, CCC, CC--
regarded, on balance, as predominantly speculative with respect to
capacity to pay interest and repay principal in accordance with the
terms of the obligation. BB indicates the lowest degree of speculation
and CC the highest degree of speculation. While such debt will likely
have some quality and protective characteristics, these are outweighed
by large uncertainties or major risk exposures to adverse conditions; C-
- -reserved for income bonds on which no interest is being paid; D- -in
default, and payment of interest and/or repayment of principal is in
arrears.
APPENDIX B--INVESTMENT OBJECTIVES OF THE OTHER FUNDS IN THE DELAWARE
INVESTMENTS FAMILY
Following is a summary of the investment objectives of the other
funds in the Delaware Investments family:
Trend Fund seeks long-term growth by investing in common stocks
issued by emerging growth companies exhibiting strong capital
appreciation potential.
Small Cap Value Fund seeks capital appreciation by investing
primarily in common stocks whose market values appear low relative to
their underlying value or future potential.
DelCap Fund seeks long-term capital growth by investing in common
stocks and securities convertible into common stocks of companies that
have a demonstrated history of growth and have the potential to support
continued growth.
Decatur Income Fund seeks 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.
Decatur Total Return Fund seeks long-term growth by investing primarily
in securities that provide the potential for income and capital
appreciation without undue risk to principal. Blue Chip Fund seeks to
achieve long-term capital appreciation. Current income is a secondary
objective. It seeks to achieve these objectives by investing primarily
in equity securities and any securities that are convertible into equity
securities. Social Awareness Fund seeks to achieve long-term capital
appreciation. It seeks to achieve this objective by investing primarily
in equity securities of medium- to large-sized companies expected to
grow over time that meet the Fund's "Social Criteria" strategy.
Delchester Fund seeks as high a current income as possible by
investing principally in high yield, high risk corporate bonds, and also
in U.S. government securities and commercial paper. Strategic Income
Fund seeks to provide investors with high current income and total
return by using a multi-sector investment approach, investing
principally in three sectors of the fixed-income securities markets:
high yield, higher risk securities, investment grade fixed-income
securities and foreign government and other foreign fixed-income
securities. High-Yield Opportunities Fund seeks to provide investors
with total return and, as a secondary objective, high current income.
Corporate Bond Fund seeks to provide investors with total return by
investing primarily in corporate bonds. Extended Duration Bond Fund
seeks to provide investors with total return by investing primarily in
corporate bonds
U.S. Government Fund seeks high current income by investing
primarily in long-term debt obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
Limited-Term Government Fund seeks high, stable income by
investing primarily in a portfolio of short- and intermediate-term
securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities and instruments secured by such securities.
Delaware Cash Reserve seeks the highest level of income consistent
with the preservation of capital and liquidity through investments in
short-term money market instruments, while maintaining a stable net
asset value.
REIT Fund seeks to achieve maximum long-term total return with
capital appreciation as a secondary objective. It seeks to achieve its
objectives by investing in securities of companies primarily engaged in
the real estate industry.
Tax-Free Money Fund seeks high current income, exempt from federal
income tax, by investing in short-term municipal obligations, while
maintaining a stable net asset value.
Tax-Free USA Fund seeks high current income exempt from federal
income tax by investing in municipal bonds of geographically-diverse
issuers. Tax-Free Insured Fund invests in these same types of
securities but with an emphasis on municipal bonds protected by
insurance guaranteeing principal and interest are paid when due. Tax-
Free USA Intermediate Fund seeks a high level of current interest income
exempt from federal income tax, consistent with the preservation of
capital by investing primarily in municipal bonds.
Tax-Free Pennsylvania Fund seeks a high level of current interest
income exempt from federal and, to the extent possible, certain
Pennsylvania state and local taxes, consistent with the preservation of
capital. Tax- Free New Jersey Fund seeks a high level of current
interest income exempt from federal income tax and New Jersey state and
local taxes, consistent with preservation of capital. Tax-Free Ohio
Fund seeks a high level of current interest income exempt from federal
income tax and Ohio state and local taxes, consistent with preservation
of capital.
Foundation Funds are "fund of funds" which invest in other funds
in the Delaware Investments family (referred to as "Underlying Funds").
Foundation Funds Income Portfolio seeks a combination of current income
and preservation of capital with capital appreciation by investing
primarily in a mix of fixed income and domestic equity securities,
including fixed income and domestic equity Underlying Funds. Foundation
Funds Balanced Portfolio seeks capital appreciation with current income
as a secondary objective by investing primarily in domestic equity and
fixed income securities, including domestic equity and fixed income
Underlying Funds. Foundation Funds Growth Portfolio seeks long-term
capital growth by investing primarily in equity securities, including
equity Underlying Funds, and, to a lesser extent, in fixed income
securities, including fixed-income Underlying Funds.
International Equity Fund seeks to achieve long-term growth
without undue risk to principal by investing primarily in international
securities that provide the potential for capital appreciation and
income. Global Bond Fund seeks to achieve current income consistent
with the preservation of principal by investing primarily in global
fixed-income securities that may also provide the potential for capital
appreciation. Global Equity Fund seeks to achieve long-term total
return by investing in global securities that provide the potential for
capital appreciation and income. Emerging Markets Fund seeks long-term
capital appreciation by investing primarily in equity securities of
issuers located or operating in emerging countries.
U.S. Growth Fund seeks to maximize capital appreciation by
investing in companies of all sizes which have low dividend yields,
strong balance sheets and high expected earnings growth rates relative
to their industry. Overseas Equity Fund seeks to maximize total return
(capital appreciation and income), principally through investments in an
internationally diversified portfolio of equity securities. New Pacific
Fund seeks long-term capital appreciation by investing primarily in
companies which are domiciled in or have their principal business
activities in the Pacific Basin.
Delaware Group Premium Fund, Inc. offers 16 funds available
exclusively as funding vehicles for certain insurance company separate
accounts. Decatur Total Return Series seeks the highest possible total
rate of return by selecting issues that exhibit the potential for
capital appreciation while providing higher than average dividend
income. Delchester Series seeks as high a current income as possible by
investing in rated and unrated corporate bonds, U.S. government
securities and commercial paper. Capital Reserves Series seeks a high
stable level of current income while minimizing fluctuations in
principal by investing in a diversified portfolio of short- and
intermediate-term securities. Cash Reserve Series seeks the highest
level of income consistent with preservation of capital and liquidity
through investments in short-term money market instruments. DelCap
Series seeks long-term capital appreciation by investing its assets in a
diversified portfolio of securities exhibiting the potential for
significant growth. Delaware Series seeks a balance of capital
appreciation, income and preservation of capital. It uses a dividend-
oriented valuation strategy to select securities issued by established
companies that are believed to demonstrate potential for income and
capital growth. International Equity Series seeks long-term growth
without undue risk to principal by investing primarily in equity
securities of foreign issuers that provide the potential for capital
appreciation and income. Small Cap Value Series seeks capital
appreciation by investing primarily in small-cap common stocks whose
market values appear low relative to their underlying value or future
earnings and growth potential. Emphasis will also be placed on
securities of companies that may be temporarily out of favor or whose
value is not yet recognized by the market. Trend Series seeks long-term
capital appreciation by investing primarily in small- cap common stocks
and convertible securities of emerging and other growth-oriented
companies. These securities will have been judged to be responsive to
changes in the market place and to have fundamental characteristics to
support growth. Income is not an objective. Global Bond Series seeks
to achieve current income consistent with the preservation of principal
by investing primarily in global fixed-income securities that may also
provide the potential for capital appreciation. Strategic Income
Series seeks high current income and total return by using a multi-
sector investment approach, investing primarily in three sectors of the
fixed-income securities markets: high-yield, higher risk securities;
investment grade fixed-income securities; and foreign government and
other foreign fixed-income securities. Devon Series seeks current
income and capital appreciation by investing primarily in income-
producing common stocks, with a focus on common stocks that the
investment manager believes have the potential for above-average
dividend increases over time. Emerging Markets Series seeks to achieve
long-term capital appreciation by investing primarily in equity
securities of issuers located or operating in emerging countries.
Convertible Securities Series seeks a high level of total return on its
assets through a combination of capital appreciation and current income
by investing primarily in convertible securities. Social Awareness
Series seeks to achieve long-term capital appreciation by investing
primarily in equity securities of medium to large-sized companies
expected to grow over time that meet the Series' "Social Criteria"
strategy. REIT Series seeks to achieve maximum long-term total return,
with capital appreciation as a secondary objective, by investing in
securities of companies primarily engaged in the real estate industry.
Delaware-Voyageur US Government Securities Fund seeks to provide a
high level of current income consistent with the prudent investment risk
by investing in U.S. Treasury bills, notes, bonds, and other obligations
issued or unconditionally guaranteed by the full faith and credit of the
U.S. Treasury, and repurchase agreements fully secured by such
obligations.
Delaware-Voyageur Tax-Free Arizona Insured Fund seeks to provide
a high level of current income exempt from federal income tax and the
Arizona personal income tax, consistent with the preservation of
capital. Delaware-Voyageur Minnesota Insured Fund seeks to provide a
high level of current income exempt from federal income tax and the
Minnesota personal income tax, consistent with the preservation of
capital.
Delaware-Voyageur Tax-Free Minnesota Intermediate Fund seeks to
provide a high level of current income exempt from federal income tax
and the Minnesota personal income tax, consistent with preservation of
capital. The Fund seeks to reduce market risk by maintaining an average
weighted maturity from five to ten years.
Delaware-Voyageur Tax-Free California Insured Fund seeks to
provide a high level of current income exempt from federal income tax
and the California personal income tax, consistent with the preservation
of capital. Delaware-Voyageur Tax-Free Florida Insured Fund seeks to
provide a high level of current income exempt from federal income tax,
consistent with the preservation of capital. The Fund will seek to
select investments that will enable its shares to be exempt from the
Florida intangible personal property tax. Delaware-Voyageur Tax-Free
Florida Fund seeks to provide a high level of current income exempt from
federal income tax, consistent with the preservation of capital. The
Fund will seek to select investments that will enable its shares to be
exempt from the Florida intangible personal property tax. Delaware-
Voyageur Tax-Free Kansas Fund seeks to provide a high level of current
income exempt from federal income tax, the Kansas personal income tax
and the Kansas intangible personal property tax, consistent with the
preservation of capital. Delaware-Voyageur Tax-Free Missouri Insured
Fund seeks to provide a high level of current income exempt from federal
income tax and the Missouri personal income tax, consistent with the
preservation of capital. Delaware-Voyageur Tax-Free New Mexico Fund
seeks to provide a high level of current income exempt from federal
income tax and the New Mexico personal income tax, consistent with the
preservation of capital. Delaware-Voyageur Tax-Free Oregon Insured Fund
seeks to provide a high level of current income exempt from federal
income tax and the Oregon personal income tax, consistent with the
preservation of capital. Delaware-Voyageur Tax-Free Utah Fund seeks to
provide a high level of current income exempt from federal income tax,
consistent with the preservation of capital. Delaware-Voyageur Tax-Free
Washington Insured Fund seeks to provide a high level of current income
exempt from federal income tax, consistent with the preservation of
capital.
Delaware-Voyageur Tax-Free Arizona Fund seeks to provide a high
level of current income exempt from federal income tax and the Arizona
personal income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free California Fund seeks to provide a high level
of current income exempt from federal income tax and the California
personal income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free Iowa Fund seeks to provide a high level of
current income exempt from federal income tax and the Iowa personal
income tax, consistent with the preservation of capital. Delaware-
Voyageur Tax-Free Idaho Fund seeks to provide a high level of current
income exempt from federal income tax and the Idaho personal income tax,
consistent with the preservation of capital. Delaware-Voyageur
Minnesota High Yield Municipal Bond Fund seeks to provide a high level
of current income exempt from federal income tax and the Minnesota
personal income tax primarily through investment in medium and lower
grade municipal obligations. National High Yield Municipal Fund seeks
to provide a high level of income exempt from federal income tax,
primarily through investment in medium and lower grade municipal
obligations. Delaware-Voyageur Tax-Free New York Fund seeks to provide
a high level of current income exempt from federal income tax and the
personal income tax of the state of New York and the city of New York,
consistent with the preservation of capital. Delaware-Voyageur Tax-Free
Wisconsin Fund seeks to provide a high level of current income exempt
from federal income tax and the Wisconsin personal income tax,
consistent with the preservation of capital.
Delaware-Voyageur Tax-Free Colorado Fund seeks to provide a high
level of current income exempt from federal income tax and the Colorado
personal income tax, consistent with the preservation of capital.
Aggressive Growth Fund seeks long-term capital appreciation, which
the Fund attempts to achieve by investing primarily in equity securities
believed to have the potential for high earnings growth. Although the
Fund, in seeking its objective, may receive current income from
dividends and interest, income is only an incidental consideration in
the selection of the Fund's investments. Growth Stock Fund has an
objective of long-term capital appreciation. The Fund seeks to achieve
its objective from equity securities diversified among individual
companies and industries. Tax-Efficient Equity Fund seeks to obtain for
taxable investors a high total return on an after-tax basis. The Fund
will attempt to achieve this objective by seeking to provide a high
long-term after-tax total return through managing its portfolio in a
manner that will defer the realization of accrued capital gains and
minimize dividend income.
Delaware-Voyageur Tax-Free Minnesota Fund seeks to provide a high
level of current income exempt from federal income tax and the Minnesota
personal income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free North Dakota Fund seeks to provide a high
level of current income exempt from federal income tax and the North
Dakota personal income tax, consistent with the preservation of capital.
For more complete information about any of the funds in the
Delaware Investments family, including charges and expenses, you can
obtain a prospectus from the Distributor. Read it carefully before you
invest or forward funds.
Each of the summaries above is qualified in its entirety by the
information contained in each fund's prospectus(es).
FINANCIAL STATEMENTS
Ernst & Young LLP serves as the independent auditors for Equity
Funds I, Inc. and, in its capacity as such, audits the annual financial
statements of each of the Funds. The Funds' Statements of Net Assets,
Statements of Assets and Liabilities, Statements of Operations,
Statements of Changes in Net Assets, Financial Highlights, and Notes to
Financial Statements, as well as the reports of Ernst & Young LLP,
independent auditors, for the fiscal year ended October 31, 1998, are
included in the Funds' Annual Reports to shareholders. The financial
statements, the notes relating thereto, the financial highlights and the
reports of Ernst & Young LLP listed above are incorporated by reference
from the Annual Reports into this Part B.
Delaware Investments includes funds with a wide range of
investment objectives. Stock funds, income funds, national and state-
specific tax-exempt funds, money market funds, global and international
funds and closed-end funds give investors the ability to create a
portfolio that fits their personal financial goals. For more
information, shareholders of the Fund Classes should contact their
financial adviser or call Delaware Investments at 800-523-1918 and
shareholders of the Institutional Classes should contact Delaware
Investments at 800-510-4015.
INVESTMENT MANAGER
Delaware Management Company
One Commerce Square
Philadelphia, PA 19103
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING,
ACCOUNTING SERVICES
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
One Commerce Square
Philadelphia, PA 19103
INDEPENDENT AUDITORS
Ernst & Young LLP
Two Commerce Square
Philadelphia, PA 19103
CUSTODIAN
The Chase Manhattan Bank
4 Chase Metrotech Center
Brooklyn, NY 11245
DELAWARE FUND
A CLASS
B CLASS
C CLASS
INSTITUTIONAL CLASS
DEVON FUND
A CLASS
B CLASS
C CLASS
INSTITUTIONAL CLASS
CLASSES OF DELAWARE GROUP
EQUITY FUNDS I, INC.
PART B
STATEMENT OF
ADDITIONAL INFORMATION
DECEMBER 30, 1998
DELAWARE
INVESTMENTS
PART C
Other Information
Item 23. Exhibits
(a) Articles of Incorporation.
(1) Articles of Incorporation, as amended and supplemented
to date, incorporated into this filing by reference to
Post-Effective Amendment No. 102 filed November 22, 1995.
(2) Executed Articles Supplementary (November 28, 1995)
incorporated into this filing by reference to
Post-Effective Amendment No. 103 filed December 29, 1995.
(3) Executed Articles of Amendment (December 1996)
incorporated into this filing by reference to
Post-Effective Amendment No. 105 filed December 23, 1997.
(b) By-Laws. By-Laws, as amended to date, incorporated into
this filing by reference to Post- Effective Amendment
No. 102 filed November 22, 1995.
(c) Instruments Defining the Rights of Security Holders.
(1) Articles of Incorporation, Articles of Amendment and
Articles Supplementary.
(i) Article Second of Articles Supplementary
(September 6, 1994), Article Fifth of Articles
Supplementary (November 30, 1993), Article Second
of Articles Supplementary (May 22, 1992), Article
Fifth of Articles of Incorporation (March 4, 1983)
and Article Eleventh of Articles of Amendment
(May 2, 1985) incorporated into this filing by
reference to Post-Effective Amendment No. 102 filed
November 22, 1995.
(ii) Executed Articles Third and Fourth of Articles
Supplementary (November 28, 1995) incorporated
into this filing by reference to Post-Effective
Amendment No. 103 filed December 29, 1995.
(2) By-Laws. Article II, Article III, as amended, and
Article XIII, which was subsequently redesignated as
Article XIV, incorporated into this filing by reference
to Post-Effective Amendment No. 102 filed
November 22, 1995.
(d) Investment Management Agreements.
(1) Investment Management Agreement (April 3, 1995) between
Delaware Management Company, Inc. and the Registrant on
behalf of Delaware Fund incorporated into this filing by
reference to Post-Effective Amendment No. 102 filed
November 22, 1995.
(2) Investment Management Agreement (April 3, 1995) between
Delaware Management Company, Inc. and the Registrant on
behalf of Devon Fund incorporated into this filing by
reference to Post-Effective Amendment No. 102 filed
November 22, 1995.
(e) (1) Distribution Agreements.
(i) Executed Distribution Agreement (April 3, 1995)
between Delaware Distributors, L.P. and the
Registrant on behalf of Delaware Fund incorporated
into this filing by reference to Post-Effective
Amendment No. 103 filed December 29, 1995.
(ii) Executed Distribution Agreement (April 3, 1995)
between Delaware Distributors, L.P. and the
Registrant on behalf of Devon Fund incorporated
into this filing by reference to Post-Effective
Amendment No. 103 filed December 29, 1995.
(iii) Executed Amendment No. 1 to Distribution Agreement
(November 29, 1995) between Delaware Distributors,
L.P. and the Registrant on behalf of Delaware Fund
incorporated into this filing by reference to
Post-Effective Amendment No. 103 filed
December 29, 1995.
(iv) Executed Amendment No. 1 to Distribution Agreement
(November 29, 1995) between Delaware Distributors,
L.P. and the Registrant on behalf of Devon Fund
incorporated into this filing by reference to
Post-Effective Amendment No. 103 filed
December 29, 1995.
(2) Administration and Service Agreement. Form of
Administration and Service Agreement (as amended
November 1995) (Module) incorporated into this filing
by reference to Post-Effective Amendment No. 102 filed
November 22, 1995.
(3) Dealer's Agreement. Dealer's Agreement (as amended
November 1995) (Module) incorporated into this filing
by reference to Post-Effective Amendment No. 102 filed
November 22, 1995.
(4) Mutual Fund Agreement for the Delaware Group of Funds
(November 1995) (Module) incorporated into this filing
by reference to Post-Effective Amendment No. 103 filed
December 29, 1995.
(f) Bonus, Profit Sharing, Pension Contracts.
(1) Amended and Restated Profit Sharing Plan
(November 17, 1994) incorporated into this filing by
reference to Post-Effective Amendment No. 102 filed
November 22, 1995.
(2) Amendment to Profit Sharing Plan (December 21, 1995)
(Module) incorporated into this filing by reference to
Post-Effective Amendment No. 104 filed December 24, 1996.
(g) Custodian Agreements.
(1) Executed Custodian Agreement (May 1, 1996) between The
Chase Manhattan Bank and the Registrant on behalf of
Delaware Fund and Devon Fund (Module) incorporated into
this filing by reference to Post-Effective Amendment
No. 104 filed December 24, 1996.
(i) Amendment (November 1997) to Custodian Agreement
between The Chase Manhattan Bank and the Registrant
on behalf of Delaware Fund and Devon Fund
incorporated into this filing by reference to
Post-Effective Amendment No. 105 filed
December 23, 1997.
(2) Form of Securities Lending Agreement between The Chase
Manhattan Bank and the Registrant on behalf of Delaware
Fund and Devon Fund incorporated into this filing by
reference to Post-Effective Amendment No. 104 filed
December 24, 1996.
(h) Other Material Contracts.
(1) Executed Shareholders Services Agreement (June 29,
1988) between Delaware Service Company, Inc. and the
Registrant on behalf of Delaware Fund incorporated
into this filing by reference to Post-Effective Amendment
No. 104 filed December 24, 1996.
(i) Amended Schedule A (January 1, 1997) to Shareholders
Services Agreement between Delaware Service Company,
Inc. and the Registrant on behalf of Delaware Fund
incorporated into this filing by reference to
Post-Effective Amendment No. 105 filed
December 23, 1997.
(ii) Amended Schedule A (July 1, 1997) to Shareholders
Services Agreement between Delaware Service Company,
Inc. and the Registrant on behalf of Delaware Fund
incorporated into this filing by reference to
Post-Effective Amendment No. 105 filed
December 23, 1997.
(iii) Amended Schedule A (October 14, 1997) to Shareholders
Services Agreement between Delaware Service Company,
Inc. and the Registrant on behalf of Delaware Fund
incorporated into this filing by reference to
Post-Effective Amendment No. 105 filed
December 23, 1997.
(2) Executed Shareholders Services Agreement
(December 29, 1993) between Delaware Service Company, Inc.
and the Registrant on behalf of Devon Fund incorporated
into this filing by reference to Post-Effective Amendment
No. 104 filed December 24, 1996.
(i) Amended Schedule A (January 1, 1997) to Shareholders
Services Agreement between Delaware Service Company,
Inc. and the Registrant on behalf of Devon Fund
incorporated into this filing by reference to
Post-Effective Amendment No. 105 filed
December 23, 1997.
(ii) Amended Schedule A (July 1, 1997) to Shareholders
Services Agreement between Delaware Service Company,
Inc. and the Registrant on behalf of Devon Fund
incorporated into this filing by reference to
Post-Effective Amendment No. 105 filed
December 23, 1997.
(iii) Amended Schedule A (October 14, 1997) to Shareholders
Services Agreement between Delaware Service Company,
Inc. and the Registrant on behalf of Devon Fund
incorporated into this filing by reference to
Post-Effective Amendment No. 105 filed
December 23, 1997.
(3) Executed Delaware Group of Funds Fund Accounting Agreement
(August 19, 1996) between Delaware Service Company, Inc.
and the Registrant on behalf of Delaware Fund and Devon
Fund incorporated into this filing by reference to
Post-Effective Amendment No. 104 filed December 24, 1996.
(i) Executed Amendment No. 7 (October 14, 1997) to
Delaware Group of Funds Fund Accounting Agreement
included as Exhibit.
(ii) Executed Amendment No. 8 (December 18, 1997) to
Delaware Group of Funds Fund Accounting Agreement
included as Exhibit.
(iii) Executed Amendment No. 9 (March 31, 1998) to
Delaware Group of Funds Fund Accounting Agreement
included as Exhibit.
(i) Legal Opinion. To be filed by Post-Effective Amendment.
(j) Consent of Auditors. To be filed by Post-Effective Amendment.
(k) Inapplicable.
(l) Inapplicable.
(m) Plans under Rule 12b-1.
(1) Executed Plan under Rule 12b-1 (November 29, 1995) for
Delaware Fund A Class incorporated into this filing by
reference to Post-Effective Amendment No. 103 filed
December 29, 1995.
(2) Executed Plan under Rule 12b-1 (November 29, 1995) for
Delaware Fund B Class incorporated into this filing by
reference to Post-Effective Amendment No. 103 filed
December 29, 1995.
(3) Executed Plan under Rule 12b-1 (November 29, 1995) for
Delaware Fund C Class incorporated into this filing by
reference to Post-Effective Amendment No. 103 filed
December 29, 1995.
(4) Executed Plan under Rule 12b-1 (November 29, 1995) for
Devon Fund A Class incorporated into this filing by
reference to Post-Effective Amendment No. 103 filed
December 29, 1995.
(5) Executed Plan under Rule 12b-1 (November 29, 1995) for
Devon Fund B Class incorporated into this filing by
reference to Post-Effective Amendment No. 103 filed
December 29, 1995.
(6) Executed Plan under Rule 12b-1 (November 29, 1995) for
Devon Fund C Class incorporated into this filing by
reference to Post-Effective Amendment No. 103 filed
December 29, 1995.
(n) Financial Data Schedules. To be filed by Post-Effective
Amendment.
(o) Plan under Rule 18f-3.
(1) Plan under Rule 18f-3 (September 18, 1997) incorporated
into this filing by reference to Post-Effective Amendment
No. 105 filed December 23, 1997.
(2) Amended Appendix A to Plan under Rule 18f-3 incorporated
into this filing by reference to Post-Effective Amendment
No. 105 filed December 23, 1997.
(p) Other: Directors' Power of Attorney.
(1) Power of Attorney (December 18, 1997) attached as Exhibit.
(2) Power of Attorney for John H. Durham attached as Exhibit.
Item 24. Persons Controlled by or under Common Control with
Registrant. None.
Item 25. Indemnification. Incorporated into this filing by reference
to Post-Effective Amendment No. 78 filed October 26, 1983 and
Post-Effective Amendment No. 102 filed November 22, 1995.
Item 26. Business and Other Connections of Investment Adviser.
Delaware Management Company, a series of Delaware Management
Business Trust, (the "Manager") serves as investment manager to the
Registrant and also serves as investment manager or sub-adviser to
certain of the other funds in the Delaware Investments family (Delaware
Group Equity Funds II, Inc., Delaware Group Equity Funds III, Inc.,
Delaware Group Equity Funds IV, Inc., Delaware Group Equity Funds V,
Inc., Delaware Group Government Fund, Inc., Delaware Group Income Funds,
Inc., Delaware Group Limited-Term Government Funds, Inc., Delaware Group
Tax-Free Fund, Inc., Delaware Group State Tax-Free Income Trust,
Delaware Group Tax-Free Money Fund, Inc., Delaware Group Premium Fund,
Inc., Delaware Group Global & International Funds, Inc., Delaware Pooled
Trust, Inc., Delaware Group Adviser Funds, Inc., Delaware Group Dividend
and Income Fund, Inc., Delaware Group Global Dividend and Income Fund,
Inc., Delaware Group Foundation Funds, Inc., Voyageur Intermediate Tax
Free Funds, Inc., Voyageur Tax Free Funds, Inc., Voyageur Funds, Inc.,
Voyageur Insured Funds, Inc., Voyageur Investment Trust, Voyageur
Investment Trust II, Voyageur Mutual Funds, Inc., Voyageur Mutual Funds
II, Inc., Voyageur Mutual Funds III, Inc., Voyageur Arizona Municipal
Income Fund, Inc., Voyageur Colorado Insured Municipal Income Fund,
Inc., Voyageur Florida Insured Municipal Income Fund, Voyageur Minnesota
Municipal Fund, Inc., Voyageur Minnesota Municipal Fund II, Inc. and
Voyageur Minnesota Municipal Fund III, Inc.). In addition, certain
officers of the Manager also serve as directors/trustees of the other
funds in the Delaware Investments family, and certain officers are also
officers of these other funds. A company indirectly owned by the
Manager's indirect parent company acts as principal underwriter to the
mutual funds in the Delaware Investments family (see Item 29 below) and
another such company acts as the shareholder services, dividend
disbursing, accounting servicing and transfer agent for all of the
mutual funds in the Delaware Investments family.
The following persons serving as directors or officers of the
Manager have held the following positions during the past two years:
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
Wayne A. Stork Chairman of the Board, President, Chief Executive
Officer and Chief Investment Officer of Delaware
Management Company (a series of Delaware Management
Business Trust); Chairman of the Board, President,
Chief Executive Officer, Chief Investment Officer
and Director/Trustee of Delaware Management Company,
Inc. and Delaware Management Business Trust;
Chairman of the Board, President, Chief Executive
Officer and Director of DMH Corp., Delaware
Distributors, Inc. and Founders Holdings, Inc.;
Chairman, Chief Executive Officer and Chief
Investment Officer of Delaware Investment Advisers
(a series of Delaware Management Business Trust);
Chairman, Chief Executive Officer and Director of
Delaware International Holdings Ltd. and Delaware
International Advisers Ltd.; Chairman of the Board
and Director of the Registrant, each of the other
funds in the Delaware Investments family, Delaware
Management Holdings, Inc., and Delaware Capital
Management, Inc.; Chairman of Delaware Distributors,
L.P.; President and Chief Executive Officer of
Delvoy, Inc.; and Director and/or Trustee of
Delaware Service Company, Inc. and Retirement
Financial Services, Inc.
Richard G.
Unruh, Jr. Executive Vice President of the Registrant, each
of the other funds in the Delaware Investments
family, Delaware Management Holdings, Inc.,
Delaware Capital Management, Inc. and Delaware
Management Company (a series of Delaware
Management Business Trust); Executive Vice
President and Director/Trustee of Delaware
Management Company, Inc. and Delaware Management
Business Trust; President of Delaware Investment
Advisers (a series of Delaware Management Business
Trust); and Director of Delaware International
Advisers Ltd.
Board of Directors, Chairman of Finance Committee,
Keystone Insurance Company since 1989, 2040 Market
Street, Philadelphia, PA; Board of Directors,
of Finance Committee, AAA Mid Atlantic, Inc. since
1989, 2040 Market Street, Philadelphia, PA; Board
of Directors, Metron, Inc. since 1995, 11911
Freedom Drive, Reston, VA
* Business address of each is 1818 Market Street, Philadelphia,
PA 19103
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
Paul E. Suckow Executive Vice President/Chief Investment
Officer, Fixed Income of Delaware Management
Company, Inc., Delaware Management Company
(a series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of Delaware
Management Business Trust), the Registrant, each
of the other funds in the Delaware Investments
family and Delaware Management Holdings, Inc.;
Executive Vice President and Director of Founders
Holdings, Inc.; Executive Vice President of
Delaware Capital Management, Inc. and Delaware
Management Business Trust; and Director of Founders
CBO Corporation
Director, HYPPCO Finance Company Ltd.
David K. Downes Executive Vice President, Chief Operating Officer
and Chief Financial Officer of the Registrant and
each of the other funds in the Delaware Investments
family, Delaware Management Holdings, Inc.,
Founders CBO Corporation, Delaware Capital
Management, Inc., Delaware Management Company
(a series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of Delaware
Management Business Trust) and Delaware Distributors,
L.P.; Executive Vice President, Chief Operating
Officer, Chief Financial Officer and Director
of Delaware Management Company, Inc., DMH Corp,
Delaware Distributors, Inc., Founders Holdings,
Inc. and Delvoy, Inc.; Executive Vice President,
Chief Financial Officer, Chief Administrative
Officer and Trustee of Delaware Management
Business Trust; President, Chief Executive Officer,
Chief Financial Officer and Director of Delaware
Service Company, Inc.; President, Chief Operating
Officer, Chief Financial Officer and Director of
Delaware International Holdings Ltd.; Chairman,
Chief Executive Officer and Director of Retirement
Financial Services, Inc.; Chairman and Director
of Delaware Management Trust Company; Director
of Delaware International Advisers Ltd.; and Vice
President of Lincoln Funds Corporation
Chief Executive Officer and Director of Forewarn,
Inc. since 1993, 8 Clayton Place, Newtown Square, PA
* Business address of each is 1818 Market Street, Philadelphia,
PA 19103.
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
Richard J. Flannery Executive Vice President and General Counsel of
Delaware Management Holdings, Inc., DMH Corp.,
Delaware Management Company, Inc., Delaware
Distributors, Inc., Delaware Distributors, L.P.,
Delaware Management Trust Company, Delaware Capital
Management, Inc., Delaware Service Company, Inc.,
Delaware Management Company (a series of Delaware
Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management Business
Trust), Founders CBO Corporation and Retirement
Financial Services, Inc.; Executive Vice President/
General Counsel and Director of Delaware
International Holdings Ltd., Founders Holdings,
Inc. and Delvoy, Inc.; Senior Vice President of
the Registrant and each of the other funds in the
Delaware Investments family; Director of Delaware
International Advisers Ltd.
Director, HYPPCO Finance Company Ltd.
Limited Partner of Stonewall Links, L.P. since 1991,
Bulltown Rd., Elverton, PA; Director and Member
of Executive Committee of Stonewall Links, Inc.
since 1991, Bulltown Rd., Elverton, PA
George M. Senior Vice President, Secretary and Director/
Chamberlain, Jr. Trustee of Delaware Management Company, Inc.,
DMH Corp., Delaware Distributors, Inc., Delaware
Service Company, Inc., Founders Holdings, Inc.,
Delaware Capital Management, Inc., Retirement
Financial Services, Inc., Delvoy, Inc.
and Delaware Management Business Trust; Senior
Vice President, Secretary and General Counsel of
the Registrant and each of the other funds in
the Delaware Investments family; Senior Vice
President and Secretary of Delaware Distributors,
L.P., Delaware Management Company (a series of
Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware
Management Business Trust) and Delaware
Management Holdings, Inc.; Senior Vice President
and Director of Delaware International Holdings
Ltd.; Executive Vice President, Secretary and
Director of Delaware Management Trust Company;
and Director of Delaware International Advisers Ltd.
* Business address of each is 1818 Market Street, Philadelphia,
PA 19103
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
Michael P. Bishof Senior Vice President/Investment Accounting
of Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust) and Delaware Service
Company, Inc.; Senior Vice President and Treasurer
of the Registrant, each of the other funds in the
Delaware Investments family and Founders Holdings,
Inc.; Senior Vice President and Treasurer/ Manager,
Investment Accounting of Delaware Distributors,
L.P. and Delaware Investment Advisers (a series
of Delaware Management Business Trust); Assistant
Treasurer of Founders CBO Corporation; and Senior
Vice President and Manager of Investment Accounting
of Delaware International Holdings Ltd.
Joseph H. Hastings Senior Vice President/Corporate Controller and
Treasurer of Delaware Management Holdings, Inc.,
DMH Corp., Delaware Management Company, Inc.,
Delaware Distributors, Inc., Delaware Capital
Management, Inc., Delaware Distributors, L.P.,
Delaware Service Company, Inc., Delaware
International Holdings Ltd., Delaware Management
Company (a series of Delaware Management Business
Trust), Delvoy, Inc. and Delaware Management
Business Trust; Senior Vice President/Corporate
Controller of the Registrant, each of the other
funds in the Delaware Investments family and
Founders Holdings, Inc.; Executive Vice President,
Chief Financial Officer and Treasurer of Delaware
Management Trust Company; Chief Financial Officer
and Treasurer of Retirement Financial Services,
Inc.; Senior Vice President/Assistant Treasurer
of Founders CBO Corporation
* Business Address of each is 1818 Market Street, Philadelphia, PA 19103
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
Michael T. Taggart Senior Vice President/Facilities Management and
Administrative Services of Delaware Management
Company, Inc. and Delaware Management Company
(a series of Delaware Management Business Trust)
Douglas L. Anderson Senior Vice President/Operations of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management
Business Trust), Delaware Investment and
Retirement Services, Inc. and Delaware Service
Company, Inc.; Senior Vice President/Operations
and Director of Delaware Management Trust Company
James L. Shields Senior Vice President/Chief Information Officer of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware Management
Business Trust), Delaware Service Company, Inc.
and Retirement Financial Services, Inc.
Eric E. Miller Vice President, Assistant Secretary and Deputy
General Counsel of the Registrant and each of
the other funds in the Delaware Investments
family, Delaware Management Company, Inc.,
Delaware Management Company (a series of
Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware
Management Business Trust), Delaware Management
Holdings, Inc., DMH Corp., Delaware Distributors,
L.P., Delaware Distributors Inc., Delaware Service
Company, Inc., Delaware Management Trust Company,
Founders Holdings, Inc., Delaware Capital Management,
Inc. and Retirement Financial Services, Inc.;
Assistant Secretary of Delaware Management Business
Trust; and Vice President and Assistant Secretary
of Delvoy, Inc.
* Business address of each is 1818 Market Street, Philadelphia,
PA 19103
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
Richelle S. Maestro Vice President and Assistant Secretary of the
Registrant, each of the other funds in the
Delaware Investments family, Delaware Management
Company, Inc., Delaware Management Company (a
series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of
Delaware Management Business Trust), Delaware
Management Holdings, Inc., Delaware Distributors,
L.P., Delaware Distributors, Inc., Delaware
Service Company, Inc., DMH Corp., Delaware
Management Trust Company, Delaware Capital
Management, Inc., Retirement Financial Services,
Inc., Founders Holdings, Inc. and Delvoy, Inc.;
Vice President and Secretary of Delaware
International Holdings Ltd.; and Secretary of
Founders CBO Corporation
Partner of Tri-R Associates since 1989, 10001
Sandmeyer Lane, Philadelphia, PA
Richard Salus1 Vice President/Assistant Controller of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust) and Delaware Management Trust Company
Bruce A. Ulmer Vice President/Director of LNC Internal Audit of
the Registrant, each of the other funds in the
Delaware Investments family, Delaware Management
Company, Inc., Delaware Management Company (a
series of Delaware Management Business Trust),
Delaware Management Holdings, Inc., DMH Corp.,
Delaware Management Trust Company and Retirement
Financial Services, Inc.; Vice President/Director
of Internal Audit of Delvoy, Inc.
Joel A. Ettinger2 Vice President/Director of Taxation of the
Registrant, each of the other funds in the
Delaware Investments family, Delaware Management
Company, Inc., Delaware Management Company (a
series of Delaware Management Business Trust) and
Delaware Management Holdings, Inc.
Christopher Adams Vice President/Business Manager, Equity Department
of Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware Management
Business Trust) and Delaware Service Company, Inc.
Susan L. Hanson Vice President/Strategic Planning of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust) and Delaware Service Company, Inc.
Dennis J. Mara3 Vice President/Acquisitions of Delaware Management
Company, Inc. and Delaware Management Company (a
series of Delaware Management Business Trust)
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
Scott Metzger Vice President/Business Development of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust) and Delaware Service Company, Inc.
Lisa O. Brinkley Vice President/Compliance of the Registrant,
Delaware Management Company, Inc., each of the
other funds in the Delaware Investments family,
Delaware Management Company (a series of Delaware
Management Business Trust), DMH Corp., Delaware
Distributors, L.P., Delaware Distributors, Inc.,
Delaware Service Company, Inc., Delaware
Management Trust Company, Delaware Capital
Management, Inc. and Retirement Financial Services,
Inc.; Vice President/Compliance Officer of Delaware
Management Business Trust; and Vice President of
Delvoy, Inc.
Mary Ellen Carrozza Vice President/Client Services of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series of
Delaware Management Business Trust) and Delaware
Pooled Trust, Inc.
Gerald T. Nichols Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware Management
Business Trust), Delaware Investment Advisers (a
series of Delaware Management Business Trust), the
fixed-income investment companies in the Delaware
Investments family; Vice President of Founders
Holdings, Inc.; and Treasurer, Assistant Secretary
and Director of Founders CBO Corporation
Paul A. Matlack Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series of
Delaware Management Business Trust), the fixed-
income investment companies in the Delaware
Investments family; Vice President of Founders
Holdings, Inc.; and President and Director of
Founders CBO Corporation
Gary A. Reed Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management Business
Trust), the fixed-income investment companies in
the Delaware Investments family and Delaware
Capital Management, Inc.
* Business address of each is 1818 Market Street, Philadelphia,
PA 19103.
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
Patrick P. Coyne Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management Business
Trust), the fixed-income investment companies in
the Delaware Investments family and Delaware
Capital Management, Inc.
Roger A. Early Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series of
Delaware Management Business Trust), the fixed-
income investment companies in the Delaware
Investments family
Mitchell L. Conery4 Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series
of Delaware Management Business Trust), the fixed-
income investment companies in the Delaware
Investments family and Delaware Capital
Management, Inc.
George H. Burwell Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), the Registrant and the other equity
investment companies in the Delaware Investments
family
John B. Fields Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series of
Delaware Management Business Trust), the
Registrant and the other equity investment companies
in the Delaware Investments family, Delaware Capital
Management, Inc. and Trustee of
Delaware Management Business Trust
Gerald S. Frey5 Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series of
Delaware Management Business Trust), the Registrant
and the other equity investment companies in the
Delaware Investments family
* Business address of each is 1818 Market Street, Philadelphia,
PA 19103
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
Christopher Beck6 Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series of
Delaware Management Business Trust), the Registrant
and the other equity investment companies in the
Delaware Investments family
Elizabeth H. Vice President/Senior Portfolio Manager of Delaware
Howell7 Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), and the fixed-income investment companies
in the Delaware Investments family
Andrew M. Vice President/Senior Portfolio Manager of Delaware
McCullagh, Jr.8 Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), and the fixed-income investment companies
in the Delaware Investments family
Babak Zenouzi Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), the Registrant and the other equity
investment companies in the Delaware Investments
family
Paul Grillo Vice President/Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series
of Delaware Management Business Trust), and the
fixed-income investment companies in the Delaware
Investments family
J. Paul Dokas9 Vice President/Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), the Registrant and the other equity
investment companies in the Delaware Investments
family
Marshall T. Vice President/Portfolio Manager of Delaware
Bassett10 Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series
of Delaware Management Business Trust), the
Registrant and the other equity investment
companies in the Delaware Investments family
John Heffern11 Vice President/Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management
Business Trust), the Registrant and the other
equity investment companies in the Delaware
Investments family
* Business address of each is 1818 Market Street, Philadelphia,
PA 19103
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
Lori P. Wachs Vice President/Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), the Registrant and the other equity
investment companies in the Delaware Investments
family
Cynthia I. Isom Vice President/Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), and the fixed-income investment companies
in the Delaware Investments family.
1 SENIOR MANAGER, Ernst & Young LLP prior to December 1996.
2 TAX PRINCIPAL, Ernst & Young LLP prior to April 1998.
3 CORPORATE CONTROLLER, IIS prior to July 1997.
4 INVESTMENT OFFICER, Travelers Insurance prior to January 1997.
5 SENIOR DIRECTOR, Morgan Grenfell Capital Management prior to
June 1996.
6 SENIOR PORTFOLIO MANAGER, Pitcairn Trust Company prior to May 1997.
7 SENIOR PORTFOLIO MANAGER, Voyageur Fund Managers, Inc. prior to
May 1997.
8 SENIOR VICE PRESIDENT, SENIOR PORTFOLIO MANAGER, Voyageur Asset
Management LLC prior to May 1997.
9 DIRECTOR OF TRUST INVESTMENTS, Bell Atlantic Corporation prior to
February 1997.
10 VICE PRESIDENT, Morgan Stanley Asset Management prior to March 1997.
11 SENIOR VICE PRESIDENT, EQUITY RESEARCH, NatWest Securities
Corporation prior to March 1997.
* Business address of each is 1818 Market Street, Philadelphia,
PA 19103
Item 29. Principal Underwriters.
(a) Delaware Distributors, L.P. serves as principal underwriter
for all the mutual funds in the Delaware Group.
(b) Information with respect to each director, officer or
partner of principal underwriter:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------- ---------------------- ---------------------
<S> <C> <C>
Delaware Distributors, Inc. General Partner None
Delaware Investment
Advisers Limited Partner None
Delaware Capital
Management, Inc. Limited Partner None
Wayne A. Stork Chairman Chairman
Bruce D. Barton President and Chief Executive None
Officer
David K. Downes Executive Vice President, Executive Vice Chief
President, Chief Operating Officer Operating Officer and
and Chief Financial Officer Chief Financial
Officer
Richard J. Flannery Executive Vice President/ Senior Vice
General Counsel President
George M. Chamberlain, Jr. Senior Vice President/ Senior Vice
Secretary President/
General Counsel
Joseph H. Hastings Senior Vice President/ Senior Vice
Corporate Controller & President/
Treasurer Corporate Controller
* Business address of each is 1818 Market Street, Philadelphia,
PA 19103
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------- ----------------------- -----------------------
Terrence P. Cunningham Senior Vice President/ None
Financial Institutions
Thomas E. Sawyer Senior Vice President/ None
National Sales Director
Mac McAuliffe Senior Vice President/Sales None
Manager, Western Division
J. Chris Meyer Senior Vice President/ None
Director Product Management
William M. Kimbrough Senior Vice President/ None
Wholesaler
Daniel J. Brooks Senior Vice President/ None
Wholesaler
Bradley L. Kolstoe Senior Vice President/ None
Western Division Sales Manager
Henry W. Orvin Senior Vice President/Eastern None
Division Sales Manager
Michael P. Bishof Senior Vice President and
Treasurer/Senior Vice Manager,
Investment Accounting
President/Treasurer
* Business address of each is 1818 Market Street, Philadelphia, PA 19103
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------- ----------------------- -----------------------
Eric E. Miller Vice President/ Vice President
Assistant Secretary/ /Assistant
Deputy General Counsel Secretary/Deputy
General Counsel
Richelle S. Maestro Vice President/ Vice President/
Assistant Secretary Assistant Secretary
Lisa O. Brinkley Vice President/Compliance Vice President/
Compliance
Daniel H. Carlson Vice President/Strategic None
Marketing
Diane M. Anderson Vice President/Plan Record None
Keeping and Administration
Anthony J. Scalia Vice President/Defined None
Contribution Sales,
SW Territory
Courtney S. West Vice President/Defined None
Contribution Sales,
NE Territory
Denise F. Guerriere Vice President/Client None
Services
Gordon E. Searles Vice President/Client None
Services
Lori M. Burgess Vice President/Client None
Services
Julia R. Vander Els Vice President/Participant None
Services
Jerome J. Alrutz Vice President/Retail Sales None
Scott Metzger Vice President/Business Vice President/
Development Business Development
Larry Carr Vice President/Sales Manager None
Stephen C. Hall Vice President/ None
Institutional Sales
Gregory J. McMillan Vice President/ None
National Accounts
Holly W. Reimel Senior Vice President/Manager, None
National Accounts
Christopher H. Price Vice President/Manager, None
Insurance
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------- ----------------------- -----------------------
Stephen J. DeAngelis Senior Vice President, None
National Director/
Manager Account Services
Andrew W. Whitaker Vice President/Financial None
Institutions
Jesse Emery Vice President/ Marketing None
Communications
Darryl S. Grayson Vice President, Broker/Dealer None
Internal Sales
Dinah J. Huntoon Vice President/Product None
Manager Equity
Soohee Lee Vice President/Fixed Income None
Product Management
Michael J. Woods Vice President/UIT Product None
Management
Ellen M. Krott Vice President/Marketing None
Dale L. Kurtz Vice President/Marketing None
Support
David P. Anderson Vice President/Wholesaler None
Lee D. Beck Vice President/Wholesaler None
Gabriella Bercze Vice President/Wholesaler None
Larry D. Birdwell Vice President/Wholesaler None
Terrence L. Bussard Vice President/Wholesaler None
William S. Carroll Vice President/Wholesaler None
William L. Castetter Vice President/Wholesaler None
Thomas J. Chadie Vice President/Wholesaler None
Joseph Gallagher Vice President/Wholesaler None
Thomas C. Gallagher Vice President/Wholesaler None
* Business address of each is 1818 Market Street, Philadelphia, PA 19103
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------- ----------------------- -----------------------
Douglas R. Glennon Vice President/Wholesaler None
Ronald A. Haimowitz Vice President/Wholesaler None
Edward J. Hecker Vice President/Wholesaler None
Christopher L. Johnston Vice President/Wholesaler None
Michael P. Jordan Vice President/Wholesaler None
Jeffrey A. Keinert Vice President/Wholesaler None
Thomas P. Kennett Vice President/Wholesaler None
Theodore T. Malone Vice President/Wholesaler None
Debbie A. Marler Vice President/Wholesaler None
Nathan W. Medin Vice President/Wholesaler None
Roger J. Miller Vice President/Wholesaler None
Andrew Morris Vice President/Wholesaler None
Patrick L. Murphy Vice President/Wholesaler None
Scott Naughton Vice President/Wholesaler None
Stephen C. Nell Vice President/Wholesaler None
Julia A. Nye Vice President/Wholesaler None
Joseph T. Owczarek Vice President/Wholesaler None
Mary Ellen Pernice-Fadden Vice President/Wholesaler None
Mark A. Pletts Vice President/Wholesaler None
Philip G. Rickards Vice President/Wholesaler None
Laura E. Roman Vice President/Wholesaler None
* Business address of each is 1818 Market Street, Philadelphia, PA 19103
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------- ----------------------- -----------------------
Linda Schulz Vice President/Wholesaler None
Edward B. Sheridan Vice President/Wholesaler None
Robert E. Stansbury Vice President/Wholesaler None
Julia A. Stanton Vice President/Wholesaler None
Larry D. Stone Vice President/Wholesaler None
Edward J. Wagner Vice President/Wholesaler None
Wayne W. Wagner Vice President/Wholesaler None
John A. Wells Vice President/Marketing None
Technology
Scott Whitehouse Vice President/Wholesaler None
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
</TABLE>
(c) Not Applicable.
Item 28. Location of Accounts and Records.
All accounts and records are maintained in Philadelphia at 1818 Market
Street, Philadelphia, PA 19103 or One Commerce Square, Philadelphia, PA
19103.
Item 29. Management Services. None.
Item 30. Undertakings.
(a) Not Applicable.
(b) Not Applicable.
(c) The Registrant hereby undertakes to furnish each
person to whom a prospectus is delivered with a copy
of the Registrant's latest annual report to
shareholders, upon request and without charge.
(d) Not Applicable.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, this Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in this City of Philadelphia, Commonwealth
of Pennsylvania on this 27th day of October, 1998.
DELAWARE GROUP EQUITY FUNDS I, INC.
By /s/ Wayne A. Stork
------------------
Wayne A. Stork
Chairman
<TABLE>
<CAPTION>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated:
Signature Title Date
- ------------------- ------------- --------
<S> <C> <C>
/s/ Wayne A. Stork Chairman of the Board and Director October 27, 1998
- -------------------
Wayne A. Stork Executive Vice President/Chief Operating
Officer/Chief Financial Officer
/s/ David K. Downes (Principal Financial Officer and October 27, 1998
- -------------------
David K. Downes Principal Accounting Officer)
/s/Walter P. Babich Director October 27, 1998
- -------------------
Walter P. Babich
/s/Anthony D. Knerr Director October 27, 1998
- -------------------
Anthony D. Knerr
/s/Ann R. Leven Director October 27, 1998
- -------------------
Ann R. Leven
/s/W. Thacher
Longstreth Director October 27, 1998
- -------------------
W. Thacher
Longstreth
/s/Thomas F. Madison Director October 27, 1998
- -------------------
Thomas F. Madison
/s/Jeffrey J. Nick Director October 27, 1998
- -------------------
Jeffrey J. Nick
/s/Charles E. Peck Director October 27, 1998
- -------------------
Charles E. Peck
/S/John H. Durham Director October 27, 1998
- -------------------
John H. Durham
</TABLE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Exhibits
to
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
INDEX TO EXHIBITS
Exhibit No. Exhibit
- ----------- ------------
EX-99.H3I Executed Amendment No.7 (October 14, 1997) to Delaware Group of
Funds Fund Accounting Agreement
EX-99.H3II Executed Amendment No.8 (December 18, 1997) to Delaware Group of
Funds Fund Accounting Agreement
EX-99.H3III Executed Amendment No.9 (March 31, 1998) to Delaware Group of
Funds Fund Accounting Agreement
EX-99.P1 Power of Attorney (December 18, 1997)
EX-99.P2 Power of Attorney for John H. Durham
AMENDMENT NO.7
to
SCHEDULE A
of
DELAWARE GROUP OF FUNDS*
FUND ACCOUNTING AGREEMENT
Delaware Group Adviser Funds, Inc.
Corporate Income Fund (liquidated September 19, 1997)
Enterprise Fund (liquidated September 19, 1997)
Federal Bond Fund (liquidated September 19, 1997)
New Pacific Fund
U.S. Growth Fund
Overseas Equity Fund
Delaware Group Cash Reserve, Inc.
Delaware Group Equity Funds I, Inc. (formerly Delaware)
Delaware Fund
Devon Fund
Delaware Group Equity Funds II, Inc. (formerly Decatur)
Blue Chip Fund (New)
Decatur Income Fund
Decatur Total Return Fund
Quantum Fund (New)
Delaware Group Equity Funds III, Inc. (formerly Trend)
Trend Fund
Delaware Group Equity Funds IV, Inc. (formerly DelCap)
Capital Appreciation Fund (New)
DelCap Fund
Delaware Group Equity Funds V, Inc. (formerly Value)
Value Fund
Retirement Income Fund (New)
Delaware Group Government Fund, Inc.
Government Income Series (U.S. Government Fund )
- ------------
*Except as otherwise noted, all Portfolios included on this Schedule A
are Existing Portfolios for purposes of the compensation described on
Schedule B to that Fund Accounting Agreement between Delaware Service
Company, Inc. and the Delaware Group of Funds dated as of August 19,
1996 ("Agreement"). All portfolios added to this Schedule A by
amendment executed by a Company on behalf of such Portfolio hereof shall
be a New Portfolio for purposes of Schedule B to the Agreement.
Delaware Group Global & International Funds, Inc.
Emerging Markets Fund (New)
Global Assets Fund
Global Bond Fund
International Equity Fund
Global Equity Fund (New)
International Small Cap Fund (New)
Delaware Group Income Funds, Inc. (formerly Delchester)
Delchester Fund
High-Yield Opportunities Fund (New)
Strategic Income Fund (New)
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund
U.S. Government Money Fund
Delaware Pooled Trust, Inc.
The Aggressive Growth Portfolio
The Defensive Equity Portfolio
The Defensive Equity Small/Mid-Cap Portfolio (New)
The Defensive Equity Utility Portfolio (deregistered January 14,
1997)
The Emerging Markets Portfolio (New)
The Fixed Income Portfolio
The Global Fixed Income Portfolio
The High-Yield Bond Portfolio (New)
The International Equity Portfolio
The International Fixed Income Portfolio (New)
The Labor Select International Equity Portfolio
The Limited-Term Maturity Portfolio (New)
The Real Estate Investment Trust Portfolio
The Global Equity Portfolio (New)
The Real Estate Investment Trust Portfolio II (New)
Delaware Group Premium Fund, Inc.
Capital Reserves Series
Cash Reserve Series
Convertible Securities Series (New)
Decatur Total Return Series
Delaware Series
Delchester Series
Devon Series (New)
Emerging Markets Series (New)
DelCap Series
Global Bond Series (New)
International Equity Series
Quantum Series (New)
Strategic Income Series (New)
Trend Series
Value Series
Delaware Group Tax-Free Fund, Inc.
Tax-Free Insured Fund
Tax-Free USA Fund
Tax-Free USA Intermediate Fund
Delaware Group Tax-Free Money Fund, Inc.
Delaware Group State Tax-Free Income Trust (formerly DMCT Tax-Free
Income Trust-Pennsylvania)
Tax-Free Pennsylvania Fund
Tax-Free New Jersey Fund (New)
Tax-Free Ohio Fund (New)
Voyageur Funds, Inc.
Voyageur U.S. Government Securities Fund (New)
Voyageur Insured Funds, Inc.
Arizona Insured Tax Free Fund (New)
Colorado Insured Fund (New)
Minnesota Insured Fund (New)
National Insured Tax Free Fund (New)
Voyageur Intermediate Tax Free Funds, Inc.
Arizona Limited Term Tax Free Fund (New)
California Limited Term Tax Free Fund (New)
Colorado Limited Term Tax Free Fund (New)
Minnesota Limited Term Tax Free Fund (New)
National Limited Term Tax Free Fund (New)
Voyageur Investment Trust
California Insured Tax Free Fund (New)
Florida Insured Tax Free Fund (New)
Florida Tax Free Fund (New)
Kansas Tax Free Fund (New)
Missouri Insured Tax Free Fund (New)
New Mexico Tax Free Fund (New)
Oregon Insured Tax Free Fund (New)
Utah Tax Free Fund (New)
Washington Insured Tax Free Fund (New)
Voyageur Investment Trust II
Florida Limited Term Tax Free Fund (New)
Voyageur Mutual Funds, Inc.
Arizona Tax Free Fund (New)
California Tax Free Fund (New)
Iowa Tax Free Fund (New)
Idaho Tax Free Fund (New)
Minnesota High Yield Municipal Bond Fund (New)
National High Yield Municipal Bond Fund (New)
National Tax Free Fund (New)
New York Tax Free Fund (New)
Wisconsin Tax Free Fund (New)
Voyageur Mutual Funds II, Inc.
Colorado Tax Free Fund (New)
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund (New)
Growth Stock Fund (New)
International Equity Fund (New)
Tax Efficient Equity Fund (New)
Voyageur Tax Free Funds, Inc.
Minnesota Tax Free Fund (New)
North Dakota Tax Free Fund (New)
Dated as of October 14, 1997
DELAWARE SERVICE COMPANY, INC.
/s/ David K. Downes
By:
------------------------
David K. Downes
President, Chief Executive Officer and Chief Financial Officer
DELAWARE GROUP ADVISER FUNDS, INC.
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE GROUP EQUITY FUNDS II, INC.
DELAWARE GROUP EQUITY FUNDS III, INC.
DELAWARE GROUP EQUITY FUNDS IV, INC.
DELAWARE GROUP EQUITY FUNDS V, INC.
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
DELAWARE GROUP INCOME FUNDS, INC.
DELAWARE GROUP LIMITED-TERM GOVERNMENT FUNDS, INC.
DELAWARE POOLED TRUST, INC.
DELAWARE GROUP PREMIUM FUND, INC.
DELAWARE GROUP STATE TAX-FREE INCOME TRUST
DELAWARE GROUP TAX-FREE FUND, INC.
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
VOYAGEUR FUNDS, INC.
VOYAGEUR INSURED FUNDS, INC.
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
VOYAGEUR INVESTMENT TRUST
VOYAGEUR INVESTMENT TRUST II
VOYAGEUR MUTUAL FUNDS, INC.
VOYAGEUR MUTUAL FUNDS II, INC.
VOYAGEUR MUTUAL FUNDS III, INC.
/s/Wayne A. Stork
By:
------------------------
Wayne A. Stork
Chairman
AMENDMENT NO. 8
to
SCHEDULE A
of
DELAWARE GROUP OF FUNDS*
FUND ACCOUNTING AGREEMENT
Delaware Group Adviser Funds, Inc.
Corporate Income Fund (liquidated September 19, 1997)
Enterprise Fund (liquidated September 19, 1997)
Federal Bond Fund (liquidated September 19, 1997)
New Pacific Fund
U.S. Growth Fund
Overseas Equity Fund (formerly World Growth Fund)
Delaware Group Cash Reserve, Inc.
Delaware Group Equity Funds I, Inc. (formerly Delaware)
Delaware Fund
Devon Fund
Delaware Group Equity Funds II, Inc. (formerly Decatur)
Blue Chip Fund (New)
Decatur Income Fund
Decatur Total Return Fund
Quantum Fund (New)
Delaware Group Equity Funds III, Inc. (formerly Trend)
Trend Fund
Delaware Group Equity Funds IV, Inc. (formerly DelCap)
Capital Appreciation Fund (New)
DelCap Fund
Delaware Group Equity Funds V, Inc. (formerly Value)
Small Cap Value Fund (formerly Value Fund)
Retirement Income Fund (New)
- ------------
*Except as otherwise noted, all Portfolios included on this
Schedule A are Existing Portfolios for purposes of the compensation
described on Schedule B to that Fund Accounting Agreement between
Delaware Service Company, Inc. and the Delaware Group of Funds dated as
of August 19, 1996 ("Agreement"). All portfolios added to this Schedule
A by amendment executed by a Company on behalf of such Portfolio hereof
shall be a New Portfolio for purposes of Schedule B to the Agreement.
Delaware Group Foundation Funds (New)
Balanced Portfolio (New)
Growth Portfolio (New)
Income Portfolio (New)
Delaware Group Government Fund, Inc.
Government Income Series (U.S. Government Fund)
Delaware Group Global & International Funds, Inc.
Emerging Markets Fund (New)
Global Assets Fund
Global Bond Fund
International Equity Fund
Global Equity Fund (New)
International Small Cap Fund (New)
Delaware Group Income Funds, Inc. (formerly Delchester)
Delchester Fund
High-Yield Opportunities Fund (New)
Strategic Income Fund (New)
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund
U.S. Government Money Fund
Delaware Pooled Trust, Inc.
The Aggressive Growth Portfolio
The Large-Cap Value Equity Portfolio
(formerly The Defensive Equity Portfolio)
The Small/Mid-Cap Value Equity Portfolio (New)
(formerly The Defensive Equity Small/Mid-Cap Portfolio)
The Defensive Equity Utility Portfolio (deregistered January 14,
1997)
The Emerging Markets Portfolio (New)
The Intermediate Fixed Income Portfolio
(formerly The Fixed Income Portfolio)
The Global Fixed Income Portfolio
The High-Yield Bond Portfolio (New)
The International Equity Portfolio
The International Fixed Income Portfolio (New)
The Labor Select International Equity Portfolio
The Limited-Term Maturity Portfolio (New)
The Real Estate Investment Trust Portfolio
The Global Equity Portfolio (New)
The Real Estate Investment Trust Portfolio II (New)
The Diversified Core Fixed Income Portfolio (New)
The Aggregate Fixed Income Portfolio (New)
Delaware Group Premium Fund, Inc.
Capital Reserves Series
Cash Reserve Series
Convertible Securities Series (New)
Decatur Total Return Series
Delaware Series
Delchester Series
Devon Series (New)
Emerging Markets Series (New)
DelCap Series
Global Bond Series (New)
International Equity Series
Quantum Series (New)
Strategic Income Series (New)
Trend Series
Value Series
Delaware Group Tax-Free Fund, Inc.
Tax-Free Insured Fund
Tax-Free USA Fund
Tax-Free USA Intermediate Fund
Delaware Group Tax-Free Money Fund, Inc.
Delaware Group State Tax-Free Income Trust (formerly DMCT Tax-Free
Income Trust-Pennsylvania)
Tax-Free Pennsylvania Fund
Tax-Free New Jersey Fund (New)
Tax-Free Ohio Fund (New)
Voyageur Funds, Inc.
Voyageur U.S. Government Securities Fund (New)
Voyageur Insured Funds, Inc.
Arizona Insured Tax Free Fund (New)
Colorado Insured Fund (New)
Minnesota Insured Fund (New)
National Insured Tax Free Fund (New)
Voyageur Intermediate Tax Free Funds, Inc.
Arizona Limited Term Tax Free Fund (New)
California Limited Term Tax Free Fund (New)
Colorado Limited Term Tax Free Fund (New)
Minnesota Limited Term Tax Free Fund (New)
National Limited Term Tax Free Fund (New)
Voyageur Investment Trust
California Insured Tax Free Fund (New)
Florida Insured Tax Free Fund (New)
Florida Tax Free Fund (New)
Kansas Tax Free Fund (New)
Missouri Insured Tax Free Fund (New)
New Mexico Tax Free Fund (New)
Oregon Insured Tax Free Fund (New)
Utah Tax Free Fund (New)
Washington Insured Tax Free Fund (New)
Voyageur Investment Trust II
Florida Limited Term Tax Free Fund (New)
Voyageur Mutual Funds, Inc.
Arizona Tax Free Fund (New)
California Tax Free Fund (New)
Iowa Tax Free Fund (New)
Idaho Tax Free Fund (New)
Minnesota High Yield Municipal Bond Fund (New)
National High Yield Municipal Bond Fund (New)
National Tax Free Fund (New)
New York Tax Free Fund (New)
Wisconsin Tax Free Fund (New)
Voyageur Mutual Funds II, Inc.
Colorado Tax Free Fund (New)
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund (New)
Growth Stock Fund (New)
International Equity Fund (New)
Tax Efficient Equity Fund (New)
Voyageur Tax Free Funds, Inc.
Minnesota Tax Free Fund (New)
North Dakota Tax Free Fund (New)
Dated as of December 18, 1997
DELAWARE SERVICE COMPANY, INC.
/s/David K. Downes
By:
- ------------------------
David K. Downes
President, Chief Executive Officer and Chief Financial Officer
DELAWARE GROUP ADVISER FUNDS, INC.
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE GROUP EQUITY FUNDS II, INC.
DELAWARE GROUP EQUITY FUNDS III, INC.
DELAWARE GROUP EQUITY FUNDS IV, INC.
DELAWARE GROUP EQUITY FUNDS V, INC.
DELAWARE GROUP FOUNDATION FUNDS
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
DELAWARE GROUP INCOME FUNDS, INC.
DELAWARE GROUP LIMITED-TERM GOVERNMENT FUNDS, INC.
DELAWARE POOLED TRUST, INC.
DELAWARE GROUP PREMIUM FUND, INC.
DELAWARE GROUP STATE TAX-FREE INCOME TRUST
DELAWARE GROUP TAX-FREE FUND, INC.
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
VOYAGEUR FUNDS, INC.
VOYAGEUR INSURED FUNDS, INC.
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
VOYAGEUR INVESTMENT TRUST
VOYAGEUR INVESTMENT TRUST II
VOYAGEUR MUTUAL FUNDS, INC.
VOYAGEUR MUTUAL FUNDS II, INC.
VOYAGEUR MUTUAL FUNDS III, INC.
/s/ Wayne A. Stork
By:
- ------------------------
Wayne A. Stork
Chairman
AMENDMENT NO. 9
to
SCHEDULE A
of
DELAWARE GROUP OF FUNDS*
FUND ACCOUNTING AGREEMENT
Delaware Group Adviser Funds, Inc.
Corporate Income Fund (liquidated September 19, 1997)
Enterprise Fund (liquidated September 19, 1997)
Federal Bond Fund (liquidated September 19, 1997)
New Pacific Fund
U.S. Growth Fund
Overseas Equity Fund (formerly World Growth Fund)
Delaware Group Cash Reserve, Inc.
Delaware Group Equity Funds I, Inc. (formerly Delaware)
Delaware Fund
Devon Fund
Delaware Group Equity Funds II, Inc. (formerly Decatur)
Blue Chip Fund (New)
Decatur Income Fund
Decatur Total Return Fund
Quantum Fund (New)
Delaware Group Equity Funds III, Inc. (formerly Trend)
Trend Fund
Delaware Group Equity Funds IV, Inc. (formerly DelCap)
Capital Appreciation Fund (New)
DelCap Fund
Delaware Group Equity Funds V, Inc. (formerly Value)
Small Cap Value Fund (formerly Value Fund)
Retirement Income Fund (New)
- ------------
*Except as otherwise noted, all Portfolios included on this Schedule A
are Existing Portfolios for purposes of the compensation described on
Schedule B to that Fund Accounting Agreement between Delaware Service
Company, Inc. and the Delaware Group of Funds dated as of August 19,
1996 ("Agreement"). All portfolios added to this Schedule A by
amendment executed by a Company on behalf of such Portfolio hereof shall
be a New Portfolio for purposes of Schedule B to the Agreement.
Delaware Group Foundation Funds (New)
Balanced Portfolio (New)
Growth Portfolio (New)
Income Portfolio (New)
Delaware Group Government Fund, Inc.
Government Income Series (U.S. Government Fund)
Delaware Group Global & International Funds, Inc.
Emerging Markets Fund (New)
Global Assets Fund
Global Bond Fund
International Equity Fund
Global Equity Fund (New)
International Small Cap Fund (New)
Delaware Group Income Funds, Inc. (formerly Delchester)
Delchester Fund
High-Yield Opportunities Fund (New)
Strategic Income Fund (New)
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund
U.S. Government Money Fund
Delaware Pooled Trust, Inc.
The Aggressive Growth Portfolio
The Large-Cap Value Equity Portfolio
(formerly The Defensive Equity Portfolio)
The Small/Mid-Cap Value Equity Portfolio (New)
(formerly The Defensive Equity Small/Mid-Cap Portfolio)
The Defensive Equity Utility Portfolio (deregistered January 14,
1997)
The Emerging Markets Portfolio (New)
The Intermediate Fixed Income Portfolio
(formerly The Fixed Income Portfolio)
The Global Fixed Income Portfolio
The High-Yield Bond Portfolio (New)
The International Equity Portfolio
The International Fixed Income Portfolio (New)
The Labor Select International Equity Portfolio
The Limited-Term Maturity Portfolio (New)
The Real Estate Investment Trust Portfolio
The Global Equity Portfolio (New)
The Real Estate Investment Trust Portfolio II (New)
The Diversified Core Fixed Income Portfolio (New)
The Aggregate Fixed Income Portfolio (New)
Delaware Group Premium Fund, Inc.
Capital Reserves Series
Cash Reserve Series
Convertible Securities Series (New)
Decatur Total Return Series
Delaware Series
Delchester Series
Devon Series (New)
Emerging Markets Series (New)
DelCap Series
Global Bond Series (New)
International Equity Series
Quantum Series (New)
REIT Series (New)
Strategic Income Series (New)
Trend Series
Value Series
Delaware Group Tax-Free Fund, Inc.
Tax-Free Insured Fund
Tax-Free USA Fund
Tax-Free USA Intermediate Fund
Delaware Group Tax-Free Money Fund, Inc.
Delaware Group State Tax-Free Income Trust (formerly DMCT Tax-Free
Income Trust-Pennsylvania)
Tax-Free Pennsylvania Fund
Tax-Free New Jersey Fund (New)
Tax-Free Ohio Fund (New)
Voyageur Funds, Inc.
Voyageur U.S. Government Securities Fund (New)
Voyageur Insured Funds, Inc.
Arizona Insured Tax Free Fund (New)
Colorado Insured Fund (New)
Minnesota Insured Fund (New)
National Insured Tax Free Fund (New)
Voyageur Intermediate Tax Free Funds, Inc.
Arizona Limited Term Tax Free Fund (New)
California Limited Term Tax Free Fund (New)
Colorado Limited Term Tax Free Fund (New)
Minnesota Limited Term Tax Free Fund (New)
National Limited Term Tax Free Fund (New)
Voyageur Investment Trust
California Insured Tax Free Fund (New)
Florida Insured Tax Free Fund (New)
Florida Tax Free Fund (New)
Kansas Tax Free Fund (New)
Missouri Insured Tax Free Fund (New)
New Mexico Tax Free Fund (New)
Oregon Insured Tax Free Fund (New)
Utah Tax Free Fund (New)
Washington Insured Tax Free Fund (New)
Voyageur Investment Trust II
Florida Limited Term Tax Free Fund (New)
Voyageur Mutual Funds, Inc.
Arizona Tax Free Fund (New)
California Tax Free Fund (New)
Iowa Tax Free Fund (New)
Idaho Tax Free Fund (New)
Minnesota High Yield Municipal Bond Fund (New)
National High Yield Municipal Bond Fund (New)
National Tax Free Fund (New)
New York Tax Free Fund (New)
Wisconsin Tax Free Fund (New)
Voyageur Mutual Funds II, Inc.
Colorado Tax Free Fund (New)
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund (New)
Growth Stock Fund (New)
International Equity Fund (New)
Tax Efficient Equity Fund (New)
Voyageur Tax Free Funds, Inc.
Minnesota Tax Free Fund (New)
North Dakota Tax Free Fund (New)
Dated as of March 31, 1998
DELAWARE SERVICE COMPANY, INC.
/s/David K. Downes
By:
- ------------------------
David K. Downes
President, Chief Executive Officer and Chief Financial Officer
DELAWARE GROUP ADVISER FUNDS, INC.
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE GROUP EQUITY FUNDS II, INC.
DELAWARE GROUP EQUITY FUNDS III, INC.
DELAWARE GROUP EQUITY FUNDS IV, INC.
DELAWARE GROUP EQUITY FUNDS V, INC.
DELAWARE GROUP FOUNDATION FUNDS
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
DELAWARE GROUP INCOME FUNDS, INC.
DELAWARE GROUP LIMITED-TERM GOVERNMENT FUNDS, INC.
DELAWARE POOLED TRUST, INC.
DELAWARE GROUP PREMIUM FUND, INC.
DELAWARE GROUP STATE TAX-FREE INCOME TRUST
DELAWARE GROUP TAX-FREE FUND, INC.
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
VOYAGEUR FUNDS, INC.
VOYAGEUR INSURED FUNDS, INC.
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
VOYAGEUR INVESTMENT TRUST
VOYAGEUR INVESTMENT TRUST II
VOYAGEUR MUTUAL FUNDS, INC.
VOYAGEUR MUTUAL FUNDS II, INC.
VOYAGEUR MUTUAL FUNDS III, INC.
/s/ Wayne A. Stork
By:
- ------------------------
Wayne A. Stork
Chairman
POWER OF ATTORNEY
Each of the undersigned, a member of the Boards of
Directors/Trustees of the Delaware Group Funds listed on Exhibit A to
this Power of Attorney, hereby constitutes and appoints on behalf of
each of the Funds listed on Exhibit A, Wayne A. Stork, Jeffrey J. Nick
and Walter P. Babich and any one of them acting singly, his true and
lawful attorneys-in-fact, in his name, place, and stead, to execute
and cause to be filed with the Securities and Exchange Commission and
other federal or state government agency or body, such registration
statements, and any and all amendments thereto as either of such
designees may deem to be appropriate under the Securities Act of 1933,
as amended, the Investment Company Act of 1940, as amended, and all
other applicable federal and state securities laws.
IN WITNESS WHEREOF, the undersigned have executed this instrument as of
this 18th day of December, 1997.
/s/Walter P. Babich /s/Thomas F. Madison
- ------------------- --------------------
Walter P. Babich Thomas F. Madison
/s/Anthony D. Knerr /s/Jeffrey J. Nick
- ------------------- --------------------
Anthony D. Knerr Jeffrey J. Nick
/s/Ann R. Leven /s/Charles E. Peck
- ------------------- --------------------
Ann R. Leven Charles E. Peck
/s/W. Thacher Longstreth /s/Wayne A. Stork
- ------------------- --------------------
W. Thacher Longstreth Wayne A. Stork
POWER OF ATTORNEY
EXHIBIT A
DELAWARE GROUP FUNDS
DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE GROUP EQUITY FUNDS II, INC.
DELAWARE GROUP EQUITY FUNDS III, INC.
DELAWARE GROUP EQUITY FUNDS IV, INC.
DELAWARE GROUP EQUITY FUNDS V, INC.
DELAWARE GROUP INCOME FUNDS, INC.
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP LIMITED-TERM GOVERNMENT FUNDS, INC.
DELAWARE GROUP TAX-FREE FUND, INC.
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
DELAWARE GROUP ADVISER FUNDS, INC.
DELAWARE POOLED TRUST, INC.
DELAWARE GROUP PREMIUM FUND, INC.
DELAWARE GROUP STATE TAX-FREE INCOME TRUST
DELAWARE GROUP DIVIDEND AND INCOME FUND, INC.
DELAWARE GROUP GLOBAL DIVIDEND AND INCOME FUND, INC.
DELAWARE GROUP FOUNDATION FUNDS
VOYAGEUR FUNDS, INC.
VOYAGEUR INSURED FUNDS, INC.
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
VOYAGEUR INVESTMENT TRUST
VOYAGEUR INVESTMENT TRUST II
VOYAGEUR MUTUAL FUNDS, INC.
VOYAGEUR MUTUAL FUNDS II, INC.
VOYAGEUR MUTUAL FUNDS III, INC.
VOYAGEUR TAX FREE FUNDS, INC.
VOYAGEUR ARIZONA MUNICIPAL INCOME FUND, INC.
VOYAGEUR COLORADO INSURED MUNICIPAL INCOME FUND, INC.
VOYAGEUR FLORIDA INSURED MUNICIPAL INCOME FUND
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND, INC.
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND II, INC.
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND III, INC.
POWER OF ATTORNEY
The undersigned, a member of the Boards of Directors/Trustees of
the Delaware Group Funds listed on Exhibit A to this Power of Attorney,
hereby constitutes and appoints on behalf of each of the Funds listed on
Exhibit A, Wayne A. Stork, Jeffrey J. Nick and Walter P. Babich and any
one of them acting singly, his true and lawful attorneys-in-fact, in his
name, place, and stead, to execute and cause to be filed with the
Securities and Exchange Commission and other federal or state government
agency or body, such registration statements, and any and all amendments
thereto as either of such designees may deem to be appropriate under the
Securities Act of 1933, as amended, the Investment Company Act of 1940,
as amended, and all other applicable federal and state securities laws.
IN WITNESS WHEREOF, the undersigned have executed this instrument
as of this 16th day of April, 1998.
/s/ John H. Durham
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John H. Durham
POWER OF ATTORNEY
EXHIBIT A
DELAWARE GROUP FUNDS
DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE GROUP EQUITY FUNDS II, INC.
DELAWARE GROUP EQUITY FUNDS III, INC.
DELAWARE GROUP EQUITY FUNDS IV, INC.
DELAWARE GROUP EQUITY FUNDS V, INC.
DELAWARE GROUP INCOME FUNDS, INC.
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP LIMITED-TERM GOVERNMENT FUNDS, INC.
DELAWARE GROUP TAX-FREE FUND, INC.
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
DELAWARE GROUP ADVISER FUNDS, INC.
DELAWARE POOLED TRUST, INC.
DELAWARE GROUP PREMIUM FUND, INC.
DELAWARE GROUP STATE TAX-FREE INCOME TRUST
DELAWARE GROUP DIVIDEND AND INCOME FUND, INC.
DELAWARE GROUP GLOBAL DIVIDEND AND INCOME FUND, INC.
DELAWARE GROUP FOUNDATION FUNDS
