DELAWARE GROUP DELCHESTER HIGH YIELD BOND FUND INC, 485BPOS, 1995-11-22

DELAWARE GROUP DELCHESTER HIGH YIELD BOND FUND INC
485BPOS, 1995-11-22

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<PAGE>

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-1A

File No. 2-37707

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
-----

Pre-Effective Amendment No. ________
-----

Post-Effective Amendment No. 52 X
-------- -----

AND

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
-----

Amendment No. 52
------

DELAWARE GROUP DELCHESTER HIGH-YIELD BOND FUND, 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: November 29, 1995
-----------------

It is proposed that this filing will become effective:

_________ immediately upon filing pursuant to paragraph (b)

X
_________ on November 29, 1995 pursuant to paragraph (b)

_________ 60 days after filing pursuant to paragraph (a)(1)

_________ on (date) pursuant to paragraph (a)(1)

_________ 75 days after filing pursuant to paragraph (a)(2)

_________ on (date) pursuant to paragraph (a)(2) of Rule 485

Registrant has registered an indefinite amount of securities
under the Securities Act of 1933 pursuant to Section 24(f)
of the Investment Company Act of 1940. Registrant's 24f-2 Notice
for its most recent fiscal year was filed on September 27, 1995.
<PAGE>

Form N-1A
File No. 2-37707
Delaware Group Delchester
High-Yield Bond Fund, Inc.

--- C O N T E N T S ---

This Post-Effective Amendment No. 52 to Registration File No. 2-37707 includes
the following:

1. Facing Page

2. Contents Page

3. Cross-Reference Sheet

4. Part A - Prospectuses

5. Part B - Statement of Additional Information

6. Part C - Other Information

7. Signatures
<PAGE>

Form N-1A
File No. 2-37707
Delaware Group Delchester
High-Yield Bond Fund, Inc.

CROSS-REFERENCE SHEET*
---------------------

PART A
------
<TABLE>
<CAPTION>
Location in
Item No. Description Prospectuses
- -------- ----------- ------------
<S> <C> <C> <C>

A Class/ Institutional
B Class/ Class
C Class

1 Cover Page............................ Cover Cover

2 Synopsis.............................. Synopsis, Synopsis,
Summary of Summary of
Expenses Expenses

3 Condensed Financial Information....... Financial Financial
Highlights Highlights

4 General Description of Registrant..... Investment Investment
Objective and Objective and
Policies, Policies, Shares
Shares

5 Management of the Fund................ Management of Management of the
the Fund Fund

6 Capital Stock and Other Securities.... Delaware Dividends and
Difference, Distributions,
Dividends and Taxes, Shares
Distributions,
Taxes, Shares

7 Purchase of Securities Being Offered.. Cover, Cover,
Buying Shares, Buying Shares,
Calculation of Calculation of
Offering Price Net Asset Value,
and Net Asset Management of
Value, the Fund
Management of
the Fund

8 Redemption or Repurchase.............. Buying Shares, Buying Shares,
Redemption and Redemption and
Exchange Exchange

9 Pending Legal Proceedings............. None None

</TABLE>
* This filing relates to Registrant's Delchester Fund A Class, Delchester
Fund B Class and Delchester Fund C Class, which are combined in one
prospectus, and Delchester Fund Institutional Class, which has its own
prospectus. The four classes have a common Part B and Part C.
<PAGE>

Form N-1A
File No. 2-37707
Delaware Group Delchester
High-Yield Bond Fund, Inc.

CROSS REFERENCE SHEET
---------------------

PART B
------
<TABLE>
<CAPTION>

Location in Statement
Item No. Description of Additional Information
- -------- ----------- -------------------------
<S> <C> <C>

10 Cover Page............................... Cover

11 Table of Contents........................ Table of Contents

12 General Information and History.......... General Information

13 Investment Objectives and Policies....... Investment Objective
and Policies

14 Management of the Registrant............. Officers and Directors

15 Control Persons and Principal Holders
of Securities............................ Officers and Directors

16 Investment Advisory and Other Services... Plans Under Rule 12b-1
for the Fund Classes
(under Purchasing Shares),
Investment Management
Agreement, Officers and
Directors, General
Information, Financial
Statements

17 Brokerage Allocation..................... Trading Practices
and Brokerage

18 Capital Stock and Other Securities....... Capitalization and
Noncumulative Voting
(under General Information)

19 Purchase, Redemption and Pricing of
Securities Being Offered................. Purchasing Shares,
Determining Offering Price
and Net Asset Value,
Redemption and Repurchase,
Exchange Privilege

20 Tax Status................................ Taxes

21 Underwriters.............................. Purchasing Shares

22 Calculation of Performance Data........... Performance Information

23 Financial Statements...................... Financial Statements
</TABLE>
<PAGE>

Form N-1A
File No. 2-37707
Delaware Group Delchester
High-Yield Bond Fund, Inc.

CROSS REFERENCE SHEET
---------------------

PART C
------
<TABLE>
<CAPTION>

Location in
Item No. Description Part C
- -------- ----------- -----------
<S> <C> <C>

24 Financial Statements and Exhibits............... Item 24

25 Persons Controlled by or under Common
Control with Registrant......................... Item 25

26 Number of Holders of Securities................. Item 26

27 Indemnification................................. Item 27

28 Business and Other Connections of
Investment Adviser.............................. Item 28

29 Principal Underwriters.......................... Item 29

30 Location of Accounts and Records................ Item 30

31 Management Services............................. Item 31

32 Undertakings.................................... Item 32
</TABLE>
<PAGE>

- ------------------------

DELCHESTER FUND

- ------------------------

A CLASS
B CLASS
C CLASS

- ------------------------

PROSPECTUS

- ------------------------

NOVEMBER 29, 1995

DELAWARE
GROUP
--------
<PAGE>

INVESTMENT MANAGER
Delaware Management Company, Inc.
One Commerce Square
Philadelphia, PA 19103
NATIONAL DISTRIBUTOR

Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young
One Commerce Square
Philadelphia, PA 19103
INDEPENDENT AUDITORS
Ernst & Young LLP
Two Commerce Square
Philadelphia, PA 19103
CUSTODIAN
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, NY 10260
<PAGE>

DELCHESTER FUND
A CLASS SHARES
B CLASS SHARES PROSPECTUS
C CLASS SHARES NOVEMBER 29, 1995

--------------------------------------------------

1818 MARKET STREET, PHILADELPHIA, PA 19103

FOR PROSPECTUS AND PERFORMANCE:
NATIONWIDE 800-523-4640

PHILADELPHIA 215-988-1333
INFORMATION ON EXISTING ACCOUNTS:
(SHAREHOLDERS ONLY)
NATIONWIDE 800-523-1918

PHILADELPHIA 215-988-1241
DEALER SERVICES:
(BROKER/DEALERS ONLY)
NATIONWIDE 800-362-7500

PHILADELPHIA 215-988-1050

This Prospectus describes the Delchester Fund A Class of shares (the "Class
A Shares"), the Delchester Fund B Class of shares (the "Class B Shares") and the
Delchester Fund C Class of shares (the "Class C Shares") (collectively, the
"Classes") of Delaware Group Delchester High-Yield Bond Fund, Inc. (the "Fund").
The Fund's objective is to seek as high a current income as is consistent with
providing reasonable safety.

This Fund invests up to 100% of its assets in lower rated fixed income
securities, commonly known as "Junk Bonds," which involve greater risks,
including default risks, than higher rated fixed income securities. Purchasers
should carefully assess these risks before investing in this Fund. See
Investment Objective and Policies, Risk Factors, and
- -----------------------------------------------

Appendix B--Ratings.
- -------------------

Class A Shares may be purchased at the public offering price, which is
equal to the next determined net asset value per share, plus a front-end sales
charge. Class B Shares and Class C Shares may be purchased at a price equal to
the next determined net asset value per share. Class A Shares are

-1-
<PAGE>

subject to a maximum front-end sales charge of 4.75% and annual 12b-1 Plan
expenses of up to .30%. Class B Shares are subject to a contingent deferred
sales charge ("CDSC") which may be imposed on redemptions made within six years
of purchase and annual 12b-1 Plan expenses of 1%, which are assessed against the
Class B Shares for approximately eight years after purchase. See Automatic
Conversion of Class B Shares under Buying Shares. Class C Shares are subject to
a CDSC which may be imposed on redemptions made within twelve months of purchase
and annual 12b-1 Plan expenses of 1%, which are assessed against the Class C
Shares for the life of the investment. See Summary of Expenses. These
alternatives permit an investor to choose the method of purchasing shares that
is most suitable for his or her needs. In choosing the most suitable class, an
investor should consider the differences among the Classes, including the effect
of sales charges and 12b-1 Plan expenses, given the amount of the purchase, the
length of time the investor expects to hold the shares and other circumstances.
See Buying Shares.

This Prospectus relates only to the Classes listed above and sets forth
information that you should read and consider before you invest. Please retain
it for future reference. Part B of the Fund's registration statement, dated
November 29, 1995, as it may be amended from time to time, contains additional
information about the Fund and has been filed with the Securities and Exchange
Commission. Part B is incorporated by reference into this Prospectus and is
available, without charge, by writing to Delaware Distributors, L.P. at the
above address or by calling the above numbers. The Fund's financial statements
appear in its Annual Report, which will accompany any response to requests for
Part B.

The Fund also offers the Delchester Fund Institutional Class. That class
is available for purchase only by certain investors. A prospectus for the
Delchester Fund Institutional Class can be obtained by writing to Delaware
Distributors, L.P. at the above address or by calling the above number.

-2-
<PAGE>

<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
COVER PAGE THE DELAWARE DIFFERENCE
SYNOPSIS PLANS AND SERVICES
SUMMARY OF EXPENSES RETIREMENT PLANNING
FINANCIAL HIGHLIGHTS BUYING SHARES
INVESTMENT OBJECTIVE AND POLICIES REDEMPTION AND EXCHANGE
INVESTMENT STRATEGY DIVIDENDS AND
SUITABILITY DISTRIBUTIONS
RISK FACTORS TAXES
YOUTH AND VOLATILITY OF THE CALCULATION OF OFFERING
HIGH-YIELD MARKET PRICE AND NET ASSET
REDEMPTIONS VALUE PER SHARE
LIQUIDITY AND VALUATION MANAGEMENT OF THE FUND
LEGISLATIVE AND REGULATORY APPENDIX A -- INVESTMENT
ACTION AND PROPOSALS ILLUSTRATIONS
ZERO COUPON BONDS AND APPENDIX B -- RATINGS
PAY-IN-KIND BONDS
</TABLE>

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

BE SURE TO CONSULT YOUR FINANCIAL ADVISER WHEN MAKING INVESTMENTS. MUTUAL FUNDS
CAN BE A VALUABLE PART OF YOUR FINANCIAL PLAN; HOWEVER, SHARES OF THE FUND ARE
NOT FDIC OR NCUSIF INSURED, ARE NOT GUARANTEED BY ANY BANK OR ANY CREDIT UNION,
ARE NOT OBLIGATIONS OF ANY BANK OR ANY CREDIT UNION, AND INVOLVE INVESTMENT
RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. SHARES OF THE FUND ARE NOT BANK
OR CREDIT UNION DEPOSITS.

-3-
<PAGE>

SYNOPSIS

CAPITALIZATION

The Fund offers four classes of shares: Class A Shares, Class B Shares,
Class C Shares and the Delchester Fund Institutional Class of shares. The Fund
has a present authorized capitalization of five hundred million shares of
capital stock, with a $1.00 par value per share. Three hundred fifty million
shares have been allocated to the Class A Shares, fifty million shares to the
Class B Shares, fifty million shares to the Class C Shares and fifty million
shares to the Delchester Fund Institutional Class. See Shares under Management
of the Fund.

INVESTMENT MANAGER, DISTRIBUTOR AND SERVICE AGENT

Delaware Management Company, Inc. (the "Manager") is the investment manager
for the Fund. The Manager or its affiliate, Delaware International Advisers
Ltd., also manages the other funds in the Delaware Group. Delaware
Distributors, L.P. (the "Distributor") is the national distributor for the Fund
and for all of the other mutual funds in the Delaware Group. Delaware Service
Company, Inc. (the "Transfer Agent") is the shareholder servicing, dividend
disbursing and transfer agent for the Fund and for all of the other mutual funds
in the Delaware Group. See Management of the Fund.

SALES CHARGES

The price of the Class A Shares includes a maximum front-end sales charge
of 4.75% of the offering price, which, based on the net asset value per share of
the Class A Shares as of the end of the Fund's most recent fiscal year, is
equivalent to 4.94% of the amount invested. The sales charge is reduced on
certain transactions of at least $100,000 but under $1,000,000. For purchases
of $1,000,000 or more, the front-end sales charge is eliminated. Class A Shares
are subject to annual 12b-1 Plan expenses.

The price of the Class B Shares is equal to the net asset value per share.
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 B Shares are subject to annual 12b-1 Plan expenses
for approximately eight years after purchase. See Automatic Conversion of Class
B Shares under Buying Shares.

-4-
<PAGE>

The price of the Class C Shares is equal to the net asset value per share.
Class C Shares are subject to a CDSC of 1% if shares are redeemed within twelve
months of purchase. Class C Shares are subject to annual 12b-1 Plan expenses
for the life of the investment.

See Buying Shares and Distribution (12b-1) and Service under Management of
the Fund.

PURCHASE AMOUNTS

Generally, the minimum initial investment is $1,000 for Class A Shares,
Class B Shares and Class C Shares. Subsequent investments generally must be at
least $100. 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. An investor may exceed the maximum purchase
limitations for Class B Shares and Class C Shares by making cumulative purchases
over a period of time. An investor should keep in mind, however, that reduced
front-end sales charges apply to investments of $100,000 or more of Class A
Shares, which 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. The minimum
and maximum purchase amounts for retirement plans may vary. See Buying
Shares.

INVESTMENT OBJECTIVE AND RISK FACTORS

The objective of the Fund is to seek as high a current income as is
consistent with providing reasonable safety by investing principally in
corporate bonds, and also in U.S. Government securities and commercial paper.
See Investment Objective and Policies. This Fund invests primarily in high-
yield securities (junk bonds) and greater risks may be involved with an
investment in the Fund than an investment in a mutual fund comprised primarily
of investment grade bonds. See Risk Factors.

OPEN-END INVESTMENT COMPANY

The Fund, which was organized as a Maryland corporation in 1983, is an
open-end management investment company and its portfolio of assets is
diversified as defined by the Investment Company Act of 1940 (the "1940 Act").
The Fund was previously organized as a Delaware corporation in 1970. See Shares
under Management of the Fund.

INVESTMENT MANAGEMENT FEES

-5-
<PAGE>

equal to .60% on the first $500 million of average daily net assets, .575% on
the next $250 million and .55% on the average daily net assets in excess of $750
million, less a proportionate share of all directors' fees paid to the
unaffiliated directors by the Fund. See Management of the Fund.

REDEMPTION AND EXCHANGE

Class A Shares of the Fund may be redeemed or exchanged at the net asset
value calculated after receipt of the redemption or exchange request. Neither
the Fund nor the Distributor assesses a charge for redemptions or exchanges of
Class A Shares, except for certain redemptions of shares purchased at net asset
value, which may be subject to a contingent deferred sales charge if such
purchases triggered the payment of a dealer's commission. See Front-End Sales
Charge Alternative-Class A Shares under Buying Shares. Class B and Class C
Shares may be redeemed or exchanged at the net asset value calculated after
receipt of the redemption or exchange request subject, in the case of
redemptions to any applicable CDSC. Neither the Fund nor the Distributor
assesses any charges other than the CDSC for redemptions or exchanges of Class B
or Class C Shares. There are certain limitations on an investor's ability to
exchange shares between the various classes of shares that are offered. See
Redemption and Exchange.

-6-
<PAGE>

SUMMARY OF EXPENSES

A general comparison of the sales arrangements and other expenses
applicable to Class A, Class B and Class C Shares follows:

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHAREHOLDER TRANSACTION EXPENSES SHARES SHARES SHARES
- --------------------------------------------------------------------------

<S> <C> <C> <C>
Maximum Sales Charge Imposed
on Purchases (as a percentage
of offering price)................ 4.75% None None

Maximum Sales Charge Imposed on
Reinvested Dividends (as a
percentage of offering price)..... None None None

Maximum Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds,
as applicable).................... None* 4.00%* 1.00%*

Redemption Fees...................... None** None** None**

ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF CLASS A CLASS B CLASS C
AVERAGE DAILY NET ASSETS) SHARES SHARES SHARES
- --------------------------------------------------------------------------

Management Fees...................... 0.58% 0.58% 0.58%

12b-1 Plan Expenses
(including service fees).......... 0.27%+/++ 1.00%++ 1.00%++

Other Operating Expenses............. 0.24% 0.24% 0.24%+++
-------- -------- --------
Total Operating Expenses........ 1.09%+ 1.82% 1.82%
======== ======== ========
</TABLE>

The purpose of this table is to assist the investor in understanding the
various costs and expenses that an investor in any of the Classes will bear
directly or indirectly.

*With respect to Class A Shares, purchases of $1 million or more may be made at
net asset value; however, if in connection with any such purchase, certain
dealer commissions are paid to the financial adviser through whom such purchase
is effected, a contingent deferred sales charge of 1% will be imposed on certain
redemptions within 12 months of purchase ("Limited CDSC"). 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; (iv) 1% if shares

-7-
<PAGE>

are redeemed during the sixth year following purchase; and (v) 0% thereafter.
Class C Shares are subject to a CDSC of 1% if the shares are redeemed within 12
months of purchase. See Contingent Deferred Sales Charge for Certain Purchases
of Class A Shares Made at Net Asset Value under Redemption and Exchange;
Deferred Sales Charge Alternative--Class B Shares and Level Sales Charge
Alternative--Class C Shares under Buying Shares.

**CoreStates Bank, N.A. currently charges $7.50 per redemption for redemptions
payable by wire.

+The actual 12b-1 Plan expenses to be paid and, consequently, the Total
Operating Expenses of the Class A Shares, may be somewhat more (but the 12b-1
Plan expenses may be no more than .30%) or somewhat less (but the 12b-1 Plan
expenses may be no less than .10%) because of the formula adopted by the Board
of Directors for use in calculating the 12b-1 Plan expenses beginning June 1,
1992. See Distribution (12b-1) and Service under Management of the Fund.

++Class A Shares, Class B Shares and Class C Shares are subject to separate 12b-
1 Plans. Long-term shareholders may pay more than the economic equivalent of
the maximum front-end sales charges permitted by rules of the National
Association of Securities Dealers, Inc. (the "NASD"). See Distribution (12b-1)
and Service under Management of the Fund.

+++"Other Operating Expenses" for Class C Shares are estimates based on the
actual expenses incurred by the Class B Shares for the fiscal year ended July
31, 1995.

See Delchester Fund Institutional Class under Buying Shares for expense
information for that class.

The following example illustrates the expenses that an investor would pay
on a $1,000 investment over various time periods, assuming (1) a 5% annual rate
of return, (2) redemption at the end of each time period and (3) with respect to
Class B Shares and Class C Shares, payment of a CDSC at the time of redemption,
if applicable.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
CLASS A SHARES $58 $81 $105 $174

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
CLASS B SHARES $58 $87 $119 $194(2)

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
CLASS C SHARES $28 $57 $ 99 $214
</TABLE>

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<PAGE>

An investor would pay the following expenses on the same $1,000 investment,
assuming no redemption at the end of the period:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
CLASS A SHARES $58 (1) $81 $105 $174

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
CLASS B SHARES $18 $57 $ 99 $194(2)

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
CLASS C SHARES $18 $57 $ 99 $214
</TABLE>

(1) Generally, the Fund does not assess a redemption charge upon redemption of
Class A Shares. Under certain circumstances, however, a Limited CDSC,
which has not been reflected in this calculation, may be imposed on certain
redemptions within 12 months of purchase. See Contingent Deferred Sales
Charge for Certain Purchases of Class A Shares Made at Net Asset Value
under Redemption and Exchange.

(2) At the end of approximately eight years after purchase, Class B Shares will
be automatically converted into Class A Shares. The example above assumes
conversion of Class B 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. See Automatic Conversion of
Class B Shares under Buying Shares for a description of the automatic
conversion feature.

THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.

-9-
<PAGE>

- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS

The following financial highlights are derived from the financial statements of
Delaware Group Delchester High-Yield Bond Fund, Inc. and have been audited by
Ernst & Young LLP, independent auditors. The data should be read in conjunction
with the financial statements, related notes, and the report of Ernst & Young
LLP covering such financial information and highlights, all of which are
incorporated by reference into Part B. Further information about the Fund's
performance is contained in its Annual Report to shareholders. A copy of the
Fund's Annual Report (including the report of Ernst & Young LLP) may be obtained
from the Fund upon request at no charge. Information regarding Class C Shares
has not been included in these tables because such shares were not offered to
the public prior to the date of this Prospectus.

- --------------------------------------------------------------------------------

-10-
<PAGE>

<TABLE>
<CAPTION>
CLASS A SHARES
---------------------------------------------------------------
YEAR ENDED
7/31/95 7/31/94 7/31/93 7/31/92 7/31/91(2)
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period............ $6.450 $7.070 $6.900 $6.260 $6.300

INCOME FROM IN-
- ---------------
VESTMENT OPERATIONS
- -------------------

Net Investment
Income............ 0.668 0.744 0.774 0.781 0.805

Net Gains (Losses)
on Securities (both
realized and
unrealized)....... (0.167) (0.618) 0.165 0.640 (0.040)
------- ------- ----- ----- -------

Total From
Investment
Operations...... 0.501 0.126 0.939 1.421 0.765
----- ----- ----- ----- -----

LESS DISTRIBUTIONS
- ------------------

Dividends from
Net Investment
Income............ (0.671) (0.746) (0.769) (0.781) (0.805)

Distributions
from Capital
Gains............. none none none none none

Returns of
Capital........... none none none none none
---- ---- ---- ---- ----

Total Distri-
butions........ (0.671) (0.746) (0.769) (0.781) (0.805)
------- ------- ------- ------- -------

Net Asset Value,
End of Period..... $ 6.280 $ 6.450 $ 7.070 $ 6.900 $ 6.260
======= ======= ======= ======= =======
- -------------------------------------------------------------

TOTAL RETURN(3)... 8.46% 1.60% 14.46% 23.94% 14.51%
- ------------

- -------------------------------------------------------------

RATIOS/SUPPLEMENTAL
- -------------------
DATA
- ----

Net Assets, End
of Period (000's
omitted)(4)....... $1,020,763 $983,569 $955,113 $760,290 $505,530

Ratio of Expenses
to Average Daily
Net Assets . . . . 1.09% 1.05% 1.04% 1.08% 1.20%

Ratio of Net
Investment Income
to Average Daily
Net Assets . . . . 10.77% 10.48% 11.17% 11.58% 14.15%

Portfolio Turnover
Rate . . . . . . . 92% 92% 72% 101% 38%
</TABLE>

-11-
<PAGE>

<TABLE>
<CAPTION>
CLASS A SHARES
--------------------------------------------------------------------------
YEAR ENDED
7/31/90(2) 7/31/89(2) 7/31/88(1) 7/31/87(1) 7/31/86(1)
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period............ $7.480 $7.750 $7.940 $8.070 $7.610

INCOME FROM IN-
- ---------------
VESTMENT OPERATIONS
- -------------------

Net Investment
Income............ 0.880 0.911 0.923 0.948 0.953

Net Gains (Losses)
on Securities (both
realized and
unrealized)....... (1.180) (0.270) (0.188) (0.129) 0.514
------- ------- ------- ------- -----

Total From
Investment
Operations..... (0.300) 0.641 0.735 0.819 1.467
------- ----- ----- ----- -----

LESS DISTRIBUTIONS
- ------------------

Dividends from
Net Investment
Income............ (0.880) (0.911) (0.925) (0.949) (1.007)

Distributions
from Capital
Gains............. none none none none none

Returns of
Capital........... none none none none none
---- ---- ---- ---- ----

Total Distri-
butions........ (0.880) (0.911) (0.925) (0.949) (1.007)
------- ------- ------- ------- -------

Net Asset Value,
End of Period..... $ 6.300 $ 7.480 $ 7.750 $ 7.940 $ 8.070
======= ======= ======= ======= =======
- -------------------------------------------------------------

TOTAL RETURN(3)... (3.80%) 8.78% 10.04% 10.50% 20.38%
- ------------

- -------------------------------------------------------------

RATIOS/SUPPLEMENTAL
- -------------------
DATA
- ----

Net Assets, End
of Period (000's
omitted)(4)....... $531,802 $708,215 $572,690 $397,895 $144,147

Ratio of Expenses
to Average Daily
Net Assets........ 1.15% 1.15% 1.17% 1.23% 1.14%

Ratio of Net
Investment Income
to Average Daily
Net Assets........ 13.17% 12.00% 11.88% 11.29% 12.37%

Portfolio Turnover
Rate.............. 72% 66% 139% 149% 137%
</TABLE>

-12-
<PAGE>

- ---------------------------------------
(1) For the periods 1986-1988, the data are derived from Delchester I class,
restated to reflect the maximum 12b-1 accrual of 0.30% payable by the
Delchester Fund A Class (formerly designated Delchester II class).
Delchester I class was converted into Delchester Fund class (known as
Delchester Fund A Class beginning May 2, 1994) on June 1, 1992, pursuant to
a Plan of Recapitalization approved by shareholders of Delchester I class.
(2) For the periods 1989-1991, the historical information for Delchester Fund A
Class has been shown. Delchester Fund A Class was initially offered on
November 2, 1987. To simplify the presentation of fiscal year 1988 data,
for the period November 2, 1987 through July 31, 1988, Delchester I class
data have been substituted for that of Delchester Fund A Class. With the
exception of the applicable 12b-1 payments, Delchester I class and
Delchester Fund A Class were identical for purposes of data presentations.
(3) Does not reflect maximum sales charge of 4.75% nor the 1% Limited CDSC that
would apply in the event of certain redemptions within 12 months of
purchase.
(4) All net assets of Delchester I class and Delchester Fund A Class have been
aggregated for the periods prior to June 1, 1992.

-13-
<PAGE>

<TABLE>
<CAPTION>
CLASS B SHARES
-------------------------------
PERIOD
5/2/94(1)
YEAR ENDED THROUGH
7/31/95 7/31/94
<S> <C> <C>
Net Asset Value,
Beginning of
Period............ $6.450 $6.730

INCOME FROM IN-
- ---------------
VESTMENT OPERATIONS
- -------------------

Net Investment
Income............ 0.624 0.120

Net Gains (Losses)
on Securities (both
realized and
unrealized)....... (0.170) (0.280)
-------- -------

Total From
Investment
Operations...... 0.454 (0.160)
-------- -------

LESS DISTRIBUTIONS
- ------------------

Dividends from
Net Investment
Income............ (0.624) (0.120)

Distributions
from Capital
Gains............. none none

Returns of
Capital........... none none
---- ----

Total Distri-
butions......... (0.624) (0.120)
------- -------

Net Asset Value,
End of Period..... $6.280 $6.450
====== ======

- ------------------------------------------------

TOTAL RETURN...... 7.64%(2) (1)
- ------------

- ------------------------------------------------

RATIOS/SUPPLEMENTAL
- -------------------
DATA
- ----

Net Assets, End
of Period (000's
omitted).......... $111,860 $21,776

Ratio of Expenses
to Average Daily
Net Assets........ 1.82% 1.83%(1)

Ratio of Net
Investment Income
to Average Daily
Net Assets........ 10.14% 9.70%(1)

Portfolio Turnover
Rate.............. 92% 92%
</TABLE>

-14-
<PAGE>

- -------------------------------------------
(1) Date of initial public offering. Ratios have been annualized. Total
return has been omitted as management believes that such information for
this relatively short period is not meaningful.
(2) Does not include the CDSC which varies from 1%-4%, depending on the holding
period, for shares held for less than seven years.

-15-
<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

INVESTMENT STRATEGY

The objective of the Fund is to seek as high a current income as is
consistent with providing reasonable safety. The strategy is to invest
primarily in those securities having a liberal and consistent yield and those
tending to reduce the risk of market fluctuations. The Fund will invest at
least 80% of its assets at the time of purchase in:
(1) Corporate Bonds. The Fund will invest in both rated and unrated bonds.
Unrated bonds may be more speculative in nature than rated bonds; or
(2) Government Securities. Securities of, or guaranteed by, the U.S.
Government, its agencies or instrumentalities; or
(3) Commercial Paper. Commercial paper of companies having, at the time of
purchase, an issue of outstanding debt securities rated as described above or
commercial paper rated A-1 or A-2 by Standard & Poor's Rating Group ("S&P") or
rated P-1 or P-2 by Moody's Investors Service, Inc. ("Moody's").

The Fund has consistently invested more than 80% of its assets in these
securities. The Fund must invest the remaining assets, if any, in income-
producing securities, including common stocks and preferred stocks, some of
which may have convertible features or attached warrants. Currently, the Fund's
assets are invested primarily in unrated corporate bonds and bonds rated BBB or
lower by S&P or Baa or lower by Moody's.

The market values of fixed income securities generally fall when interest
rates rise and, conversely, rise when interest rates fall. Lower-rated and
unrated fixed income securities tend to reflect short-term corporate and market
developments to a greater extent than higher-rated fixed income securities,
which react primarily to fluctuations in the general level of interest rates.
These lower-rated or unrated securities generally have higher yields, but, as a
result of factors such as reduced creditworthiness of issuers, increased risks
of default and a more limited and less liquid secondary market, are subject to
greater volatility and risk of loss of income and principal than are higher-
rated securities. The Manager will attempt to reduce such risk through
portfolio diversification, credit analysis, and attention to trends in the
economy, industries and financial markets.

The Fund may purchase privately-placed debt and other securities the resale
of which is restricted under applicable securities laws. The Fund will not
purchase illiquid assets, including restricted securities, if more than 10% of
its assets would consist of such illiquid securities.

-16-
<PAGE>

For temporary defensive purposes, the Fund may hold a substantial portion
of its assets in cash or short-term obligations. While the Fund is permitted,
it normally does not borrow money or invest in repurchase agreements, except to
invest cash balances.

Although the Fund will constantly strive to attain its objective, there can
be no assurance that it will be attained. The objective of the Fund may not be
changed without shareholder approval. Part B sets forth other investment
restrictions.

RULE 144A SECURITIES

The Fund may invest in restricted securities, including securities eligible
for resale without registration pursuant to Rule 144A ("Rule 144A Securities")
under the Securities Act of 1933. Rule 144A permits many privately placed and
legally restricted securities to be freely traded among certain institutional
buyers such as the Fund. The Fund may invest no more than 10% of the value of
its net assets in illiquid securities.

While maintaining oversight, the Board of Directors has delegated to the
Manager the day-to-day function of determining whether or not individual Rule
144A Securities are liquid for purposes of the Fund's 10% limitation on
investments in illiquid assets. 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; (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).

If the Manager determines that a Rule 144A Security which was previously
determined to be liquid is no longer liquid and, as a result, the Fund's
holdings of illiquid securities exceed the Fund's 10% limit on investments in
such securities, the Manager will determine what action to take to ensure that
the Fund continues to adhere to such limitation.

PORTFOLIO LOAN TRANSACTIONS

The 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.

The major risk to which the Fund would be exposed on a loan transaction is
the risk that the borrower would go bankrupt at a time when the value of the
security goes up.

-17-
<PAGE>

Therefore, the Fund will only enter into loan arrangements after a review of all
pertinent facts by the Manager, subject to overall supervision by 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.

SUITABILITY

The Fund may be suitable for the investor interested in high current income
flow. The types of securities in which the Fund invests are subject to price
fluctuations particularly due to changes in interest rates. The investor should
consider asset value fluctuation, as well as yield, in making an investment
decision. Also, while investments in unrated, lower-rated and restricted
securities have the potential for higher yields, they are more speculative and
increase the portfolio's credit risk. Changes in the market value of portfolio
securities will not affect interest income from such securities, but will be
reflected in the Fund's net asset value. The investor should be willing to
accept the risks, including the risk of net asset value fluctuations, associated
with investing in these securities.

The Fund's objective of high current income also may be suited for longer-
term investments, such as tax-deferred retirement plans (e.g., IRA, 401(k),
Profit Sharing, etc.), where the income stream can be left to compound on a tax-
deferred basis.

Net asset value may fluctuate in response to the condition of individual
companies and general market and economic conditions and, as a result, the Fund
is not appropriate for a short-term investor.

Ownership of Fund shares reduces the bookkeeping and administrative
inconveniences connected with direct purchases of these securities. Investors
should not consider a purchase of Fund shares as equivalent to a complete
investment program. The Delaware Group includes a family of funds, generally
available through registered investment dealers, which may be used in concert to
create a more complete investment program.

RISK FACTORS

The Fund's assets may be invested primarily in bonds rated BBB or lower by
S&P or Baa or lower by Moody's and in unrated corporate bonds. See Appendix B
to this Prospectus for more rating information. Investing in these so-called
"junk" or "high-yield" bonds entails certain risks, including the risk of loss
of principal, which may be greater than the

-18-
<PAGE>

risks involved in investment grade bonds, and which should be considered by
investors contemplating an investment in the Fund. Such bonds are sometimes
issued by companies whose earnings at the time of issuance are less than the
projected debt service on the junk bonds. In addition to the considerations
discussed elsewhere in this Prospectus, those risks include the following:

YOUTH AND VOLATILITY OF THE HIGH-YIELD MARKET

Although the market for high-yield bonds has been in existence for many
years, including periods of economic downturns, the high-yield market grew
rapidly during the long economic expansion which took place in the United States
during the 1980s. During that economic expansion, the use of high-yield debt
securities to fund highly leveraged corporate acquisitions and restructurings
increased dramatically. As a result, the high-yield market grew substantially
during that economic expansion. Although experts disagree on the impact
recessionary periods have had and will have on the high-yield market, some
analysts believe a protracted economic downturn would severely disrupt the
market for high-yield bonds, would adversely affect the value of outstanding
bonds and would adversely affect the ability of high-yield issuers to repay
principal and interest. Those analysts cite volatility experienced in the high-
yield market in the past as evidence for their position. It is likely that
protracted periods of economic uncertainty would result in increased volatility
in the market prices of high-yield bonds, an increase in the number of high-
yield bond defaults and corresponding volatility in the Fund's net asset value.
At times in the past, uncertainty and volatility in the high-yield market
resulted in volatility in the Fund's net asset value.

REDEMPTIONS

If, as a result of volatility in the high-yield market or other factors,
the Fund experiences substantial net redemptions of the Fund's shares for a
sustained period of time (i.e., more shares of the Fund are redeemed than are
purchased), the Fund may be required to sell securities without regard to the
investment merits of the securities to be sold. If the Fund sells a substantial
number of securities to generate proceeds for redemptions, the asset base of the
Fund will decrease and the Fund's expense ratio may increase.

LIQUIDITY AND VALUATION

The secondary market for high-yield securities is currently dominated by
institutional investors, including mutual funds and certain financial
institutions. There is

-19-
<PAGE>

generally no established retail secondary market for high-yield securities. As
a result, the secondary market for high-yield securities is more limited and
less liquid than other secondary securities markets. The high-yield secondary
market is particularly susceptible to liquidity problems when the institutions
that dominate it temporarily cease buying bonds for regulatory, financial or
other reasons, such as the savings and loan crisis. A less liquid secondary
market may have an adverse effect on the Fund's ability to dispose of particular
issues, when necessary, to meet the Fund's liquidity needs or in response to a
specific economic event, such as the deterioration in the creditworthiness of
the issuer. In addition, a less liquid secondary market makes it more difficult
for the Fund to obtain precise valuations of the high-yield securities in its
portfolio. During periods involving such liquidity problems, judgment plays a
greater role in valuing high-yield securities than is normally the case. The
secondary market for high-yield securities is also generally considered to be
more likely to be disrupted by adverse publicity and investor perceptions than
the more established secondary securities markets. The Fund's privately placed
high-yield securities are particularly susceptible to the liquidity and
valuation risks outlined above.

LEGISLATIVE AND REGULATORY ACTION AND PROPOSALS

There are a variety of legislative actions which have been taken or which
are considered from time to time by the United States Congress which could
adversely affect the market for high-yield bonds. For example, Congressional
legislation limited the deductibility of interest paid on certain high-yield
bonds used to finance corporate acquisitions. Also, Congressional legislation
has, with some exceptions, generally prohibited federally-insured savings and
loan institutions from investing in high-yield securities. Regulatory actions
have also affected the high-yield market. For example, many insurance companies
have restricted or eliminated their purchases of high-yield bonds as a result
of, among other factors, actions taken by the National Association of Insurance
Commissioners. If similar legislative and regulatory actions are taken in the
future, they could result in further tightening of the secondary market for
high-yield issues, could reduce the number of new high-yield securities being
issued and could make it more difficult for the Fund to attain its investment
objective.

ZERO COUPON BONDS AND PAY-IN-KIND BONDS

Although the Fund does not generally purchase a substantial amount of zero
coupon bonds or pay-in-kind (PIK) bonds, from time to time, the Fund may acquire
zero coupon

-20-
<PAGE>

bonds and, to a lesser extent, PIK bonds. Zero coupon bonds and PIK bonds are
generally considered to be more interest-sensitive than income bearing bonds, to
be more speculative than interest-bearing bonds, and to have certain tax
consequences which could, under certain circumstances, be adverse to the Fund.
For example, the Fund accrues, and is required to distribute to shareholders,
income on its zero coupon bonds. However, the Fund may not receive the cash
associated with this income until the bonds are sold or mature. If the Fund did
not have sufficient cash to make the required distribution of accrued income,
the Fund could be required to sell other securities in its portfolio or to
borrow to generate the cash required.

-21-
<PAGE>

THE DELAWARE DIFFERENCE

PLANS AND SERVICES

The Delaware Difference is our commitment to provide you with superior
information and quality service on your investments in the Delaware Group of
funds.

SHAREHOLDER PHONE DIRECTORY

INVESTOR INFORMATION CENTER
800-523-4640
(PHILADELPHIA 215-988-1333)
FUND INFORMATION
LITERATURE
PRICE, YIELD AND PERFORMANCE FIGURES

SHAREHOLDER SERVICE CENTER
800-523-1918
(PHILADELPHIA 215-988-1241)
INFORMATION ON EXISTING REGULAR INVESTMENT
ACCOUNTS AND RETIREMENT PLAN ACCOUNTS
WIRE INVESTMENTS
WIRE LIQUIDATIONS
TELEPHONE LIQUIDATIONS
TELEPHONE EXCHANGES

DELAPHONE
800-362-FUND
(800-362-3863)

SHAREHOLDER SERVICES

During business hours, you can call the Fund's Shareholder Service Center.
Our representatives can answer any questions about your account, the Fund,
various service features and other funds in the Delaware Group.

PERFORMANCE INFORMATION

During business hours, you can call the Investor Information Center to get
current yield information. Current yield and total return information may also
be included in advertisements and information given to shareholders. Yields are
computed on an annual basis over a 30-day period.

DELAPHONE SERVICE

Delaphone is an account inquiry service for investors with Touch-Tone(R)
phone service. It enables you to get information on your account faster than
the mailed statements and confirmations. Delaphone is available seven days a
week, 24 hours a day.

STATEMENTS AND CONFIRMATIONS

You will receive quarterly statements of your account summarizing all
transactions during the period. A

-22-
<PAGE>

confirmation statement will be sent following all transactions other than those
involving a reinvestment of distributions. You should examine statements and
confirmations immediately and promptly report any discrepancy by calling the
Shareholder Service Center.

DUPLICATE CONFIRMATIONS

If your investment dealer is noted on your investment application, we will
send your dealer a duplicate confirmation. This makes it easier for your
investment dealer to help you manage your investments.

TAX INFORMATION

Each year, the Fund will mail you information on the tax status of your
dividends and distributions.

DIVIDEND REINVESTMENT PLAN

You can elect to have your distributions (capital gains and/or dividend
income) paid to you by check or reinvested in your account. Also, you may
invest your distributions in certain other funds in the Delaware Group, subject
to the exceptions noted below as well as the eligibility and minimum purchase
requirements set forth in each fund's prospectus.

Reinvestments of distributions into Class A Shares of the Fund or of other
Delaware Group funds are made without a front-end sales charge. Reinvestments
of distributions into Class B Shares of the Fund or of other Delaware Group
funds or into Class C Shares of the Fund or of other Delaware Group funds are
also made without any sales charge and will not be subject to a CDSC if later
redeemed. See Automatic Conversion of Class B Shares under Buying Shares for
information concerning the automatic conversion of Class B Shares acquired by
reinvesting dividends.

Holders of Class A Shares of the Fund may not reinvest their distributions
into Class B Shares or Class C Shares of any fund in the Delaware Group,
including the Fund. Holders of Class B Shares of the Fund may reinvest their
distributions only into Class B Shares of the funds in the Delaware Group which
offer that class of shares (the "Class B Funds"). Similarly, holders of Class C
Shares of the Fund may reinvest their distributions only into Class C Shares of
the funds in the Delaware Group which offer that class of shares (the "Class C
Funds"). See Class B Funds and Class C Funds under Buying Shares for a list of
the funds offering those classes of shares. For more information about
reinvestments, please call the Shareholder Service Center.

EXCHANGE PRIVILEGE

The Exchange Privilege permits shareholders to exchange all or part of
their shares into shares of the other funds in the Delaware Group, subject to
certain exceptions and limitations. For additional information on exchanges,
see

-23-
<PAGE>

Investing by Exchange under How to Buy Shares and Redemption and Exchange.

WEALTH BUILDER OPTION

You may elect to have amounts in your account automatically invested in
shares of other funds in the Delaware Group. Investments under this feature are
exchanges and are therefore subject to the same conditions and limitations as
other exchanges of Class A, Class B and Class C Shares. See Redemption and
Exchange.

RIGHT OF ACCUMULATION

With respect to Class A Shares, the Right of Accumulation feature allows
you to combine the value of your current holdings of Class A Shares, Class B
Shares and Class C Shares of the Fund with the dollar amount of new purchases of
Class A Shares to qualify for a reduced front-end sales charge. Under the
COMBINED PURCHASES PRIVILEGE, you may also include certain shares that you own
in other funds in the Delaware Group. See Buying Shares.

LETTER OF INTENTION

The Letter of Intention feature permits you to obtain a reduced front-end
sales charge on purchases of Class A Shares by aggregating certain of your
purchases of Delaware Group fund shares over a 13-month period. See Buying
Shares and Part B.

12-MONTH REINVESTMENT PRIVILEGE

The 12-Month Reinvestment Privilege permits you to reinvest proceeds of
Class A Shares within one year of the date of redemption, without a front-end
sales charge. See Part B.

DELAWARE GROUP ASSET PLANNER

Delaware Group Asset Planner is an asset allocation service that gives
investors, working with a professional financial adviser, the ability to more
easily design and maintain investments in a diversified selection of Delaware
Group mutual funds. The Asset Planner service offers a choice of four pre-
designed allocation Strategies (each with a different risk/reward profile) made
up of separate investments in predetermined percentages of Delaware Group funds.
With the guidance of a financial adviser, investors may also tailor a Strategy
that meets their personal needs and goals. See How to Buy Shares under Buying
Shares.

FINANCIAL INFORMATION ABOUT THE FUND

Each fiscal year, you will receive an audited annual report and an
unaudited semi-annual report. These reports provide detailed information about
the Fund's investments and performance. The Fund's fiscal year ends on July 31.

-24-
<PAGE>

RETIREMENT PLANNING

Retirement plans may be subject to plan establishment fees, annual
maintenance fees and/or other administrative or trustee fees. Fees are based on
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.

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 the Delchester Fund Institutional
Class. For additional information on any of the plans and Delaware's retirement
services, call the Shareholder Service Center or see Part B.

INDIVIDUAL RETIREMENT ACCOUNT ("IRA")

Individuals, even if they participate in an employer-sponsored retirement
plan, may establish their own retirement program for investments in each of the
Classes. Contributions to an IRA may be tax-deductible and earnings are tax-
deferred. Under the Tax Reform Act of 1986, the tax deductibility of IRA
contributions is restricted, and in some cases eliminated, for individuals who
participate in certain employer-sponsored retirement plans and whose annual
income exceeds certain limits. Existing IRAs and future contributions up to the
IRA maximums, whether deductible or not, still earn on a tax-deferred basis.

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")

Offers employers with 25 or fewer eligible employees the ability to
establish a SEP/IRA that permits salary deferral contributions. An employer may
also elect to make additional contributions to this plan. Class B Shares are
not available for purchase by such plans.

-25-
<PAGE>

403(B)(7) DEFERRED COMPENSATION PLAN

Permits employees of public school systems or of certain types of non-
profit organizations to enter into a deferred compensation arrangement for the
purchase of shares of each of the Classes.

457 DEFERRED COMPENSATION PLAN

Permits employees of state and local governments and certain other entities
to enter into a deferred compensation arrangement for the purchase of shares of
each of the Classes.

PROTOTYPE PROFIT SHARING OR MONEY PURCHASE PENSION PLAN

Offers self-employed individuals, partnerships and corporations a tax-
qualified plan which provides for the investment of contributions in Class A
Shares or Class C Shares. Class B Shares are not available for purchase by such
plans.

PROTOTYPE 401(K) DEFINED CONTRIBUTION PLAN

Permits employers to establish a tax-qualified plan based on salary
deferral contributions. Class B Shares are not available for purchase by such
plans.

ALLIED PLANS

Class A Shares are available for purchase by participants in 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 Group funds ("eligible Delaware Group fund shares"), as well
as shares of designated classes of non-Delaware Group funds ("eligible non-
Delaware Group 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 Group and eligible non-Delaware Group fund shares held by a
participant under the Allied Plan, may be combined with the dollar amount of new
purchases by that participant to obtain a reduced front-end sales charge on
additional purchases of eligible Delaware Group fund shares. See Front-End
Sales Charge Alternative - Class A Shares under Buying Shares.

Participants in Allied Plans may exchange all or part of their eligible
Delaware Group fund shares for other eligible Delaware Group fund shares or for
eligible non-Delaware Group fund shares at net asset value without payment of a
front-end

-26-
<PAGE>

sales charge. However, exchanges of eligible fund shares, both Delaware Group
and non-Delaware Group, which were not subject to a front-end sales charge, will
be subject to the applicable sales charge if exchanged for eligible Delaware
Group 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.

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 below under the heading Waiver of Limited CDSC--
Class A Shares, apply to redemptions by participants in Allied Plans, except in
the case of exchanges between eligible Delaware Group and non-Delaware Group
fund shares. When eligible Delaware Group fund shares are exchanged into
eligible non-Delaware Group 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 CDSC will be paid by the financial adviser or selling dealer. See
Contingent Deferred Sales Charge for Certain Purchases of Class A Shares Made at
Net Asset Value under Redemption and Exchange.

A dealer's commission may be payable on purchases of eligible Delaware
Group 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 Group fund shares in connection with Allied Plans, all participant
holdings in the Allied Plan will be aggregated. See Front-End Sales Charge
Alternative - Class A Shares under Buying Shares.

-27-
<PAGE>

BUYING SHARES

PURCHASE AMOUNTS

Generally, the minimum initial purchase is $1,000 for Class A Shares, Class
B Shares and Class C Shares. Subsequent purchases generally must be $100 or
more. Class A Shares purchased under the Uniform Gifts to Minors Act or Uniform
Transfer to Minors Act are subject to a minimum initial purchase of $250 and a
minimum subsequent purchase of $25. In addition, there is a maximum purchase
limitation of $250,000 on each purchase of Class B Shares; for Class C Shares,
each purchase must be in an amount that is less than $1,000,000. An investor
may exceed these maximum purchase limitations by making cumulative purchases
over a period of time. In doing so, an investor should keep in mind that
reduced front-end sales charges are available on investments of $100,000 or more
in Class A Shares, and that Class A Shares (i) are subject to lower annual 12b-1
Plan expenses than Class B Shares and Class C Shares and (ii) generally are not
subject to a CDSC.

For retirement plans, the maximum purchase limitations apply only to the
initial purchase of Class B Shares or Class C Shares by the plan. Minimum
purchase requirements do not apply to retirement plans other than IRAs for which
there is a minimum initial purchase of $250, and a minimum subsequent purchase
of $25, regardless of which class is selected.

ALTERNATIVE PURCHASE ARRANGEMENTS

Shares may be purchased at a price equal to the next determined net asset
value per share, subject to a sales charge which may be imposed, at the election
of the purchaser, at the time of the purchase with respect to Class A Shares
("front-end sales charge alternative"), or on a contingent deferred basis with
respect to Class B Shares ("deferred sales charge alternative") or Class C
Shares ("level sales charge alternative").

Class A Shares. An investor who elects the front-end sales charge
alternative acquires Class A Shares. Class A Shares incur a sales charge when
they are purchased but generally are not subject to any sales charge when they
are redeemed. Class A Shares are subject to annual 12b-1 Plan expenses of up to
a maximum of .30% of average daily net assets of such shares. See Contingent
Deferred Sales Charge for Certain Purchases of Class A Shares Made at Net Asset
Value and Distribution (12b-1) and Service. Certain purchases of Class A Shares
qualify for reduced front-end sales charges. See Front-End Sales Charge
Alternative -Class A Shares, below.

-28-
<PAGE>

Class B Shares. An investor who elects the deferred sales charge
alternative acquires Class B Shares. Class B Shares do not incur a front-end
sales charge when they are purchased, but are subject to a sales charge if they
are redeemed within six years of purchase and are subject to annual 12b-1 Plan
expenses of up to a maximum of 1% (.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 such shares for
approximately eight years after purchase. Class B Shares permit all of the
investor's dollars to work from the time the investment is made. The higher
12b-1 Plan expenses paid by Class B Shares will cause such shares to have a
higher expense ratio and to pay lower dividends than those related to the Class
A Shares. At the end of approximately eight years after purchase, the Class B
Shares will automatically be converted into Class A Shares. See Automatic
Conversion of Class B Shares, below.

Class C Shares. An investor who elects the level sales charge alternative
acquires Class C Shares. Class C Shares do not incur a front-end sales charge
when they are purchased, but are subject to a sales charge if they are redeemed
within twelve months of purchase and are subject to annual 12b-1 Plan expenses
of up to a maximum of 1% (.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 such shares for the life of
the investment. The higher 12b-1 Plan expenses paid by Class C Shares will
cause such shares to have a higher expense ratio and to pay lower dividends than
those related to the Class A Shares. Unlike Class B Shares, Class C Shares do
not convert to another class.

The alternative purchase arrangements described above permit investors in
the Fund to choose the method of purchasing shares that is most suitable 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, purchase Class B Shares and have
the entire initial purchase amount invested in the Fund with their investment
being subject to a CDSC if they redeem shares within six years of purchase, or
purchase Class C Shares and have the entire initial purchase amount invested in
the Fund with their investment being subject to a CDSC if they redeem shares
within twelve months

-29-
<PAGE>

of purchase. In addition, investors should consider the level of annual 12b-1
Plan expenses to which each of the Classes is subject and, in comparing Class B
Shares to Class C Shares, the desirability of an automatic conversion feature,
which is available only for Class B Shares.

As an illustration, investors who qualify for significantly reduced front-
end sales charges on purchases of Class A Shares, as described below, might
elect the front-end sales charge alternative because similar sales charge
reductions are not available under either the deferred sales charge alternative
or the level sales charge alternative. Moreover, shares acquired under the
front-end sales charge alternative are subject to annual 12b-1 Plan expenses of
up to .30%, whereas Class B Shares acquired under the deferred sales charge
alternative are subject to annual 12b-1 Plan expenses of up to 1% for
approximately eight years after purchase (see Automatic Conversion of Class B
Shares) and Class C Shares acquired under the level sales charge alternative are
subject to annual 12b-1 Plan expenses of up to 1% for the life of the
investment. However, because front-end sales charges are deducted from the
purchase amount at the time of purchase, investors who buy Class A Shares will
not have their full purchase amount invested in the Fund.

Certain other investors might determine it to be more advantageous to
purchase Class B Shares and have all their funds invested initially, although
they would be subject to a CDSC for up to six years after purchase, as well as
annual 12b-1 Plan expenses of up to 1% until the shares are automatically
converted into Class A Shares. Still other investors might determine it to be
more advantageous to purchase Class C Shares and have all of their funds
invested initially, recognizing that they would be subject to a CDSC for just 12
months after purchase but that Class C Shares do not offer a conversion feature,
so their shares would be subject to annual 12b-1 Plan expenses of up to 1% for
the life of the investment. 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 under the deferred sales charge alternative
or the level sales charge alternative. However, there can be no assurance as to
the return, if any, that will be realized on such additional money.

Prospective investors should refer to Appendix A to this Prospectus for an
illustration of the potential impact on a long-term shareholder's investment in
the Fund under each of the purchase options.

-30-
<PAGE>

For the distribution and related services provided to, and the expenses
borne on behalf of, the Fund, the Distributor and others will be paid, in the
case of the Class A Shares, from the proceeds of the front-end sales charge and
12b-1 Plan fees and, in the case of the Class B Shares and the Class C Shares,
from the proceeds of the 12b-1 Plan fees and, if applicable, the CDSC incurred
upon redemption. Sales personnel may receive different compensation for selling
Class A, Class B 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 PROVIDE FOR THE FINANCING OF THE DISTRIBUTION OF THE RESPECTIVE CLASSES.
See 12b-1 Distribution Plans - Class A, Class B and Class C Shares.

Dividends paid by the Fund with respect to the Class A, Class B and Class C
Shares, to the extent any dividends are paid, will be calculated in the same
manner, at the same time, on the same day and will be in the same amount, except
that the additional amount of 12b-1 Plan expenses relating to the Class B Shares
and the Class C Shares will be borne exclusively by such shares. See
Calculation of Offering Price and Net Asset Value Per Share.

The NASD has adopted certain rules relating to investment company sales
charges. The Fund and the Distributor intend to operate in compliance with
these rules.

FRONT-END SALES CHARGE ALTERNATIVE--CLASS A SHARES

The Class A Shares may be purchased at the offering price, which reflects a
maximum front-end sales charge of 4.75%. See Calculation of Offering Price and
Net Asset Value Per Share.

Purchases of $100,000 or more carry a reduced front-end sales charge as
shown in the following table.

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<PAGE>

<TABLE>
<CAPTION>
DELCHESTER FUND A CLASS
- --------------------------------------------------------------
Dealer's
Front-End Sales Charge Concession***
as % of as % of
Offering Amount Offering
Amount of Purchase Price Invested** Price
- --------------------------------------------------------------
<S> <C> <C> <C>

Less than $100,000 4.75% 4.94% 4.00%

$100,000 but
under $250,000 3.75 3.82 3.00

$250,000 but
under $500,000 2.50 2.55 2.00

$500,000 but
under $1,000,000* 2.00 2.07 1.60
</TABLE>

* There is no front-end sales charge on purchases of Class A Shares of $1
million or more but, under certain limited circumstances, a 1% Limited CDSC
may apply upon redemption of such shares.

** Based on the net asset value per share of the Class A Shares as of the end
of the Fund's most recent fiscal year.

*** Financial institutions or their affiliated brokers may receive an agency
transaction fee in the percentages set forth above.
- --------------------------------------------------------------------------------

The Fund must be notified when a sale takes place which would qualify for
the reduced front-end sales charge on the basis of previous or current
purchases. The reduced front-end sales charge will be granted upon
confirmation of the shareholder's holdings by the Fund. Such reduced
front-end sales charges are not retroactive.

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 charge shown above. In addition, certain dealers who enter into
an agreement to provide extra training and information on Delaware Group
products and services and who increase sales of Delaware Group funds may
receive an additional concession of up to .15% of the offering price.
Dealers who receive 90% or more of the sales charge may be deemed to be
underwriters under the Securities Act of 1933.
- --------------------------------------------------------------------------------

-32-
<PAGE>

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 made in accordance with the following schedule:

<TABLE>
<CAPTION>
DEALER'S COMMISSION
-------------------
AMOUNT OF PURCHASE (as a percentage of
- ------------------ amount purchased)

<S> <C>
Up to $2 million 1.00%
Next $1 million up to $3 million .75
Next $2 million up to $5 million .50
Amount over $5 million .25
</TABLE>

In determining a financial adviser's eligibility for the dealer's
commission, purchases of Class A Shares of other Delaware Group funds as to
which a Limited CDSC applies may be aggregated with those of the Class A Shares
of the 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 Group funds will not qualify for payment of
the dealer's commission, unless such exchange is from a Delaware Group fund with
assets as to which a dealer's commission or similar payment has not been
previously paid. The schedule and program for payment of the dealer's
commission are subject to change or termination at any time by the Distributor
in its discretion.

Redemptions of Class A Shares purchased at net asset value may result in
the imposition of a Limited CDSC if the dealer's commission described above was
paid in connection with the purchase of those shares. See Contingent Deferred
Sales Charge for Certain Purchases of Class A Shares Made at Net Asset Value
under Redemption and Exchange.

COMBINED PURCHASES PRIVILEGE

By combining your holdings of Class A Shares with your holdings of Class B
Shares and/or Class C Shares of the Fund and shares of the other funds in the
Delaware Group, except those noted below, you can reduce the front-end sales
charges on any additional purchases of Class A Shares. Shares of Delaware Group
Premium Fund, Inc. beneficially owned in connection with ownership of variable
insurance products may be combined with other Delaware Group fund holdings.
Shares of other funds that do not carry a front-end sales charge or CDSC may not
be included, unless they

-33-
<PAGE>

were acquired through an exchange from a Delaware Group fund that does carry a
front-end sales charge or CDSC.

This privilege permits you to combine your purchases and holdings with
those of your spouse, your children under 21 and any trust, fiduciary or
retirement account for the benefit of such family members.

It also permits you to use these combinations under a Letter of Intention.
A Letter of Intention allows you to make purchases over a 13-month period and
qualify the entire purchase for a reduction in front-end sales charges on Class
A Shares.

Combined purchases of $1,000,000 or more, including certain purchases made
at net asset value pursuant to a Right of Accumulation or under a Letter of
Intention, may trigger the payment of a dealer's commission and the
applicability of a Limited CDSC. Investors should consult their financial
advisers or the Shareholder Service Center about the operation of these
features. See Front-End Sales Charge Alternative -- Class A Shares under Buying
Shares.

BUYING AT NET ASSET VALUE

Class A Shares may be purchased at net asset value under the Delaware Group
Dividend Reinvestment Plan and, under certain circumstances, the 12-month
Reinvestment Privilege and the Exchange Privilege. (See The Delaware Difference
and Redemption and Exchange for additional information.)

Purchases of Class A Shares may be made at net asset value by current and
former officers, directors and employees (and members of their immediate
families) of the Manager, any affiliate, any of the funds in the Delaware Group,
certain of their agents and registered representatives and employees of
authorized investment dealers and by employee benefit plans for such entities.
Individual purchases include retirement accounts and must be for accounts in the
name of the individual or a qualifying family member. Purchases of Class A
Shares may be made by clients of registered representatives of an authorized
investment dealer at net asset value within six months of a change of the
registered representative's employment, if the purchase is funded by proceeds
from an investment where a front-end sales charge has been assessed and the
redemption of the investment did not result in the imposition of a contingent
deferred sales charge or other redemption charge. Purchases of Class A Shares
also may 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 Class A Shares. Officers, directors and key employees of
institutional clients of the Manager, or any

-34-
<PAGE>

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.

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 Delaware
Group account in connection with loans originated from accounts previously
maintained by another investment firm will also be invested at net asset value.

The Fund must be notified in advance that an investment qualifies for
purchase of Class A Shares at net asset value.

GROUP INVESTMENT PLANS

Group Investment Plans (e.g., SEP/IRA, SAR/SEP, Prototype Profit Sharing,
Pension and 401(k) Defined Contribution Plans) may benefit from the reduced
front-end sales charges relating to the Class A Shares set forth in the table on
page _____, based on total plan assets. In addition, 403(b)(7) and 457
Retirement Plan Accounts may benefit from a reduced front-end sales charge on
Class A Shares based on the total amount invested by all participants in the
plan by satisfying the following criteria: (i) the employer for which the plan
was established has 250 or more eligible employees and the plan lists only one
broker of record, or (ii) the plan includes employer contributions and the plan
lists only one broker of record. If a company has more than one plan investing
in the Delaware Group of funds, then the total amount invested in all plans will
be aggregated to determine the applicable front-end sales charge reduction on
each purchase, both initial and subsequent, if, at the time of each such
purchase, the company notifies the Fund that it qualifies for the reduction.
Employees participating in such Group Investment Plans may also combine the
investments held in their plan account to determine the front-end sales charge
applicable to purchases in non-retirement Delaware Group investment accounts if,
at the time of each such purchase, they notify the Fund that they are eligible
to combine purchase amounts held in their plan account.

For additional information on these plans, including Plan forms,
applications, minimum investments and any applicable account maintenance fees,
contact your investment dealer or the Distributor.

-35-
<PAGE>

For other retirement plans and special services, see Retirement
Planning.

DEFERRED SALES CHARGE ALTERNATIVE - CLASS B SHARES

Class B Shares may be purchased at net asset value without the imposition
of a front-end sales charge and, as a result, the Fund will invest the full
amount of the investor's purchase payment. The Distributor currently
anticipates compensating 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 4% of
the dollar amount purchased. 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 facilitates the ability of the Fund to
sell the Class B Shares without deducting a front-end sales charge at the time
of purchase.

Shareholders of the Fund's Class B Shares exercising the exchange privilege
described below will continue to be subject to the CDSC schedule described in
this Prospectus, even after the exchange. Such CDSC schedule may be higher than
the CDSC schedule relating to the Class B Shares acquired as a result of the
exchange. See Redemption and Exchange.

AUTOMATIC CONVERSION OF CLASS B SHARES

Except for shares acquired through a reinvestment of dividends, Class B
Shares held for eight years after purchase are eligible for automatic conversion
into Class A Shares. The Fund will effect conversions of Class B Shares into
Class A Shares 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

-36-
<PAGE>

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 after purchase before the shares will automatically convert into
Class A Shares.

Class B Shares of a fund acquired through 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 the imposition
of a front-end sales charge and, as a result, the Fund will invest the full
amount of the investor's purchase payment. The Distributor currently
anticipates compensating 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, however, Class C Shares are
subject to annual 12b-1 Plan expenses and, if redeemed within twelve months of
purchase, a CDSC.

Shareholders of the Fund's Class C Shares who exercise the exchange
privilege described below will continue to be subject to the CDSC schedule for
the Fund's C Class shares described in this Prospectus. See Redemption and
Exchange.

CONTINGENT DEFERRED SALES CHARGE - CLASS B SHARES AND CLASS C SHARES

Class B Shares redeemed within six years of purchase may be subject to a
CDSC at the rates set forth below and Class C Shares redeemed within twelve
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

-37-
<PAGE>

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. In
addition, no CDSC will be assessed on redemptions of shares received through
reinvestments 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 either the Class B Shares or the Class C Shares of the
Fund, even if those shares are later exchanged for shares of another Delaware
Group 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.

The following table sets forth the rates of the CDSC for the Class B Shares
of the Fund:

<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES CHARGE
YEAR AFTER (AS A PERCENTAGE OF DOLLAR
PURCHASE MADE AMOUNT SUBJECT TO CHARGE)
- ------------- --------------------------------

<S> <C>
0-2 4%
3-4 3%
5 2%
6 1%
7 and thereafter None
</TABLE>

During the seventh year after purchase and, thereafter, until converted
automatically into Class A Shares of the Fund, the 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. See Automatic Conversion of Class B Shares above.
Investors are reminded that the Class A Shares into which the Class B Shares
will convert are subject to ongoing annual 12b-1 Plan expenses of up to a
maximum of .30% of average daily net assets representing such shares.

In determining whether a CDSC is applicable 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 the Class C Shares, it will be assumed that shares held for more
than twelve months are redeemed first followed by shares acquired through the
reinvestment of dividends or distributions, and finally by shares held for
twelve 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.

The CDSC is waived on certain redemptions of Class B Shares and Class C
Shares. See Waiver of CDSC under Redemption and Exchange.

-38-
<PAGE>

12B-1 DISTRIBUTION PLANS - CLASS A, CLASS B AND CLASS C SHARES

Under the distribution plans adopted by the Fund in accordance with Rule
12b-1 under the 1940 Act, the Fund is permitted to pay the Distributor annual
distribution fees of up to .30% of the average daily net assets of the Class A
Shares, 1% of the average daily net assets of the Class B Shares and 1% of the
average daily net assets of the Class C Shares. These fees, which are payable
monthly, compensate the Distributor for providing distribution and related
services and bearing certain expenses of each Class. The 12b-1 Plans applicable
to the Class B Shares and the Class C Shares are designed to permit an investor
to purchase Class B Shares or Class C Shares through dealers or brokers without
the assessment of a front-end sales charge while enabling the Distributor to
compensate dealers and brokers for the sale of such shares. For more detailed
discussion of the 12b-1 Plans relating to the Class A, Class B and Class C
Shares, see Distribution (12b-1) and Service under Management of the Fund.

OTHER PAYMENTS TO DEALERS -- CLASS A, CLASS B AND CLASS C SHARES

In addition, from time to time at the discretion of the Distributor, all
registered broker/dealers whose aggregate sales of the Classes exceed certain
limits as set by the Distributor, may receive from the Distributor an additional
payment of up to .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 Group 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.

Subject to pending amendments to the NASD's Rules of Fair Practice, in
connection with the promotion of Delaware Group 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 Rules of Fair Practice 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 Rules of Fair Practice as they may be amended. In addition, as noted
above, the Distributor may pay dealers a commission in connection with net asset
value purchases.

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<PAGE>

CLASS B FUNDS AND CLASS C FUNDS

The following funds currently offer Class B Shares and Class C Shares:
Delaware Group Government Fund, Inc., Limited-Term Government Fund of Delaware
Group Limited-Term Government Funds, Inc., Delaware Group Cash Reserve, Inc.,
Tax-Free USA Fund, Tax-Free Insured Fund and Tax-Free USA Intermediate Fund of
Delaware Group Tax-Free Fund, Inc., Delaware Group DelCap Fund, Inc., Delaware
Fund and Devon Fund of Delaware Group Delaware Fund, Inc., Delaware Group Value
Fund, Inc., Decatur Income Fund and Decatur Total Return Fund of Delaware Group
Decatur Fund, Inc., Delaware Group Trend Fund, Inc., International Equity
Series, Global Bond Series and Global Assets Series of Delaware Group Global &
International Funds, Inc., DMC Tax-Free Income Trust-Pennsylvania and the
Fund.

DELCHESTER FUND INSTITUTIONAL CLASS

In addition to offering the Class A, Class B and Class C Shares, the Fund
also offers the Delchester Fund Institutional Class of shares, which is
described in a separate prospectus relating to that class of shares and is
available for purchase only by certain investors. Delchester Fund Institutional
Class shares generally are distributed directly by the Distributor and do not
have a front-end sales charge, a CDSC or a Limited CDSC, and they are not
subject to 12b-1 Plan distribution expenses. To obtain a prospectus which
describes the Delchester Fund Institutional Class, contact the Distributor by
writing to the address or by calling the telephone number listed on the cover of
this Prospectus.

DIVIDEND ORDERS

YOU MAY HAVE THE DIVIDENDS EARNED IN ONE FUND AUTOMATICALLY INVESTED IN
ANOTHER DELAWARE GROUP FUND WITH A DIFFERENT INVESTMENT OBJECTIVE. For more
information, see Dividend Reinvestment Plan under The Delaware Difference or
call the Shareholder Service Center.

HOW TO BUY SHARES

The Fund makes it easy to invest by mail, by wire, by exchange and by
arrangement with your investment dealer.

INVESTING THROUGH YOUR INVESTMENT DEALER

You can make a purchase of shares of the Classes through most investment
dealers who, as part of the service they provide, must transmit orders promptly.
They may charge for this service. If you want a dealer but do not have one, we
can refer you to one.

-40-
<PAGE>

INVESTING BY MAIL

1. Initial Purchases--An Investment Application or, in the case of a
retirement account, an appropriate retirement plan application, must be
completed, signed and sent with a check payable to Delchester Fund A Class,
Delchester Fund B Class or Delchester Fund C Class at 1818 Market Street,
Philadelphia, PA 19103.

2. Subsequent Purchases--Additional purchases may be made at any time by
mailing a check payable to Delchester Fund A Class, Delchester Fund B Class or
Delchester Fund C Class. Your check should be identified with your name(s) and
account number. An investment slip (similar to a deposit slip) is provided at
the bottom of transaction confirmations and dividend statements that you will
receive from the Fund. Use of this investment slip can help expedite processing
of your check when making additional purchases. Your investment may be delayed
if you send additional purchases by certified mail.

INVESTING BY WIRE

You may purchase shares by requesting your bank to transmit funds by wire
to CoreStates Bank, N.A., ABA #031000011, account number 0114-2596 (include your
name(s) and your account number for the Class in which you are investing).

1. Initial Purchases--Before you invest, telephone the Fund's Shareholder
Service Center to get an account number. If you do not call first, processing
of your investment may be delayed. In addition, you must promptly send your
Investment Application or, in the case of a retirement account, an appropriate
retirement plan application, to Delchester Fund A Class, Delchester Fund B Class
or Delchester Fund C Class at 1818 Market Street, Philadelphia, PA 19103.

2. Subsequent Purchases--You may make additional investments anytime by wiring
funds to CoreStates Bank, N.A., as described above. You should advise the
Fund's Shareholder Service Center by telephone of each wire you send.

If you want to wire investments to a retirement plan account, call the
Shareholder Service Center for special wiring instructions.

DELAWARE GROUP ASSET PLANNER

To invest in Delaware Group funds using the Asset Planner service, you
should complete a Delaware Group Asset Planner Account Registration Form, which
is available only

-41-
<PAGE>

from a financial adviser. The sales charge on the investment is determined by
the individual sales charges of the underlying funds and their percentage
allocation in the selected Strategy. 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 for use inside the Asset
Planner service; however, only "like" class shares may be used within the same
Strategy.

An annual maintenance fee, currently $35 per Strategy, is due at the time
of initial investment and by September 30th 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 your Fund accounts if not paid by September 30th. See the Statement of
Additional Information.

Investors will receive a customized quarterly Strategy Report summarizing
all Delaware Group 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.

INVESTING BY EXCHANGE

If you have an investment in another mutual fund in the Delaware Group, you
may write and authorize an exchange of part or all of your investment into
shares of the 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.

Shareholders of Class A Shares may exchange all or part of their shares for
certain of the shares of other funds in the Delaware Group, including other
Class A Shares, but may not exchange their shares for Class B Shares or Class C
Shares of the Fund or for Class B Shares or Class C Shares of any other fund in
the Delaware Group. Shareholders of Class B Shares of the Fund are permitted to
exchange all or part of their Class B Shares only into the corresponding class
of shares of the Class B Funds. Similarly, shareholders of Class C Shares of
the Fund are permitted to exchange all or part of their Class C Shares only into
the corresponding

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class of shares of the Class C Funds. Class B Shares of the Fund and Class C
Shares of the Fund acquired by exchange will continue to carry the contingent
deferred sales charge 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 the Class B Shares of the 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 the Fund.

Permissible exchanges into Class A Shares of the Fund will be made without
a front-end sales charge imposed by the Fund, except for exchanges from funds
not subject to a front-end sales charge (unless such shares were acquired in an
exchange from a fund subject to such a charge or such shares were acquired
through the reinvestment of dividends). Permissible exchanges into Class B
Shares or Class C Shares of the Fund will be made without the imposition of a
contingent deferred sales charge by the fund from which the exchange is being
made at the time of the exchange.

ADDITIONAL METHODS OF ADDING TO YOUR INVESTMENT

Call the Shareholder Service Center for more information if you wish to use
the following services:

1. Direct Deposit

YOU MAY HAVE YOUR EMPLOYER OR BANK MAKE REGULAR INVESTMENTS DIRECTLY TO
YOUR ACCOUNT FOR YOU (for example: payroll deduction, pay by phone, annuity
payments). The Fund also accepts preauthorized recurring government and private
payments by Electronic Fund Transfer, which avoids mail time and check clearing
holds on payments such as social security, federal salaries, Railroad Retirement
benefits, etc.

2. Automatic Investing Plan

THE AUTOMATIC INVESTING PLAN ENABLES YOU TO MAKE REGULAR MONTHLY
INVESTMENTS WITHOUT WRITING OR MAILING CHECKS. You may authorize the Fund to
transfer a designated amount monthly from your checking account to your Fund
account. Many shareholders use this as an automatic savings plan. Shareholders
should allow a reasonable amount of time for initial purchases and changes to
these plans to become effective.

This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans.

* * *

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<PAGE>

Should investments by these two methods be reclaimed or returned for some
reason, the Fund has the right to liquidate your shares to reimburse the
government or transmitting bank. If there are insufficient funds in your
account, you are obligated to reimburse the Fund.

PURCHASE PRICE AND EFFECTIVE DATE

The offering price and net asset value of the Class A, Class B and Class C
Shares are determined 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 effective date of a purchase made through an investment dealer is the
date the order is received by the Fund. The effective date of a direct purchase
is the day your wire, electronic transfer or check is received, unless it is
received after the time the offering price or net asset value of shares is
determined, as noted above. Purchase orders received after such time will be
effective the next business day.

THE CONDITIONS OF YOUR PURCHASE

The Fund reserves the right to reject any purchase order. If a purchase is
canceled because your check is returned unpaid, you are responsible for any loss
incurred. The 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 Group. The 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.

The Fund also reserves the right, following shareholder notification, to
charge a service fee on non-retirement accounts that 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 below minimum status 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 contingent deferred sales charge will apply
to such assessments.

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<PAGE>

The Fund also reserves the right, upon 60 days' written notice, to
involuntarily redeem accounts that remain under a Class' 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.

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<PAGE>

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 bond funds, equity funds, tax-advantaged 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 from one fund or class to another 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 the Delaware Group will best meet
your changing objectives and the consequences of any exchange transaction. You
may also call the Delaware Group directly for fund information.

Your shares will be redeemed or exchanged at a price based on the net asset
value next determined after we receive your request in good order subject, in
the case of a redemption, to any applicable CDSC or Limited CDSC. Redemption or
exchange requests received in good order after the time the offering price and
net asset value of shares are determined, as noted above, will be processed on
the next business day. See Purchase Price and Effective Date under Buying
Shares. A shareholder submitting a redemption 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, the Fund will redeem the number of shares necessary to deduct the
applicable CDSC in the case of Class B or Class C Shares or, 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.

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 you want to receive 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 Fund at 800-523-1918 (in Philadelphia, 215-988-1241).
The Fund may suspend,

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<PAGE>

terminate, or amend the terms of the exchange privilege upon 60 days' written
notice to shareholders.

The Fund will honor written redemption requests of shareholders who
recently purchased shares by check, but will not mail the proceeds until it is
reasonably satisfied the purchase check has cleared, which may take up to 15
days from the purchase date. The Fund will not honor telephone redemptions for
shares recently purchased by check unless it is reasonably satisfied that the
purchase check has cleared. You can avoid this potential delay if you purchase
shares by wiring Federal Funds. The 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.

There is no front-end sales charge or fee for exchanges made between shares
of funds which both carry a front-end sales charge. Any applicable front-end
sales charge will apply to exchanges from shares of funds not subject to a
front-end sales charge, except for transfers involving assets that were
previously invested in a fund with a front-end sales charge and/or transfers
involving the reinvestment of dividends.

Holders of Class B Shares or Class C Shares that exchange their shares
("Original Shares") for Class B Shares of other Class B Funds or Class C Shares
of other Class C Funds, as applicable (in each case, "New Shares"), 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 Prospectus and any CDSC assessed upon redemption
will be charged by the Fund. In an exchange of Class B Shares, 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 the New Shares by exchange may subject
an investor to the higher 12b-1 fees applicable to Class B Shares for a longer
period of time than if the investment in the New Shares were made directly.

Various redemption and exchange methods are outlined below. Except for the
CDSC applicable to certain redemptions of Class B and Class C Shares and the
Limited CDSC applicable to certain redemptions of Class A Shares

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<PAGE>

purchased at net asset value, there is no fee charged by the Fund or the
Distributor for redeeming or exchanging your shares, but such fees could be
charged in the future. You may have your investment dealer arrange to have your
shares redeemed or exchanged. Your investment dealer may charge for this
service.

All authorizations given by shareholders, including selection of any of
the features described below, shall continue in effect until such time as a
written revocation or modification has been received by the Fund or its
agent.

WRITTEN REDEMPTION

You can write to the 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 Fund requires a signature by all owners of the account and a
signature guarantee for each owner. Each signature guarantee must be supplied
by an eligible guarantor institution. The Fund reserves the right to reject a
signature guarantee supplied by an eligible institution based on its
creditworthiness. The Fund may require further documentation from corporations,
executors, retirement plans, administrators, trustees or guardians.

Payment is normally mailed the next business day, but no later than seven
days, after receipt of your redemption request. If your Class A Shares are in
certificate form, the certificate must accompany your request and also be in
good order. The Fund issues certificates for Class A Shares only if a
shareholder submits a specific request. The Fund does not issue certificates
for Class B Shares or Class C Shares.

WRITTEN EXCHANGE

You may also write to the Fund (at 1818 Market Street, Philadelphia, PA
19103) to request an exchange of any or all of your shares into another mutual
fund in the Delaware Group, subject to the same conditions and limitations as
other exchanges noted above.

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<PAGE>

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
only redeem or exchange 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 writing that you do not wish to have such
services available with respect to your account. The 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 Fund by telephone during periods
when market or economic conditions lead to an unusually large volume of
telephone requests.

Neither the Fund nor the 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, the 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, the Fund or the Transfer Agent may be liable for any losses due to
unauthorized or fraudulent transactions. Instructions received by telephone 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, but no later than seven days, after receipt of the 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

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<PAGE>

you change your predesignated bank account, the Fund requires an Authorization
Form with 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. CoreStates Bank, N.A.'s fee (currently $7.50) will be
deducted from your redemption. If you ask for a check, it will normally be
mailed the next business day, but no later than seven days, after receipt of
your request to your predesignated bank account. Except for any CDSC which may
be applicable to Class B and Class C Shares and the Limited CDSC which may be
applicable to certain Class A Shares, there are no fees for this redemption
method, but the mail time may delay getting funds into your bank account.
Simply call the Fund's Shareholder Service Center prior to the time the offering
price and net asset value are determined, as noted above.

If expedited payment by check or wire could adversely affect the Fund, the
Fund may take up to seven days to pay.

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 any fund in the Delaware Group 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.

SYSTEMATIC WITHDRAWAL PLANS

1. Regular Plans

This plan provides shareholders with a consistent monthly (or quarterly)
payment. THIS IS PARTICULARLY USEFUL TO SHAREHOLDERS LIVING ON FIXED INCOMES,
SINCE IT CAN PROVIDE THEM WITH A STABLE SUPPLEMENTAL AMOUNT. With accounts of
at least $5,000, you may elect monthly withdrawals of $25 (quarterly $75) or
more. The Fund does not recommend any particular monthly amount, as each
shareholder's situation and needs vary. Payments are normally made by check.
You may elect to have your payments transferred from your Fund account to your
predesignated bank account through the Delaware Group's MoneyLine service. Your
funds will normally be credited to your bank account two business days after the
payment date. Except for the Limited CDSC which may be applicable to Class A
Shares and the CDSC which may be applicable to Class B and Class C Shares as
noted below, there are no fees for this redemption method. You can

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<PAGE>

initiate the MoneyLine service by completing an Authorization Agreement. If the
name and address on your bank account are not identical to the name and address
on your Fund account, you must have your signature guaranteed. Please call the
Shareholder Service Center for additional information.

2. Retirement Plans

For shareholders eligible under the applicable retirement plan to receive
benefits in periodic payments, the Fund's Systematic Withdrawal Plan provides
you with maximum flexibility. A number of formulas are available for
calculating your withdrawals, depending upon whether the distributions are
required or optional. Withdrawals must be for $25 or more; however, no minimum
account balance is required. The MoneyLine Service described above is not
available for retirement plans.

* * *

Shareholders should not purchase Class A Shares while participating in a
Systematic Withdrawal Plan. Also, redemptions of Class A Shares via a
Systematic Withdrawal Plan may be subject to a Limited CDSC if the original
purchase was made at net asset value within the 12 months prior to the
withdrawal and a dealer's commission has been paid on that purchase. See
Contingent Deferred Sales Charge for Certain Purchases of Class A Shares Made at
Net Asset Value, below. With respect to Class B Shares and Class C Shares
redeemed via a Systematic Withdrawal Plan, any applicable CDSC 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 CDSC - Class B and Class C
Shares below.

For more information on Systematic Withdrawal Plans, call the Shareholder
Service Center.

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<PAGE>

WEALTH BUILDER OPTION

Shareholders may elect to invest in other mutual funds in the Delaware
Group through our Wealth Builder Option. Under this automatic exchange program,
shareholders can authorize regular monthly amounts (minimum of $100 per fund) to
be liquidated from their Fund account and invested automatically into an account
in one or more funds in the Delaware Group. If, in connection with the Wealth
Builder Option, a shareholder wishes to open a new account in such other fund or
funds to receive the automatic investment, such new account in any fund must
meet such other fund's minimum initial purchase requirements. Investments under
this option are exchanges and are therefore subject to the same conditions and
limitations as other exchanges noted above.

Shareholders can use the Wealth Builder Option to invest in the Fund
through regular liquidations of shares in their accounts in other funds in the
Delaware Group, subject to the same conditions and limitations as other
exchanges noted above. Shareholders can terminate their participation at any
time by written notice to the Fund. See Redemption and Exchange.

CONTINGENT DEFERRED SALES CHARGE FOR CERTAIN PURCHASES OF CLASS A SHARES MADE AT
NET ASSET VALUE

A Limited CDSC will be imposed by the Fund upon certain redemptions of
Class A Shares (or shares into which such Class A Shares are exchanged) made
within 12 months of purchase, if such purchases were made at net asset value and
triggered the payment by the Distributor of the dealer's commission described
above. See Buying Shares.

The Limited CDSC will be paid to the Distributor and will be equal to the
lesser of 1% 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 Group
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 12 months will not be
subjected to the Limited CDSC and an exchange of such Class A Shares into
another Delaware Group

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<PAGE>

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 12-month holding period. The Fund
assesses the Limited CDSC if such 12-month period is not satisfied irrespective
of whether the redemption triggering its payment is of the Class A Shares of the
Fund or the 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 CDSC--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 the 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) distributions from a section 403(b)(7)
Plan or an IRA due to death, disability, or attainment of age 59 1/2; (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 at Net Asset Value
under Buying Shares).

WAIVER OF CDSC--CLASS B AND CLASS C SHARES

The CDSC is waived on redemptions of Class B Shares in connection with the
following redemptions: (i) redemptions that result from the 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

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<PAGE>

minimum account size; (ii) returns of excess contributions to an IRA or
403(b)(7) Deferred Compensation Plan; (iii) required minimum distributions from
an IRA, 403(b)(7) Deferred Compensation Plan, or 457 Deferred Compensation Plan;
and (iv) distributions from an IRA, 403(b)(7) Deferred Compensation Plan or 457
Deferred Compensation Plan due to death or disability.

The CDSC on Class C Shares is waived in connection with the following
redemptions: (i) redemptions that result from the 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, 403(b)(7) Deferred Compensation Plan, Profit
Sharing Plan, Money Purchase Pension Plan or 401(k) Defined Contribution Plan;
(iii) required minimum distributions from an IRA, 403(b)(7) Deferred
Compensation Plan, 457 Deferred Compensation Plan, Profit Sharing Plan, Money
Purchase Pension Plan, or 401(k) Defined Contribution Plan; (iv) distributions
from a 403(b)(7) Deferred Compensation Plan, 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) Deferred Compensation
Plan, 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)
distributions from an 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 Internal Revenue 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.

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<PAGE>

DIVIDENDS AND DISTRIBUTIONS

The Fund declares a dividend to all shareholders of record at the time the
offering price of shares is determined. See Purchase Price and Effective Date
under Buying Shares. Thus, when redeeming shares, dividends continue to be
credited up to and including the date of redemption.

The Fund's dividends are declared daily and paid monthly on the first
business day following the end of the month. Payment by check of cash dividends
will ordinarily be mailed within three business days after the payable date.
Distributions from net realized securities profits, if any, will be distributed
twice a year. The first payment normally would be made during the first quarter
of the next fiscal year. The second payment would be made near the end of the
calendar year to comply with certain requirements of the Internal Revenue Code.
During the fiscal year ended July 31, 1995, dividends totaling $0.671 per share
of the Class A Shares and $0.624 per share of the Class B Shares were paid from
net investment income. Class C Shares were not offered prior to the date of
this Prospectus.

Purchases of the shares by wire begin earning dividends when converted into
Federal Funds and available for investment, normally the next business day after
receipt. However, if the Fund is given prior notice of Federal Funds wire and
an acceptable written guarantee of timely receipt from an investor satisfying
the Fund's credit policies, the purchase will start earning dividends on the
date the wire is received. Purchases by check earn dividends upon conversion to
Federal Funds, normally one business day after receipt.

Each of the Classes will share proportionately in the investment income and
expenses of the Fund, except that the per share dividends from net investment
income on the Class A Shares, the Class B Shares and the Class C Shares will
vary due to the expenses under the 12b-1 Plan applicable to each Class.
Generally, the dividends per share on Class B Shares and Class C Shares can be
expected to be lower than the dividends per share on Class A Shares because the
expenses under the 12b-1 Plans relating to Class B and Class C Shares will be
higher than the expenses under the 12b-1 Plan relating to Class A Shares. See
Distribution (12b-1) and Service under Management of the Fund.

Both dividends and distributions, if any, are automatically reinvested in
your account at net asset value unless you elect otherwise. Any check in
payment of dividends or other distributions which cannot be delivered by

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<PAGE>

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.
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 Delaware
Group's MoneyLine service and have such payments transferred from your Fund
account to your predesignated bank account. Your funds will normally be
credited to your bank account two business days after the payment date. There
are no fees for the MoneyLine service. See Systematic Withdrawal Plans under
Redemption and Exchange for information regarding authorization of this service.
This service is not available for retirement plans. (See The Delaware
Difference for more information on reinvestment options.)

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<PAGE>

TAXES

The Fund has qualified, and intends to continue to qualify, as a regulated
investment company under Subchapter M of the Internal Revenue Code (the "Code").
As such, the 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.

The Fund intends to distribute substantially all of its net investment
income and net capital gains, if any. Dividends from net investment income or
net short-term capital gains will be taxable to you as ordinary income, whether
received in cash or in additional shares. No portion of the Fund's
distributions will be eligible for the dividends-received deduction for
corporations. Distributions paid by the Fund from long-term capital gains,
whether received in cash or in additional shares, are taxable to those investors
who are subject to income taxes as long-term capital gains, regardless of the
length of time an investor has owned shares in the Fund. The Fund does not seek
to realize any particular amount of capital gains during a year; rather,
realized gains are a byproduct of Fund management activities. Consequently,
capital gains distributions may be expected to vary considerably from year to
year. Also, for those investors subject to tax, if purchases of shares in the
Fund are made shortly before the record date for a dividend or capital gains
distribution, a portion of the investment will be returned as a taxable
distribution.

Dividends which are declared in October, November or December to
shareholders of record on a specified date in one of those months, but which,
for operational reasons, may not be paid to the shareholder until the following
January, will be treated for tax purposes as if paid by the Fund and received by
the shareholder on December 31 of the calendar year in which they are
declared.

The sale of shares of the Fund is a taxable event and may result in a
capital gain or loss to shareholders subject to tax. Capital gain or loss may be
realized from an ordinary redemption of shares or an exchange of shares between
two mutual funds (or two series or portfolios of a mutual fund). Any loss
incurred on sale or exchange of the Fund's shares which had been held for six
months or less will be treated as a long-term capital loss to the extent of
capital gain dividends received with respect to such shares. All or a portion of
the sales charge incurred in acquiring Fund shares will be excluded from the
federal tax basis of any of such shares sold or exchanged within ninety days of
their purchase (for purposes of determining gain or loss upon the sale of such
shares) if the sale proceeds are

-57-
<PAGE>

reinvested in the Fund or in another fund in the Delaware Group of funds and a
sales charge that would otherwise apply to the reinvestment is reduced or
eliminated. Any portion of such sales charge excluded from the tax basis of the
shares sold will be added to the tax basis of the shares acquired in the
reinvestment.

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 Buying Shares.

In addition to federal taxes, shareholders may be subject to state and
local taxes on distributions. Distributions of interest income and capital
gains realized from certain types of U.S. Government securities may be exempt
from state personal income taxes. Shares of the Fund are exempt from
Pennsylvania county personal property taxes.

Each year, the Fund will mail you information on the tax status of the
Fund's dividends and distributions. Shareholders will also receive each year
information as to the portion of dividend income that is derived from U.S.
Government securities that are exempt from state income tax. Of course,
shareholders who are not subject to tax on their income would not be required to
pay tax on amounts distributed to them by the Fund.

The Fund is required to withhold 31% of taxable dividends, capital gains
distributions, and redemptions paid to shareholders who have not complied with
IRS taxpayer identification regulations. You may avoid this withholding
requirement by certifying on your Account Registration Form your proper Taxpayer
Identification Number and by certifying that you are not subject to backup
withholding.

The tax discussion set forth above is included for general information
only. Investors should consult their own advisers concerning the federal,
state, local or foreign tax consequences of an investment in the Fund.

See Taxes in Part B for additional information on tax matters relating to
the Fund and its shareholders.

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<PAGE>

CALCULATION OF OFFERING PRICE AND NET ASSET VALUE PER SHARE

Class A Shares are purchased at the offering price per share, while Class B
Shares and Class C Shares are purchased at the net asset value ("NAV") per
share. The offering price per share of Class A Shares consists of the NAV per
share next computed after the order is received, plus any applicable front-end
sales charges. The offering price and NAV 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 NAV per share is computed by adding the value of all securities and
other assets in the portfolio, deducting any liabilities (expenses and fees are
accrued daily) and dividing by the number of shares outstanding. Debt
securities are priced at fair value by an independent pricing service using
methods approved by the Fund's Board of Directors. Short-term investments
having a maturity of less than 60 days are valued at amortized cost, which
approximates market value. All other securities are valued at their fair value
as determined in good faith and in a method approved by the Fund's Board of
Directors.

Each of the Fund's four classes will bear, pro-rata, all of the common
expenses of the Fund. The net asset values of all outstanding shares of each
class of the Fund will be computed on a pro-rata basis for each outstanding
share based on the proportionate participation in the Fund represented by the
value of shares of that class. All income earned and expenses incurred by the
Fund will be borne on a pro-rata basis by each outstanding share of a class,
based on each class' percentage in the Fund represented by the value of shares
of such classes, except that the Delchester Fund Institutional Class will not
incur any of the expenses under the Fund's 12b-1 Plans and the Class A, Class B
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 dividends paid to each class of the
Fund may vary. However, the NAV per share of each class is expected to be
equivalent.

-59-
<PAGE>

MANAGEMENT OF THE FUND

DIRECTORS

The business and affairs of the Fund are managed under the direction of its
Board of Directors. Part B contains additional information regarding the
directors and officers.

INVESTMENT MANAGER

The Manager furnishes investment management services to the Fund.

The Manager and its predecessors have been managing the funds in the
Delaware Group since 1938. On July 31, 1995, the Manager and its affiliate,
Delaware International Advisers Ltd., were supervising in the aggregate more
than $27 billion in assets in the various institutional (approximately
$17,356,716,000) and investment company (approximately $9,964,548,000)
accounts.

The Manager is an indirect, wholly-owned subsidiary 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 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. In connection with the merger, a new
Investment Management Agreement between the Fund and the Manager was executed
following shareholder approval.

The Manager manages the Fund's portfolio and makes investment decisions
which are implemented by the Fund's Trading Department. The Manager also
administers the Fund's affairs and pays the salaries of all the directors,
officers and employees of the Fund who are affiliated with the Manager. For
these services, the Manager is paid an annual fee of .60% on the first $500
million of average daily net assets of the Fund, .575% on the next $250 million
and .55% on the average daily net assets in excess of $750 million, less all
directors' fees paid to unaffiliated directors by the Fund. Investment
management fees paid by the Fund for the fiscal year ended July 31, 1995 were
0.58% of average daily net assets.

Paul A. Matlack, Gerald T. Nichols and James R. Raith, Jr. have primary
responsibility for making day-to-day investment decisions for the Fund. Mr.
Matlack and Mr. Nichols have been members of the Fund's management team since
1990, and were named co-managers of the Fund in January 1993.

-60-
<PAGE>

Mr. Raith was named co-manager in January 1994. A Chartered Financial Analyst,
Mr. Matlack is a graduate of the University of Pennsylvania with an MBA in
Finance from George Washington University. He began his career at Mellon Bank
as a credit specialist, and later served as a corporate loan officer for Mellon
Bank and then Provident National Bank.

Mr. Nichols is a graduate of the University of Kansas, where he received a
BS in Business Administration and an MS in Finance. Prior to joining the
Delaware Group, he was a high-yield credit analyst at Waddell & Reed, Inc. and
subsequently the investment officer for a private merchant banking firm. He is
a Chartered Financial Analyst.

Mr. Raith is a 1973 graduate of Holy Cross University and received his MBA
in Finance from Tulane University in 1975. Before joining the Delaware Group in
1987, he held portfolio management positions in both fixed income and equity
management, including managing life insurance reserves at ICH Corporation and
managing high-yield pension assets for Firestone Tire and Rubber. Prior to
being named co-manager of the Fund, Mr. Raith managed separate accounts for the
Delaware Group's institutional clients using a similar strategy employed in
managing the Fund.

In making investment decisions for the Fund, Mr. Matlack, Mr. Nichols and
Mr. Raith regularly consult with Paul E. Suckow. Mr. Suckow is the Manager's
Chief Investment Officer for Fixed Income. A Chartered Financial Analyst, he is
a graduate of Bradley University with an MBA from Western Illinois University.
Mr. Suckow was a fixed income portfolio manager at the Delaware Group from 1981
to 1985. He returned to the Delaware Group in 1993 after eight years with
Oppenheimer Management Corporation.

PORTFOLIO TRADING PRACTICES

The Fund normally will not invest for short-term trading purposes.
However, the Fund may sell securities without regard to the length of time they
have been held. The degree of portfolio activity will affect brokerage costs of
the Fund and may affect taxes payable by the Fund's shareholders. Given the
Fund's investment objective, its annual portfolio turnover rate is not expected
to exceed 150%. A turnover rate of 100% would occur, for example, if all the
investments in the Fund's portfolio at the beginning of the year were replaced
by the end of the year. During the past two fiscal years, the Fund's portfolio
turnover rate was 92% for each of 1994 and 1995.

The Fund uses its best efforts to obtain the best available price and most
favorable execution for portfolio transactions. Orders may be placed with
brokers or dealers

-61-
<PAGE>

who provide brokerage and research services to the Manager or its advisory
clients. These services may be used by the Manager in servicing any of its
accounts. Subject to best price and execution, the Fund may consider a
broker/dealer's sales of its shares in placing portfolio orders and may place
orders with broker/dealers that have agreed to defray certain Fund expenses such
as custodian fees.

PERFORMANCE INFORMATION

From time to time, the Fund may quote yield or total return performance of
the Classes in advertising and other types of literature.

The current yield for each of the Classes will be calculated by dividing
the annualized net investment income earned by that Class during a recent 30-day
period by the maximum offering price per share on the last day of the period.
The yield formula provides for semi-annual compounding, which assumes that net
investment income is earned and reinvested at a constant rate and annualized at
the end of a six-month period.

Total return will be based on a hypothetical $1,000 investment, reflecting
the reinvestment of all distributions at net asset value and: (i) in the case of
Class A Shares, the impact of the maximum front-end sales charge at the
beginning of each specified period; and (ii) in the case of Class B Shares and
Class C Shares, the deduction of any applicable CDSC at the end of the relevant
period. Each presentation will include the average annual total return for one-,
five- and ten-year periods, as relevant. The Fund may also advertise aggregate
and average total return information concerning a Class over additional periods
of time. In addition, the Fund may present total return information that does
not reflect the deduction of the maximum front-end sales charge or any
applicable CDSC. In this case, such total return information would be more
favorable than total return information that includes the deductions of the
maximum front-end sales charge or any applicable CDSC.

Yield and net asset value fluctuate and are not guaranteed. Past
performance is not an indication of future results.

DISTRIBUTION (12B-1) AND SERVICE

The Distributor, Delaware Distributors, L.P. (which formerly conducted
business as Delaware Distributors, Inc.), serves as the national distributor for
the Fund under a Distribution Agreement dated April 3, 1995, as amended on
November 29, 1995.

-62-
<PAGE>

The Fund has adopted a separate distribution plan under Rule 12b-1 for each
of the Class A Shares, Class B Shares and Class C Shares (the "Plans"). The
Plans permit the Fund to pay the Distributor from the assets of the respective
Classes a monthly fee for its services and expenses in distributing and
promoting sales of shares. 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 Class A, Class B and Class C Shares, 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, the Fund may make
payments from the assets of the respective Class 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 the Fund.

The 12b-1 Plan expenses relating to each of the 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 aggregate fees paid by the Fund from the assets of the respective
Classes to the Distributor and others under the Plans may not exceed .30% of the
Class A Shares' average daily net assets in any year, and 1% (.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 in any year. The Class A,
Class B and Class C Shares will not incur any distribution expenses beyond these
limits, which may not be increased without shareholder approval. The
Distributor may, however, incur additional expenses and make additional payments
to dealers from its own resources to promote the distribution of shares of the
Classes.

Although the maximum fee payable under the Plan relating to the Class A
Shares is .30% of average daily net assets, the Board of Directors has
determined that the annual fee payable on a monthly basis, under such Plan, will
be equal to

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<PAGE>

the sum of: (i) the amount obtained by multiplying .10% by the average daily
net assets represented by the Class A Shares which were originally purchased
prior to June 1, 1992 in the Delchester I class (which was converted into what
is now referred to as the Class A Shares on June 1, 1992 pursuant to a Plan of
Recapitalization approved by shareholders of the Delchester I class), and (ii)
the amount obtained by multiplying .30% by the average daily net assets
represented by all other Class A Shares. While this is the method to be used to
calculate the 12b-1 expenses to be paid by the Class A Shares under its Plan,
the fee is a Class A Shares' expense so that all shareholders of the Class A
Shares, regardless of whether they originally purchased or received shares in
the Delchester I class or in one of the other classes that is now known as Class
A Shares, will bear 12b-1 expenses at the same rate. While this describes the
current formula for calculating the fees which will be payable under the Class A
Shares' Plan, such Plan permits a full .30% on all Class A Shares' assets to be
paid at any time following appropriate Board approval. See Shares.

The Fund's Plans do not apply to the Delchester Fund Institutional Class of
shares. Those shares are not included in calculating the Plans' fees, and the
Plans are not used to assist in the distribution and marketing of Delchester
Fund Institutional Class shares.

While payments pursuant to the Plans may not exceed .30% annually with
respect to the Class A Shares, and 1% annually with respect to each of the Class
B Shares and the 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 monthly fees paid to the Distributor are subject to the
review and approval of the Fund's unaffiliated directors, who may reduce the
fees or terminate the Plans at any time.

The Distributor and the Transfer Agent are also indirect, wholly-owned
subsidiaries of DMH.

EXPENSES

The Fund is responsible for all of its own expenses other than those borne
by the Manager under the Investment Management Agreement and those borne by the
Distributor under

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<PAGE>

the Distribution Agreement. The ratios of expenses to average daily net assets
were 1.09% and 1.82% for the Class A Shares and the Class B Shares,
respectively, for the fiscal year ended July 31, 1995. The Fund anticipates
that the expense ratio for Class C Shares will be identical to the expense ratio
for Class B Shares. The expense ratio of each Class reflects the impact of its
12b-1 Plan.

The Fund is an open-end management investment company and its portfolio of
assets is diversified as defined by the 1940 Act. Commonly known as a mutual
fund, the Fund was organized as a Maryland corporation on March 4, 1983. The
Fund was previously organized as a Delaware corporation in 1970.

Fund shares have a par value of $1.00, equal voting rights, except as noted
below, and are equal in all other respects. All Fund shares have noncumulative
voting rights which means that the holders of more than 50% of the Fund's shares
voting for the election of directors can elect 100% of the directors if they
choose to do so. Under Maryland law, the Fund is not required, and does not
intend, to hold annual meetings of shareholders unless, under certain
circumstances, it is required to do so under the 1940 Act. Shareholders of 10%
or more of the Fund's shares may request that a special meeting be called to
consider the removal of a director.

In addition to Class A Shares, Class B Shares and Class C Shares, the Fund
also offers the Delchester Fund Institutional Class shares. Shares of each
class represent proportionate interests in the assets of the Fund and have the
same voting and other rights and preferences as the other classes of the Fund,
except that shares of the Delchester Fund Institutional Class are not subject
to, and may not vote on matters affecting, the Distribution Plans under Rule
12b-1 relating to the Class A, Class B and Class C Shares. Similarly, as a
general matter, the shareholders of Class A Shares, Class B Shares and Class C
Shares may vote only on matters affecting the 12b-1 Plan that relates to the
class of shares that they hold. However, the Class B Shares may vote on any
proposal to increase materially the fees to be paid by the Fund under the Rule
12b-1 Plan relating to the Class A Shares.

-65-
<PAGE>

recapitalization on May 8, 1992, shareholders of the Delchester I class had
their shares converted into shares of the Delchester II class and became subject
to the latter class' Rule 12b-1 charges. Effective at the same time, following
approval by shareholders, the name of the Delchester II class was changed to the
Delchester Fund class. Prior to May 2, 1994, the Delchester Fund Institutional
Class was known as Delchester Fund (Institutional) class and Delchester Fund A
Class was known as the Delchester Fund class.

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<PAGE>

APPENDIX B -- RATINGS

The Fund's assets are invested primarily in bonds rated BBB or lower by S&P
or Baa or lower by Moody's and in unrated corporate bonds. These credit ratings
evaluate only the safety of principal and interest and do not consider the
market value risk associated with high-yield securities. The table set forth
below shows the percentage of the Fund's securities included in each of the
specified rating categories and shows the percentage of the Fund's assets held
in United States Government securities. Certain securities may not be rated
because the rating agencies were either not asked to provide ratings (e.g., many
issuers of privately placed bonds do not seek ratings) or because the rating
agencies declined to provide a rating for some reason, such as insufficient
data. The table below shows the percentage of the Fund's securities which are
not rated. The information contained in the table was prepared based on a
dollar weighted average of the Fund's portfolio composition based on month end
data for the Fund's fiscal year ended July 31, 1995. The paragraphs following
the table contain excerpts from Moody's and S&P's rating descriptions.

<TABLE>
<CAPTION>
Rating Moody's Average Weighted
and/or Percentage of
S&P Portfolio
- -------------------------------- -------------------

<S> <C>
United States Treasury Obligations 4.33%
Aaa/AAA 4.42%
Aa/AA 0.00%
A/A 0.00%
Baa/BBB 0.00%
Ba/BB 33.25%
B/B 45.64%
Caa/CCC 4.41%
Not Rated/Other 7.95%
</TABLE>

General Rating Information

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

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<PAGE>

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.

COMMERCIAL PAPER

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.

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.

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<PAGE>

APPENDIX A
ILLUSTRATIONS OF THE POTENTIAL IMPACT ON INVESTMENT BASED ON PURCHASE OPTION
$10,000 PURCHASE

<TABLE>
<CAPTION>
Scenario 1 Scenario 2 Scenario 3 Scenario 4
No Redemption Redeem 1st Year Redeem 3rd Year Redeem 5th Year
--------------------------- --------------------- ---------------------- ----------------------
Year Class A Class B Class C Class A Class B Class C Class A Class B Class C Class A Class B Class C
- ---- ------- -------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 9,525 10,000 10,000 9,525 10,000 10,000 9,525 10,000 10,000 9,525 10,000 10,000
1 10,192 10,630 10,630 10,192 10,230 10,530+ 10,192 10,630 10,630 10,192 10,630 10,630
2 10,905 11,300 11,300 10,905 11,300 11,300 10,905 11,300 11,300
3 11,669 12,012 12,012 11,669 11,712 12,012+ 11,669 12,012 12,012
4 12,485 12,768 12,768 12,485 12,768 12,768
5 13,359 13,573 13,573 13,359 13,373 13,573+
6 14,294 14,428 14,428
7 15,295 15,337 15,337
8 16,366+ 16,303 16,303
9 17,511 17,444* 17,330
10 18,737 18,665* 18,422
</TABLE>

*This assumes that Class B Shares were converted to Class A shares at the
end of the eighth year.

$250,000 PURCHASE

<TABLE>
<CAPTION>
Scenario 1 Scenario 2 Scenario 3 Scenario 4
No Redemption Redeem 1st Year Redeem 3rd Year Redeem 5th Year
---------------------------- ---------------------- ---------------------- ------------------------
Year Class A Class B Class C Class A Class B Class C Class A Class B Class C Class A Class B Class C
- ---- -------- -------- ------- ------- ------- ------- ------- ------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 243,750 250,000 250,000 243,750 250,000 250,000 243,750 250,000 250,000 243,750 250,000 250,000
1 260,813 265,750 265,750 260,813 255,750 263,250+ 260,813 265,750 265,750 260,813 265,750 265,750
2 279,069 282,492 282,492 279,069 282,492 282,492 279,069 282,492 282,492
3 298,604 300,289 300,289 298,604 292,789 300,289+ 298,604 300,289 300,289
4 319,507+ 319,207 319,207 319,507+ 319,207 319,207
5 341,872 339,318 339,318 341,872 334,318 339,318
6 365,803 360,695 360,695
7 391,409 383,418 383,418
8 418,808 407,574 407,574
9 448,124 436,104* 433,251
10 479,493 466,631* 460,546
</TABLE>

*This assumes that Class B Shares were converted to Class A shares at the
end of the eighth year.

Assumes a hypothetical return for Class A of 7% per year, a hypothetical return
for Class B of 6.3% for years 1-8 and 7% for years 9-10, and a hypothetical
return for Class C of 6.3% per year. Hypothetical returns vary due to the
different expense structure for each Class and do not represent actual
performance.
Class A purchase subject to appropriate sales charge breakpoint (4.75% @
$10,000; 3.75% @ $100,000; 2.50% @ $250,000).
Class B purchase assessed appropriate CDSC upon redemption (4%-4%-3%-3%-2%-1% in
years 1-2-3-4-5-6).
Class C purchase assessed 1% CDSC upon redemption in year 1.
Figures marked "+" identify which class offers the greater return potential
based on investment amount and holding period.
<PAGE>

- ---------------------------------

DELCHESTER FUND

- ---------------------------------

INSTITUTIONAL

- ---------------------------------

P R O S P E C T U S

- ---------------------------------

NOVEMBER 29, 1995

DELAWARE
GROUP
--------
<PAGE>

For more information contact the Delaware Group at 800-828-5052.

INVESTMENT MANAGER
Delaware Management Company, Inc.
One Commerce Square
Philadelphia, PA 19103

NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young
One Commerce Square
Philadelphia, PA 19103
INDEPENDENT AUDITORS
Ernst & Young LLP
Two Commerce Square
Philadelphia, PA 19103
CUSTODIAN
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, NY 10260
<PAGE>

DELCHESTER FUND INSTITUTIONAL PROSPECTUS

NOVEMBER 29, 1995

---------------------------------------------------

1818 MARKET STREET, PHILADELPHIA, PA 19103

FOR MORE INFORMATION ABOUT
THE DELCHESTER FUND INSTITUTIONAL CLASS
CALL THE DELAWARE GROUP AT 800-828-5052.

This Prospectus describes the Delchester Fund Institutional Class (the
"Class") of shares of Delaware Group Delchester High-Yield Bond Fund, Inc. (the
"Fund"). The Fund's objective is to seek as high a current income as is
consistent with providing reasonable safety.

This Fund invests up to 100% of its assets in lower rated fixed income
securities, commonly known as "junk bonds," which involve greater risks,
including default risks, than higher rated fixed income securities. Purchasers
should carefully assess these risks before investing in this Fund. See
Investment Objective and Policies, Risk Factors, and Appendix A-Ratings.
- ----------------------------------------------- ------------------

Shares of this Class are available for purchase only by certain enumerated
investors and are offered at net asset value without the imposition of a front-
end or contingent deferred sales charge and without a 12b-1 charge. See Buying
Shares.

This Prospectus relates only to the Class and sets forth information that
you should read and consider before you invest. Please retain it for future
reference. Part B of the Fund's registration statement, dated November 29,
1995, as it may be amended from time to time, contains additional information
about the Fund and has been filed with the Securities and Exchange Commission.
Part B is incorporated by reference into this Prospectus and is available,
without charge, by writing to Delaware Distributors, L.P. at the above address
or by calling the above number. The Fund's financial statements appear in its
Annual Report, which will accompany any response to requests for Part B.

The Fund also offers Delchester Fund A Class, Delchester Fund B Class and
Delchester Fund C Class. Shares of Delchester Fund A Class carry a front-end
sales charge and are subject to ongoing distribution expenses. Shares of these
classes are subject to sales charges and other expenses, which may affect their
performance. A prospectus for these classes can be obtained by writing to
Delaware Distributors, L.P. at the above address or by calling 800-523-4640 (in
Philadelphia, 215-988-1333).

-1-
<PAGE>

TABLE OF CONTENTS

<TABLE>

<S> <C>
COVER PAGE BUYING SHARES
SYNOPSIS REDEMPTION AND EXCHANGE
SUMMARY OF EXPENSES DIVIDENDS AND DISTRIBUTIONS
FINANCIAL HIGHLIGHTS TAXES
INVESTMENT OBJECTIVE CALCULATION OF NET ASSET
AND POLICIES VALUE PER SHARE
INVESTMENT STRATEGY MANAGEMENT OF THE FUND
SUITABILITY APPENDIX A - RATINGS
RISK FACTORS
YOUTH AND VOLATILITY OF
THE HIGH-YIELD MARKET
REDEMPTIONS
LIQUIDITY AND VALUATION
LEGISLATIVE AND REGULATORY
ACTION AND PROPOSALS
ZERO COUPON BONDS AND
PAY-IN-KIND BONDS
</TABLE>

-2-
<PAGE>

SYNOPSIS

CAPITALIZATION

The Fund offers the Delchester Fund Institutional Class, the Delchester
Fund A Class, the Delchester Fund B Class and the Delchester Fund C Class. The
Fund has a present authorized capitalization of five hundred million shares of
capital stock, with a $1.00 par value per share. Fifty million shares of that
stock have been allocated to the Delchester Fund Institutional Class, three
hundred fifty million shares to the Delchester Fund A Class, fifty million
shares to the Delchester Fund B Class and fifty million shares to the Delchester
Fund C Class. See Shares under Management of the Fund.

INVESTMENT MANAGER, DISTRIBUTOR AND SERVICE AGENT

PURCHASE PRICE

Shares of the Class offered by this Prospectus are available at net asset
value, without a front-end or contingent deferred sales charge, and are not
subject to distribution fees under a Rule 12b-1 distribution plan. See Buying
Shares.

INVESTMENT OBJECTIVE AND RISK FACTORS

The objective of the Fund is to seek as high a current income as is
consistent with providing reasonable safety by investing principally in
corporate bonds, and also in U.S. Government securities and commercial paper.
For further details, see Investment Objective and Policies. This Fund invests
primarily in high-yield securities (junk bonds) and greater risks may be
involved with an investment in the Fund than an investment in a mutual fund
comprised primarily of investment grade bonds. See Risk Factors.

OPEN-END INVESTMENT COMPANY

-3-
<PAGE>

INVESTMENT MANAGEMENT FEES

The Manager furnishes investment management services to the Fund, subject
to the supervision and direction of the Board of Directors. Under the
Investment Management Agreement, the annual compensation paid to the Manager is
equal to .60% on the first $500 million of average daily net assets, .575% on
the next $250 million and .55% on the average daily net assets in excess of $750
million, less a proportionate share of all directors' fees paid to the
unaffiliated directors by the Fund. See Management of the Fund.

REDEMPTION AND EXCHANGE

Shares of the Class are redeemed or exchanged at the net asset value
calculated after receipt of the redemption or exchange request. See Redemption
and Exchange.

-4-
<PAGE>

SUMMARY OF EXPENSES

<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
- -------------------------------------------------------------
<S> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price). . . . . None
Maximum Sales Charge Imposed on
Reinvested Dividends (as a
percentage of offering price). . . . . . . . None
Redemption Fees . . . . . . . . . . . . . . . . . None*
Exchange Fees . . . . . . . . . . . . . . . . . . None**
</TABLE>

<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF
AVERAGE DAILY NET ASSETS)
- -------------------------------------------------------------
<S> <C>
Management Fees . . . . . . . . . . . . . . . . . 0.58%
12b-1 Fees. . . . . . . . . . . . . . . . . . . . None
Other Operating Expenses. . . . . . . . . . . . . 0.24%
-----
Total Operating Expenses . . . . . . . . . . 0.82%
=====
</TABLE>

The purpose of this table is to assist the investor in understanding the
various costs and expenses that an investor in the Class will bear directly or
indirectly.

*CoreStates Bank, N.A. currently charges $7.50 per redemption for redemptions
payable by wire.

**Exchanges are subject to the requirements of each fund and a front-end sales
charge may apply. See Delchester Fund A Class, Delchester Fund B Class and
Delchester Fund C Class for expense information about those classes.

The following example illustrates the expenses that an investor would pay
on a $1,000 investment over various time periods, assuming (1) a 5% annual rate
of return and (2) redemption at the end of each time period. As noted in the
table above, the Fund charges no redemption fees.

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$8 $26 $46 $101
</TABLE>

THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.

-5-
<PAGE>

- -------------------------------------------------------------

FINANCIAL HIGHLIGHTS

The following financial highlights are derived from the financial statements of
Delaware Group Delchester High-Yield Bond Fund, Inc. and have been audited by
Ernst & Young LLP, independent auditors. The data should be read in conjunction
with the financial statements, related notes, and the report of Ernst & Young
LLP covering such financial information and highlights, all of which are
incorporated by reference into Part B. Further information about the Fund's
performance is contained in its Annual Report to shareholders. A copy of the
Fund's Annual Report (including the report of Ernst & Young LLP) may be obtained
from the Fund upon request at no charge.
- -------------------------------------------------------------

-6-
<PAGE>

<TABLE>
<CAPTION>
YEAR ENDED
7/31/95 7/31/94 7/31/93 7/31/92(1)(2) 7/31/91(1)
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period . . . . . . $6.450 $7.070 $6.900 $6.260 $6.300

INCOME FROM IN-
- ---------------
VESTMENT OPERATIONS
- -------------------

Net Investment
Income . . . . . . 0.685 0.758 0.787 0.798 0.822

Net Gains or Losses
on Securities (both
realized and
unrealized). . . . (0.169) (0.617) 0.165 0.640 (0.040)
------- ------- ----- ----- -------

Total From
Investment
Operations. . . 0.516 0.141 0.952 1.438 0.782
----- ----- ----- ----- -----

LESS DISTRIBUTIONS
- ------------------

Dividends (from
net investment
income). . . . . . (0.686) (0.761) (0.782) (0.798) (0.822)

Distributions
(from capital
gains) . . . . . . none none none none none

Returns of
Capital none none none none none
---- ---- ---- ---- ----

Total Distri-
butions . . . . (0.686) (0.761) (0.782) (0.798) (0.822)
------- ------- ------- ------- -------

Net Asset Value,
End of Period. . . $6.280 $6.450 $7.070 $6.900 $6.260
====== ====== ====== ====== ======
- -------------------------------------------------------------

TOTAL RETURN . . . 8.72% 1.82% 14.67% 24.28% 14.85%
- ------------
- -------------------------------------------------------------

RATIOS/SUPPLEMENTAL
- -------------------
DATA
- ----

Net Assets, End
of Period (000's
omitted) . . . . . $61,742 $71,122 $35,909 $18,746 $113,414

Ratio of Expenses
to Average Daily
Net Assets . . . . 0.82% 0.83% 0.86% 0.86% 0.90%

Ratio of Net
Investment Income
to Average Daily
Net Assets . . . . 11.14% 10.70% 11.35% 12.17% 14.45%

Portfolio Turnover
Rate . . . . . . . 92% 92% 72% 101% 38%
</TABLE>

-7-
<PAGE>

<TABLE>
<CAPTION>
YEAR ENDED
7/31/90(1) 7/31/89(1) 7/31/88(1) 7/31/87(1) 7/31/86(1)

<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period . . . . . . $7.480 $7.750 $7.940 $8.070 $7.610

INCOME FROM IN-
- ---------------
VESTMENT OPERATIONS
- -------------------

Net Investment
Income . . . . . . 0.900 0.934 0.946 0.973 0.976

Net Gains or Losses
on Securities (both
realized and
unrealized). . . . (1.180) (0.270) (0.188) (0.129) 0.514
------- ------- ------- ------- -----

Total From
Investment
Operations. . . (0.280) 0.664 0.758 0.844 1.490
------- ----- ----- ----- -----

LESS DISTRIBUTIONS
- ------------------

Dividends (from
net investment
income). . . . . . (0.900) (0.934) (0.948) (0.974) (1.030)

Distributions
(from capital
gains) . . . . . . none none none none none

Returns of
Capital none none none none none
---- ---- ---- ---- ----

Total Distri-
butions . . . . (0.900) (0.934) (0.948) (0.974) (1.030)

------- ------- ------- ------- -------

Net Asset Value,
End of Period..... $ 6.300 $ 7.480 $ 7.750 $ 7.940 $ 8.070
======= ======= ======= ======= =======
- -------------------------------------------------------
TOTAL RETURN . . . (3.58%) 9.10% 10.37% 10.84% 20.73%
- ------------
- -------------------------------------------------------

RATIOS/SUPPLEMENTAL
- -------------------
DATA
- ----

Net Assets, End
of Period (000's
omitted) . . . . . $96,161 $84,800 $37,639 --- ---

Ratio of Expenses
to Average Daily
Net Assets . . . . 0.85% 0.85% 0.87% 0.93% 0.84%

Ratio of Net
Investment Income
to Average Daily
Net Assets . . . . 13.47% 12.30% 12.18% 11.59% 12.67%

Portfolio Turnover
Rate . . . . . . . 72% 66% 139% 149% 137%
</TABLE>

-8-
<PAGE>

- ---------------------------------------
(1) The financial highlights for the period prior to June 1, 1992 (the date
Delchester Fund Institutional Class was first offered for public sale) are
derived from data of the Delchester I class, which like the Delchester Fund
Institutional Class, was not subject to Rule 12b-1 distribution expenses.
Shares of Delchester I class were converted into shares of Delchester II
class (now referred to as Delchester Fund A Class) on June 1, 1992,
pursuant to a Plan of Recapitalization approved by shareholders of
Delchester I class. Prior to May 2, 1994, Delchester Fund A Class was
known as Delchester Fund class and Delchester Fund Institutional Class was
known as Delchester Fund (Institutional) class.

(2) The data for Delchester I class and Delchester Fund Institutional Class
have been combined for 1992. For the ten months ended May 31 1992, the
Delchester I class' operating expenses and net investment income per share
were $0.047 and $0.666, respectively. For the two months ended July 31,
1992, the Delchester Fund Institutional Class' operating expenses and net
investment income per share were $0.009 and $0.132, respectively. All net
investment income was distributed to shareholders.

-9-
<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

INVESTMENT STRATEGY

(1) Corporate Bonds. The Fund will invest in both rated and unrated
bonds. Unrated bonds may be more speculative in nature than rated bonds; or

(2) Government Securities. Securities of, or guaranteed by, the U.S.
Government, its agencies or instrumentalities; or

(3) Commercial Paper. Commercial paper of companies having, at the time
of purchase, an issue of outstanding debt securities rated as described above or
commercial paper rated A-1 or A-2 by Standard & Poor's Rating Group ("S&P") or
rated P-1 or P-2 by Moody's Investors Service, Inc. ("Moody's").

The market values of fixed income securities generally fall when interest
rates rise and, conversely, rise when interest rates fall. Lower-rated and
unrated fixed income securities tend to reflect short-term corporate and market
developments to a greater extent than higher-rated fixed income securities,
which react primarily to fluctuations in the general level of interest rates.
These lower-rated or unrated securities generally have higher yields, but, as a
result of factors such as reduced creditworthiness of issuers, increased risk of
default and a more limited and less liquid secondary market, are subject to
greater volatility and risk of loss of income and principal than are higher-
rated securities. The Manager will attempt to reduce such risk through portfolio
diversification, credit analysis, and attention to trends in the economy,
industries and financial markets.

For temporary defensive purposes, the Fund may hold a substantial portion
of its assets in cash or short-term

-10-
<PAGE>

obligations. While the Fund is permitted, it normally does not borrow money or
invest in repurchase agreements, except to invest cash balances.

RULE 144A SECURITIES

While maintaining oversight, the Board of Directors has delegated to the
Manager the day-to-day function of determining whether or not individual Rule
144A Securities are liquid for purposes of the Fund's 10% limitation on
investments in illiquid assets. 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; (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).

PORTFOLIO LOAN TRANSACTIONS

The Fund may loan up to 25% of its assets to qualified broker/dealers or
institutional investors.

-11-
<PAGE>

to overall supervision by 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.

SUITABILITY

The Fund may be suitable for the investor interested in high current income
flow. The types of securities in which the Fund invests are subject to price
fluctuations particularly due to changes in interest rates. Investors should
consider asset value fluctuation, as well as yield, in making an investment
decision. Also, while investments in unrated, lower-rated and restricted
securities have the potential for higher yields, they are more speculative and
increase the portfolio's credit risk. Changes in the market value of portfolio
securities will not affect interest income from such securities, but will be
reflected in the Fund's net asset value. Investors should be willing to accept
the risks, including the risk of net asset value fluctuations, associated with
investing in these securities.

The Fund's objective of high current income also may be suited for longer-
term investments, such as tax-deferred retirement plans, where the income stream
can be left to compound on a tax-deferred basis.

Net asset value may fluctuate in response to the condition of individual
companies and general market and economic conditions and, as a result, the Fund
is not appropriate for a short-term investor.

RISK FACTORS

The Fund's assets may be invested primarily in bonds rated BBB or lower by
S&P or Baa or lower by Moody's and in unrated corporate bonds. See Appendix A to
this Prospectus for more rating information. Investing in these so-called "junk"
or "high-yield" bonds entails certain risks, including the risk of loss of
principal, which may be greater than the risks involved in investment grade
bonds, and which should be considered by investors contemplating an investment
in the Fund. Such bonds are sometimes issued by companies whose earnings at the
time of issuance are less than the projected debt service on the junk bonds. In
addition to the considerations discussed elsewhere in this Prospectus, those
risks include the following:

YOUTH AND VOLATILITY OF THE HIGH-YIELD MARKET

-12-
<PAGE>

during the 1980s. During that economic expansion, the use of high-yield debt
securities to fund highly leveraged corporate acquisitions and restructurings
increased dramatically. As a result, the high-yield market grew substantially
during that economic expansion. Although experts disagree on the impact
recessionary periods have had and will have on the high-yield market, some
analysts believe a protracted economic downturn would severely disrupt the
market for high-yield bonds, would adversely affect the value of outstanding
bonds and would adversely affect the ability of high-yield issuers to repay
principal and interest. Those analysts cite volatility experienced in the high-
yield market in the past as evidence for their position. It is likely that
protracted periods of economic uncertainty would result in increased volatility
in the market prices of high-yield bonds, an increase in the number of high-
yield bond defaults and corresponding volatility in the Fund's net asset value.
At times in the past, uncertainty and volatility in the high-yield market
resulted in volatility in the Fund's net asset value.

REDEMPTIONS

LIQUIDITY AND VALUATION

The secondary market for high-yield securities is currently dominated by
institutional investors, including mutual funds, and certain financial
institutions. There is generally no established retail secondary market for
high-yield securities. As a result, the secondary market for high-yield
securities is more limited and less liquid than other secondary securities
markets. The high-yield secondary market is particularly susceptible to
liquidity problems when the institutions that dominate it temporarily cease
buying bonds for regulatory, financial or other reasons, such as the savings and
loan crisis. A less liquid secondary market may have an adverse effect on the
Fund's ability to dispose of particular issues, when necessary, to meet the
Fund's liquidity needs or in response to a specific economic event, such as the
deterioration in the creditworthiness of the issuer. In addition, a less liquid
secondary market makes it more difficult for the Fund to obtain precise
valuations of
-13-
<PAGE>

the high-yield securities in its portfolio. During periods involving such
liquidity problems, judgment plays a greater role in valuing high-yield
securities than is normally the case. The secondary market for high-yield
securities is also generally considered to be more likely to be disrupted by
adverse publicity and investor perceptions than the more established secondary
securities markets. The Fund's privately placed high-yield securities are
particularly susceptible to the liquidity and valuation risks outlined
above.

LEGISLATIVE AND REGULATORY ACTION AND PROPOSALS

ZERO COUPON BONDS AND PAY-IN-KIND BONDS

Although the Fund does not generally purchase a substantial amount of zero
coupon bonds or pay-in-kind (PIK) bonds, from time to time, the Fund may acquire
zero coupon bonds and, to a lesser extent, PIK bonds. Zero coupon bonds and PIK
bonds are generally considered to be more interest-sensitive than income bearing
bonds, to be more speculative than interest-bearing bonds, and to have certain
tax consequences which could, under certain circumstances, be adverse to the
Fund. For example, the Fund accrues, and is required to distribute to
shareholders, income on its zero coupon bonds. However, the Fund may not receive
the cash associated with this income until the bonds are sold or mature. If the
Fund did not have sufficient cash to make the required distribution of accrued
income, the Fund could be required to sell other securities in its portfolio or
to borrow to generate the cash required.

-14-
<PAGE>

BUYING SHARES

The Distributor serves as the national distributor for the Fund. Shares of
the Class may be purchased directly by contacting the Fund or its agent or
through authorized investment dealers. All purchases of shares of the Class are
at net asset value. There is no front-end or contingent deferred sales
charge.

INVESTMENT INSTRUCTIONS GIVEN ON BEHALF OF PARTICIPANTS IN AN EMPLOYER-
SPONSORED RETIREMENT PLAN ARE MADE IN ACCORDANCE WITH DIRECTIONS PROVIDED BY THE
EMPLOYER. EMPLOYEES CONSIDERING PURCHASING SHARES OF THE CLASS AS PART OF THEIR
RETIREMENT PROGRAM SHOULD CONTACT THEIR EMPLOYER FOR DETAILS.

Shares of the Class 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 plans 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, a division 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) banks, trust companies and similar financial institutions
investing for their own account or for the account of their trust customers for
whom such financial institution is exercising investment discretion in
purchasing shares of the Class; 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.

DELCHESTER FUND A CLASS, DELCHESTER FUND B CLASS AND DELCHESTER FUND C CLASS

In addition to offering the Delchester Fund Institutional class, the Fund
also offers the Delchester Fund A Class, the Delchester Fund B Class and the
Delchester Fund C Class, which are described in a separate prospectus relating
only to those classes. Shares of the Delchester Fund A Class, the Delchester
Fund B Class and the Delchester Fund C Class may be purchased through authorized
investment dealers or directly by contacting the Fund or its

-15-
<PAGE>

agent. The Delchester Fund A Class carries a front-end sales charge and has
annual 12b-1 expenses equal to a maximum of .30%. The maximum front-end sales
charge as a percentage of the offering price is 4.75% (which, based on the net
asset value per share of such shares as of the end of the Fund's most recent
fiscal year, is equivalent to 0.00% as a percentage of the amount invested) and
is reduced on certain transactions of $100,000 or more. The Delchester Fund B
Class and the Delchester Fund C Class have no front-end sales charge but are
subject to annual 12b-1 expenses equal to a maximum of 1%. Shares of the
Delchester Fund B Class and the Delchester Fund C Class and certain shares of
the Delchester Fund A Class may be subject to a contingent deferred sales charge
upon redemption. To obtain a prospectus relating to the Delchester Fund A Class,
the Delchester Fund B Class and the Delchester Fund C Class, contact the
Distributor by writing to the address on the cover of this Prospectus or by
calling 800-523-4640 (in Philadelphia, 215-988-1333).

HOW TO BUY SHARES

The Fund makes it easy to invest by mail, by wire, by exchange and by
arrangement with your investment dealer. In all instances, investors must
qualify to purchase shares of the Class.

INVESTING DIRECTLY BY MAIL

1. Initial Purchases--An Investment Application or, in the case of a
retirement account, an appropriate retirement plan application, must be
completed, signed and sent with a check payable to Delchester Fund Institutional
Class, at 1818 Market Street, Philadelphia, PA 19103.

2. Subsequent Purchases--Additional purchases may be made at any time by
mailing a check payable to Delchester Fund Institutional Class. Your check
should be identified with your name(s) and account number.

INVESTING DIRECTLY BY WIRE

1. Initial Purchases--Before you invest, telephone the Fund's Client Services
Department at 800-828-5052 to get an account number. If you do not call first,
it may delay processing your investment. In addition, you must promptly

-16-
<PAGE>

send your Investment Application or, in the case of a retirement account, an
appropriate retirement plan application, to Delchester Fund Institutional Class,
1818 Market Street, Philadelphia, PA 19103.

2. Subsequent Purchases--You may make additional investments anytime by
wiring funds to CoreStates Bank, N.A., as described above. You must advise your
Client Services Representative by telephone at 800-828-5052 prior to sending
your wire.

INVESTING BY EXCHANGE

If you have an investment in another mutual fund in the Delaware Group and
you qualify to purchase shares of the Class, you may write and authorize an
exchange of part or all of your investment into the Class. However, shares of
the Delchester Fund B Class and Delchester Fund C Class and the Class B Shares
and the Class C Shares of the other funds in the Delaware Group offering such a
class of shares may not be exchanged into the Class. If you wish to open an
account by exchange, call your Client Services Representative at 800-828-5052
for more information.

INVESTING THROUGH YOUR INVESTMENT DEALER

You can make a purchase of Class shares through most investment dealers
who, as part of the service they provide, must promptly transmit orders to the
Fund. They may charge for this service.

PURCHASE PRICE AND EFFECTIVE DATE

The purchase price (net asset value) is determined 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 effective date of a purchase made through an investment dealer is the
date the order is received by the Fund. The effective date of a direct purchase
is the day your wire, electronic transfer or check is received unless it is
received after the time the share price is determined, as noted above. Purchase
orders received after such time will be effective the next business day.

THE CONDITIONS OF YOUR PURCHASE

-17-
<PAGE>

The 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.

The Fund also reserves the right, upon 60 days' written notice, to redeem
accounts that remain under $250 as a result of redemptions.

-18-
<PAGE>

REDEMPTION AND EXCHANGE

REDEMPTION AND EXCHANGE REQUESTS MADE ON BEHALF OF PARTICIPANTS IN AN
EMPLOYER-SPONSORED RETIREMENT PLAN ARE MADE IN ACCORDANCE WITH DIRECTIONS
PROVIDED BY THE EMPLOYER. EMPLOYEES SHOULD THEREFORE CONTACT THEIR EMPLOYER FOR
DETAILS.

Your shares will be redeemed or exchanged based at a price based on the net
asset value next determined after we receive your request in good order.
Redemption and exchange requests received in good order after the time the net
asset value of shares is determined, as noted above, will be processed on the
next business day. See Purchase Price and Effective Date under Buying Shares.
Except as otherwise 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 you want to receive the proceeds. Exchange
instructions and redemption requests must be signed by the record owner(s)
exactly as the shares are registered. You may also request a redemption or an
exchange by calling the Fund at 800-828-5052.

The Fund will honor written redemption requests of shareholders who
recently purchased Class shares by check but will not mail the proceeds until it
is reasonably satisfied that the purchase check has cleared, which may take up
to 15 days from the purchase date. The Fund will not honor telephone redemptions
for shares recently purchased by check unless it is reasonably satisfied that
the purchase check has cleared. You can avoid this potential delay if you
purchase shares by wiring Federal Funds. The 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.

Shares of the Class may be exchanged into any other Delaware Group mutual
fund provided: (1) the investment satisfies the eligibility and other
requirements set forth in the prospectus of the fund being acquired, including
the payment of any applicable front-end sales charge; and (2) the shares of the
fund being acquired are in a state where that fund is registered. If exchanges
are made into other shares that are eligible for purchase only by those
permitted to purchase shares of the Class, such exchange will be exchanged at
net asset value. Shares of the Class may not be exchanged into the Class B
Shares or the Class C Shares of any of the funds in the Delaware Group. The Fund
may suspend, terminate, or amend the terms of the exchange privilege upon 60
days' written notice to shareholders.

-19-
<PAGE>

Various redemption and exchange methods are outlined below. No fee is
charged by the Fund or the Distributor for redeeming or exchanging your shares.
You may also have your investment dealer arrange to have your shares redeemed or
exchanged. Your investment dealer may charge for this service.

All authorizations given by shareholders, including selection of any of the
features described below, shall continue in effect until such time as a written
revocation or modification has been received by the Fund or its agent.

WRITTEN REDEMPTION AND EXCHANGE

You can write to the Fund at 1818 Market Street, Philadelphia, PA 19103 to
redeem some or all of your shares or to request an exchange of any or all of
your shares into another mutual fund in the Delaware Group, subject to the same
conditions and limitations as other exchanges noted above. 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 Fund requires a signature by
all owners of the account and may require a signature guarantee. Each signature
guarantee must be supplied by an eligible guarantor institution. The Fund
reserves the right to reject a signature guarantee supplied by an eligible
institution based on its creditworthiness. The Fund may require further
documentation from corporations, executors, retirement plans, administrators,
trustees or guardians.

Payment is normally mailed the next business day, but no later than seven
days, after receipt of your redemption request. The Fund issues certificates for
Class shares only if you submit a specific request. If your shares are in
certificate form, the certificate must accompany your request and also be in
good order.

Shareholders also may submit their written requests for redemption or
exchange by facsimile transmission at the following number: 215-972-8864.

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

-20-
<PAGE>

your shares in certificate form, you may only redeem or exchange 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 writing that you do not wish to have such
service available with respect to your account. The 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 Fund by telephone during periods
when market or economic conditions lead to an unusually large volume of
telephone requests.

Neither the Fund nor the Transfer Agent is responsible for any shareholder
loss incurred in acting upon written or telephone instructions for redemption or
exchange of Class shares which are reasonably believed to be genuine. With
respect to such telephone transactions, the 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, the Fund or the Transfer Agent may be liable for any losses due to
unauthorized or fraudulent transactions. 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

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, but no later than seven days, after receipt of the request.

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, the Fund requires a written authorization and may require that you 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. CoreStates Bank, N.A.'s fee (currently $7.50) will be deducted from your
redemption. If you ask for a check, it

-21-
<PAGE>

will normally be mailed the next business day, but no later than seven days,
after receipt of your request to your predesignated bank account. There are no
fees for this redemption method, but the mail time may delay getting funds into
your bank account. Simply call your Client Services Representative prior to the
time the net asset value is determined, as noted above.

TELEPHONE EXCHANGE

You or your investment dealer of record can exchange shares into any fund
in the Delaware Group under the same registration. As with the written exchange
service, telephone exchanges are subject to the same conditions and limitations
as other exchanges noted above. Telephone exchanges may be subject to
limitations as to amounts or frequency.

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<PAGE>

DIVIDENDS AND DISTRIBUTIONS

The Fund declares a dividend to all shareholders of record at the time the
net asset value per share is determined. See Purchase Price and Effective Date
under Buying Shares. Thus, when redeeming shares, dividends continue to be
credited up to and including the date of redemption.

Purchases of Class shares by wire begin earning dividends when converted
into Federal Funds and available for investment, normally the next business day
after receipt. However, if the Fund is given prior notice of a Federal Funds
wire and an acceptable written guarantee of timely receipt from an investor
satisfying the Fund's credit policies, the purchase will start earning dividends
on the date the wire is received. Purchases by check earn dividends upon
conversion to Federal Funds, normally one business day after receipt.

Each class of the Fund will share proportionately in the investment income
and expenses of the Fund, except that the Class will not incur distribution fees
under the Rule 12b-1 Plans which apply to the Delchester Fund A Class, the
Delchester Fund B Class and the Delchester Fund C Class.

The Fund's dividends are declared daily and paid monthly on the first
business day following the end of the month. Dividends and distributions, if
any, will be automatically reinvested in a shareholder's account at net asset
value. Distributions from net realized securities profits, if any, will be
distributed twice a year. The first payment normally would be made during the
first quarter of the next fiscal year. The second payment would be made near the
end of the calendar year to comply with certain requirements of the Internal
Revenue Code. During the fiscal year ended July 31, 1995, dividends totaling
$0.686 per share of the Class were paid from net investment income.

-23-
<PAGE>

TAXES

Distributions paid by the Fund from long-term capital gains, received in
additional shares, are taxable to those investors who are subject to income
taxes as long-term capital gains, regardless of the length of time an investor
has owned shares in the Fund. The Fund does not seek to realize any particular
amount of capital gains during a year; rather, realized gains are a byproduct of
Fund management activities. Consequently, capital gains distributions may be
expected to vary considerably from year to year. Also, for those investors
subject to tax, if purchases of shares in the Fund are made shortly before the
record date for a dividend or capital gains distribution, a portion of the
investment will be returned as a taxable distribution.

In addition to federal taxes, shareholders may be subject to state and
local taxes on distributions. Distributions of interest income and capital gains
realized

-24-
<PAGE>

from certain types of U.S. Government securities may be exempt from state
personal income taxes. Shares of the Fund are exempt from Pennsylvania county
personal property taxes.

The tax discussion set forth above is included for general information
only. Investors should consult their own tax advisers concerning the federal,
state, local or foreign tax consequences of an investment in the Fund.

See Taxes in Part B for additional information on tax matters relating to
the Fund and its shareholders.

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<PAGE>

CALCULATION OF NET ASSET VALUE PER SHARE

The purchase and redemption price of the Class is the net asset value
("NAV") per share of the Class next computed after the order is received. The
NAV is computed as of the close of regular trading on the New York Stock
Exchange (ordinarily, 4 p.m., Eastern time) on days when such exchange is
open.

The NAV is computed by adding the value of all securities and other assets
in the portfolio, deducting any liabilities (expenses and fees are accrued
daily) and dividing by the number of shares outstanding. Debt securities are
priced at fair value by an independent pricing service using methods approved by
the Fund's Board of Directors. Short-term investments having a maturity of less
than 60 days are valued at amortized cost, which approximates market value. All
other securities are valued at their fair value as determined in good faith and
in a method approved by the Fund's Board of Directors.

Each of the Fund's four classes will bear, pro-rata, all of the common
expenses of the Fund. The net asset values of all outstanding shares of each
class of the Fund will be computed on a pro-rata basis for each outstanding
share based on the proportionate participation in the Fund represented by the
value of shares of that class. All income earned and expenses incurred by the
Fund will be borne on a pro-rata basis by each outstanding share of a class,
based on each class' percentage in the Fund represented by the value of shares
of such classes, except that the Class will not incur any of the expenses under
the Fund's 12b-1 Plans and Delchester Fund A, B and C Classes alone will bear
the 12b-1 Plan fees payable under their respective Plans. Due to the specific
distribution expenses and other costs that will be allocable to each class, the
dividends paid to each class of the Fund may vary. However, the NAV per share of
each class is expected to be equivalent.

-26-
<PAGE>

MANAGEMENT OF THE FUND

DIRECTORS

The business and affairs of the Fund are managed under the direction of its
Board of Directors. Part B contains additional information regarding the Fund's
directors and officers.

INVESTMENT MANAGER

The Manager furnishes investment management services to the Fund.

The Manager is an indirect, wholly-owned subsidiary 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 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. In connection with the merger, a new Investment Management Agreement
between the Fund and the Manager was executed following shareholder
approval.

-27-
<PAGE>

Mr. Raith is a 1973 graduate of Holy Cross University and received his MBA
in Finance from Tulane University in 1975. Before joining the Delaware Group in
1987, he held portfolio management positions in both fixed income and equity
management, including managing life insurance reserves at ICH Corporation and
managing high-yield pension assets for Firestone Tire and Rubber. Prior to being
named co-manager of the Fund, Mr. Raith managed separate accounts for the
Delaware Group's institutional clients using a similar strategy employed in
managing the Fund.

PORTFOLIO TRADING PRACTICES

The Fund normally will not invest for short-term trading purposes. However,
the Fund may sell securities without regard to the length of time they have been
held. The degree of portfolio activity will affect brokerage costs of the Fund
and may affect taxes payable by the Fund's shareholders. Given the Fund's
investment objective, its annual portfolio turnover rate is not expected to
exceed 150%. A turnover rate of 100% would occur if all the investments in the
Fund's portfolio at the beginning of the year were replaced by the end of the
year. During the past two fiscal years, the Fund's portfolio turnover rate was
92% for each of 1994 and 1995.

The Fund uses its best efforts to obtain the best available price and most
favorable execution for portfolio transactions. Orders may be placed with
brokers or dealers who provide brokerage and research services to the Manager or
its advisory clients. These services may be used by the

-28-
<PAGE>

Manager in servicing any of its accounts. Subject to best price and execution,
the Fund may consider a broker/dealer's sales of its shares in placing portfolio
orders and may place orders with broker/dealers that have agreed to defray
certain Fund expenses such as custodian fees.

PERFORMANCE INFORMATION

From time to time, the Fund may quote yield or total return performance of
the Class in advertising and other types of literature.

The current yield for the Class will be calculated by dividing the
annualized net investment income earned by the Class during a recent 30-day
period by the net asset value per share on the last day of the period. The yield
formula provides for semi-annual compounding, which assumes that net investment
income is earned and reinvested at a constant rate and annualized at the end of
a six-month period.

Total return will be based on a hypothetical $1,000 investment, reflecting
the reinvestment of all distributions. Each presentation will include the
average annual total return for one-, five- and ten-year periods. The Fund may
also advertise aggregate and average total return information concerning the
Class over additional periods of time.

Yield and net asset value fluctuate and are not guaranteed. Past
performance is not an indication of future results.

STATEMENTS AND CONFIRMATIONS

You will receive quarterly statements of your account summarizing all
transactions during the period. A confirmation statement will be sent following
all transactions other than those involving a reinvestment of distributions. You
should examine statements and confirmations immediately and promptly report any
discrepancy by calling your Client Services Representative.

FINANCIAL INFORMATION ABOUT THE FUND

DISTRIBUTION AND SERVICE

-29-
<PAGE>

The Transfer Agent, Delaware Service Company, Inc., serves as the
shareholder servicing, dividend disbursing and transfer agent for the Fund under
an Agreement dated June 29, 1988. The directors annually review service fees
paid to the Transfer Agent. Certain recordkeeping and other shareholder services
that otherwise would be performed by the Transfer Agent may be performed by
certain other entities and the Transfer Agent may elect to enter into an
agreement to pay such other entities for their services. In addition,
participant account maintenance fees may be assessed for certain recordkeeping
provided as part of retirement plan and administration service packages. These
fees are based on the number of participants in the plan and the various
services selected. Fees will be quoted upon request and are subject to
change.

The Distributor and the Transfer Agent are also indirect, wholly-owned
subsidiaries of DMH.

EXPENSES

The Fund is responsible for all of its own expenses other than those borne
by the Manager under the Investment Management Agreement and those borne by the
Distributor under the Distribution Agreement. The ratio of operating expenses to
average daily net assets for the Class was 0.82% for the fiscal year ended July
31, 1995.

The Fund's shares have a par value of $1.00, equal voting rights, except as
noted below, and are equal in all other respects. All Fund shares have
noncumulative voting rights which means that the holders of more than 50% of the
Fund's shares voting for the election of directors can elect 100% of the
directors if they choose to do so. Under Maryland law, the Fund is not required,
and does not intend, to hold annual meetings of shareholders unless, under
certain circumstances, it is required to do so under the 1940 Act. Shareholders
of 10% or more of the Fund's shares may request that a special meeting be called
to consider the removal of a director.

In addition to the Class, the Fund also offers the Delchester Fund A Class,
the Delchester Fund B Class and the Delchester Fund C Class. Shares of each
class represent proportionate interests in the assets of the Fund and have

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<PAGE>

the same voting and other rights and preferences as the other classes of the
Fund, except that shares of the Class are not subject to, and may not vote on
matters affecting, the Distribution Plans under Rule 12b-1 relating to the
Delchester Fund A Class, the Delchester Fund B Class and the Delchester Fund C
Class.

Until May 31, 1992, the Fund offered shares of two retail classes of
shares, Delchester II class (now the Delchester Fund A Class) and the Delchester
I class. Shares of Delchester I class were offered with a sales charge, but
without the imposition of a Rule 12b-1 fee. Effective June 1, 1992, following
shareholder approval of a plan of recapitalization on May 8, 1992, shareholders
of the Delchester I class had their shares converted into shares of the
Delchester II class and became subject to the latter class' Rule 12b-1 charges.
Effective at the same time, following approval by shareholders, the name of the
Delchester II class was changed to the Delchester Fund class. Prior to May 2,
1994, the Class was known as Delchester Fund (Institutional) class and
Delchester Fund A Class was known as the Delchester Fund class.
<PAGE>

APPENDIX A - RATINGS

The Fund's assets are invested primarily in bonds rated BBB or lower by S&P
or Baa or lower by Moody's and in unrated corporate bonds. These credit ratings
evaluate only the safety of principal and interest and do not consider the
market value risk associated with high-yield securities. The table set forth
below shows the percentage of the Fund's securities included in each of the
specified rating categories and shows the percentage of the Fund's assets held
in United States Government securities. Certain securities may not be rated
because the rating agencies were either not asked to provide ratings (e.g., many
issuers of privately placed bonds do not seek ratings) or because the rating
agencies declined to provide a rating for some reason, such as insufficient
data. The table below shows the percentage of the Fund's securities which are
not rated. The information contained in the table was prepared based on a dollar
weighted average of the Fund's portfolio composition based on month end data for
the Fund's fiscal year ended July 31, 1995. The paragraphs following the table
contain excerpts from Moody's and S&P's rating descriptions.

<TABLE>
<CAPTION>
Rating Moody's Average Weighted
and/or Percentage of
S&P Portfolio
- -------------------- ----------------
<S> <C>
United States
Treasury Obligations 4.33%
Aaa/AAA 4.42%
Aa/AA 0.00%
A/A 0.00%
Baa/BBB 0.00%
Ba/BB 33.25%
B/B 45.64%
Caa/CCC 4.41%
Not Rated/Other 7.95%
</TABLE>

General Rating Information

BONDS

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<PAGE>

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.

COMMERCIAL PAPER

-33-
<PAGE>

- ----------------------------------------

DELCHESTER FUND

- ----------------------------------------

A CLASS
- ----------------------------------------

B CLASS
- ----------------------------------------

C CLASS
- ----------------------------------------

INSTITUTIONAL CLASS
- ----------------------------------------

CLASSES OF DELAWARE GROUP
- ----------------------------------------

DELCHESTER HIGH-YIELD BOND FUND, INC.
- ----------------------------------------

PART B

STATEMENT OF
ADDITIONAL INFORMATION

- ----------------------------------------

NOVEMBER 29, 1995

DELAWARE
GROUP
--------
<PAGE>

The Delaware Group includes funds with a wide range of investment objectives.
Stock funds, income funds, tax-free funds, money market funds, global and
international funds and closed-end equity 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 Group at 800-523-4640, in Philadelphia call 215-988-
1333 and shareholders of the Institutional Class should contact Delaware Group
at 800-828-5052.

INVESTMENT MANAGER
Delaware Management Company, Inc.
One Commerce Square
Philadelphia, PA 19103
NATIONAL DISTRIBUTOR

- ------------------------------------------------------------

PART B--STATEMENT OF ADDITIONAL INFORMATION
NOVEMBER 29, 1995
- ------------------------------------------------------------

DELAWARE GROUP

- ------------------------------------------------------------

DELCHESTER HIGH-YIELD BOND FUND, INC.

- ------------------------------------------------------------
1818 MARKET STREET
PHILADELPHIA, PA 19103
- ------------------------------------------------------------
FOR MORE INFORMATION ABOUT THE
DELCHESTER FUND INSTITUTIONAL CLASS:
800-828-5052

FOR PROSPECTUS AND PERFORMANCE
OF THE DELCHESTER FUND A CLASS,
THE DELCHESTER FUND B CLASS AND
THE DELCHESTER FUND C CLASS:
NATIONWIDE 800-523-4640

PHILADELPHIA 215-988-1333

INFORMATION ON EXISTING ACCOUNTS
OF THE DELCHESTER FUND A CLASS,
THE DELCHESTER FUND B CLASS AND
THE DELCHESTER FUND C CLASS:
(SHAREHOLDERS ONLY)
NATIONWIDE 800-523-1918

PHILADELPHIA 215-988-1241
DEALER SERVICES:
(BROKER/DEALERS ONLY)
NATIONWIDE 800-362-7500

PHILADELPHIA 215-988-1050
- ------------------------------------------------------------
TABLE OF CONTENTS
- ------------------------------------------------------------
COVER PAGE
- ------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
- ------------------------------------------------------------
PERFORMANCE INFORMATION
- ------------------------------------------------------------
TRADING PRACTICES AND BROKERAGE
- ------------------------------------------------------------
PURCHASING SHARES
- ------------------------------------------------------------
INVESTMENT PLANS
- ------------------------------------------------------------

-1-
<PAGE>

DETERMINING OFFERING PRICE AND
NET ASSET VALUE
- ------------------------------------------------------------
REDEMPTION AND REPURCHASE
- ------------------------------------------------------------
DIVIDENDS AND REALIZED SECURITIES
PROFITS DISTRIBUTIONS
- ------------------------------------------------------------
TAXES
- ------------------------------------------------------------
INVESTMENT MANAGEMENT AGREEMENT
- ------------------------------------------------------------
OFFICERS AND DIRECTORS
- ------------------------------------------------------------
EXCHANGE PRIVILEGE
- ------------------------------------------------------------
GENERAL INFORMATION
- ------------------------------------------------------------
APPENDIX A -- IRA INFORMATION
- ------------------------------------------------------------
FINANCIAL STATEMENTS
- ------------------------------------------------------------

-2-
<PAGE>

Delaware Group Delchester High-Yield Bond Fund, Inc. (the "Fund") is a
professionally-managed mutual fund. The Fund offers four classes (individually,
a "Class" and collectively, the "Classes") of shares -- Delchester Fund A Class
(the "Class A Shares"), Delchester Fund B Class (the "Class B Shares") and
Delchester Fund C Class ("Class C Shares") (together, the "Fund Classes") and
Delchester Fund Institutional Class (the "Institutional Class"). Class B
Shares, Class C Shares and Institutional Class shares may be purchased at a
price equal to the next determined net asset value per share. Class A Shares
may be purchased at the public offering price, which is equal to the next
determined net asset value per share, plus a front-end sales charge. Class A
Shares are subject to a maximum front-end sales charge of 4.75% and annual 12b-1
Plan expenses of up to .30%. Class B Shares are subject to a contingent
deferred sales charge ("CDSC") which may be imposed on redemptions made within
six years of purchase and annual 12b-1 Plan expenses of up to 1%, which are
assessed against Class B Shares for approximately eight years after purchase.
See Automatic Conversion of Class B Shares under Buying Shares in the Fund
Classes' Prospectus. Class C Shares are subject to a CDSC which may be imposed
on redemptions made within twelve months of purchase and annual 12b-1 Plan
expenses of up to 1%, which are assessed against the Class C Shares for the life
of the investment. All references to "shares" in this Statement of Additional
Information ("Part B" of the registration statement) refer to all Classes of
shares of the Fund, except where noted.

This Part B supplements the information contained in the current Prospectus
for the Fund Classes dated November 29, 1995 and the current Prospectus for the
Institutional Class dated November 29, 1995, as they may be amended from time to
time. It 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 Class may be obtained by
writing or calling your investment dealer or by contacting the Fund's national
distributor, Delaware Distributors, L.P. (the "Distributor"), 1818 Market
Street, Philadelphia, PA 19103.

-3-
<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

The Fund seeks to earn and pay shareholders as high a current income as is
consistent with providing reasonable safety. The Fund's investment objective is
a fundamental policy and cannot be changed without shareholder approval.

In investing for income and safety of principal, the emphasis in selection
will be on securities having a liberal and consistent yield and those tending to
reduce the risk of market fluctuations. The types of securities in which the
Fund invests are subject to price fluctuations particularly due to changes in
interest rates. Management will seek to achieve the Fund's objective by
investing at least 80% of the Fund's assets at time of purchase in:

(1) Corporate Bonds. The Fund will invest in both rated and unrated bonds.
Unrated bonds may be more speculative in nature than rated bonds; or

(2) Government Securities. Securities of, or guaranteed by, the U.S.
Government, its agencies or instrumentalities; or

(3) Commercial Paper. Commercial paper of companies having, at the time of
purchase, an issue of outstanding debt securities rated as described above or
commercial paper rated A-1 or A-2 by Standard & Poor's Rating Group ("Standard &
Poor's") or rated P-1 or P-2 by Moody's Investors Service, Inc.
("Moody's").

Appendix A to the Prospectuses describes the ratings of Standard & Poor's
and Moody's and provides information concerning the ratings of the securities in
the Fund's portfolio.

As a matter of practice, the Fund has consistently invested more than 80%
of its assets in such securities. With respect to the remaining assets, if any,
that the Fund may invest in other securities, the Fund must invest in income-
producing securities, including common stocks and preferred stocks some of which
may have convertible features or attached warrants. Additionally, from time to
time for temporary defensive purposes, the Fund may hold a substantial portion
of its assets in cash or short-term obligations for an appreciable period of
time when market conditions warrant and the Fund is anticipating higher interest
rates. Currently, the Fund's assets are invested primarily in unrated bonds and
bonds rated BBB or lower by Standard & Poor's or Baa or lower by Moody's

The Fund will not 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. It will not
invest more than 25% of its assets in any one particular industry.

-4-
<PAGE>

The Fund may purchase privately-placed debt and other securities whose resale is
restricted under applicable securities laws. Such restricted securities
generally offer a higher return than comparable registered securities but
involve some additional risk since they can be resold only in privately-
negotiated transactions or after registration under applicable securities laws.
The registration process may involve delays which could result in the Fund
obtaining a less favorable price on a resale. The Fund will not purchase
illiquid assets, including restricted securities, if more than 10% of its total
assets would then consist of such illiquid securities. While the Fund is
permitted to do so, it normally does not borrow money or invest in repurchase
agreements, except to invest cash balances.

A repurchase agreement is a short-term investment by which the purchaser
acquires ownership of a debt security and the seller agrees to repurchase the
obligation at a future time and set price, thereby determining the yield during
the purchaser's holding period. Should an issuer of a repurchase agreement fail
to repurchase the underlying security, the loss to the Fund, if any, would be
the difference between the repurchase price and the market value of the
security. The Fund will limit its investments in repurchase agreements to those
which Delaware Management Company, Inc. (the "Manager"), under the guidelines of
the Board of Directors, determines to present minimal credit risks and which are
of high quality. In addition, the Fund must have collateral of at least 100% of
the repurchase price, including the portion representing the Fund's yield under
such agreements, which is monitored on a daily basis.

The funds in the Delaware Group have obtained an exemption from the joint-
transaction prohibitions of Section 17(d) of the Investment Company Act of 1940
to allow the Delaware Group funds jointly to invest cash balances. The Fund may
invest cash balances in a joint repurchase agreement in accordance with the
terms of the Order and subject generally to the conditions described above.

Investment securities will not normally be purchased while the Fund has an
outstanding borrowing.

PORTFOLIO LOAN TRANSACTIONS

The 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 the Manager that the staff of the Securities and
Exchange Commission 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

-5-
<PAGE>

of credit payable by banks acceptable to the 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; 6) the voting rights on the lent securities may
pass to the borrower; however, if the directors of the Fund 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 the Fund would be exposed on a loan transaction is
the risk that the borrower would go bankrupt at a time when the value of the
security goes up. Therefore, the 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.

INVESTMENT RESTRICTIONS

The Fund has the following investment restrictions which may not be amended
without approval of a majority of the outstanding voting securities, which is
the lesser of more than 50% of the outstanding voting securities, or 67% of the
voting securities present at a shareholder meeting if 50% or more of the voting
securities are present in person or represented by proxy. The percentage
limitations contained in the restrictions and policies set forth herein apply at
the time of purchase of securities.

1. The Fund will not 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. The Fund will not invest for the purpose of acquiring control of any
company.

3. The Fund will not purchase or retain securities of a company which has
an officer or director who is an officer or director of the Fund, or an officer,
director or partner of its investment manager if, to the knowledge of the Fund,
one or more of such persons owns beneficially more than 1/2 of 1% of the shares
of the company, and in the aggregate more than 5% thereof.

-6-
<PAGE>

4. The Fund will not invest in securities of other investment companies.

5. The Fund will not make any investment in real estate. This
restriction does not preclude the Fund's purchase of securities issued by real
estate investment trusts.

6. The Fund will not sell short any security or property.

7. The Fund will not buy or sell commodities or commodity contracts.

8. The Fund will not borrow money in excess of 10% of the value of its
assets and then only as a temporary measure for extraordinary or emergency
purposes. Any borrowing will be done from a bank and to the extent that such
borrowing exceeds 5% of the value of the Fund's assets, asset coverage of at
least 300% is required. In the event that such asset coverage shall at any time
fall below 300%, the Fund 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%. The Fund shall not issue senior securities as defined in the
Investment Company Act of 1940, except for notes to banks.

9. The Fund will not make loans. However, (i) the purchase of a portion
of an issue of publicly distributed bonds, debentures or other securities, or of
other securities authorized to be purchased by the Fund's investment policies,
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 the Fund; and (ii) the Fund may loan up to 25% of its
assets to qualified broker/dealers or institutional investors for their use
relating to short sales and other security transactions.

10. The Fund will not invest in the securities of companies which have a
record of less than three years' continuous operation, including any predecessor
company or companies, if such purchase at the time thereof would cause more than
5% of the total Fund assets to be invested in the securities of such company or
companies.

11. The Fund will not act as an underwriter of securities of other
issuers, except that the Fund may acquire restricted or not readily marketable
securities under circumstances where, if such securities are sold, the Fund
might be deemed to be an underwriter for purposes of the Securities Act of 1933.

-7-
<PAGE>

12. No long or short positions on shares of the Fund may be taken by its
officers, directors or any of its affiliated persons. Such persons may buy
shares of the Fund for investment purposes, however, as described under
Purchasing Shares.

13. The Fund will not invest more than 25% of its assets in any one
particular industry.

Although not a fundamental investment restriction, the Fund currently does
not invest its assets in real estate limited partnerships or oil, gas and other
mineral leases.

-8-
<PAGE>

PERFORMANCE INFORMATION*

From time to time, the Fund may state each Class' total return in
advertisements and other types of literature. Any statements of total return
performance data for a Class will be accompanied by information on the average
annual compounded rate of return for that Class over, as relevant, the most
recent one-, five- and ten-year (or life-of-fund, if applicable) periods. The
Fund may also advertise aggregate and average total return information of each
Class over additional 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 the case of Class A Shares, the Limited CDSC applicable to only certain
redemptions of those shares will not be deducted from any computation 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 contingent deferred sales charges or a CDSC in this
Performance Information section will apply to Class B Shares or Class C
Shares.
-9-
<PAGE>

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 the 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, the Fund may
present total return information that does not reflect the deduction of the
maximum front-end sales charge or any applicable CDSC.

The performance of Class A Shares and the Institutional Class, as shown
below, is the average annual total return quotations for the one-, three-,
five-, ten- and fifteen-year periods ended July 31, 1995, and for the life of
these Classes, computed as described above. The average annual total return for
Class A Shares at offer reflects the maximum front-end sales charges 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.
Securities prices fluctuated during the periods covered and past results should
not be considered as representative of future performance.

Pursuant to applicable regulation, total return shown for the Institutional
Class for the periods prior to the commencement of operations of such Class is
calculated by taking the performance of Class A Shares 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 may have been affected had such an adjustment been made.

The performance of Class B Shares, as shown below, is the average annual
total return quotation for the one-year period ended July 31, 1995 and for the
life of this Class. 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 July 31, 1995. The average annual total
return for the Class B Shares excluding deferred sales charge assumes the shares
were not redeemed at July 31, 1995 and therefore does not reflect the deduction
of a CDSC.

-10-
<PAGE>

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
CLASS A CLASS A
SHARES SHARES INSTITUTIONAL
(AT OFFER) (AT NAV) CLASS(1)

<S> <C> <C> <C>
1 year ended
7/31/95 3.33% 8.46% 8.72%

3 years ended
7/31/95 6.32% 8.04% 8.27%

5 years ended
7/31/95 11.28% 12.35% 12.62%

10 years ended
7/31/95 10.17% 10.71% 10.91%

15 years ended
7/31/95 11.14% 11.50% 11.64%

Period 8/20/70(2)
through 7/31/95 9.44% 9.65% 9.73%
</TABLE>

<TABLE>
<CAPTION>
CLASS B SHARES CLASS B SHARES
(INCLUDING DEFERRED (EXCLUDING DEFERRED
SALES CHARGE) SALES CHARGE)

<S> <C> <C>
1 year ended
7/31/95 3.75% 7.64%

Period 5/2/94(3)
through 7/31/95 1.73% 4.69%
</TABLE>

(1) Date of initial public offering of the Institutional Class was June 1,
1992.

(2) Date of initial public offering of Class A Shares.

(3) Date of initial public offering of Class B Shares.

Information regarding the performance of Class C Shares is not shown
because such shares were not offered to the public prior to the date of this
Part B.

As stated in the Fund's Prospectuses, the Fund may also quote each Class'
current yield in advertisements and investor communications.

-11-
<PAGE>

The yield computation is determined by dividing the net investment income
per share earned during the period by the maximum offering price per share on
the last day of the period and annualizing the resulting figure, according to
the following formula:

a -- b
------ 6
YIELD = 2[( cd + 1) -- 1]

Where: a = dividends and interest earned during the period;

b = expenses accrued for the period (net of reimbursements);

c = the average daily number of shares outstanding during the period
that were entitled to receive dividends;

d = the maximum offering price per share on the last day of the
period.

The above formula will be used in calculating quotations of yield of each
Class, based on specified 30-day periods identified in advertising by the Fund.
The yields of the Class A Shares, the Class B Shares and the Institutional Class
as of July 31, 1995 using this formula were 8.67%, 8.32% and 9.37%,
respectively. Yield calculations assume the maximum front-end sales charge, if
any, and do not reflect the deduction of any contingent deferred sales charge.
Actual yield on Class A Shares may be affected by variations in sales charges on
investments. Information regarding the performance of Class C Shares is not
shown because such shares were not offered to the public prior to the date of
this Part B.

Past performance, such as is reflected in quoted yields, should not be
considered as a representation of the results which may be realized from an
investment in any class of the Fund in the future.

Investors should note that the income earned and dividends paid by the Fund
will vary with the fluctuation of interest rates and performance of the
portfolio. The net asset value of the Fund may change. Unlike money market
funds, the Fund invests in longer-term securities that fluctuate in value and do
so in a manner inversely correlated with changing interest rates. The Fund's
net asset value will tend to rise when interest rates fall. Conversely, the

-12-
<PAGE>

Fund's net asset value will tend to fall as interest rates rise. Normally,
fluctuations in interest rates have a greater effect on the prices of longer-
term bonds. The value of the securities held in the Fund will vary from day to
day and investors should consider the volatility of the Fund's net asset value
as well as its yield before making a decision to invest.

The Fund's average weighted portfolio maturity at July 31, 1995 was
7 years.

Statistical and performance information and various indices compiled and
maintained by organizations such as the following may also be used in preparing
exhibits comparing certain industry trends and competitive mutual fund
performance to comparable Fund activity and performance and in illustrating
general financial planning principles. From time to time, certain mutual fund
performance ranking information, calculated and provided by these organizations,
may also be used in the promotion of sales of the Fund. Any indices used are
not managed for any investment goal.

CDA Technologies, Inc., Lipper Analytical Services, Inc. and Morningstar,
Inc. are performance evaluation services that maintain statistical
performance databases, as reported by a diverse universe of independently-
managed mutual funds.

Ibbotson Associates, Inc. is a consulting firm that provides a variety of
historical data including total return, capital appreciation and income on
the stock market as well as other investment asset classes, and inflation.
With their permission, this information will be used primarily for
comparative purposes and to illustrate general financial planning
principles.

Interactive Data Corporation is a statistical access service that maintains
a database of various international industry indicators, such as historical
and current price/earning information, individual equity and fixed income
price and return information.

Compustat Industrial Databases, a service of Standard & Poor's, may also be
used in preparing performance and historical stock and bond market
exhibits. This firm maintains fundamental databases that provide
financial, statistical and market information covering more than 7,000
industrial and non-industrial companies.

-13-
<PAGE>

Salomon Brothers and Lehman Brothers are statistical research firms that
maintain databases of international market, bond market, corporate and
government-issued securities of various maturities. This information, as
well as unmanaged indices compiled and maintained by these firms, will be
used in preparing comparative illustrations.

Current interest rate and yield information on government debt obligations
of various durations, as reported weekly by the Federal Reserve (Bulletin H.15),
may also be used. In addition, current rate information on municipal debt
obligations of various durations, as reported daily by the Bond Buyer, may also
be used. The Bond Buyer is published daily and is an industry-accepted source
for current municipal bond market information.

From time to time, the Fund may quote actual total return performance for
each Class 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. Comparative information
on the Consumer Price Index may also be included. The Consumer Price Index, as
prepared by the U.S. Bureau of Labor Statistics, is the most commonly used
measure of inflation. It indicates the cost fluctuations of a representative
group of consumer goods. It does not represent a return from an investment.

The total return performance for each Class of the Fund will reflect the
appreciation or depreciation of principal, reinvestment of income and any
capital gains distributions paid during any indicated period, and the impact of
the maximum front-end sales charge, in the case of Class A Shares, if any,
paid on the illustrated investment amount, annualized. The results will not
reflect any income taxes, if applicable, payable by shareholders on the
reinvested distributions included in the calculations. The performance of Class
B Shares is calculated both with the applicable CDSC included and excluded. The
net asset value of the Fund fluctuates so shares, when redeemed, may be worth
more or less than the original investment, and the Fund's results should not be
considered as representative of future performance.

-14-
<PAGE>

The following table is an example, for purposes of illustration only, of
cumulative total return performance for Class A Shares and the Institutional
Class for the three-, six- and nine-month periods ended July 31, 1995, the one-,
three-, five-, ten- and fifteen-year periods ended July 31, 1995 and for the
life of these Classes. Cumulative total return for Class B Shares for the three-
, six- and nine-month periods ended July 31 1995, the one-year period ended July
31, 1995 and for the life of this Class is also provided below. Information
regarding the performance of Class C Shares is not shown because such shares
were not offered to the public prior to the date of this Part B.

<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
CLASS A CONSUMER
SHARES INSTITUTIONAL PRICE
(AT OFFER) CLASS(2) INDEX(3)
<S> <C> <C> <C>
3 months ended
7/31/95 (1.27%) 3.72% 0.40%

6 months ended
7/31/95 4.14% 9.44% 1.46%

9 months ended
7/31/95 4.14% 9.54% 2.01%

1 year ended
7/31/95 3.33% 8.72% 2.76%

3 years ended
7/31/95 20.20% 26.93% 8.54%

5 years ended
7/31/95 70.61% 81.19% 16.95%

10 years ended
7/31/95 163.48% 181.69% 41.52%

15 years ended
7/31/95 387.33% 421.24% 84.36%

Period 8/20/70(1)
through 7/31/95 848.73% 914.64% 290.80%
</TABLE>

-15-
<PAGE>

<TABLE>
<CAPTION>
CLASS B SHARES CLASS B SHARES
(INCLUDING (EXCLUDING CONSUMER
DEFERRED DEFERRED PRICE
SALES CHARGE) SALES CHARGE) INDEX(3)
<S> <C> <C> <C>
3 months ended
7/31/95 (0.54%) 3.46% 0.40%

6 months ended
7/31/95 4.91% 8.91% 1.46%

9 months ended
7/31/95 4.73% 8.73% 2.01%

1 year ended
7/31/95 3.75% 7.64% 2.76%

Period 5/2/94(4)
through 7/31/95 2.17% 5.90% 3.46%
</TABLE>

(1) Date of initial public offering of Class A Shares.

(2) Date of initial public offering of the Institutional Class was June 1,
1992. Pursuant to applicable regulation, total return shown for the
Institutional Class for the periods prior to the commencement of operations
of such Class is calculated by taking the performance of Class A Shares 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 may have been affected had such an adjustment
been made.

(3) Source--U.S. Department of Labor

(4) Date of initial public offering of Class B Shares.

Because every investor's goals and risk threshold are different, the
Distributor, as distributor for the Fund and other mutual funds in the Delaware
Group, 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
personal 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 the Fund's, and other Delaware Group
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.

-16-
<PAGE>

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 and the following chart illustrates just how powerful it can be.

COMPOUNDED RETURNS

Results of various assumed fixed rates of return on a $10,000 investment
compounded monthly for 10 years:

<TABLE>
<CAPTION>
9% Rate of Return 11% Rate of Return 13% Rate of Return

These figures are calculated assuming a fixed constant investment return
and assume no fluctuation in the value of principal. These figures, which do
not reflect payment of applicable taxes or any sales charges, are not intended
to be a projection of investment results and do not reflect the actual
performance results of any of the Classes.

-17-
<PAGE>

TRADING PRACTICES AND BROKERAGE

The Fund selects banks, brokers or dealers to execute transactions 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 banks, 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. In most instances, trades are made on a net basis where the Fund
either buys the 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, the Fund pays reasonably competitive
brokerage commission rates based upon the professional knowledge of its trading
department as to rates paid and charged for similar transactions throughout the
securities industry. In some instances, the Fund pays a minimal share
transaction cost when the transaction presents no difficulty.

During the fiscal years ended July 31, 1993, 1994 and 1995, no brokerage
commissions were paid by the Fund.

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 July 31, 1995, there were no portfolio
transactions of the Fund resulting in brokerage commissions directed to brokers
for brokerage and research services.

-18-
<PAGE>

As provided in the Securities Exchange Act of 1934 and the 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 Fund believes 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 the Fund and to other funds in the Delaware
Group. 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 the
Fund's Board of Directors that the advantages of combined orders outweigh the
possible disadvantages of separate transactions.

-19-
<PAGE>

Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. (the "NASD"), and subject to seeking best price and
execution, the Fund may place orders with broker/dealers that have agreed to
defray certain Fund expenses such as custodian fees, and may, at the request of
the Distributor, give consideration to sales of its shares as a factor in the
selection of brokers and dealers to execute Fund portfolio transactions.

PORTFOLIO TURNOVER

The rate of portfolio turnover will not be a limiting factor when portfolio
changes are deemed appropriate. The Fund anticipates that its annual rate of
portfolio turnover will not generally exceed 150%, although it is possible that
in any particular year market conditions or other factors might result in
portfolio activity at a greater rate than anticipated.

The degree of portfolio activity may affect taxes payable by the Fund's
shareholders. A turnover rate of 100% would occur, for example, if all the
investments in the Fund's portfolio at the beginning of the year were replaced
by the end of the year. In investing for liberal current income, the Fund may
hold securities for any period of time. To the extent the Fund realizes gains
on securities held for less than six months, such gains are taxable to the
shareholder or to the Fund at ordinary income tax rates. The turnover rate also
may be affected by cash requirements from redemptions and repurchases of Fund
shares.

During the past two fiscal years, the Fund's portfolio turnover rate was
approximately 92% for each of 1994 and 1995.

-20-
<PAGE>

PURCHASING SHARES

The Distributor serves as the national distributor for the Fund's four
classes of shares - Class A Shares, Class B Shares, Class C Shares and the
Institutional Class, and has agreed to use its best efforts to sell shares of
the Fund. See the Prospectuses for additional information on how to invest.
Shares of the Fund are offered on a continuous basis, and may be purchased
through authorized investment dealers or directly by contacting the Fund or its
agent.

The minimum initial investment generally is $1,000 for the Class A Shares,
Class B Shares and Class C Shares. Subsequent purchases generally must be at
least $100. The initial and subsequent minimum investments for Class A Shares
will be waived for purchases by officers, directors and employees of any
Delaware Group fund, the Manager or any of the Manager's affiliates if the
purchases are made pursuant to a payroll deduction program. Class A Shares
purchased pursuant to the Uniform Gifts to Minors Act or Uniform Transfer to
Minors Act and Class A 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 Group 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 Class, but certain eligibility requirements must be satisfied.

There is a maximum purchase limitation of $250,000 on each purchase of
Class B Shares; 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 each of the Fund's master retirement plans.) The Fund will reject any order
for purchase of more than $250,000 of Class B Shares and $1,000,000 or more for
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 $100,000
or more of Class A Shares, which 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 have the responsibility of transmitting orders promptly.
The Fund reserves the right to reject any order for the purchase of its shares
if in the opinion of management such rejection is in the Fund's best
interest.

The NASD has adopted Rules of Fair Practice relating to investment company
sales charges. The Fund 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 4.75%; however, lower front-end sales charges apply
for larger purchases.

-21-
<PAGE>

See the table below. Class A Shares are also subject to annual 12b-1 Plan
expenses.

Class B Shares are purchased at net asset value and 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 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 under Buying Shares in the Fund Classes' Prospectus.

Class C Shares are purchased at net asset value and are subject to a CDSC
of 1% if shares are redeemed within twelve 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 Determining Offering Price and Net Asset Value and
Plans Under Rule 12b-1 for the Fund Classes in this Part B.

Institutional Class shares, Class A Shares, Class B Shares and Class C
Shares represent a proportionate interest in the Fund's assets and will receive
a proportionate interest in the Fund's income, before application, as to the
Class A, Class B and Class C Shares, of any expenses under the Fund's 12b-1
Plans.

Certificates representing shares purchased are not ordinarily issued unless
a shareholder submits a specific request. Certificates are not issued in the
case of Class B Shares or Class C Shares. 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
shares purchased by sending a letter to the Transfer Agent requesting the
certificate. No charge is made for any certificate issued. 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.

-22-
<PAGE>

ALTERNATIVE PURCHASE ARRANGEMENTS

The alternative purchase arrangements of Class A, Class B and Class C
Shares permit investors to choose the method of purchasing shares that is most
suitable for his or her 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 .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 twelve 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% (.25% of which are service
fees to be paid by the Fund 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 .30%
of average daily net assets of such shares. Unlike Class B Shares, Class C
Shares do not convert to another class.

CLASS A SHARES

Purchases of $100,000 or more of Class A Shares at the offering price carry
reduced front-end sales charges as shown in the accompanying table, 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.

-23-
<PAGE>

<TABLE>
<CAPTION>
CLASS A SHARES
- -------------------------------------------------------------
DEALER'S
FRONT-END SALES CHARGE CONCESSION***
AS % OF AS % OF
OFFERING AMOUNT OFFERING
AMOUNT OF PURCHASE PRICE INVESTED** PRICE
- -------------------------------------------------------------
<S> <C> <C> <C>

Less than $100,000 4.75% 4.94% 4.00%

$100,000 but
under $250,000 3.75 3.82 3.00

$250,000 but
under $500,000 2.50 2.55 2.00

$500,000 but
under $1,000,000* 2.00 2.07 1.60
</TABLE>

* There is no front-end sales charge on purchases of Class A Shares of $1
million or more but, under certain limited circumstances, a 1% contingent
deferred sales charge may apply upon redemption of such shares. The
contingent deferred sales charge ("Limited CDSC") that may be applicable
arises only in the case of certain net asset value purchases which have
triggered the payment of a dealer's commission.

** Based on the net asset value per share of the Class A Shares as of the end
of the Fund's most recent fiscal year.

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 front-end
sales charge shown above. Dealers who receive 90% or more of the sales
charge may be deemed to be underwriters under the Securities Act of
1933.
- --------------------------------------------------------------------------------

-24-
<PAGE>

Certain dealers who enter into an agreement to provide extra training and
information on Delaware Group products and services and who increase sales of
Delaware Group funds may receive an additional concession of up to .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 concession will be paid. Participating dealers may be
deemed to have additional responsibilities under the securities laws.

DEALER'S COMMISSION

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 in accordance with the following schedule:

<TABLE>
<CAPTION>
DEALER'S
COMMISSION
(as a percent-
AMOUNT age of amount
OF PURCHASE purchased)

<S> <C>
Up to $2 million 1.00%
Next $1 million up to $3 million .75
Next $2 million up to $5 million .50
Amount over $5 million .25
</TABLE>

In determining a financial adviser's eligibility for the dealer's
commission, purchases of Class A Shares of other Delaware Group funds as to
which a Limited CDSC applies (see Redemption and Repurchase) may be aggregated
with those of Class A Shares of the 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.

-25-
<PAGE>

CONTINGENT DEFERRED SALES CHARGE - CLASS B SHARES AND CLASS C SHARES

Class B and Class C Shares are purchased without the imposition of 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 below and Class C Shares redeemed
within twelve months of purchase may be subject to a CDSC of 1%. CDSC fees 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. In addition, no CDSC will be
assessed on redemption of shares received through reinvestment of dividends or
capital gains distributions. See the Prospectus for the Fund Classes under
Redemption and Exchange - Waiver of CDSC - Class B and Class C Shares for a list
of the instances in which the CDSC is waived.

The following table sets forth the rates of the CDSC for Class B Shares of
the Fund:

<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE (AS A
PERCENTAGE OF
DOLLAR AMOUNT
YEAR AFTER PURCHASE MADE SUBJECT TO CHARGE)
- ------------------------ ------------------

<S> <C>
0-2 4%
3-4 3%
5 2%
6 1%
7 and thereafter None
</TABLE>

During the seventh year after purchase and, thereafter, until converted
automatically into Class A Shares of the Fund, 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 Fund. See Automatic Conversion of Class B Shares under Buying
Shares in the Fund Classes' Prospectus. Such conversion will constitute a tax-
free exchange for federal income tax purposes. See Taxes in the Prospectus for
the Fund Classes.

PLANS UNDER RULE 12B-1 FOR THE FUND CLASSES

Pursuant to Rule 12b-1 under the Investment Company Act of 1940, the Fund
has adopted a separate plan for each of the Class A Shares, the Class B Shares
and the Class C Shares

-26-
<PAGE>

of the Fund (the "Plans"). Each Plan permits the Fund to pay for certain
distribution, promotional and related expenses involved in the marketing of only
the Class to which the Plan applies. The Plans do not apply to the
Institutional Class 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 the Institutional Class shares. Shareholders of the Institutional
Class may not vote on matters affecting the Plans.

The Plans permit the Fund, pursuant to the Distribution Agreement, to pay
out of the assets of the Class A Shares, the Class B Shares and the 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, and paying distribution and maintenance fees to
securities brokers and dealers who enter into agreements with the Distributor.
The Plan expenses relating to Class B 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.

In addition, the Fund may make payments out of the assets of the Class A,
Class B and Class C Shares directly to other unaffiliated parties, such as
banks, who either aid in the distribution of shares of, or provide services to,
such classes.

The maximum aggregate fee payable by the Fund under the Plans, and the
Fund's Distribution Agreement, is on an annual basis, up to .30% of the Class A
Shares' average daily net assets for the year, and up to 1% (.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 the Class C Shares' average daily net assets for the year. The
Fund's Board of Directors may reduce these amounts at any time. The Distributor
has agreed to waive these distributions fees to the extent such fee for any day
exceeds the net investment income realized by the Class A, Class B and Class C
Shares for such day.

Although the maximum fee payable under the 12b-1 Plan relating to the Class
A Shares is .30% of average daily net assets of such class, the Board of
Directors has determined that the annual fee, payable on a monthly basis, under
the Plan relating to the Class A Shares, will be equal to the sum of: (i) the
amount obtained by multiplying .10% by the average daily net assets represented
by the Class A Shares which were originally purchased prior to June 1, 1992 in
Delchester I class (that was converted into what is now

-27-
<PAGE>

referred to as the Class A Shares on June 1, 1992 pursuant to a Plan of
Recapitalization approved by shareholders of the Delchester I class), and (ii)
the amount obtained by multiplying .30% by the average daily net assets
represented by all other Class A Shares. While this is the method to be used to
calculate the 12b-1 fees to be paid by the Class A Shares under its Plan, the
fee is a Class A Shares' expense so that all shareholders of the Class A Shares,
regardless of whether they originally purchased or received shares in the
Delchester I class, or in one of the other classes that is now known as Class A
Shares, will bear 12b-1 expenses at the same rate. While this describes the
current formula for calculating the fees which will be payable under the Class A
Shares' Plan, such Plan permits a full .30% on all Class A Shares' assets to be
paid at any time following appropriate Board approval.

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, Class
B and Class C Shares would be borne by such persons without any reimbursement
from such classes. Subject to seeking best price and execution, the 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 Agreement, as amended, have been approved by
the Board of Directors of the Fund, including a majority of the directors who
are not "interested persons" (as defined in the Investment Company Act of 1940)
of the Fund 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
Agreement, 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 and that there is a reasonable likelihood of the
Plan relating to a Fund Class providing a benefit to that Class. The Plans and
the Distribution Agreement, 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 outstanding voting securities
of the relevant Fund Class. Any amendment materially increasing the percentage
payable under the Plans must likewise be approved by a majority vote of the

-28-
<PAGE>

outstanding voting securities of the relevant Fund Class, as well as by a
majority vote of those directors who are not "interested persons." With respect
to the Class A Share Plan, any material increase in the maximum percentage
payable thereunder must also be approved by a majority of the outstanding voting
Class B Shares. 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 the Fund 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 the Fund 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 July 31, 1995, payments from the Class A Shares
pursuant to its Plan amounted to $2,376,443 and such payments were used for the
following purposes: Advertising - $736; Annual and Semi-Annual Reports -
$21,258; Broker Trails - $1,947,463; Commissions to Wholesalers - $329,987;
Promotional-Broker Meetings -$29,195; Promotional-Other - $13,877; Prospectus
Printing -$2,702; Telephone Expenses - $7,910; Wholesaler Expenses
- -$23,315.

For the fiscal year ended July 31, 1995, payments from the Class B Shares
pursuant to its Plan amounted to $702,719 and such payments were used for the
following purposes: Broker Sales Charges - $245,228; Broker Trails - $175,111;
Commissions to Wholesalers - $28,695; Interest on Broker Sales Charges -
$246,676; Promotional-Broker Meetings -$2,041; Telephone Expenses - $588;
Wholesaler Expenses -$4,380.

The staff of the Securities and Exchange Commission ("SEC") has proposed
amendments to Rule 12b-1 and other related regulations that could impact Rule
12b-1 Distribution Plans. The Fund intends to amend the Plans, if necessary, to
comply with any new rules or regulations the SEC may adopt with respect to Rule
12b-1.

OTHER PAYMENTS TO DEALERS -- CLASS A, CLASS B 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 .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 Group of funds. In

-29-
<PAGE>

some instances, these incentives or payments may be offered only to certain
dealers who maintain, have sold or may sell certain amounts of shares.

Payments to dealers made in connection with seminars, conferences or
contests relating to the promotion of fund shares may be in an amount up to 100%
of the expenses incurred or awards made. The Distributor may also pay a portion
of the expense of preapproved dealer advertisements promoting the sale of
Delaware Group fund shares.

SPECIAL PURCHASE FEATURES -- CLASS A SHARES

BUYING AT NET ASSET VALUE

Class A Shares may be reinvested without a front-end sales charge under the
Dividend Reinvestment Plan and, under certain circumstances, the 12-Month
Reinvestment Privilege and the Exchange Privilege.

Current and former officers, directors and employees of the Fund, any other
fund in the Delaware Group, the Manager or any of the Manager's current
affiliates and those that may in the future be created, legal counsel to the
funds and registered representatives, and employees of broker/dealers who have
entered into Dealer's Agreements with the Distributor may purchase Class A
Shares and any such class of shares of any of the funds in the Delaware Group,
including any fund that may be created, at the net asset value per share.
Spouses, parents, brothers, sisters and children (regardless of age) of such
persons at their direction, and any employee benefit plan established by any of
the foregoing funds, corporations, counsel or broker/dealers may also purchase
shares at net asset value. Purchases of Class A Shares may also be made by
clients of registered representatives of an authorized investment dealer at net
asset value within six months of a change of the registered representative's
employment, if the purchase is funded by proceeds from an investment where a
front-end sales charge has been assessed and the redemption of the investment
did not result in the imposition of a contingent deferred sales charge or other
redemption charges. Purchases of Class A Shares also may be made at net
asset
-30-
<PAGE>

value by bank employees who provide services in connection with agreements
between the bank and unaffiliated brokers or dealers concerning sales of Class A
Shares. 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. Such purchasers are required to
sign a letter stating that the purchase is for investment only and that the
securities may not be resold except to the issuer. Such purchasers may also be
required to sign or deliver such other documents as the Fund may reasonably
require to establish eligibility for purchase at net asset value. The Fund must
be notified in advance that the trade qualifies for purchase at net asset
value.

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 by any such
purchaser previously enumerated 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 the Fund, which provides for the holding in
escrow by the Transfer Agent, of 5% of the total amount of the 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

-31-
<PAGE>

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 Fund and of any class of any of the other mutual funds in the Delaware
Group (except shares of any Delaware Group 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 Group 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. For purposes of satisfying an
investor's obligation under a Letter of Intention, Class B Shares and Class C
Shares of the Fund and the corresponding classes of shares of other Delaware
Group funds which offer such shares may be aggregated with Class A Shares of the
Fund and the corresponding class of shares of the other Delaware Group
funds.

Employers offering a Delaware Group retirement plan may also complete a
Letter of Intention to obtain a reduced front-end sales charge on investments in
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 Group 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
the Fund and other Delaware Group funds which offer corresponding classes of
shares may also be aggregated for this purpose.

-32-
<PAGE>

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 the Class A Shares, Class B Shares and/or
Class C Shares of the Fund, as well as shares of any other class of any of the
other Delaware Group funds (except shares of any Delaware Group 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 Group fund which carried a front-end sales charge, CDSC
or Limited CDSC).

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 the age
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 Class A Shares, purchasers may also combine any subsequent purchases
of Class A Shares, Class B Shares and Class C Shares of the Fund, as well as
shares of any other class of any of the other Delaware Group funds which offer
such classes (except shares of any Delaware Group 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 Group 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 $60,000 at
offering price of additional shares of Class A Shares, the charge applicable to
the $60,000 purchase would be 3.75%. 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 (and of the Institutional Class holding shares
which were acquired through an exchange of one of the other mutual funds in the
Delaware Group

-33-
<PAGE>

offered with a front-end sales charge) who redeem such shares of the Fund have
one year from the date of redemption to reinvest all or part of their redemption
proceeds in Class A Shares of the Fund or in Class A Shares of any of the other
funds in the Delaware Group, 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 Group 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 proposed 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 Fund's shareholder servicing agent, about the
applicability of the Limited CDSC (see Contingent Deferred Sales Charge for
Certain Purchases of Class A Shares Made at Net Asset Value under Redemption and
Exchange in the Fund Classes' Prospectus) in connection with the features
described above.

GROUP INVESTMENT PLANS

Group Investment Plans that are not eligible to purchase shares of the
Institutional Class may also benefit from the reduced front-end sales charges
for investments in Class A Shares set forth in the table on page 24, based on
total plan assets. If a company has more than one plan investing in the
Delaware Group 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 at the time
of each such purchase. Employees

-34-
<PAGE>

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 Group investment accounts if they
so notify the Fund in connection with each purchase. For other retirement plans
and special services, see Retirement Plans for the Fund Classes under Investment
Plans.

DELCHESTER FUND INSTITUTIONAL CLASS

The Institutional Class 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, a division 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) banks, trust companies and similar financial institutions
investing for their own account or for the account of their trust customers for
whom such financial institution is exercising investment discretion in
purchasing shares of the class; 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 the Institutional Class 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.

-35-
<PAGE>

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 the Institutional
Class are reinvested in the account of the holders of such shares (based on the
net asset value of the Fund in effect on the reinvestment date). A confirmation
of each distribution from realized securities profits, if any, 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 Fund. Such
purchases, which must meet the minimum subsequent purchase requirements set
forth in the Prospectus 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
Class 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 GROUP 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
from the Fund in any of the other mutual funds in the Delaware Group, including
the Fund, 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. Nor will such investments be subject to a
CDSC or Limited CDSC. 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
proposed to be made before investing or sending money. The prospectus contains
more complete information about the fund, including charges and expenses.

-36-
<PAGE>

Subject to the following limitations, dividends and/or distributions from
other funds in the Delaware Group may be invested in shares of the Fund,
provided an account has been established. Dividends from Class A Shares may not
be directed to Class B Shares or Class C Shares of another fund in the Delaware
Group. Dividends from Class B Shares may only be directed to Class B Shares of
another fund in the Delaware Group that offers such class of shares. Dividends
from Class C Shares may only be directed to Class C Shares of another fund in
the Delaware Group that offers such class of shares. See Class B Funds and
Class C Funds under Buying Shares in the Fund Classes' Prospectus for the funds
in the Delaware Group that are eligible for investment by holders of Fund
shares.

INVESTING BY ELECTRONIC FUND TRANSFER

Direct Deposit Purchase Plan -- Investors may arrange for the Fund to
accept for investment in Class A, Class B 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, Class B 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 two ways noted
below. (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.

-37-
<PAGE>

* * *

Investments under the Direct Deposit Purchase Plan and the Automatic
Investing Plan must be for $25 or more for Class A Shares and $100 or more for
Class B and Class C Shares. 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 the 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,
the 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. The 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 the Fund for proper
instructions.

RETIREMENT PLANS FOR THE FUND CLASSES

An investment in the Fund may be suitable for tax-deferred retirement
plans. Among the retirement plans noted below, Class B Shares are available for
investment only by Individual Retirement Accounts, Simplified Employee Pension
Plans, 457 Deferred Compensation Plans and 403(b)(7) Deferred Compensation
Plans. The CDSC may be waived on certain redemptions of Class B Shares and
Class C Shares. See the Prospectus for the Fund Classes under Redemption and
Exchange - Waiver of CDSC - Class B and Class C Shares for a list of the
instances in which the CDSC is waived.

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Each purchase of Class B Shares is subject to a maximum purchase limitation
of $250,000 for retirement plans. Each purchase 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
("IRAs") 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. See
Delchester Fund Institutional Class 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
and corporations which replace the former Keogh and corporate retirement plans.
These Plans contain profit sharing or money purchase pension plan provisions.
Contributions for plans of this type may be invested only in Class A and Class C
Shares.

INDIVIDUAL RETIREMENT ACCOUNT ("IRA")

A document is available for an individual who wants to establish an IRA by
making contributions which may be tax-deductible, even if the individual is
already participating

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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 or elects to be treated as having no compensation
for the year. Investments in each of the Fund Classes are permissible.

The Tax Reform Act of 1986 (the "Act") restructured, and in some cases
eliminated, the tax deductibility of IRA contributions. Under the Act, the full
deduction for IRAs ($2,000 for each working spouse and $2,250 for one-income
couples) was retained for all taxpayers who are not covered by an employer-
sponsored retirement plan. Even if a taxpayer (or his or her spouse) is covered
by an employer-sponsored retirement plan, the full deduction is still available
if the taxpayer's adjusted gross income is below $25,000 ($40,000 for taxpayers
filing joint returns). A partial deduction is allowed for married couples with
incomes between $40,000 and $50,000, and for single individuals with incomes
between $25,000 and $35,000. The Act does not permit deductions for
contributions to IRAs by taxpayers whose adjusted gross income before IRA
deductions exceeds $50,000 ($35,000 for singles) and who are active participants
in an employer-sponsored retirement plan. Taxpayers who are not allowed
deductions on IRA contributions still can make nondeductible IRA contributions
of as much as $2,000 for each working spouse ($2,250 for one-income couples),
and defer taxes on interest or other earnings from the IRAs. Special rules
apply for determining the deductibility of contributions made by married
individuals filing separate returns.

A company or association may establish a Group IRA for employees or members
who want to purchase shares of the Fund. Purchases of $1 million or more of
Class A Shares qualify for purchase at net asset value but may, under certain
circumstances, be subject to a Limited CDSC. See Purchasing Shares concerning
reduced front-end sales charges applicable to Class A Shares.

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

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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. See Class B Shares and Class C Shares under Alternative Purchase
Arrangements, Contingent Deferred Sales Charge - Class B Shares, and Waiver of
CDSC - Class B and Class C Shares in the Funds Classes' Prospectus concerning
the applicability of a CDSC upon redemption.

See Appendix A for additional IRA information.

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 Fund Classes is available for investment by a SEP/IRA.

SALARY REDUCTION SIMPLIFIED EMPLOYEE PENSION PLAN ("SAR/SEP")

Employers with 25 or fewer eligible employees can establish this plan which
permits employer contributions and salary deferral contributions in Class A
Shares and Class C Shares only.

PROTOTYPE 401(K) DEFINED CONTRIBUTION PLAN

Section 401(k) of the Code permits employers to establish qualified plans
based on salary deferral contributions. 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 Group.
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 on
page 24.

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 any of
the Fund Classes in conjunction with such an arrangement. Applicable front-end
sales charges with respect to Class A Shares for such purchases are set forth in
the table on page 24.

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<PAGE>

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 any of the Fund Classes. Although investors may use
their own plan, there is available a Delaware Group 457 Deferred Compensation
Plan. Interested investors should contact the Distributor or their investment
dealers to obtain further information. Applicable front-end sales charges for
such purchases of Class A Shares are set forth in the table on page 24.

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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 after receipt of the order by the Fund or its agent.
Orders for purchases of Class B Shares, Class C Shares and the Institutional
Class are effected at the net asset value per share next calculated after
receipt of the order by the Fund or its agent. 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 New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas. When the New York
Stock Exchange is closed, the Fund 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 the
Fund's financial statements which are incorporated by reference into this Part
B.

The Fund's net asset value per share is computed by adding the value of all
the 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 the 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.
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

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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 the Fund will bear, pro-rata, all of the common expenses of
the Fund. The net asset values of all outstanding shares of each Class of the
Fund will be computed on a pro-rata basis for each outstanding share based on
the proportionate participation in the Fund represented by the value of shares
of that Class. All income earned and expenses incurred by the Fund will be
borne on a pro-rata basis by each outstanding share of a Class, based on each
Class' percentage in the Fund represented by the value of shares of such
Classes, except that the Institutional Class will not incur any of the expenses
under the Fund's 12b-1 Plans and the Class A, Class B 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 dividends paid to each Class of the Fund may vary. However, the
net asset value per share of each Class is expected to be equivalent.

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<PAGE>

REDEMPTION AND REPURCHASE

Any shareholder may require the Fund to redeem shares by sending a WRITTEN
REQUEST, signed by the record owner or owners exactly as the shares are
registered, to the Fund, 1818 Market Street, Philadelphia, PA 19103. In
addition, certain expedited redemption methods described below are available
when stock certificates have not been issued. The Fund does not issue
certificates for Class A Shares or Institutional Class shares, unless a
shareholder specifically requests them. The Fund does not issue certificates
for Class B Shares or Class C Shares. If stock certificates have been issued
for shares being redeemed, they must accompany the written request. For
redemptions of $50,000 or less paid to the shareholder at the address of record,
the Fund requires a request signed by all owners of the shares or the investment
dealer of record, but does not require signature guarantees. When the
redemption is for more than $50,000, or if payment is made to someone else or to
another address, signatures of all record owners are required and a signature
guarantee may be required. Each signature guarantee must be supplied by an
eligible guarantor institution. The Fund reserves the right to reject a
signature guarantee supplied by an eligible institution based on its
creditworthiness. The Fund may request further documentation from corporations,
retirement plans, executors, administrators, trustees or guardians.

In addition to redemption of shares by the Fund, the Distributor, acting as
agent of the Fund, 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 next determined
after receipt of the request in good order by the Fund or its agent, less any
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 Fund and the Distributor end their business day
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 any 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

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<PAGE>

the broker/dealer (who may make a charge to the shareholder for this service)
delivering the shares repurchased.

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 Purchases of Class A Shares Made at Net Asset Value under
Redemption and Exchange in the Prospectus for the Fund Classes. 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 twelve months following purchase. See Contingent Deferred Sales
Charge under Buying Shares in the Prospectus for the Fund Classes. Except for
the applicable CDSC or Limited CDSC and, with respect to the expedited payment
by wire described below, for which there is currently a $7.50 bank wiring cost,
neither the Fund nor the Distributor charges a fee for redemptions or
repurchases, but such fees could be charged at any time in the future.

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.

If a shareholder who recently purchased shares by check seeks to redeem all
or a portion of those shares in a written request, the Fund will honor the
redemption request but will not mail the proceeds until it is reasonably
satisfied of the collection of the investment check. This potential delay can
be avoided by making investments by wiring Federal Funds.

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 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 the 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 the Fund of securities owned by it is not reasonably practical, or
it is not reasonably practical for the Fund fairly to value its assets, or in
the event that the Securities and Exchange Commission has provided for such
suspension for the protection of shareholders, the 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.

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<PAGE>

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, the Fund
has elected to be governed by Rule 18f-1 under the Investment Company Act of
1940 pursuant to which the Fund is obligated to redeem shares solely in cash up
to the lesser of $250,000 or 1% of the net asset value of the Fund during any
90-day period for any one shareholder.

The value of the Fund's investments is subject to changing market prices.
Thus, a shareholder reselling shares to the Fund may sustain either a gain or
loss, depending upon the price paid and the price received for such shares.

SMALL ACCOUNTS

Before the Fund involuntarily redeems shares from an account that, under
the circumstances listed in the relevant Prospectus, has remained below the
minimum amounts required by the Fund's Prospectus and sends the proceeds to the
shareholder, the shareholder will be notified in writing that the value of the
shares in the account is less than the minimum required and will be allowed 60
days from the date of notice to make an additional investment to meet the
required minimum. See The Conditions of Your Purchase under Buying Shares in
the Prospectuses. Any redemption in an inactive account established with a
minimum investment may trigger mandatory redemption. No CDSC or Limited CDSC
will apply to the redemptions described in this paragraph.

Effective November 29, 1995, the minimum initial investment in Class A
Shares was increased from $250 to $1,000. Class A accounts that were
established prior to November 29, 1995 and maintain a balance in excess of $250
will not presently be subject to the $9 quarterly service fee that may be
assessed against accounts with balances below the stated minimum nor subject to
involuntary redemption.

* * *

The Fund has available certain redemption privileges, as described below.
The Fund reserves the right to suspend or terminate these expedited payment
procedures upon 60 days' written notice to shareholders.

EXPEDITED TELEPHONE REDEMPTIONS

Shareholders of the Fund Classes or their investment dealers of record
wishing to redeem any amount of shares of $50,000 or less for which certificates
have not been issued may call the Fund at 800-523-1918 (in Philadelphia, 215-
988-1241) or, in the case of shareholders of the Institutional Class, their
Client Services Representative at 800-828-5052 prior to the time the offering
price and net asset value are determined, as noted above, and have the proceeds
mailed to them at the address of record. Checks

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<PAGE>

payable to the shareholder(s) of record will normally be mailed the next
business day, but no later than seven days, after the receipt of the redemption
request. This option is only available to individual, joint and individual
fiduciary-type accounts.

In addition, redemption proceeds of $1,000 or more can be transferred to
your predesignated bank account by wire or by check by calling the Fund, as
described above. An authorization form must have been completed by the
shareholder and filed with the Fund before the request is received. Payment
will be made by wire or check to the bank account designated on the
authorization form as follows:

1. PAYMENT BY WIRE: Request that Federal Funds be wired to the bank
account designated on the authorization form. Redemption proceeds will normally
be wired on the next business day following receipt of the redemption request.
There is a $7.50 wiring fee (subject to change) charged by CoreStates Bank, N.A.
which will be deducted from the withdrawal proceeds each time the shareholder
requests a redemption. 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.

2. PAYMENT BY CHECK: Request a check be mailed to the bank account
designated on the authorization form. Redemption proceeds will normally be
mailed the next business day, but no later than seven days, from the date of the
telephone request. This procedure will take longer than the Payment by Wire
option (1 above) because of the extra time necessary for the mailing and
clearing of the check after the bank receives it.

REDEMPTION REQUIREMENTS: In order to change the name of the bank and the
account number it will be necessary to send a written request to the Fund and a
signature guarantee may be required. Each signature guarantee must be supplied
by an eligible guarantor institution. The Fund reserves the right to reject a
signature guarantee supplied by an eligible institution based on its
creditworthiness.

To reduce the shareholder's risk of attempted fraudulent use of the
telephone redemption procedure, payment will be made only to the bank account
designated on the authorization form.

The Fund will not honor telephone redemptions for shares recently purchased
by check unless it is reasonably satisfied that the purchase check has cleared.

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<PAGE>

If expedited payment under these procedures could adversely affect the
Fund, the Fund may take up to seven days to pay the shareholder.

Neither the Fund nor the 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, the 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, the Fund or the Transfer Agent may be liable for any losses due to
unauthorized or fraudulent transactions. Telephone instructions received by
shareholders of the Fund Classes are generally tape recorded. A written
confirmation will be provided for all purchase, exchange and redemption
transactions initiated by telephone.

SYSTEMATIC WITHDRAWAL PLAN

Shareholders of Class A, Class B 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 Fund does not recommend any specific
amount of withdrawal. This $5,000 minimum does not apply for the 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.

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

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<PAGE>

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 by the holders of Class A Shares or any similar
plan of any other investment company charging a front-end sales charge made
concurrently with the purchases of the Class A Shares of this or the shares of
any other investment company will ordinarily be disadvantageous to the
shareholder because of the payment of duplicative sales charges. Shareholders
should not purchase Class A Shares while participating in a Systematic
Withdrawal Plan and a periodic investment program in a fund managed by the
Manager must be terminated before a Systematic Withdrawal Plan can take effect,
except if the shareholder is a participant in one of our Retirement Plans or is
investing in Delaware Group funds which do not carry a sales charge. Also,
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. Redemptions of Class B
Shares or Class C Shares pursuant to a Systematic Withdrawal Plan may be subject
to a CDSC, unless the annual amount selected to be withdrawn is less than 12% of
the account balance on the date that the Systematic Withdrawal Plan was
established. See Waiver of CDSC - Class B and Class C Shares and Waiver of
Limited CDSC - Class A Shares under Redemption and Exchange in the Prospectus
for the Fund Classes.

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 Fund reserves 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.

The Systematic Withdrawal Plan is not available for the Institutional
Class.

WEALTH BUILDER OPTION

Shareholders of the Fund Classes may elect to invest in one or more of the
other mutual funds in the Delaware Group through our Wealth Builder Option.
Under this automatic exchange program, shareholders can authorize regular
monthly investments (minimum of $100 per fund) to be liquidated from

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<PAGE>

their account and invested automatically into other mutual funds in the Delaware
Group, subject to the conditions and limitations set forth in the Fund Classes'
Prospectus. See Wealth Builder Option and Redemption and Exchange in the
Prospectus for the Fund Classes.

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 also 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 Group, subject to the conditions and limitations described
in the Fund Classes' Prospectus. Shareholders can terminate their participation
at any time by written notice to the Fund.

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<PAGE>

DIVIDENDS AND REALIZED SECURITIES PROFITS DISTRIBUTIONS

The Fund declares a dividend to shareholders of each Class of Fund shares
from net investment income on a daily basis. Dividends are declared each day
the Fund is open and paid monthly on the first business day following the end of
each month. Payment by check of cash dividends will ordinarily be mailed within
three business days after the payable date. Net investment income earned on
days when the Fund is not open will be declared as a dividend on the next
business day. Purchases of Fund shares by wire begin earning dividends when
converted into Federal Funds and available for investment, normally the next
business day after receipt. However, if the Fund is given prior notice of
Federal Funds wire and an acceptable written guarantee of timely receipt from an
investor satisfying the Fund's credit policies, the purchase will start earning
dividends on the date the wire is received. Investors desiring to guarantee
wire payments must have an acceptable financial condition and credit history in
the sole discretion of the Fund. The Fund reserves the right to terminate this
option at any time. Purchases by check earn dividends upon conversion to
Federal Funds, normally one business day after receipt.

Each Class of shares of the Fund will share proportionately in the
investment income and expenses of the 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 of the same
Class of the Fund at net asset value, unless an election to receive dividends in
cash has been made. 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. If a shareholder redeems an entire account, all
dividends accrued to the time of the withdrawal will be paid by separate check
at the end of that particular monthly dividend period, consistent with the
payment and mailing schedule described above. 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. The Fund may deduct
from a shareholder's account the costs of the Fund's effort to locate a
shareholder if a shareholder's mail is returned by the Post Office or the Fund
is otherwise unable to locate the shareholder or verify the shareholder's
mailing address.

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<PAGE>

These costs may include a percentage of the account when a search company
charges a percentage fee in exchange for their location services.

Any distributions from net realized securities profits will be made twice a
year. The first payment would be made during the first quarter of the next
fiscal year. The second payment would be made near the end of the calendar year
to comply with certain requirements of the Internal Revenue Code. Such
distributions will be reinvested in shares at the net asset value in effect on
the first business day after month end, unless the shareholder elects to receive
it in cash. The Fund will mail a quarterly statement showing the dividends paid
and all the transactions made during the period.

During the fiscal year ended July 31, 1995, dividends totaling $0.671,
$0.624 and $0.686 per share of the Class A Shares, the Class B Shares and the
Institutional Class, respectively, were paid from net investment income.

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TAXES

It is the Fund's policy to pay out substantially all net investment income
and net realized gains to relieve the Fund of federal income tax liability on
that portion of its income paid to shareholders under Subchapter M of the
Internal Revenue Code. The Fund has met these requirements in previous years
and intends to meet them this year. The Fund also intends to meet the calendar
year distribution requirements imposed by the Internal Revenue Code to avoid the
imposition of a 4% excise tax.

The Fund has no fixed policy with regard to distributions of realized
securities profits when such realized securities profits may be offset by
capital losses carried forward. Presently, however, the Fund intends to offset
realized securities profits to the extent of the capital losses carried forward.
The Fund had an accumulated capital loss carryforward of approximately
$240,229,579 at July 31, 1995 which for federal income tax purposes may be
carried forward and applied against future capital gains. The capital loss
carryforward expires as follows: 1998--$59,747,000, 1999--$89,261,000, 2002--
$3,628,000 and 2003--$87,593,579.

Distributions of net investment income and short-term realized securities
profits are taxable as ordinary income to shareholders. Since the major portion
of the Fund's investment income is derived from interest rather than dividends,
no portion of such distributions will be eligible for the dividends-received
deduction available to corporations. Distributions of long-term capital gains,
if any, are taxable as long-term capital gains, for federal income tax purposes,
regardless of the length of time an investor has held such shares, and these
gains are currently taxed at long-term capital gain rates. 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. These distributions are not
eligible for the dividends-received exclusion. Advice as to the tax status of
each year's dividends and distributions, when paid, will be mailed annually.
Shares of the Fund are exempt from Pennsylvania county personal property taxes.

Net long-term gain from the sale of securities when realized and
distributed (actually or constructively) is taxable as capital gain. 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 Fund's portfolio securities had
an unrealized net appreciation for tax purposes of $38,624,817 as of July 31,
1995.

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INVESTMENT MANAGEMENT AGREEMENT

The Manager, located at One Commerce Square, Philadelphia, PA 19103,
furnishes investment management services to the Fund, subject to the supervision
and direction of the Fund's Board of Directors.

The Manager and its predecessors have been managing the funds in the
Delaware Group since 1938. The aggregate assets of these funds on July 31, 1995
were approximately $9,964,548,000. Investment advisory services are also
provided to institutional accounts with assets on July 31, 1995 of approximately
$17,356,716,000.

The Investment Management Agreement for the Fund is dated April 3, 1995 and
was approved by shareholders on March 29, 1995.

The 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, and only if the terms and the renewal thereof
have been approved by the vote of a majority of the directors of the Fund 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. The Agreement
is terminable without penalty on 60 days' notice by the directors of the Fund or
by the Manager. The Agreement will terminate automatically in the event of its
assignment.

The annual compensation paid by the Fund for investment management services
is equal to .60% on the first $500 million of the Fund's average daily net
assets, .575% of the next $250 million and .55% of the average daily net assets
in excess of $750 million, less all directors' fees paid to the unaffiliated
directors of the Fund. On July 31, 1995, the total net assets of the Fund were
$1,194,365,262. The Manager makes all investment decisions which are
implemented by the Fund. The Manager pays the salaries of all directors,
officers and employees who are affiliated with both the Manager and the Fund.
Investment management fees paid by the Fund during the past three fiscal years
were for $4,969,999 for 1993, $6,090,393 for 1994 and $6,469,140 for 1995.

Except for those expenses borne by the Manager under the Investment
Management Agreement and the Distributor under the Distribution Agreement, the
Fund is responsible for all of its own expenses. Among others, these include
the Fund's 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

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shareholders. The ratios of expenses to average daily net assets for Class A
Shares, Class B Shares and the Institutional Class for the fiscal year ended
July 31, 1995 were 1.09%, 1.82% and 0.82%, respectively. The ratios for the
Class A Shares and the Class B Shares reflect the impact of their respective
12b-1 Plans. The Fund anticipates that the ratio of expenses to average daily
net assets of Class C Shares will be identical to that of the Class B Shares.

By California regulation, the Manager is required to waive certain fees and
reimburse the Fund for certain expenses to the extent that the Fund's annual
operating expenses, exclusive of taxes, interest, brokerage commissions and
extraordinary expenses, exceed 2 1/2% of its first $30 million of average daily
net assets, 2% of the next $70 million of average daily net assets and 1 1/2% of
any additional average daily net assets. For the fiscal year ended July 31,
1995, no such reimbursement was necessary or paid.

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 Fund shares under
a Distribution Agreement 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 the Fund on behalf of Class A
Shares, Class B Shares and Class C Shares under their respective 12b-1 Plans.
Prior to January 3, 1995, Delaware Distributors, Inc. ("DDI") served as the
national distributor of the Fund's shares. On that date Delaware Distributors,
L.P., a newly formed limited partnership, succeeded to the business of DDI. All
officers and employees of DDI became officers and employees of Delaware
Distributors, L.P. DDI is the corporate general partner of Delaware
Distributors, L.P. and both DDI and Delaware Distributors, L.P. are 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 the
Fund's shareholder servicing, dividend disbursing and transfer agent pursuant to
a Shareholders Services Agreement dated June 29, 1988. The Transfer Agent is
also an indirect, wholly-owned subsidiary of Delaware Management Holdings, Inc.

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OFFICERS AND DIRECTORS

The business and affairs of the Fund are managed under the direction of its
Board of Directors. Certain officers and directors of the Fund hold identical
positions in each of the other funds in the Delaware Group. On October 31,
1995, the Fund's officers and directors owned less than 1% of the outstanding
shares of, respectively, the Class A Shares, the Class B Shares and the
Institutional Class.

As of October 31, 1995, the Fund believes Merrill, Lynch, Pierce, Fenner &
Smith Inc., Mutual Fund Operations, Attention Book Entry, 4800 Deer Lake Drive
East, 3rd Fl., Jacksonville, FL 32246 held of record for the benefit of others
1,228,335 shares (6.03%) of the outstanding shares of the Class B Shares.

DMH Corp., Delaware Management Company, Inc., 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. and Delaware Investment Counselors, 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. In connection with the merger, a new Investment Management Agreement
between the Fund and the Manager was executed following shareholder approval.
DMH and the Manager are now 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 the Fund 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.

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<PAGE>

*WAYNE A. STORK (58)
Chairman, President, Chief Executive Officer, Director and/or Trustee
of the Fund, 15 other funds in
the Delaware Group (which excludes Delaware Pooled Trust, Inc.) and
Delaware Management Holdings, Inc.
Chairman and Director of Delaware Investment Counselors,
Inc. and Delaware Pooled Trust, Inc.
Chairman, Chief Executive Officer, Chief Investment
Officer and Director of Delaware Management Company, Inc.
Chairman, Chief Executive Officer and Director of
DMH Corp., Delaware International Advisers Ltd., Delaware
International Holdings Ltd. and Founders Holdings, Inc.
Director of Delaware Distributors, Inc. and Delaware
Service Company, Inc.
During the past five years, Mr. Stork has served in
various executive capacities at different times
within the Delaware organization.

WINTHROP S. JESSUP (50)
Executive Vice President of the Fund, 15 other funds in the Delaware
Group (which excludes Delaware Pooled Trust, Inc.) and Delaware
Management Holdings, Inc.
President and Chief Executive Officer of Delaware Pooled
Trust, Inc.
President and Director of Delaware Investment
Counselors, Inc.
Executive Vice President and Director of DMH Corp.,
Delaware Management Company, Inc., Delaware International Holdings
Ltd. and Founders Holdings, Inc.
Vice Chairman and Director of Delaware Distributors,
Inc.
Vice Chairman of Delaware Distributors, L.P.
Director of Delaware Management Trust Company, Delaware
Service Company, Inc. and Delaware International Advisers Ltd.
During the past five years, Mr. Jessup has served in
various executive capacities at different times within the Delaware
organization.

______________________________
*Director affiliated with the investment manager of the Fund and considered an
"interested person" as defined in the Investment Company Act of 1940.

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<PAGE>

RICHARD G. UNRUH, JR. (56)
Executive Vice President of the Fund and each of the
other 16 funds in the Delaware Group.
Executive Vice President and Director of Delaware
Management Company, Inc.
Senior Vice President of Delaware Management Holdings,
Inc.
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.

WALTER P. BABICH (68)
Director and/or Trustee of the Fund and each of the
other 16 funds in the Delaware Group.
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.

ANTHONY D. KNERR (56)
Director and/or Trustee of the Fund and each of the
other 16 funds in the Delaware Group.
500 Fifth Avenue, New York, NY 10110.
Consultant, 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.

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<PAGE>

ANN R. LEVEN (55)
Director and/or Trustee of the Fund and each of the
other 16 funds in the Delaware Group.
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 1994, she was Adjunct Professor of Columbia Business
School.

W. THACHER LONGSTRETH (75)
Director and/or Trustee of the Fund and each of the
other 16 funds in the Delaware Group.
1617 John F. Kennedy Boulevard, Philadelphia, PA 19103.
Vice Chairman, Packquisition Corp., a financial
printing, commercial printing and information
processing firm.
Philadelphia City Councilman.
President, MLW, Associates.
Director, Tasty Baking Company.
Director, Healthcare Services Group.

CHARLES E. PECK (69)
Director and/or Trustee of the Fund and each of the
other 16 funds in the Delaware Group.
P.O. Box 1102, Columbia, MD 21044.
Secretary, Enterprise Homes, Inc.
From 1981 to 1990, Mr. Peck was Chairman and Chief
Executive Officer of The Ryland Group, Inc., Columbia, MD.

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<PAGE>

DAVID K. DOWNES (55)
Senior Vice President/Chief Administrative Officer/Chief
Financial Officer of the Fund, each of the other 16 funds in the
Delaware Group and Delaware Management Company, Inc.
Chairman and Director of Delaware Management Trust
Company.
Senior Vice President/Chief Administrative Officer/Chief
Financial Officer/Treasurer of Delaware Management Holdings, Inc.
Senior Vice President/Chief Financial Officer/Treasurer
and Director of DMH Corp.
Senior Vice President/Chief Administrative Officer/Chief
Financial Officer and Director of Delaware Service
Company, Inc.
Senior Vice President/Chief Administrative Officer of
Delaware Distributors, L.P.
Senior Vice President/Chief Administrative Officer
and Director of Delaware Distributors, Inc.
Chief Financial Officer and Director of Delaware
International Holdings Ltd.
Senior Vice President/Chief Financial Officer/Treasurer
of Delaware Investment Counselors, Inc.
Senior Vice President and Director of Founders Holdings,
Inc.
Director of Delaware International Advisers Ltd.
Before joining the Delaware Group in 1992, Mr. Downes
was Chief Administrative Officer, Chief Financial Officer and
Treasurer of Equitable Capital Management Corporation, New York, from
December 1985 through August 1992, Executive Vice President from
December 1985 through March 1992, and Vice Chairman from March 1992
through August 1992.

GEORGE M. CHAMBERLAIN, JR. (48)
Senior Vice President and Secretary of the Fund, each of
the other 16 funds in the Delaware Group, Delaware Management
Holdings, Inc., Delaware Distributors, L.P. and Delaware Investment
Counselors, Inc.
Executive Vice President and Secretary of Delaware
Management Trust Company.
Senior Vice President, Secretary and Director of DMH
Corp., Delaware Management Company, Inc., Delaware Distributors, Inc.
and Delaware Service Company, Inc.
Corporate Vice President and Secretary of Founders
Holdings, Inc.
Secretary and Director of Delaware International
Holdings Ltd.
Director of Delaware International Advisers Ltd.
Attorney.
During the past five years, Mr. Chamberlain has served
in various capacities at different times within the Delaware
organization.

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<PAGE>

PAUL E. SUCKOW (48)
Senior Vice President/Chief Investment Officer, Fixed
Income of the Fund, each of the other 16 funds in the Delaware Group,
Delaware Management Holdings, Inc. and Delaware Management Company,
Inc.
Senior Vice President and Director of Founders Holdings,
Inc.
Director of Founders CBO Corporation.
Before returning to the Delaware Group 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 the Delaware Group.

GERALD T. NICHOLS (37)
Vice President/Senior Portfolio Manager of the Fund, of
nine other income funds and the closed-end funds in the Delaware Group
and of Delaware Management Company, Inc.
Vice President of Founders Holdings, Inc.
Treasurer and Director of Founders CBO Corporation.
During the past five years, Mr. Nichols has served in
various capacities at different times within the Delaware
organization.

PAUL A. MATLACK (36)
Vice President/Senior Portfolio Manager of the Fund, of
nine other income funds and the closed-end funds in the Delaware Group
and of Delaware Management Company, Inc.
Vice President of Founders Holdings, Inc.
Secretary and Director of Founders CBO Corporation.
During the past five years, Mr. Matlack has served in
various capacities at different times within the Delaware
organization.

JAMES R. RAITH, JR. (44)
Vice President/Senior Portfolio Manager of the Fund, of
nine other income funds and the closed-end funds in the Delaware Group
and of Delaware Management Company, Inc.
Vice President of Founders Holdings, Inc.
President and Director of Founders CBO Corporation.
During the past five years, Mr. Raith has served in
various capacities at different times within the Delaware
organization.

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<PAGE>

JOSEPH H. HASTINGS (45)
Vice President/Corporate Controller of the Fund, each of
the other 16 funds in the Delaware Group, Delaware Management
Holdings, Inc., DMH Corp., Delaware Management Company, Inc., Delaware
Distributors, L.P., Delaware Distributors, Inc., Delaware Service
Company, Inc., Delaware Investment Counselors, Inc. and Founders
Holdings, Inc.
Executive Vice President/Treasurer/Chief Financial
Officer of Delaware Management Trust Company.
Assistant Treasurer of Founders CBO Corporation.
1818 Market Street, Philadelphia, PA 19103.
Before joining the Delaware Group in 1992, Mr. Hastings
was Chief Financial Officer for Prudential Residential Services, L.P.,
New York, NY from 1989 to 1992. Prior to that, Mr. Hastings served as
Controller and Treasurer for Fine Homes International, L.P., Stamford,
CT from 1987 to 1989.

MICHAEL P. BISHOF (33)
Vice President/Treasurer of the Fund, each of the other
16 funds in the Delaware Group, Delaware
Management Company, Inc., Delaware Distributors, Inc.,
Delaware Distributors, L.P., Delaware Service Company, Inc., Founders
Holdings, Inc. and Founders CBO Corporation.
Before joining the Delaware Group 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.

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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 Delaware Group funds for the fiscal year
ended July 31, 1995 and an estimate of annual benefits to be received upon
retirement under the Delaware Group Retirement Plan for Directors/Trustees as of
July 31, 1995.

PENSION OR
RETIREMENT
BENEFITS ESTIMATED TOTAL
AGGREGATE ACCRUED ANNUAL COMPENSATION
COMPEN- AS PART BENEFITS FROM ALL 17
SATION OF FUND UPON DELAWARE
NAME FROM FUND EXPENSES RETIREMENT* GROUP FUNDS
<S> <C> <C> <C> <C>

W. Thacher Longstreth $3,098.38 None $18,100 $51,187.97
Ann R. Leven $3,600.89 None $18,100 $59,323.96
Walter P. Babich $3,667.17 None $18,100 $60,323.88
Anthony D. Knerr $2,411.08 None $18,100 $41,974.22
Charles E. Peck $2,927.38 None $18,100 $48,052.01
</TABLE>

* Under the terms of the Delaware Group Retirement Plan for
Directors/Trustees, each disinterested director 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 fund in the Delaware Group for a period equal to the lesser of
the number of years that such person served as a director 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 of each fund at the time of such person's retirement. If an
eligible director retired as of July 31, 1995, he or she would be entitled
to annual payments totaling $18,100, in the aggregate, from all of the
funds in the Delaware Group, based on the number of funds in the Delaware
Group as of that date.

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EXCHANGE PRIVILEGE

The exchange privileges available for shareholders of the Classes and for
shareholders of classes of other funds in the Delaware Group are set forth in
the relevant prospectuses for such classes. The following supplements that
information. The Fund may modify, terminate or suspend the exchange privilege
upon 60 days' notice to shareholders.

All exchanges involve a purchase of shares of the fund into which the
exchange is made. As with any purchase, an investor should obtain and carefully
read that fund's prospectus before buying shares in an exchange. The prospectus
contains more complete information about the fund, including charges and
expenses. A shareholder requesting an exchange will be sent a current
prospectus and an authorization form for any of the other mutual funds in the
Delaware Group. Exchange instructions must be signed by the record owner(s)
exactly as the shares are registered.

An exchange constitutes, for tax purposes, the sale of one fund and the
purchase of another. The sale may involve either a capital gain or loss to the
shareholder for federal income tax purposes.

In addition, investment advisers and dealers may make exchanges between
funds in the Delaware Group on behalf of their clients by telephone or other
expedited means. This service may be discontinued or revised at any time by the
Transfer Agent. Such exchange requests may be rejected if it is determined that
a particular request or the total requests at any time could have an adverse
effect on any of the funds. Requests for expedited exchanges may be submitted
with a properly completed exchange authorization form, as described above.

TELEPHONE EXCHANGE PRIVILEGE

Shareholders owning shares for which certificates have not been issued or
their investment dealers of record may exchange shares by telephone for shares
in other mutual funds in the Delaware Group. This service is automatically
provided unless the Fund receives written notice from the shareholder to the
contrary.

Shareholders or their investment dealers of record may contact the Transfer
Agent at 800-523-1918 (in Philadelphia, 215-988-1241) or, in the case of
shareholders of the Institutional Class, their Client Services Representative at
800-828-5052, to effect an exchange. The shareholder's current Fund account
number must be identified, as well as the registration of the account, the share
or dollar amount to be exchanged and the fund into which the exchange is to be

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made. Requests received on any day after the time the offering price and net
asset value are determined will be processed the following day. See Determining
Offering Price and Net Asset Value. Any new account established through the
exchange will automatically carry the same registration, shareholder information
and dividend option as the account from which the shares were exchanged. The
exchange requirements of the fund into which the exchange is being made, such as
sales charges, eligibility and investment minimums, must be met. (See the
prospectus of the fund desired or inquire by calling the Transfer Agent or, as
relevant, your Client Services Representative.) Certain funds are not available
for Retirement Plans.

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 Group. Telephone exchanges may be subject to limitations
as to amounts or frequency. The Transfer Agent and the Fund reserve the right
to record exchange instructions received by telephone and to reject exchange
requests at any time in the future.

As described in the Fund's Prospectuses, neither the Fund nor the 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.

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 Fund will refuse any new Timing
Arrangements, as well as any new purchases (as opposed to exchanges) in Delaware
Group funds from Timing Firms. The 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.

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RESTRICTIONS ON TIMED EXCHANGES

Timing Accounts operating under existing Timing Agreements may only execute
exchanges between the following eight Delaware Group funds: (1) Decatur Income
Fund, (2) Decatur Total Return Fund, (3) Delaware Fund, (4) Limited-Term
Government Fund, (5) Tax-Free USA Fund, (6) Delaware Cash Reserve, (7) Tax-Free
Pennsylvania Fund and (8) the Fund. No other Delaware Group funds are available
for Timed Exchanges. Assets redeemed or exchanged out of Timing Accounts in
Delaware Group funds not listed above may not be reinvested back into that
Timing Account. The Fund reserves the right to apply these same restrictions to
the account(s) of any person whose transactions seem to follow a timing pattern
(as described above).

The 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 the 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 the 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.

Following is a summary of the investment objectives of the other Delaware
Group funds:

DELAWARE FUND seeks long-term growth by 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. DEVON FUND seeks
current income and capital appreciation by investing primarily in income-
producing common stocks, with a focus on common stocks the Manager believes have
the potential for above average dividend increases over time.

TREND FUND seeks long-term growth by investing in common stock issued by
emerging growth companies exhibiting strong capital appreciation potential.

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

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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.

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
instrumentalities secured by such securities. U.S. GOVERNMENT MONEY FUND seeks
maximum current income with preservation of principal and maintenance of
liquidity by investing only in short-term securities issued or guaranteed as to
principal and interest by the U.S. Government, its agencies or
instrumentalities, and repurchase agreements collateralized by such securities,
while maintaining a stable net asset value.

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.

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 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 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.

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 ASSETS FUND seeks to achieve long-
term total return by investing in global securities which will provide higher
current income than a portfolio comprised exclusively of equity securities,
along with the potential for capital growth.

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DELAWARE GROUP PREMIUM FUND offers nine series available exclusively as
funding vehicles for certain insurance company separate accounts. EQUITY/INCOME
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. HIGH YIELD 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. MONEY
MARKET SERIES seeks the highest level of income consistent with preservation of
capital and liquidity through investments in short-term money market
instruments. GROWTH SERIES seeks long-term capital appreciation by investing
its assets in a diversified portfolio of securities exhibiting the potential for
significant growth. MULTIPLE STRATEGY 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. VALUE SERIES seeks capital
appreciation by investing in small- to mid-cap common stocks whose market value
appears 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.
EMERGING GROWTH 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.

For more complete information about any of these funds, 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).

-69-
<PAGE>

GENERAL INFORMATION

The Manager is the investment manager of the Fund. The Manager or its
affiliate, Delaware International Advisers Ltd., also manages the other funds in
the Delaware Group. The Manager, through a separate division, also manages
private investment accounts. While investment decisions for the Fund are made
independently from those of the other funds and accounts, they may make
investment decisions at the same time.

Access persons and advisory persons of the Delaware Group of funds, as
those terms are defined in SEC Rule 17j-1 under the Investment Company Act of
1940, 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 the Fund and for the other
mutual funds in the Delaware Group. As previously described, prior to January
3, 1995, DDI served as the national distributor for the Fund. The Distributor
and, in its capacity as such, DDI received net commissions from the Fund on
behalf of Class A Shares, after reallowances to dealers, as follows:

CLASS A SHARES
TOTAL
AMOUNT OF AMOUNTS NET
FISCAL UNDERWRITING REALLOWED COMMISSION
YEAR ENDING COMMISSION TO DEALERS TO DISTRIBUTOR
------------ -------------- --------------
<S> <C> <C> <C>

July 31, 1995 $5,089,170 $4,248,856 $ 840,314
July 31, 1994 8,625,370 7,218,669 1,406,701
July 31, 1993 7,770,503 6,454,824 1,315,679
</TABLE>

-70-
<PAGE>

During the fiscal years ended July 31, 1994 and 1995, the Distributor and,
in its capacity as the Fund's national distributor, DDI received Limited CDSC
payments in the amounts of $6,497 and $966, respectively, with respect to Class
A Shares. No payments were received during the fiscal year ended July 31, 1993
with respect to the Class A Shares.

During the period from inception on May 2, 1994 through July 31, 1994 and
the fiscal year ended July 31, 1995, the Distributor and, in its capacity as the
Fund's national distributor, DDI received CDSC payments in the amount of $1,555
and $184,351, respectively, with respect to Class B Shares.

Effective as of January 3, 1995, all such payments described above have
been paid to the Distributor.

The Transfer Agent, an affiliate of the Manager, acts as shareholder
servicing, dividend disbursing and transfer agent for the Fund and for the other
mutual funds in the Delaware Group. The Transfer Agent is paid a fee by the
Fund for providing these services consisting of an annual per account charge of
$11.00 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 Manager and its affiliates own the name "Delaware Group." Under
certain circumstances, including the termination of the Fund's advisory
relationship with the Manager or its distribution relationship with the
Distributor, the Manager and its affiliates could cause the Fund to delete the
words "Delaware Group" from the Fund's name.

Morgan Guaranty Trust Company of New York ("Morgan"), 60 Wall Street, New
York, NY 10260, is custodian of the Fund's securities and cash. As custodian
for the Fund, Morgan 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.

The legality of the issuance of the shares offered hereby, registered
pursuant to Rule 24f-2 under the Investment Company Act of 1940, has been passed
upon for the Fund by Stradley, Ronon, Stevens & Young, Philadelphia,
Pennsylvania.

Shares of the Fund are exempt from Pennsylvania personal property taxes and
qualify as an authorized investment for trustees in Pennsylvania if such an
investment is otherwise appropriate.

-71-
<PAGE>

CAPITALIZATION

The Fund has a present authorized capitalization of five hundred million
shares of capital stock with a $1 par value per share. The Fund offers four
classes of shares, each representing a proportionate interest in the assets of
the Fund, and each having the same voting and other rights and preferences as
the other classes, except that shares of the Institutional Class may not vote on
matters affecting the Fund's Distribution Plans under Rule 12b-1. Similarly, as
a general matter, shareholders of Class A Shares, Class B Shares and Class C
Shares may vote only on matters affecting the 12b-1 Plan that relates to the
class of shares that they hold. However, Class B Shares may vote on any
proposal to increase materially the fees to be paid by the Fund under the Rule
12b-1 Plan relating to Class A Shares. General expenses of the 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 Class A, Class B and Class C Shares
will be allocated solely to those classes. The Board of Directors has allocated
three hundred fifty million shares to Class A Shares, fifty million shares to
Class B Shares, fifty million shares to Class C Shares and fifty million shares
to the Institutional Class.

Shares have no preemptive rights, are fully transferable and, when issued,
are fully paid and nonassessable.

Until May 31, 1992, the Fund offered shares of two retail classes,
Delchester I class and Delchester II class (now, the Class A Shares).
Delchester I class shares were offered with a higher sales charge than that
applicable to the Delchester II class, but without the imposition of a Rule 12b-
1 fee. Effective June 1, 1992, following shareholder approval of a Plan of
Recapitalization on May 8, 1992, shareholders of the Delchester I class had
their shares converted into shares of the Delchester II class and became subject
to that class' Rule 12b-1 charges. Effective at the same time, following
approval by shareholders, the name of the Delchester II class was changed to the
Delchester Fund class. Effective May 2, 1994, the Delchester Fund class became
known as the Delchester Fund A Class and the Delchester Fund (Institutional)
class became known as the Delchester Fund Institutional Class.

-72-
<PAGE>

NONCUMULATIVE VOTING

THESE SHARES HAVE NONCUMULATIVE VOTING RIGHTS WHICH MEANS THAT THE HOLDERS
OF MORE THAN 50% OF THE SHARES OF THE FUND 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 Securities and Exchange
Commission.

-73-
<PAGE>

APPENDIX A--IRA INFORMATION

The Tax Reform Act of 1986 restructured, and in some cases eliminated, the
tax deductibility of IRA contributions. Under the Act, the full deduction for
IRAs ($2,000 for each working spouse and $2,250 for one-income couples) was
retained for all taxpayers who are not covered by an employer-sponsored
retirement plan. Even if a taxpayer (or his or her spouse) is covered by an
employer-sponsored retirement plan, the full deduction is still available if the
taxpayer's adjusted gross income is below $25,000 ($40,000 for taxpayers filing
joint returns). A partial deduction is allowed for married couples with incomes
between $40,000 and $50,000, and for single individuals with incomes between
$25,000 and $35,000. The Act does not permit deductions for contributions to
IRAs by taxpayers whose adjusted gross income before IRA deductions exceeds
$50,000 ($35,000 for singles) and who are active participants in an employer-
sponsored retirement plan. Taxpayers who were not allowed deductions on IRA
contributions still can make nondeductible IRA contributions of as much as
$2,000 for each working spouse ($2,250 for one-income couples), and defer taxes
on interest or other earnings from the IRAs. Special rules apply for
determining the deductibility of contributions made by married individuals
filing separate returns.

As illustrated in the following tables, maintaining an Individual
Retirement Account remains a valuable opportunity.

For many, an IRA will continue to offer both an up-front tax break with its
tax deduction each year and the real benefit that comes with tax-deferred
compounding. For others, losing the tax deduction will impact their taxable
income status each year. Over the long term, however, being able to defer taxes
on earnings still provides an impressive investment opportunity--a way to have
money grow faster due to tax-deferred compounding.

-74-
<PAGE>

Even if your IRA contribution is no longer deductible, the benefits of
saving on a tax-deferred basis can be substantial. The following tables
illustrate the benefits of tax-deferred versus taxable compounding. Each
reflects a constant 10% rate of return, compounded annually, with the
reinvestment of all proceeds. The tables do not take into account any sales
charges or fees. Of course, earnings accumulated in your IRA will be subject to
tax upon withdrawal. If you choose a mutual fund with a fluctuating net asset
value, like the Fund, your bottom line at retirement could be lower--it could
also be much higher.

$2,000 INVESTED ANNUALLY ASSUMING A 10% ANNUALIZED RETURN

15% Tax Bracket Single -- $0 - $22,750
- --------------- Joint -- $0 - $38,000

HOW MUCH
CUMULATIVE HOW MUCH YOU HAVE
END OF INVESTMENT YOU HAVE WITH FULL
YEAR AMOUNT WITHOUT IRA IRA DEDUCTION
<S> <C> <C> <C>

1 $ 2,000 $ 1,844 $ 2,200
5 10,000 10,929 13,431
10 20,000 27,363 35,062
15 30,000 52,074 69,899
20 40,000 89,231 126,005
25 50,000 145,103 216,364
30 60,000 229,114 361,887
35 70,000 355,438 596,254
40 80,000 545,386 973,704
</TABLE>

[Without IRA--investment of $1,700 ($2,000 less 15%) earning 8.5% (10% less
15%)]

-75-
<PAGE>

<TABLE>
<CAPTION>
28% Tax Bracket Single -- $22,751 - $55,100
- --------------- Joint -- $38,001 - $91,850

HOW MUCH HOW MUCH YOU HAVE
CUMULATIVE YOU HAVE WITH FULL IRA
END OF INVESTMENT WITHOUT NO
YEAR AMOUNT IRA DEDUCTION DEDUCTION
<S> <C> <C> <C> <C>
1 $ 2,000 $ 1,544 $ 1,584 $ 2,200
5 10,000 8,913 9,670 13,431
10 20,000 21,531 25,245 35,062
15 30,000 39,394 50,328 69,899
20 40,000 64,683 90,724 126,005
25 50,000 100,485 155,782 216,364
30 60,000 151,171 260,559 361,887
35 70,000 222,927 429,303 596,254
40 80,000 324,512 701,067 973,704
</TABLE>

[Without IRA--investment of $1,440 ($2,000 less 28%) earning
7.2% (10% less 28%)]

[With IRA--No Deduction--investment of $1,440 ($2,000 less
28%) earning 10%]

31% Tax Bracket Single -- $55,101 - $115,000
--------------- Joint -- $91,851 - $140,000

<TABLE>
<CAPTION>
HOW MUCH HOW MUCH YOU HAVE
CUMULATIVE YOU HAVE WITH FULL IRA
END OF INVESTMENT WITHOUT NO
YEAR AMOUNT IRA DEDUCTION DEDUCTION
<S> <C> <C> <C> <C>
1 $ 2,000 $ 1,475 $ 1,518 $ 2,200
5 10,000 8,467 9,268 13,431
10 20,000 20,286 24,193 35,062
15 30,000 36,787 48,231 69,899
20 40,000 59,821 86,943 126,005
25 50,000 91,978 149,291 216,364
30 60,000 136,868 249,702 361,887
35 70,000 199,536 411,415 596,254
40 80,000 287,021 671,855 973,704
</TABLE>

[Without IRA--investment of $1,380 ($2,000 less 31%) earning 6.9% (10% less
31%)]

[With IRA--No Deduction--investment of $1,380 ($2,000 less 31%) earning 10%]

-76-
<PAGE>

36% Tax Bracket* Single -- $115,001 - $250,000
- --------------- Joint -- $140,001 - $250,000

HOW MUCH HOW MUCH YOU HAVE
CUMULATIVE YOU HAVE WITH FULL IRA
END OF INVESTMENT WITHOUT NO
YEAR AMOUNT IRA DEDUCTION DEDUCTION
<S> <C> <C> <C> <C>

1 $ 2,000 $ 1,362 $ 1,408 $ 2,200
5 10,000 7,739 8,596 13,431
10 20,000 18,292 22,440 35,062
15 30,000 32,683 44,736 69,899
20 40,000 52,308 80,643 126,005
25 50,000 79,069 138,473 216,364
30 60,000 115,562 231,608 361,887
35 70,000 165,327 381,602 596,254
40 80,000 233,190 623,170 973,704

[Without IRA--investment of $1,280 ($2,000 less 36%) earning
6.4% (10% less 36%)]

[With IRA--No Deduction--investment of $1,280 ($2,000 less
36%) earning 10%]

39.6% Tax Bracket* Single -- over $250,000
----------------- Joint -- over $250,000

HOW MUCH HOW MUCH YOU HAVE
CUMULATIVE YOU HAVE WITH FULL IRA
END OF INVESTMENT WITHOUT NO
YEAR AMOUNT IRA DEDUCTION DEDUCTION
<S> <C> <C> <C> <C>

1 $ 2,000 $ 1,281 $ 1,329 $ 2,200
5 10,000 7,227 8,112 13,431
10 20,000 16,916 21,178 35,062
15 30,000 29,907 42,219 69,899
20 40,000 47,324 76,107 126,005
25 50,000 70,677 130,684 216,364
30 60,000 101,986 218,580 361,887
35 70,000 143,965 360,137 596,254
40 80,000 200,249 588,117 973,704
</TABLE>
[Without IRA--investment of $1,208 ($2,000 less 39.6%) earning 6.04% (10% less
39.6%)]

[With IRA--No Deduction--investment of $1,208 ($2,000 less 39.6%) earning 10%]

-77-
<PAGE>

- -----------------------
* For tax years beginning after 1992, a 36% tax rate applies to all taxable
income in excess of the maximum dollar amounts subject to the 31% tax rate.
In addition, a 10% surtax (not applicable to capital gains) applies to
certain high-income taxpayers. It is computed by applying a 39.6% rate to
taxable income in excess of $250,000. The above tables do not reflect the
personal exemption phaseout nor the limitations of itemized deductions that
may apply.

-78-
<PAGE>

<TABLE>
<CAPTION>
$2,000 SINGLE INVESTMENT AT A RETURN OF 10%
COMPOUNDED MONTHLY

TAXABLE-- TAXABLE-- TAXABLE--
YEARS 39.6%* 36%* 31%
- -------------------------------------------------------
<S> <C> <C> <C>
10 $ 3,653 $ 3,787 $ 3,980
15 4,938 5,210 5,614
20 6,673 7,169 7,918
30 12,190 13,572 15,756
40 22,267 25,696 31,351
</TABLE>

TAXABLE-- TAXABLE-- TAX
YEARS 28% 15% DEFERRED
- -------------------------------------------------------
<S> <C> <C> <C>
10 $ 4,100 $ 4,665 $ 5,414
15 5,870 7,125 8,908
20 8,405 10,882 14,656
30 17,231 25,385 39,675
40 35,323 59,214 107,401
</TABLE>

$2,000 INVESTED ANNUALLY AT A RETURN OF 10%
COMPOUNDED MONTHLY

<TABLE>
<CAPTION>
TAXABLE-- TAXABLE-- TAXABLE--
YEARS 39.6%* 36%* 31%
- -------------------------------------------------------
<S> <C> <C> <C>
10 $ 28,276 $ 28,891 $ 29,773
15 50,241 51,913 54,348
20 79,928 83,590 89,014
30 174,276 187,150 206,891
40 347,756 383,214 441,441
</TABLE>

<TABLE>
<CAPTION>
TAXABLE-- TAXABLE-- TAX
YEARS 28% 15% DEFERRED
- -------------------------------------------------------
<S> <C> <C> <C>
10 $ 30,317 $ 32,819 $ 36,018
15 55,875 63,110 72,877
20 92,468 109,373 133,521
30 219,878 287,948 397,466
40 481,071 704,501 1,111,974

</TABLE>

-79-
<PAGE>

THE VALUE OF STARTING YOUR IRA EARLY

The following illustrates how much more you would have contributing $2,000
each January--the earliest opportunity--compared to contributing on April 15th
of the following year--the latest, for each tax year.

<TABLE>
<S> <C>
After 5 years $ 3,528 more
10 years $ 6,113
20 years $17,228
30 years $47,295
</TABLE>

Compounded returns for the longest period of time is the key. The above
illustration assumes a 10% rate of return and the reinvestment of all proceeds.

And it pays to shop around. If you get just 2% more per year, it can make
a big difference when you retire. A constant 8% versus 10% return, compounded
monthly, illustrates the point. This chart is based on a yearly investment of
$2,000 on January 1. After 30 years the difference can mean as much as 50%
more!

<TABLE>
8% 10%
<S> <C> <C>
10 years $ 31,828 $ 36,018
30 years 259,288 397,466
</TABLE>

The statistical exhibits above are for illustration purposes only and do
not reflect the actual performance for the Fund either in the past or in the
future.

-80-
<PAGE>

FINANCIAL STATEMENTS

Ernst & Young LLP serves as the independent auditors for the Fund and, in
its capacity as such, audits the financial statements contained in the Fund's
Annual Report. The Fund's Statement of Net Assets, Statement of Operations,
Statement of Changes in Net Assets and Notes to Financial Statements, as well as
the report of Ernst & Young LLP, independent auditors, for the fiscal year ended
July 31, 1995 are included in the Fund's Annual Report to shareholders. The
financial statements, the notes relating thereto and the report of Ernst & Young
LLP listed above are incorporated by reference from the Annual Report into this
Part B.

-81-
<PAGE>

Report of Independent Auditors

To the Shareholders and Board of Directors
Delaware Group Delchester High-Yield Bond Fund, Inc.

We have audited the accompanying statement of net assets of Delaware Group
Delchester High-Yield Bond Fund, Inc. as of July 31, 1995, and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
July 31, 1995, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Delaware Group Delchester High-Yield Bond Fund, Inc. at July 31, 1995, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and the financial highlights
for each of the five years in the period then ended, in conformity with
generally accepted accounting principles.

/s/ Ernst & Young LLP
---------------------
Ernst & Young LLP

Philadelphia, Pennsylvania
September 7, 1995
<PAGE>

Form N-1A
File No. 2-37707
Delaware Group Delchester
High-Yield Bond Fund, Inc.

PART C
------

Other Information
-----------------

Item 24. Financial Statements and Exhibits
---------------------------------

(a) Financial Statements:

Part A - Financial Highlights

*Part B - Statement of Net Assets
Statement of Operations
Statement of Changes in Net Assets
Notes to Financial Statements
Accountant's Report

* The financial statements and Accountant's Report listed above
are incorporated by reference from the Registrant's Annual
Report for the fiscal year ended July 31, 1995 into Part B.

(b) Exhibits:

(1) Articles of Incorporation.
-------------------------

(a) Articles of Incorporation, as amended and supplemented
to date, attached as Exhibit.

(b) Form of Articles Supplementary (November 1995) attached
as Exhibit.

(2) By-Laws. By-Laws, as amended to date, attached as Exhibit.
-------

(3) Voting Trust Agreement. Inapplicable.
----------------------

i
<PAGE>

Form N-1A
File No. 2-37707
Delaware Group Delchester
High-Yield Bond Fund, Inc.

(4) Copies of All Instruments Defining the Rights of Holders.
--------------------------------------------------------

(a) Articles of Incorporation, Articles of Amendment and
----------------------------------------------------
Articles Supplementary. Article Second of Articles
----------------------
Supplementary (June 1, 1992 and April 29, 1995), Article
Fifth of Articles of Incorporation (March 4, 1983) and
Article Tenth of Articles of Amendment (May 2, 1985)
attached as Exhibit 24(b)(1)(a) and Form of Articles
Supplementary (November 1995) attached as Exhibit
24(b)(1)(b).

(b) By-Laws. Article II, Article III, as amended, and
-------
Article XIII, which was subsequently redesignated as
Article XIV, attached as Exhibit 24(b)(2).

(5) Investment Management Agreement. Investment Management
-------------------------------
Agreement between Delaware Management Company, Inc. and the
Registrant dated April 3, 1995 attached as Exhibit.

(6) (a) Distribution Agreement.
----------------------

(i) Form of Distribution Agreement (April 1995)
included as Module.

(ii) Form of Amendment No. 1 to Distribution
Agreement (November 1995) included as Module.

(b) Administration and Service Agreement. Form of
------------------------------------
Administration and Service Agreement (as amended
November 1995) included as Module.

(d) Form of Mutual Fund Agreement for the Delaware Group of
Funds included as Module.

(7) Bonus, Profit Sharing, Pension Contracts. Amended and Restated
----------------------------------------
Profit Sharing Plan included as Module.

ii
<PAGE>

Form N-1A
File No. 2-37707
Delaware Group Delchester
High-Yield Bond Fund, Inc.

(8) Custodian Agreement. Incorporated into this filing by
-------------------
reference to Post-Effective Amendment No. 41 filed September
28, 1989, Post-Effective Amendment No. 44 filed July 31, 1991
and Post-Effective Amendment No. 51 filed September 29, 1994.

(9) Other Material Contracts. Shareholders Services Agreement
------------------------
incorporated into this filing by reference to Post-Effective
Amendment No. 39 filed July 28, 1988.

(10) Opinion of Counsel. Filed with letter relating to Rule 24f-2
------------------
on September 27, 1995.

(11) Consent of Auditors. Attached as Exhibit.
-------------------

(12-13) Inapplicable.

(14) Model Plans. Incorporated into this filing by reference to
-----------
Post-Effective Amendment No. 49 filed September 28, 1993.

Amended Model Plans included as Module.

**(15) Plans under Rule 12b-1.
----------------------

(a) Form of Plan under Rule 12b-1 for Class A (November
1995) included as Module.

(b) Form of Plan under Rule 12b-1 for Class B (November
1995) included as Module.

(16) Schedules of Computation for each Performance Quotation.
-------------------------------------------------------
Attached as Exhibit.

(17) Financial Data Schedules. Attached as Exhibit.
------------------------

(18) Inapplicable.

(19) Other: Directors' Power of Attorney. Attached as Exhibit.
----------------------------

**Relates only to Delchester Fund A Class, Delchester Fund B Class and
Delchester Fund C Class.

Item 25. Persons Controlled by or under Common Control with Registrant. None.
-------------------------------------------------------------

iii
<PAGE>

Form N-1A
File No. 2-37707
Delaware Group Delchester
High-Yield Bond Fund, Inc.

Item 26. Number of Holders of Securities.
-------------------------------
<TABLE>
<CAPTION>

(1) (2)

Number of
Title of Class Record Holders*
-------------- --------------
<S> <C>

Delaware Group Delchester
High-Yield Bond Fund, Inc.'s:

Delchester Fund A Class
Common Stock Par Value 48,480 Accounts as of
$1.00 Per Share October 31, 1995

Delchester Fund B Class
Common Stock Par Value 5,022 Accounts as of
$1.00 Per Share October 31, 1995

Delchester Fund C Class
Common Stock Par Value 0 Accounts as of
$1.00 Per Share October 31, 1995

Delchester Fund Institutional Class
Common Stock Par Value 36 Accounts as of
$1.00 Per Share October 31, 1995
</TABLE>
*Delchester Fund C Class was not offered prior to the effective date of this
Registration Statement.

Item 27. Indemnification. Incorporated into this filing by reference to Post-
---------------
Effective Amendment No. 30 filed July 28, 1983 and Article VII of the
By-Laws, as amended, attached as Exhibit.

iv
<PAGE>

Form N-1A
File No. 2-37707
Delaware Group Delchester
High-Yield Bond Fund, Inc.

Item 28. Business and Other Connections of Investment Adviser.
----------------------------------------------------

Delaware Management Company, Inc. (the "Manager") or its affiliate,
Delaware International Advisers Ltd., also serves as investment manager to the
other funds in the Delaware Group (Delaware Group Delaware Fund, Inc., Delaware
Group Trend Fund, Inc., Delaware Group Value Fund, Inc., Delaware Group DelCap
Fund, Inc., Delaware Group Decatur Fund, Inc., Delaware Group Government Fund,
Inc., Delaware Group Limited-Term Government Funds, Inc., Delaware Group Cash
Reserve, Inc., Delaware Group Tax-Free Fund, Inc., DMC Tax-Free Income Trust-
Pennsylvania, Delaware Group Tax-Free Money Fund, Inc., Delaware Group Premium
Fund, Inc., Delaware Group Global & International Funds, Inc., Delaware Pooled
Trust, Inc., Delaware Group Dividend and Income Fund, Inc. and Delaware Group
Global Dividend and Income Fund, Inc.) and provides investment advisory services
to institutional accounts, primarily retirement plans and endowment funds. In
addition, certain directors of the Manager also serve as directors/trustees of
the other Delaware Group funds, and certain officers are also officers of these
other funds. A company owned by the Manager's parent company acts as principal
underwriter to the mutual funds in the Delaware Group (see Item 29 below) and
another such company acts as the shareholder servicing, dividend disbursing and
transfer agent for all of the mutual funds in the Delaware Group.

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, Chief Executive Officer, Chief
Investment Officer and Director of Delaware Management
Company, Inc.; President, Chief Executive Officer,
Chairman of the Board and Director of the Registrant,
and with the exception of Delaware Pooled Trust, Inc.
each of the other funds in the Delaware Group and
Delaware Management Holdings, Inc.; Chairman of the
Board and Director of Delaware Pooled Trust, Inc. and
Delaware Investment Counselors, Inc.; Chairman, Chief
Executive Officer and Director of DMH Corp., Delaware
International Advisers Ltd., Delaware International
Holdings Ltd. and Founders Holdings, Inc.; and Director
of Delaware Distributors, Inc. and Delaware Service
Company, Inc.

*Business address of each is 1818 Market Street, Philadelphia, PA 19103.

v
<PAGE>

Form N-1A
File No. 2-37707
Delaware Group Delchester
High-Yield Bond Fund, Inc.

Winthrop S. Jessup Executive Vice President and Director of Delaware
Management Company, Inc., DMH Corp., Delaware
International Holdings Ltd. and Founders Holdings, Inc.;
Executive Vice President of the Registrant and, with the
exception of Delaware Pooled Trust, Inc., each of the
other funds in the Delaware Group and Delaware
Management Holdings, Inc.; President and Chief Executive
Officer of Delaware Pooled Trust, Inc.; Vice Chairman of
Delaware Distributors, L.P.; Vice Chairman and Director
of Delaware Distributors, Inc.; Director of Delaware
Management Trust Company, Delaware Service Company, Inc.
and Delaware International Advisers Ltd.; and President
and Director of Delaware Investment Counselors, Inc.

Richard G. Unruh, Jr. Executive Vice President and Director of Delaware
Management Company, Inc.; Executive Vice President of
the Registrant and each of the other funds in the
Delaware Group; Senior Vice President of Delaware
Management Holdings, Inc.; 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, Chairman
of Finance Committee, Mid Atlantic, Inc., since 1989,
2040 Market Street, Philadelphia, PA

Paul E. Suckow Senior Vice President/Chief Investment Officer, Fixed
Income of Delaware Management Company, Inc., the
Registrant and each of the other funds in the Delaware
Group and Delaware Management Holdings, Inc.; Senior
Vice President and Director of Founders Holdings, Inc.;
and Director of Founders CBO Corporation

*Business address of each is 1818 Market Street, Philadelphia, PA 19103.

vi
<PAGE>

Form N-1A
File No. 2-37707
Delaware Group Delchester
High-Yield Bond Fund, Inc.

David K. Downes Senior Vice President, Chief Administrative Officer and
Chief Financial Officer of Delaware Management Company,
Inc., the Registrant, each of the other funds in the
Delaware Group; Chairman and Director of Delaware
Management Trust Company; Senior Vice President, Chief
Administrative Officer, Chief Financial Officer and
Treasurer of Delaware Management Holdings, Inc.; Senior
Vice President, Chief Financial Officer, Treasurer and
Director of DMH Corp.; Senior Vice President, Chief
Administrative Officer, Chief Financial Officer and
Director of Delaware Distributors, Inc. and Delaware
Service Company, Inc.; Chief Financial Officer and
Director of Delaware International Holdings Ltd.; Senior
Vice President, Chief Financial Officer and Treasurer of
Delaware Investment Counselors, Inc.; Senior Vice
President and Director of Founders Holdings, Inc.; and
Director of Delaware International Advisers Ltd.

George M.
Chamberlain, Jr. Senior Vice President, Secretary and Director of
Delaware Management Company, Inc., DMH Corp.,
Delaware Distributors, Inc. and Delaware Service
Company, Inc.; Executive Vice President, Secretary
and Director of Delaware Management Trust Company;
Corporate Vice President, Secretary and Director of
Founders Holdings, Inc.; Senior Vice President and
Secretary of the Registrant, each of the other funds
in the Delaware Group, Delaware Distributors, L.P.,
Delaware Investment Counselors, Inc. and Delaware
Management Holdings, Inc.; Secretary and Director of
Delaware International Holdings Ltd.; and Director
of Delaware International Advisers Ltd.

Director of ICI Mutual Insurance Co. since 1992,
P.O. Box 730, Burlington, VT

*Business address of each is 1818 Market Street, Philadelphia, PA 19103.

vii
<PAGE>

Form N-1A
File No. 2-37707
Delaware Group Delchester
High-Yield Bond Fund, Inc.

Richard J. Flannery Managing Director/Corporate Tax & Affairs of Delaware
Management Company, Inc., Delaware Management Holdings,
Inc., DMH Corp., Delaware Distributors, L.P., Delaware
Distributors, Inc., Delaware Service Company, Inc.,
Delaware Management Trust Company, Founders CBO
Corporation, Delaware International Holdings Ltd. and
Delaware Investment Counselors, Inc.; Vice President of
the Registrant and each of the other funds in the
Delaware Group; Managing Director/Corporate Tax &
Affairs and Director of Founders Holdings, Inc.; and
Director of Delaware International Advisers 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

Michael P. Bishof/1/ Vice President and Treasurer of Delaware Management
Company, Inc., the Registrant, each of the other funds
in the Delaware Group, Delaware Management Holdings,
Inc., DMH Corp., Delaware Distributors, L.P., Delaware
Distributors, Inc., Delaware Service Company, Inc.,
Founders Holdings, Inc. and Founders CBO Corporation

Eric E. Miller Vice President and Assistant Secretary of Delaware
Management Company, Inc., the Registrant, each of the
other funds in the Delaware Group, Delaware Management
Holdings, Inc., DMH Corp., Delaware Distributors, L.P.,
Delaware Distributors Inc., Delaware Service Company,
Inc., Delaware Management Trust Company, Founders
Holdings, Inc. and Delaware Investment Counselors, Inc.

Richelle S. Maestro Vice President and Assistant Secretary of Delaware
Management Company, Inc., Delaware Management Holdings,
Inc., Delaware Distributors, L.P., Delaware
Distributors, Inc., Delaware Service Company, Inc., the
Registrant, each of the other funds in the Delaware
Group, DMH Corp., Delaware Management Trust Company,
Delaware Investment Counselors, Inc. and Founders
Holdings, Inc.; and Assistant Secretary of Founders CBO
Corporation

General Partner of Tri-R Associates since 1989, 10001
Sandmeyer Ln., Philadelphia, PA

*Business address of each is 1818 Market Street, Philadelphia, PA 19103.

viii
<PAGE>

Form N-1A
File No. 2-37707
Delaware Group Delchester
High-Yield Bond Fund, Inc.

Joseph H. Hastings Vice President/Corporate Controller of Delaware
Management Company, Inc., the Registrant, each of the
other funds in the Delaware Group, Delaware Management
Holdings, Inc., DMH Corp., Delaware Distributors, L.P.,
Delaware Distributors, Inc., Delaware Service Company,
Inc., Delaware Investment Counselors, Inc. and Founders
Holdings, Inc.; Executive Vice President, Treasurer and
Chief Financial Officer of Delaware Management Trust
Company; and Assistant Treasurer of Founders CBO
Corporation

Bruce A. Ulmer Vice President/Director of Internal Audit of Delaware
Management Company, Inc., the Registrant, each of the
other funds in the Delaware Group, Delaware Management
Holdings, Inc., DMH Corp. and Delaware Management Trust
Company

Lisa O. Brinkley/2/ Vice President/Compliance of Delaware Management
Company, Inc., the Registrant, each of the other funds
in the Delaware Group, DMH Corp., Delaware Distributors,
L.P., Delaware Distributors, Inc., Delaware Service
Company, Inc., Delaware Management Trust Company and
Delaware Investment Counselors, Inc.

Rosemary E. Milner Vice President/Legal of Delaware Management Company,
Inc., the Registrant, each of the other funds in the
Delaware Group, Delaware Distributors, L.P. and Delaware
Distributors, Inc.

Douglas L. Anderson/3/ Vice President/Operations of Delaware Management
Company, Inc. and Delaware Service Company, Inc.; and
Vice President/Operations and Director of Delaware
Management Trust Company

Michael T. Taggart/4/ Vice President/Facilities Management and Administrative
Services of Delaware Management Company, Inc.

Gerald T. Nichols Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., the Registrant, each of the
tax-exempt funds, the fixed income funds and the closed-
end funds in the Delaware Group; Vice President of
Founders Holdings, Inc.; and Treasurer and Director of
Founders CBO Corporation

*Business address of each is 1818 Market Street, Philadelphia, PA 19103.

ix
<PAGE>

Form N-1A
File No. 2-37707
Delaware Group Delchester
High-Yield Bond Fund, Inc.

J. Michael Pokorny Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., the Registrant, each of the
tax-exempt funds and the fixed income funds in the
Delaware Group

Gary A. Reed Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., the Registrant, each of the
tax-exempt funds and the fixed income funds in the
Delaware Group and Delaware Investment Counselors, Inc.

Paul A. Matlack Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., the Registrant, each of the
tax-exempt funds, the fixed income funds and the closed-
end funds in the Delaware Group; Vice President of
Founders Holdings, Inc.; and Secretary and Director of
Founders CBO Corporation

James R. Raith, Jr. Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., the Registrant, each of the
tax-exempt funds, the fixed income funds and the closed-
end funds in the Delaware Group; Vice President of
Founders Holdings, Inc.; and President and Director of
Founders CBO Corporation

Patrick P. Coyne Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., the Registrant, each of the
tax-exempt funds and the fixed income funds in the
Delaware Group

Roger A. Early/5/ Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., the Registrant, each of the
tax-exempt funds and the fixed income funds in the
Delaware Group

Edward N. Antoian Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc. and each of the equity funds in
the Delaware Group

George H. Burwell Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc. and each of the equity funds in
the Delaware Group

John B. Fields Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., each of the equity funds in
the Delaware Group and Delaware Investment Counselors,
Inc.

*Business address of each is 1818 Market Street, Philadelphia, PA 19103.

x
<PAGE>

Form N-1A
File No. 2-37707
Delaware Group Delchester
High-Yield Bond Fund, Inc.

Edward A. Trumpbour Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc. and each of the equity funds in
the Delaware Group

David C. Dalrymple Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc. and each of the equity funds in
the Delaware Group

/1/ VICE PRESIDENT/GLOBAL INVESTMENT MANAGEMENT OPERATIONS, Bankers Trust
and VICE PRESIDENT, CS First Boston Investment Management prior to June
1995.
/2/ VICE PRESIDENT AND COMPLIANCE OFFICER, Banc One Securities Corporation
prior to June 1994 and ASSISTANT VICE PRESIDENT AND COMPLIANCE OFFICER,
Aetna Life and Casualty prior to March 1993.
/3/ VICE PRESIDENT OF OPERATIONS, Supervised Service Company prior to March
1994.
/4/ ASSISTANT VICE PRESIDENT/ADMINISTRATIVE SERVICES, United Pacific Life
Insurance prior to January 1994.
/5/ SENIOR VICE PRESIDENT AND PORTFOLIO MANAGER, Federated Investors prior to
July 1994.

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 Management
Company, Inc. Limited Partner Investment Manager

Delaware Investment
Counselors, Inc. Limited Partner None

Winthrop S. Jessup Vice Chairman Executive Vice President

Keith E. Mitchell President and Chief None
Executive Officer
</TABLE>

*Business address of each is 1818 Market Street, Philadelphia, PA 19103.

xi
<PAGE>

Form N-1A
File No. 2-37707
Delaware Group Delchester
High-Yield Bond Fund, Inc.

Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- --------------------------- ------------------------- ------------------------
<S> <C> <C>

David K. Downes Senior Vice President/ Senior Vice
President/Chief
Chief Administrative Financial Officer/Chief
Officer Administrative Officer

George M. Chamberlain, Jr. Senior Vice President/ Senior Vice President/
Secretary Secretary

J. Lee Cook Senior Vice President/ None
National Sales Manager

Stephen H. Slack Senior Vice President/ None
Wholesaler

William F. Hostler Senior Vice President/ None
Marketing Services

Minette van Noppen Senior Vice President/ None
Retirement Services

Richard J. Flannery Managing Vice President
Director/Corporate
& Tax Affairs

Eric E. Miller Vice President/ Vice President/
Assistant Secretary Assistant Secretary

Richelle S. Maestro Vice President/ Vice President/
Assistant Secretary Assistant Secretary

Joseph H. Hastings Vice President/ Vice President/
Corporate Controller Corporate Controller

Michael P. Bishof Vice President/Treasurer Vice President/Treasurer

Rosemary E. Milner Vice President/Legal Vice President/Legal

Lisa O. Brinkley Vice President/Compliance Vice
President/Compliance

</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.

xii
<PAGE>

Form N-1A
File No. 2-37707
Delaware Group Delchester
High-Yield Bond Fund, Inc.

Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ------------------------ ------------------------------ ---------------------
<S> <C> <C>

Diane M. Anderson Vice President/ None
Retirement Services

Denise F. Guerriere Vice President/Client Services None

Julia R. Vander Els Vice President/ None
Retirement Services

Jerome A. Alrutz Vice President/ None
Retirement Services

Martin J. Cole Vice President/ None
Retirement Services

Joanne A. Mettenheimer Vice President/ None
National Accounts

Christopher H. Price Vice President/Annuity None
Marketing & Administration

Thomas S. Butler Vice President/ None
DDI Administration

Frank Albanese 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

Robert M. Frank Vice President/Wholesaler None

Douglas R. Glennon Vice President/Wholesaler None

Alan D. Kessler Vice President/Wholesaler None

</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.

xiii
<PAGE>

Form N-1A
File No. 2-37707
Group Delchester
High-Yield Bond Fund, Inc.

Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ------------------------- ------------------------- ---------------------
<S> <C> <C>

William M. Kimbrough Vice President/Wholesaler None

Mac McAuliffe Vice President/Wholesaler None

Patrick L. Murphy Vice President/Wholesaler None

Henry W. Orvin Vice President/Wholesaler None

Philip G. Rickards Vice President/Wholesaler None

Dion D. Rooney Vice President/Wholesaler None

Michael W. Rose Vice President/Wholesaler None

Thomas E. Sawyer Vice President/Wholesaler None

Sanford G. Simmons, Jr. Vice President/Wholesaler None

Robert E. Stansbury Vice President/Wholesaler None

Larry D. Stone Vice President/Wholesaler None
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.

Item 30. 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 31. Management Services. None.
-------------------

Item 32. Undertakings.
------------

(a) Not Applicable.

(b) Not Applicable.

xiv
<PAGE>

Form N-1A
File No. 2-37707
Delaware Group Delchester
High-Yield Bond Fund, Inc.

(c) The Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's annual report to
shareholders, upon request and without charge.

(d) The Registrant hereby undertakes to promptly call a meeting of
shareholders for the purpose of voting upon the question of removal of
any director when requested in writing to do so by the record holders of
not less than 10% of the outstanding shares.

xv
<PAGE>

SIGNATURES
----------

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, this Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in this City of Philadelphia and Commonwealth of Pennsylvania on
this 21st day of November, 1995.

DELAWARE GROUP DELCHESTER
HIGH-YIELD BOND FUND, INC.

By /s/Wayne A. Stork
----------------------------
Wayne A. Stork
Chairman of the Board, President,
Chief Executive Officer and Director

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:
<TABLE>
<CAPTION>
Signature Title Date
- --------------------------- -------------------------------- -----------------
<S> <C> <C>
Chairman of the Board, President,
/s/Wayne A. Stork Chief Executive Officer and Director November 21, 1995
- ---------------------------
Wayne A. Stork

Senior Vice President/Chief Financial
Officer/Chief Administrative Officer
(Principal Financial Officer and
/s/David K. Downes Principal Accounting Officer) November 21, 1995
- ---------------------------
David K. Downes

/s/Walter P. Babich * Director November 21, 1995
- ---------------------------
Walter P. Babich

/s/Anthony D. Knerr * Director November 21, 1995
- ---------------------------
Anthony D. Knerr

/s/Ann R. Leven * Director November 21, 1995
- ---------------------------
Ann R. Leven

/s/W. Thacher Longstreth * Director November 21, 1995
- ---------------------------
W. Thacher Longstreth

/s/Charles E. Peck * Director November 21, 1995
- ---------------------------
Charles E. Peck
</TABLE>

*By /s/Wayne A. Stork
-----------------------------
Wayne A. Stork
as Attorney-in-Fact for
each of the persons indicated

xvi
<PAGE>

INDEX TO EXHIBITS

Exhibit No. Exhibit
- ----------- -------
<S> <C>
EX-99.B1A Articles of Incorporation, as amended and supplemented to date

EX-99.B1B Form of Articles Supplementary (November 1995)

EX-99.B2 By-Laws, as amended to date

EX-99.B5 Investment Management Agreement (April 3, 1995)

EX-99.B6AI Form of Distribution Agreement (April 1995)
(Module Name
DIS_AGR_NON_MON)

EX-99.B6AII Form of Amendment No. 1 to Distribution Agreement (November 1995)
(Module Name
AMD_DIS_AGR_NON)

EX-99.B6B Form of Administration and Service Agreement (as amended November
1995)
(Module Name
ADMIN_SER_AGREE)

EX-99.B6C Form of Dealer's Agreement (as amended November 1995)
(Module Name
DEALERS_AGREE)

EX-99.B6D Form of Mutual Fund Agreement for the Delaware Group of Funds
(Module Name
MUTUAL_FUND_AGR)

EX-99.B7 Amended and Restated Profit Sharing Plan
(Module Name
PROF_SHARE_PLAN)

EX-99.B11 Consent of Auditors

EX-99.B14 Amended Model Plans
(Module Name
MODEL_PLANS)

EX-99.B15A Form of Plan under Rule 12b-1 for Class A (November 1995)
(Module Name
CL_A_SHARE_NON)

EX-99.B15B Form of Plan under Rule 12b-1 for Class B (November 1995)
(Module Name
CL_B_SHARE_ALL)

EX-99.B15C Form of Plan under Rule 12b-1 for Class C (November 1995)
(Module Name
CL_C_SHARE_ALL)

EX-99.B16 Schedules of Computation for each
Performance Quotation

EX-27 Financial Data Schedules

EX-99.B19 Directors' Power of Attorney

</TABLE>

<PAGE>

DELAWARE GROUP DELCHESTER HIGH-YIELD BOND FUND, INC.

ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION

Delaware Group Delchester High-Yield Bond Fund, Inc., a Maryland
corporation having its principal office in Baltimore, Maryland (the
"Corporation"), hereby certifies, in accordance with section 2-208 of the
Maryland General Corporation Law, to the State Department of Assessments and
Taxation of Maryland that:

FIRST: The Board of Directors of the Corporation has adopted resolutions
classifying a third class of shares of Common Stock of the Corporation as the
Delchester Fund B Class and allocating 50,000,000 shares of authorized, unissued
and unclassified Common Stock, par value $1.00 per share, to the Delchester Fund
B Class (the "B Class").

SECOND: The shares of the B Class shall represent proportionate interests in
the same portfolio of investments as the shares of the Delchester Fund
(Institutional) class and the Delchester Fund class of the Corporation. The
shares of the B Class shall have the same preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, or terms or conditions of redemption as the shares of the
Delchester Fund (Institutional) class and the Delchester Fund class, all as set
forth in the Articles of Incorporation of the Corporation, except for the
differences hereafter set forth:

1. The dividends and distributions of investment income and capital gains with
respect to the B Class of shares of Common Stock shall be in such amounts as may
be declared from time to time by the Board of Directors, and such dividends and
distributions may vary with respect to such class from the dividends and
distributions of investment income and capital gains with respect to the other
classes of Common Stock of the Corporation to reflect differing allocations of
the expenses of the Corporation among the classes and any resultant difference
among the net asset values per share of the classes, to such extent and for such
purposes as the Board of Directors may deem appropriate. The allocation of
investment income and capital gains and expenses and liabilities of the
Corporation among the three classes of Common Stock of the Corporation shall be
determined by the Board of Directors in a manner that is consistent with the
<PAGE>

orders, as applicable, dated April 10, 1987 and November 9, 1992 (Investment
Company Act of 1940 Release Nos. 15675 and 19086) issued by the Securities and
Exchange Commission, and any existing or future amendment to such orders or any
rule or interpretation under the Investment Company Act of 1940, as amended,
that modifies or supersedes such orders;

2. Except as may otherwise be required by law pursuant to any applicable
order, rule or interpretation issued by the Securities and Exchange Commission,
or otherwise, the holders of the B Class shares shall have (i) exclusive voting
rights with respect to any matter submitted to a vote of stockholders that
affects only holders of the B Class shares, including without limitation, the
provisions of any Distribution Plan adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended, (a "Distribution Plan") applicable
to the B Class and (ii) no voting rights with respect to the provisions of any
Distribution Plan applicable to the existing classes of Common Stock or with
regard to any other matter submitted to a vote of stockholders which does not
affect holders of the B Class shares.

3. (a) Each share of the B Class, other than shares described in paragraph
(3) (b) herein, shall be converted automatically, and without any action or
choice on the part of the holder thereof, into shares of the Delchester Fund
class on the Conversion Date. The term "Conversion Date" when used herein shall
mean a date set forth in the Corporation's prospectus, as such prospectus may be
amended from time to time, that is no later than three months after either (i)
the date on which the eighth anniversary of the date of issuance of the share
occurs, or (ii) any such other anniversary date as may be determined by the
Board of Directors and set forth in the Corporation's prospectus, as such
prospectus may be amended from time to time; provided that any such other
anniversary date determined by the Board of Directors shall be a date that will
occur prior to the anniversary date set forth in clause (i) and any such other
date theretofore determined by the Board of Directors pursuant to this clause
(ii); but further provided that, subject to the provisions of the next sentence,
for any shares of the B Class acquired through an exchange, or through a series
of exchanges, as permitted by the Corporation as provided in the Corporation's
prospectus, as such prospectus may be amended from time to time, from another
investment company (an "eligible investment company"), the Conversion Date shall
be the conversion date applicable to the shares of stock of the eligible
investment company originally subscribed for in lieu of the Conversion Date of
any stock acquired through exchange if such eligible investment company issuing
the stock originally subscribed for had a conversion feature, but not later than
the Conversion Date determined under (i) above. For the purpose of calculating
the holding period required for conversion, the date of issuance of a share of
the B
<PAGE>

Class shall mean (i) in the case of a share of the B Class obtained by the
holder thereof through an original subscription to the Corporation, the date of
the issuance of such share of the B Class, or (ii) in the case of a share of the
B Class obtained by the holder thereof through an exchange, or through a series
of exchanges, from an eligible investment company, the date of issuance of the
share of the eligible investment company to which the holder originally
subscribed.

(b) Each share of the B Class (i) purchased through the automatic reinvestment
of a dividend or distribution with respect to the B Class or the corresponding B
Class of any other investment company issuing such class of shares or (ii)
issued pursuant to an exchange privilege granted by the Corporation in an
exchange or series of exchanges for shares originally purchased through the
automatic reinvestment of a dividend or distribution with respect to shares of
capital stock of an eligible investment company shall be segregated in a
separate sub-account on the stock records of the Corporation for each of the
holders of record thereof. On any Conversion Date, a number of the shares held
in the separate sub-account of the holder of record of the share or shares being
converted, calculated in accordance with the next following sentence, shall be
converted automatically, and without any action or choice on the part of the
holder, into shares of the Delchester Fund class. The number of shares in the
holder's separate sub-account so converted shall (i) bear the same ratio to the
total number of shares maintained in the separate sub-account on the Conversion
Date (immediately prior to conversion) as the number of shares of the holder
converted on the Conversion Date pursuant to paragraph (3)(a) hereof bears to
the total number of B Class shares of the holder on the Conversion Date
(immediately prior to conversion) after subtracting the shares then maintained
in the holder's separate sub-account, or (ii) be such other number as may be
calculated in such other manner as may be determined by the Board of Directors
and set forth in the Corporation's prospectus, as such prospectus may be amended
from time to time.

(c) The number of shares of the Delchester Fund class into which a share of the
B Class is converted pursuant to paragraphs 3(a) and 3(b) hereof shall equal the
number (including for this purpose fractions of a share) obtained by dividing
the net asset value per share of the B Class for purposes of sales and
redemption thereof on the Conversion Date by the net asset value per share of
the Delchester Fund class for purposes of sales and redemption thereof on the
Conversion Date.

(d) On the Conversion Date, the shares of the B Class converted into shares of
the Delchester Fund class will no longer be deemed outstanding and the rights of
the holders
<PAGE>

thereof (except the right to receive (i) the number of shares of the Delchester
Fund class into which the shares of the B Class have been converted and (ii)
declared but unpaid dividends to the Conversion Date or such other date set
forth in the Corporation's prospectus, as such prospectus may be amended from
time to time and (iii) the right to vote converting shares of the B Class held
as of any record date occurring on or before the Conversion Date and theretofore
set with respect to any meeting held after the Conversion Date) will cease.
Certificates representing shares of the Delchester Fund class resulting from the
conversion need not be issued until certificates representing shares of the B
Class converted, if issued, have been received by the Corporation or its agent
duly endorsed for transfer.

(e) The automatic conversion of the B Class into the Delchester Fund class as
set forth in paragraphs 3(a) and 3(b) of this Article SECOND shall be suspended
at any time that the Board of Directors determines (i) that there is not
available a reasonably satisfactory opinion of counsel to the effect that (x)
the assessment of the higher fee under the Distribution Plan with respect to the
B Class does not result in the Corporation's dividends or distributions
constituting a "preferential dividend" under the Internal Revenue Code of 1986,
as amended, and (y) the conversion of the B Class does not constitute a taxable
event under federal income tax law, or (ii) any other condition to conversion
set forth in the Corporation's prospectus, as such prospectus may be amended
from time to time, is not satisfied.

(f) The automatic conversion of the B Class into the Delchester Fund class as
set forth in paragraphs 3(a) and 3(b) hereof may also be suspended by action of
the Board of Directors at any time that the Board of Directors determines such
suspension to be appropriate in order to comply with, or satisfy the
requirements of the Investment Company Act of 1940, as amended, and in -effect
from time to time, or any rule, regulation or order issued thereunder relating
to voting by the holders of the B Class on any Distribution Plan with respect to
the Delchester Fund class and in effect from time to time, and in connection
with, or in lieu of, any such suspension, the Board of Directors may provide
holders of the B Class with alternative conversion or exchange rights into other
classes of stock of the Corporation in a manner consistent with the law, rule,
regulation or order giving rise to the possible suspension of the conversion
right.

THIRD: The shares of the B Class have been classified by the Board of
Directors pursuant to authority contained in the Articles of Incorporation of
the Corporation.

IN WITNESS WHEREOF, Delaware Group Delchester High-Yield Bond Fund, Inc. has
caused these Articles Supplementary to be signed in its name and on its behalf
this 28th day of April, 1994.

<PAGE>

DELAWARE GROUP DELCHESTER HIGH-YIELD
BOND FUND, INC.

By:/s/George M. Chamberlain, Jr.
-----------------------------
George M. Chamberlain, Jr.
Senior Vice President

ATTEST:

/s/Eric E. Miller
- -------------------
Eric E. Miller
Assistant Secretary

THE UNDERSIGNED, Senior Vice President of DELAWARE GROUP DELCHESTER HIGH-YIELD
BOND FUND, INC., who executed on behalf of the said Corporation the foregoing
Articles Supplementary, of which this instrument is made a part, hereby
acknowledges, in the name of and on behalf of said Corporation, said Articles
Supplementary to be the corporate act of said Corporation and further certifies
that, to the best of his knowledge, information and belief, the matters and
facts set forth therein with respect to the authorization and approval thereof
are true in all material respects, under the penalties of perjury.

By:/s/George M. Chamberlain, Jr.
-----------------------------
George M. Chamberlain, Jr.
Senior Vice President
<PAGE>

DELAWARE GROUP DELCHESTER HIGH-YIELD BOND FUND, INC.

ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION

Delaware Group Delchester High-Yield Bond Fund Inc., a Maryland corporation
having its principal office in Baltimore, Maryland (the "Corporation"), hereby
certifies, in accordance with Section 2-208 of the Maryland General Corporation
Law, to the State Department of Assessments and Taxation of Maryland that:

FIRST: The Board of Directors of the Corporation has adopted a
resolution designating the Delchester Fund (Institutional) class of shares
(as distinguished from the existing Delchester Fund class of shares) as the
second class of Common Stock of the Corporation and allocating Fifty
Million (50,000,000) shares of authorized, unissued and unallocated Common
Stock, with a par value of One Dollar ($1.00) per share, to the Delchester
Fund (Institutional) class.

SECOND: The shares of the Delchester Fund (Institutional) class and
the Delchester Fund class shall represent proportionate interests in the
same portfolio of investments of the Common Stock Series. The shares of the
Delchester Fund (Institutional) class of the Corporation shall have the
same rights and privileges, and shall be subject to the same limitations
and priorities as the shares of the Delchester Fund class, all as set forth
in the Articles of Incorporation of the Corporation, provided that
dividends paid on the shares of the Delchester Fund (Institutional) class
of shares shall not reflect any reduction for payment of fees under the
Distribution Plan of the Delchester Fund class adopted pursuant to Rule
12b-1 under the Investment Company Act of 1940, as amended, and provided
further, that the shares of the Delchester Fund (Institutional) class shall
not vote upon or with respect to any matter relating to or arising from any
such Distribution Plan.

THIRD: The shares of the Delchester Fund (Institutional) class and
the Delchester Fund class of the Corporation have been classified by the
Board of Directors pursuant to authority contained in the Articles of
Incorporation of the Corporation.
<PAGE>

THE UNDERSIGNED, Vice President of DELAWARE GROUP DELCHESTER HIGH-YIELD
BOND FUND, INC., who executed on behalf of the said Corporation the foregoing
Articles Supplementary, of which this instrument is made a part, hereby
acknowledges, in the name of and on behalf of said Corporation, said Articles
Supplementary to be the corporate act of said Corporation and further certifies
that, to the best of his knowledge, information and belief, the matters and
facts set forth therein with respect to the approval thereof are true in all
material respects, under the penalties of perjury.

/s/George M. Chamberlain, Jr.
- -----------------------------
George M. Chamberlain, Jr.

IN WITNESS WHEREOF, Delaware Group Delchester High-Yield Bond Fund, Inc.
has caused these Articles Supplementary to be signed in its name and on its
behalf this 21st day of May, 1992.

DELAWARE GROUP DELCHESTER
HIGH-YIELD BOND FUND, INC.

By:/s/George M. Chamberlain, Jr.
-----------------------------
George M. Chamberlain, Jr.
Vice President

ATTEST:

/s/Eric E. Miller
- -----------------
Eric E. Miller
Assistant Secretary
<PAGE>

DELAWARE GROUP DELCHESTER HIGH-YIELD BOND FUND, INC.

ARTICLES OF AMENDMENT

DELAWARE GROUP DELCHESTER HIGH-YIELD BOND FUND, INC., a Maryland
corporation having its principal office in Baltimore City (hereinafter called
the "Corporation"), certifies that:

FIRST: The Articles of Incorporation of the Corporation are hereby amended by
deleting the first paragraph of Article FIFTH in its entirety and inserting the
following paragraph in lieu thereof:

FIFTH: The total number of shares of stock which the Corporation shall have
- ------
authority to issue is Five Hundred Million (500,000,000) shares of stock, with a
par value of One Dollar ($1.00) per share, to be known and designated as Common
Stock, such shares of Common Stock having an aggregate par value of Five Hundred
Million Dollars ($500,000,000), and one sub-series of the Common Stock Series is
hereby designated as the "Delchester Fund" class, and Four Hundred Million
(400,000,000) shares of Common Stock are hereby allocated to such sub-series.
One Hundred Million (100,000,000) shares of the Common Stock Series are not
classified. The aggregate par value of all shares of all series and classes of
stock is Five Hundred Million Dollars ($500,000,000).

SECOND: (a) The total number of shares of stock which the Corporation was
authorized to issue prior to the amendment was Five Hundred Million
(500,000,000) shares, with a par value of One Dollar ($1.00) per share, known
and designated as Common Stock, with an aggregate par value of Five Hundred
Million Dollars ($500,000,000). Two sub-series of the Common Stock Series were
designated and classified as the Delchester I Class, and Two Hundred Million
(200,000,000) shares (par value $1.00 per share) of Common Stock were classified
and allocated to such sub-series, with an aggregate par value of Two Hundred
Million Dollars ($200,000,000), and the Delchester II Class, and Two Hundred
Million (200,000,000) shares (par value $1.00 per share) of Common Stock were
classified and allocated to such sub-series, with an aggregate par value of Two
Hundred Million Dollars ($200,000,000); and

(b) The total number of shares of stock which the Corporation is authorized to
issue, following the aforesaid amendment, is Five Hundred Million (500,000,000)
shares, with a par value of One Dollar ($1.00) per share, with an aggregate par
value of Five Hundred Million Dollars ($500,000,000), known and designated as
Common Stock. One sub-series of the Common Stock Series has been designated as
<PAGE>

the Delchester Fund class, and Four Hundred Million (400,000,000) shares of
Common Stock, with a par value of One Dollar ($1.00) per share, have been
designated and allocated to such sub-series, with an aggregate par value of Four
Hundred Million Dollars ($400,000,000).

(c) The total number of shares of all classes and series of stock and the
individual and aggregate par value of such shares have not been changed by this
amendment.

THIRD: The amendment was advised by the Board of Directors and approved by
the stockholders.

FOURTH: The Articles of Amendment shall become effective at 5:00 P.M. on the
date of filing.

FIFTH: At the effective time, each issued share of Delchester I Class shall
be changed into a share of the Delchester Fund class and the Delchester II Class
shares shall be redesignated Delchester Fund class shares. Outstanding
certificates of Delchester I Class shall be deemed to represent the same number
of shares of the Delchester Fund class.

THE UNDERSIGNED, Vice President of DELAWARE GROUP DELCHESTER HIGH-YIELD BOND
FUND, INC., who executed on behalf of said Corporation the foregoing Articles of
Amendment, of which this certificate is made a part, hereby acknowledges, in the
name and on behalf of said Corporation, the foregoing Articles of Amendment to
be the corporate act of said Corporation and further certifies that, to the best
of his knowledge, information and belief, the matters and facts set forth
therein with respect to the approval thereof are true in all material respects,
under the penalties of perjury.

/s/Eric E. Miller
- -----------------
Eric E. Miller
Vice President

IN WITNESS WHEREOF, DELAWARE GROUP DELCHESTER HIGH-YIELD BOND FUND, INC. has
caused these Articles of Amendment to be signed in its name and on its behalf by
its Vice President and attested by its Assistant Secretary, on May 15, 1992.

DELAWARE GROUP DELCHESTER HIGH-YIELD
BOND FUND, INC.

By:/s/Eric E. Miller
-----------------
Eric E. Miller
Vice President

<PAGE>

Attest:

/s/Richard J. Flannery
- ----------------------
Richard J. Flannery
Assistant Secretary
<PAGE>

ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
DELCHESTER BOND FUND, INC.

DELCHESTER BOND FUND, INC., a Maryland corporation having its principal
office in Baltimore City, Maryland (the "Corporation"), hereby certifies to the
State Department of Assessments and Taxation of Maryland, that:

ONE: ARTICLE SECOND of the Articles of Incorporation is hereby amended in its
entirety to read as follows:

SECOND: The name of the corporation is Delaware Group Delchester High-
- -------
Yield Bond Fund, Inc.

The Corporation expressly agrees and acknowledges that the name "Delaware Group"
is the sole property of Delaware Management Company, Inc. ("DMC"), that similar
names are used by affiliated funds in the investment business with the
permission of DMC, and that the Corporation's use of such name is with the
permission of DMC. The Corporation further expressly agrees and acknowledges
that its use of "Delaware Group" in its name may be terminated by DMC if the
Corporation ceases to use Delaware Management Company, Inc. as its investment
adviser or Delaware Distributors, Inc. ("DDI") as its principal underwriter (or
to use affiliates of DMC and DDI for such purposes). The Corporation further
expressly agrees and acknowledges that in such event DMC may require the
Corporation to present to its shareholders, at the next annual or special
meeting of the Corporation held after such request, a proposal to change the
name of the Corporation to delete reference to the name "Delaware Group." The
Corporation further expressly agrees and acknowledges in such event to use its
best efforts to promptly comply with such request to change its name and that
the Board of Directors of the Corporation shall recommend such a proposal to it
shareholders. The Corporation further expressly acknowledges and agrees, upon
shareholder approval of such a proposal, to make and cause to be made such
filings to effect the change of name as may be necessary with the State of
Maryland, the United States Securities and Exchange Commission, or other
regulatory authorities.

TWO: Pursuant to Section 2-604(b) of the Maryland General Corporation Law, the
board of directors of the Corporation on April 7, 1988 duly adopted a resolution
setting forth the foregoing amendment to the Articles of Incorporation,
declaring said amendment to the Articles of Incorporation advisable and
directing that it be submitted for consideration by the shareholders of the
Corporation at the annual meeting to be held on June 14, 1988.
<PAGE>

THIRD: Notice setting forth said amendment to the Articles of Incorporation
and stating that a purpose of the meeting of the shareholders would be to take
action thereon was given, as required by law, to all shareholders entitled to
vote thereon. The amendment to the Articles of Incorporation was approved by the
shareholders of the Corporation at said meeting by the affirmative vote of a
majority of all the votes entitled to be cast thereon. (Approval by a majority
of all the votes entitled to be cast on the matter is authorized pursuant to the
Articles of Incorporation of the Corporation.)

FOURTH: The amendment to the Articles of Incorporation as hereinabove set
forth has been duly advised by the board of directors and approved by the
shareholders of the Corporation.

FIFTH: The amendment to the Articles of Incorporation as hereinabove set
forth shall be duly filed with Maryland Department of Assessments and Taxation
on June 15, 1988, the effective time being 5:00 p.m. on that date.

IN WITNESS WHEREOF, Delchester Bond Fund, Inc., has caused these Articles of
Amendment to be signed by its President and attested by its Secretary on June
14, 1988.

Delchester Bond Fund, Inc.

/s/John H. Durham
- -----------------
John H. Durham
President

Attest:

/s/George M. Chamberlain, Jr.
- -----------------------------
George M. Chamberlain, Jr.
Secretary

THE UNDERSIGNED, President of Delchester Bond Fund, Inc., who executed on behalf
of said Corporation the foregoing Articles of Amendment, of which this
certificate is made a part, hereby acknowledges, in the name and on behalf of
said Corporation, the foregoing Articles of Amendment to be the corporate act of
said Corporation and further certifies that, to the best of his knowledge,
information and belief, the matters and facts set forth therein with respect to
the approval thereof are true in all material respects, under the penalties of
perjury.

/s/John H. Durham
- -----------------
John H. Durham
President
<PAGE>

DELCHESTER BOND FUND, INC.

ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION

Delchester Bond Fund, Inc., a Maryland corporation having its principal
office in Baltimore, Maryland (the "Corporation") hereby certifies, in
accordance with Section 2-208 of the Maryland General Corporation Law, to the
State Department of Assessments and Taxation of Maryland that:

FIRST: The Board of Directors of the Corporation, at a meeting held
on July 16, 1987, adopted a resolution designating the Delchester II Class
of shares (as distinguished from the existing Delchester I Class of shares)
as the second class of the Corporation of common stock of the Corporation
and allocated Two Hundred Million (200,000,000) shares of authorized and
unissued Common Stock, with a par value of One Dollar ($1.00) per share, to
each Class of the Fund.

SECOND: The shares of the Delchester II Class of the Corporation
shall have the same rights and privileges, and shall be subject to the
limitations and priorities as the shares of the Delchester I Class, all set
forth in the Articles of Incorporation of the Corporation, provided, that
dividends paid on the Delchester I Class of shares shall not reflect any
reduction for payment of fees under the Distribution Plan of the Original
Class adopted pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended, and provided further, that the shares of the Delchester I
Class shall not vote upon or with respect to any matter relating to or
arising from any such Plan of Distribution.

THIRD: The shares of the Delchester II Class of said Corporation
have been classified by the Board of Directors pursuant to authority
contained in the Articles of Incorporation of the Corporation.

IN WITNESS WHEREOF, Delchester Bond Fund, Inc. has caused these Articles
Supplementary to be signed in its name and on its behalf this 20th day of July,
1987.

DELCHESTER BOND FUND. INC.
<PAGE>

By:/s/John H. Durham
-----------------
John H. Durham
President

ATTEST:

/s/George M. Chamberlain, Jr.
- -----------------------------
George M. Chamberlain, Jr.
Secretary

THE UNDERSIGNED, President of DELCHESTER BOND FUND, INC., who executed on
behalf of the said Corporation the foregoing Articles Supplementary, of which
this instrument is made a part, hereby acknowledges, in the name of and on
behalf of said Corporation, said Articles Supplementary to be the corporate act
of said Corporation and further certifies that, to the best of his knowledge,
information and belief, the matters and facts set forth therein with respect to
the approval thereof are true in all material respects, under the penalties of
perjury.

/s/John H. Durham
- -----------------
John H. Durham
<PAGE>

ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
DELCHESTER BOND FUND, INC.

DELCHESTER BOND FUND, INC., a Maryland corporation having its principal office
in Baltimore City, Maryland (the "Corporation"), hereby certifies to the State
Department of Assessments and Taxation of Maryland, that:

ONE: The first paragraph of ARTICLE FIFTH of the Articles of Incorporation is
hereby amended in its entirety to read as follows:

FIFTH: The total number of shares which the Corporation shall have authority
- ------
to issue is Five Hundred Million (500,000,000) shares of stock, with a par value
of One Dollar ($1.00) per share, to be known and designated as Common Stock,
such shares of Common Stock having an aggregate par value of Five Hundred
Million Dollars ($500,000,000).

TWO: The board of directors of the Corporation on December 18, 1986 duly adopted
a resolution setting forth the foregoing amendment to the Articles of
Incorporation, declaring said amendment of the Articles of Incorporation
advisable and directing that it be submitted for consideration by the
stockholders of the Corporation at the annual meeting to be held on April 21,
1987.

THREE: Notice setting forth said amendment to the Articles of Incorporation
and stating that a purpose of the meeting of the stockholders would be to take
action thereon, was given, as required by law, to all stockholders entitled to
vote thereon. The amendment to the Articles of Incorporation was approved by the
stockholders of the Corporation at said meeting by the affirmative vote of a
majority of all the votes entitled to be cast thereon. (Approval by a majority
of all the votes entitled to be cast on the matter is authorized pursuant to the
Articles of Incorporation of the Corporation.)

FOUR: The amendment to the Articles of Incorporation as hereinabove set
forth has been duly advised by the board of directors and approved by the
stockholders of the Corporation.

FIVE: (a) The total number of shares of stock which the Corporation was
heretofore authorized to issue is Fifty Million (50,000,000) shares, with a par
value of One Dollar ($1.00) per share, known and designated as Common Stock,
with an aggregate par value of Fifty Million Dollars ($50,000,000). (b) The
total number of shares of stock which
<PAGE>

the Corporation is authorized to issue is increased by this amendment to Five
Hundred Million (500,000,000) shares, with a par value of One Dollar ($1.00) per
share, and of the aggregate par value of Five Hundred Million Dollars
($500,000,000).

IN WITNESS WHEREOF, Delchester Bond Fund, Inc. has caused these Articles of
Amendment to be signed by its President or Vice President and attested by its
Secretary or Assistant Secretary on May 21, 1987.

DELCHESTER BOND FUND, INC.

/s/William P. Brady
- -------------------
William P. Brady
Executive Vice President

Attest:

/s/George M. Chamberlain, Jr.
- -----------------------------
George M. Chamberlain, Jr.
Secretary

THE UNDERSIGNED, Executive Vice President of DELCHESTER BOND FUND, INC., who
executed on behalf of said Corporation the foregoing Articles of Amendment, of
which this certificate is made a part, hereby acknowledges, in the name and on
behalf of said Corporation, the foregoing Articles of Amendment to be the
corporate act of said Corporation and further certifies that, to the best of his
knowledge, information and belief, the matters and facts set forth therein with
respect to the approval thereof are true in all material respects, under the
penalties of perjury.

/s/William P. Brady
- -------------------
William P. Brady
<PAGE>

ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
DELCHESTER BOND FUND, INC.

ONE: ARTICLE TENTH of the Articles of Incorporation is hereby amended in its
entirety to read as follows:

TENTH: Subject to the Investment Company Act of 1940, as amended, each
of the following actions, to the extent required to be approved by the
shareholders under the Maryland General Corporation Law, shall be approved
by a majority of all votes entitled to be cast on the matter:

(i) Amendment or amendment and restatement of the Articles;

(ii) Reduction of stated capital;

(iii) Consolidation, merger, share exchange or transfer of assets;

(iv) Distribution in partial liquidation; or

(v) Voluntary dissolution.

TWO: The board of directors of the Corporation on February 21, 1985 duly adopted
a resolution setting forth the foregoing amendment to the Articles of
Incorporation, declaring said amendment of the Articles of Incorporation
advisable and directing that it be submitted for consideration by the
stockholders of the Corporation at the annual meeting to be held on April 16,
1985.

THIRD: Notice setting forth said amendment to the Articles of Incorporation
and stating that a purpose of the meeting of the stockholders would be to take
action thereon, was given, as required by law, to all stockholders entitled to
vote thereon. The amendment to the Articles of Incorporation was approved by the
stockholders of the Corporation at said meeting by the affirmative vote of a
majority of all the votes entitled to be cast thereon. (Approval by a majority
of all of the votes entitled to be cast on the matter is authorized pursuant to
the Articles of Incorporation of the Corporation.)

FOURTH: The amendment to the Articles of Incorporation as
<PAGE>

hereinabove set forth has been duly advised by the board of directors and
approved by the stockholders of the Corporation.

DELCHESTER BOND FUND, INC.

By:/s/William P. Brady
-------------------
William P. Brady
Executive Vice President

Attest:

/s/Donald M. Allen
- ------------------
Donald M. Allen
Secretary

THE UNDERSIGNED, Executive Vice President of DELCHESTER BOND FUND, INC.,
who executed on behalf of said corporation the foregoing Articles of Amendment,
of which this certificate is made a part, hereby acknowledges, in the name and
on behalf of said corporation, the foregoing Articles of Amendment to be the
corporate act of said corporation and further certifies that, to the best of his
knowledge, information and belief, the matters and facts set forth therein with
respect to the approval thereof are true in all material respects, under the
penalties of perjury.

/s/William P. Brady
- -------------------
William P. Brady
<PAGE>

ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
DELCHESTER BOND FUND, INC.

ONE: The first paragraph of ARTICLE FIFTH of the Articles of Incorporation
is hereby amended in its entirety to read as follows:

The total number of shares of stock which the Corporation shall have
authority to issue is Fifty Million (50,000,000) shares of stock, with a
par value of One Dollar ($1.00) per share, to be known and designated as
Common Stock, such shares of Common Stock having an aggregate par value of
Fifty Million Dollars ($50,000,000).

TWO: The board of directors of the Corporation on December 15, 1983 duly
adopted a resolution setting forth the foregoing amendment to the Articles of
Incorporation, declaring said amendment of the Articles of Incorporation
advisable and directing that it be submitted for consideration by the
stockholders of the Corporation at the annual meeting to be held on April 17,
1984.

THIRD: Notice setting forth a summary of the changes to be effected by
said amendment to the Articles of Incorporation and stating that a purpose of
the meeting of the stockholders would be to take action thereon, was given, as
required by law, to all stockholders entitled to vote thereon. The amendment to
the Articles of Incorporation was approved by the stockholders of the
Corporation at said meeting by the affirmative vote of 79.1 percent of all the
votes entitled to be cast thereon. (The Articles of Incorporation of the
Corporation authorizes approval by a majority of all of the votes entitled to be
cast on the matter.)

FOURTH: The amendment to the Articles of Incorporation as hereinabove set
forth has been duly advised by the board of directors and approved by the
stockholders of the Corporation.

FIFTH: (a) The total number of shares of stock which the Corporation was
heretofore authorized to issue is Ten Million (10,000,000) shares, all of one
class, of the par value of One Dollar ($1.00) per share, and of the aggregate
<PAGE>

par value of Ten Million Dollars ($10,000,000).

(b) The total number of shares of stock is increased by this amendment to
Fifty Million (50,000,000) shares, all of one class, of the par value of One
Dollar ($1.00) per share, and of the aggregate par value of Fifty Million
Dollars ($50,000,000).

DELCHESTER BOND FUND, INC.

By:/s/Thomas F. Glancey
--------------------
Thomas F. Glancey

Attest:

/s/George M. Chamberlain, Jr.
- -----------------------------
George M. Chamberlain, Jr.

THE UNDERSIGNED, Executive Vice President of DELCHESTER BOND FUND, INC.,
------------------------
who executed on behalf of said corporation the foregoing Articles of Amendment,
of which this certificate is made a part, hereby acknowledges, in the name and
on behalf of said corporation, the foregoing Articles of Amendment to be the
corporate act of said corporation and further certifies that, to the best of his
knowledge, information and belief, the matters and facts set forth therein with
respect to the approval thereof are true in all material respects, under the
penalties of perjury.

/s/Thomas F. Glancey
- --------------------
Thomas F. Glancey
<PAGE>

ARTICLES OF INCORPORATION
OF
DELCHESTER BOND FUND, INC.

FIRST: The undersigned, George M. Chamberlain, Jr. whose post office address
- -----
is Ten Penn Center Plaza, Philadelphia, Pennsylvania 19103, and being at least
eighteen years of age, does hereby cause to be filed these Articles of
Incorporation for the purpose of forming a corporation under the General
Corporation Law of the State of Maryland.

SECOND: The name of the corporation is Delchester Bond Fund, Inc.
- ------

THIRD: The nature of the business, objects and purposes proposed to be
- -----
transacted, promoted and carried on by the corporation is to do any and all of
the things herein set forth, as fully and to the same extent as natural persons
might or could do, and in any part of the world, viz:

1. To purchase, become interested in, receive, own, hold, invest and
reinvest in, sell, negotiate, exchange, transfer, assign, mortgage, pledge, turn
to account, realize upon, and otherwise acquire and dispose of securities of
every kind, character and description, issued or created by, or secured upon the
property, income or revenues of individuals, associations, public and private
corporations, the United States of America, its agencies and instrumentalities,
or any territory, state, county, city, town, district or other political sub-
division, or any foreign government or any political sub-division thereof; and
to acquire or become interested in any such securities by original subscription,
underwriting, participation in syndicates, purchase, exchange, or otherwise. The
term "securities", whenever used herein, shall, consistent with the context, and
without limiting the generality of the foregoing, include shares of stock
(preferred, common and debenture), scrip, purchase or subscription warrants or
other rights, voting trust certificates, certificates of interest or
participation in any profit sharing agreement, pre-organization certificates or
subscriptions, fractional or undivided interests in oil, gas or other mineral
rights, investment contracts, evidences of interest, ownership, or indebtedness,
call or time loans, notes, acceptances, bills of exchange, commercial paper,
choses in action, bonds, debentures, mortgages, collateral trust certificates,
and in general any interests or instruments commonly known as securities, or any
certificate of interest or participation in, any temporary or interim
certificate for, or receipt for, any of the foregoing, and any securities,
negotiable or non-negotiable, secured or unsecured, and however described.

2. To exercise all rights, powers and privileges with reference to or
incident to ownership, use and enjoyment of any of such securities, including,
but without limitation, the right, power and privilege to own, vote, hold,
purchase, sell, negotiate, assign, exchange, transfer, mortgage, pledge
<PAGE>

or otherwise deal with, dispose of, use, exercise or enjoy any rights, title,
interest, powers or privileges under or with reference to any of such
securities; and to do any and all acts and things for the preservation,
protection, improvement and enhancement in value of any of such securities, or
designed to accomplish any such purpose.

3. To purchase or otherwise acquire, own, hold, sell, exchange, assign,
transfer, mortgage, pledge or otherwise dispose of, property of all kinds,
including, but without limitation, specie, money, and foreign exchange, to the
extent permitted by law, except that the corporation shall not purchase, own, or
sell commodities or future contracts for the delivery of commodities.

4. To buy, sell, mortgage, encumber, hold, own, exchange, rent or
otherwise acquire and dispose of, and to develop, improve, manage, subdivide,
build, erect, construct, alter and maintain buildings, structures, and other
improvements on real property for its own use for business offices exclusively
and may acquire real estate as a result of the foreclosure of mortgages securing
the payment of securities then owned by the corporation, or as a result of any
reorganization or other readjustment in connection with any securities then
owned by the corporation, or otherwise for the purpose of the proper
administration of the investments of the corporation in securities.
Nothing contained in this paragraph shall be construed to restrict the power of
the corporation, subject to all other restrictions and limitations contained in
these Articles of Incorporation, to invest in securities, as defined in
paragraph 1 of Article Third of these Articles of Incorporation, whether or not
any such security shall be deemed to be an interest in real estate.

5. To borrow or raise moneys for any of the purposes of the corporation,
and from time to time, to draw, make, accept, endorse, execute and issue bonds,
debentures, notes, drafts, acceptances, bills of exchange, warrants and other
negotiable or non-negotiable instruments and evidences of indebtedness and other
securities; and to secure the payment thereof and of the interest thereon by
mortgage upon or pledge of, or by conveyance or assignment in trust of, the
whole or any part of the property and franchises of the corporation, real,
personal, and mixed, tangible or intangible, and wheresoever situate, whether at
the time owned or thereafter acquired, and to issue, sell, negotiate, pledge, or
otherwise dispose of such bonds or other obligations of the corporation for its
corporate purposes.

6. To acquire all or any part of the good will, rights, property, and
business of any individual, association or corporation; to pay for the same in
cash or in shares of stock, bonds, notes or other obligations of the
corporation, or otherwise. To hold, utilize, operate, reorganize, liquidate, and
in any manner dispose of the whole or any part of the good will, rights,
property and business so acquired; to assume in connection therewith the whole
or any part of the
<PAGE>

liabilities and obligations of any such person, association or corporation; and
to conduct in any lawful manner the whole or any part of the business thus
acquired.

7. To enter into, make, perform and carry out contracts and undertakings
of every kind for any lawful purpose, without limit as to amount, with any
individual, association or corporation.

8. To purchase, sell and transfer, re-acquire, hold, trade and deal in,
the bonds, debentures and other securities of the corporation, from time to
time, to such extent and in such manner and upon such terms as the Board of
Directors shall, consistent with the provisions of these Articles of
Incorporation, determine; and to purchase and re-acquire, from time to time, the
shares of its own capital stock; provided, however, that the corporation shall
not have power to trade or deal in the shares of its own Common Stock.

9. To conduct its business and maintain offices both within and without
the State of Maryland, and in all other states and territories and the District
of Columbia, in all dependencies, colonies or possessions of the United States
and any foreign countries and places, and to purchase or otherwise acquire,
hold, possess, convey, transfer or otherwise dispose of real and personal
property in all thereof to the extent that the same may be permissible under
their respective laws.

10. To carry out all or any part of the foregoing objects and purposes,
and to exercise any and all of the foregoing rights and powers, and to do any
and all of the foregoing acts and things, as principal, factor, agent,
contractor or otherwise, either alone or through or in conjunction with, or
jointly with, any individual, association or corporation.

11. In general to carry on any other business in connection with the
foregoing, and to have and exercise all the powers conferred by the laws of the
State of Maryland upon corporations formed under the General Corporation Law
thereof.

The foregoing clauses shall each be construed as purposes, objects and
powers, and it is hereby expressly provided that the foregoing enumeration of
specific purposes, objects and powers shall not be held to limit or restrict in
any manner the powers of the corporation, and that they are in furtherance of,
and in addition to, and not in limitation of, the general powers conferred upon
the corporation by the laws of the State of Maryland or otherwise; nor shall the
enumeration of one thing be deemed to exclude another, although it be of like
nature, not expressed.

It is the intention that the purposes, objects and powers specified in this
Article Third, and all subdivisions thereof, shall, except as otherwise
expressly provided, in no wise be limited or restricted by reference to or
inference from the terms of any other clause or subdivision of this Article
Third, and that each of the purposes, objects and powers specified in this
Article Third shall be regarded as
<PAGE>

independent purposes, objects and powers.

FOURTH: The post office address of the principal office of the corporation
- ------
in the State of Maryland is:

c/o The Corporation Trust, Incorporated
32 South Street
Baltimore Maryland 21202

The name and post office address of the initial resident agent of the
corporation in the State of Maryland is:

The Corporation Trust, Incorporated
32 South Street
Baltimore, Maryland 21202

FIFTH: The total number of shares of stock which the Corporation shall have
- -----
authority to issue is Ten Million (10,000,000) shares of stock, with a par value
of One Dollar ($1.00) per share, to be known and designated as Common Stock,
such shares of Common Stock having an aggregate par value of Ten Million Dollars
($10,000,000).

The Board of Directors of the corporation shall have the power to issue
shares in one or more series which together with the issued shares of stock of
the corporation shall have such designations as the Board may determine and
(subject to any applicable rule, regulation or order of the Securities and
Exchange Commission or other applicable law or regulation) shall have such
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, terms and conditions of redemption
and other characteristics as the Board may determine (or in the absence of
contrary determination, such as set forth herein). At any time when there are no
shares outstanding or subscribed for a particular series previously established
and designated by the Board of Directors, the series may be liquidated by
similar means. If the Board so determines, one or more series of stock may be
treated for all purposes other than dividends as if all shares of such series
were shares of one series. The dividends payable to the holders of any series
(subject to any applicable rule, regulation or order of the Securities and
Exchange Commission or any other applicable law or regulation) shall be
determined by the Board and need not be individually declared, but may be
declared and paid in accordance with a formula adopted by the Board. Except as
otherwise provided herein, all references in these Articles of Incorporation to
Common Stock or series of stock shall apply without discrimination to the shares
of each series of stock.

The holders of each share of stock of the corporation shall be entitled to
one vote for each full share, and a fractional vote for each fractional share of
stock, irrespective of the series then standing in his or her name in the books
of the corporation. On any matter submitted to
<PAGE>

a vote of shareholders, all shares of the corporation then issued and
outstanding and entitled to vote, irrespective of the series, shall be voted in
the aggregate and not by series except (1) when otherwise expressly provided by
the Maryland General Corporation Law, or (2) when required by the Investment
Company Act of 1940, as amended, shares shall be voted by individual series; and
(3) when the matter does not affect any interest of a particular series, then
only shareholders of the affected series shall be entitled to vote thereon.

Each series of stock of the corporation shall have the following powers,
preferences and participating, voting, or other special rights and the
qualifications, restrictions, and limitations thereof shall be as follows:

1. All consideration received by the corporation for the issue or sale of
stock of each series, together with all income, earnings, profits, and proceeds
thereof, including any proceeds derived from the sale, exchange or liquidation
thereof, and any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, shall irrevocably belong to the
series of shares of stock with respect to which such assets, payments or funds
were received by the corporation for all purposes, subject only to the rights of
creditors, and shall be so handled upon the books of account of the corporation.
Such assets, income, earnings, profits and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation thereof and any assets
derived from any reinvestment of such proceeds, in whatever form the same may
be, are herein referred to as "assets belonging to" such series.

2. The Board of Directors may from time to time declare and pay dividends
or distributions, in stock or in cash, on any or all series of stock; provided,
such dividends or distributions on shares of any series of stock shall be paid
only out of earnings, surplus, or other lawfully available assets belonging to
such series.

3. The Board of Directors shall have the power in its discretion to
distribute in any fiscal year as dividends, including dividends designated in
whole or in part as capital gain distributions, amounts sufficient, in the
opinion of the Board of Directors, to enable the corporation to qualify as a
"regulated investment company" under the Internal Revenue Code of 1954, as
amended, or any successor or comparable statute thereto, and regulations
promulgated thereunder, and to avoid liability for the corporation for Federal
income tax in respect of that year and to make other appropriate adjustments in
connection therewith.

4. In the event of the liquidation of dissolution of the corporation,
shareholders of each series shall be entitled to receive, as a series, out of
the assets of the corporation available for distribution to shareholders, but
other than general assets not belonging to any particular series of stock, the
assets belonging to such series, and the assets so distributable to the
shareholders of any series
<PAGE>

shall be distributed among such shareholders in proportion to the number of
shares of such series held by them and recorded on the books of the corporation.
In the event that there are any general assets not belonging to any particular
series of stock and available for distribution, such distribution shall be made
to the holders of stock of all series in proportion to the asset value of the
respective series determined as hereinafter provided.

5. The assets belonging to any series of stock shall be charged with the
liabilities in respect to such series, and shall also be charged with its share
of the general liabilities of the corporation, in proportion to the asset value
of the respective series determined as hereinafter provided. The determination
of the Board of Directors shall be conclusive as to the amount of liabilities,
including accrued expenses and reserves, as to the allocation of the same as to
a given series, and as to whether the same or general assets of the corporation
are allocable to one or more series.

The Board of Directors may provide for a holder of any series of stock of
the corporation, who surrenders his certificate in good form for transfer to the
corporation or, if the shares in question are not represented by certificates,
who delivers to the corporation a written request in good order signed by the
shareholder, to convert the shares in question on such basis as the Board may
provide, into shares of stock of any other series of the corporation.

The net asset value per share of a series of the corporation's common stock
shall be determined in accordance with the Investment Company Act of 1940, as
amended, and with generally accepted accounting principles, by adding the market
or appraised value of all securities, cash and other assets of the corporation
pertaining to that series, subtracting the liabilities determined by the Board
of Directors to be applicable to that series, allocating any general assets and
general liabilities to that series, and dividing the net result by the number of
shares of that series outstanding. Securities and other investments and assets
will be valued at fair value as determined in good faith by the Board of
Directors.

The holders of the shares of Common Stock of the corporation shall have no
preemptive rights to subscribe to further or additional shares of its Common
Stock.

Without action or consent of the stockholders of the corporation, the Board
of Directors shall have authority, subject to the provisions of these Articles
of Incorporation, to issue shares of Common Stock of the Corporation, from time
to time, for such consideration, not less than the par value thereof, as may be
fixed from time to time by the Board of Directors.

SIXTH: The number of directors of the Corporation shall be three, or such
- -----
other number as may from time to time be fixed by the By-Laws of the corporation
or pursuant to
<PAGE>

authorization contained in such By-Laws, but the number of directors shall never
be less than three; provided, notwithstanding anything herein to the contrary,
the Board of Directors shall initially consist of one director. The name of the
director who shall act as such until successors are duly chosen and qualify is:
James P. Schellenger.

SEVENTH: In furtherance, and not in limitation of the powers conferred by
- -------
statute, the Board of Directors of the corporation is expressly authorized:

1. To make, alter and amend the By-Laws of the corporation, to fix the
amount to be reserved as working capital over and above its capital stock paid
in, and to authorize and cause to be executed mortgages and liens upon the real
and personal property of the corporation.

2. Pursuant to the affirmative vote of the holders of at least a majority
of the shares of the capital stock of the corporation issued and outstanding,
given at a meeting of the stockholders duly called for that purpose, or when
authorized by the written consent of the holders of a majority of the shares of
the capital stock of the corporation issued and outstanding, the Board of
Directors shall have power and authority at any meeting to authorize the sale,
lease or exchange of all of the property and assets of the corporation,
including its good will and its corporate franchises, upon such terms and
conditions as the Board of Directors may deem expedient and for the best
interests of the corporation.

3. The corporation may in its By-Laws confer powers upon its Board of
Directors in addition to the foregoing, and in addition to the powers and
authorities expressly conferred upon them by statute.

4. The Board of Directors shall have power generally to exercise all such
powers and do all such acts and things as may be exercised or done by the
corporation, subject, nevertheless, to the provisions of the statutes of the
State of Maryland and of these Articles of Incorporation, including any
amendments thereof, and of the By-Laws of the corporation.

EIGHTH: The following provisions are inserted for the
- ------
management of the business and for the conduct of the affairs of the
corporation:

1. The Board of Directors shall have power to fix an initial offering
price which shall yield to the corporation not less than the par value thereof,
at which the shares of the Common Stock of the corporation shall be offered for
sale, and to determine from time to time thereafter the offering price which
shall yield to the corporation not less than the par value thereof, of the
shares of its Common Stock; provided, however, that no shares of the Common
Stock of the corporation shall be issued or sold for a consideration which shall
be less than the net asset value of such shares, determined as hereinafter
provided, except in the case of shares of such Common Stock issued in payment of
a dividend properly declared and payable.
<PAGE>

The net asset value of the property and assets of the corporation shall be
determined by or under the direction of the Board of Directors of the
corporation, by deducting from the total appraised value of all of the property
and assets of the corporation, determined in the manner hereinafter provided,
all debts, obligations and liabilities of the corporation including, but without
limitation of the generality of any of the foregoing, any or all debts,
obligations, liabilities or claims of any and every kind and nature, whether
fixed, accrued, or unmatured, and any reserves or charges, determined in
accordance with sound accounting practice, for any or all thereof, whether for
taxes, including estimated taxes or unrealized book profits, expenses,
contingencies or otherwise. In addition, should it become necessary to sell
investments or other assets for monies with which to redeem or repurchase
shares, the Board of Directors, in their discretion may deduct from the net
asset value as hereinabove calculated, a reasonable approximation of brokers'
commissions, taxes, stock transfer fees and other costs which would be incurred
in the sale of such investments and other assets.

In determining the total appraised value of all the property and assets of
the corporation:

(a) Securities owned shall be valued at market value, or in the absence of
readily available market quotations at fair value, both as determined pursuant
to methods approved by the Board of Directors and in accordance with applicable
statutes and regulations.

(b) Dividends declared but not yet received, or rights, in respect of
securities which are quoted ex-dividend or ex-rights, shall be included in the
value of such securities as determined by or pursuant to the direction of the
Board of Directors on the day the particular securities are first quoted ex-
dividend or ex-rights, and on each succeeding day until the said dividends or
rights are received and become part of the assets of the corporation.

(c) The value of any other assets of the corporation, including restricted
securities, (and any of the assets mentioned in paragraphs (a) or (b), in the
event of a national financial emergency determined to be such by the Board of
Directors, in their discretion) shall be determined in such manner as may be
approved from time to time by or pursuant to the direction of the Board of
Directors.

The net asset value of each share of the Common Stock of the corporation
shall be determined by dividing the total net asset value of the property and
assets of the corporation by the total number of shares of its Common Stock then
issued and outstanding, including any shares sold by the corporation up to and
including the date as of which such net asset value is to be determined whether
or not certificates therefor have actually been issued. In case the net asset
value of each share so determined shall include a fraction of one cent, such net
asset value of each share shall be adjusted to the nearest full cent.
<PAGE>

2. The corporation shall redeem shares of its Common Stock from its
stockholders upon the presentation of a written request for redemption by any
such stockholder to the corporation or its designated agent during business
hours of any business day, provided, however, that such request for redemption
must be accompanied by any stock certificates for such shares, if such have been
issued, in form for transfer, together with such proof of the authenticity of
signatures as may be reasonably required by, or pursuant to the direction, of
the Board of Directors of the corporation. The corporation will pay therefor the
net asset value of the shares next calculated following the time at which the
request is received by the corporation or its designated agent.

After receipt of any such request from a stockholder, the corporation shall
mail to such stockholder a written confirmation of the redemption of such
shares, which shall state the number of shares to be redeemed by the
corporation, the time as of which the purchase price of such shares is to be
determined, and the purchase price of such shares.

Payments for shares so redeemed by the corporation shall be made in cash,
except that the Board of Directors may adopt a special resolution (notice of
which shall be given forthwith to all stockholders of the corporation in the
manner provided in the By-Laws) authorizing, during such period of time as the
board may fix, payment for such shares by the delivery to the redeeming
stockholder of corporate assets at a value equivalent to the redemption value of
the shares, or, at the option of the corporation, by the payment to such
stockholder of such equivalent value partly in cash and partly in other assets.
The value of any part of such purchase price paid by the delivery of corporate
assets shall be determined as provided in sub-paragraphs (a), (b) and (c) of
paragraph (1) of this Article Eighth. In order to avoid delivering securities in
kind in unreasonably small denominations (that is, less than ten shares in the
case of stocks and $1,000 principal amount in the case of bonds) the corporation
may adjust any interest in any securities so to be delivered to any such
stockholder to somewhat more or less than such stockholder's arithmetical
proportion of such security, and may adjust fractional differences in cash or in
other assets, and any such adjustment made by the corporation in good faith
shall be binding upon such stockholder and upon all other stockholders of the
corporation, past, present or future.

Payment for shares of the Common Stock of the corporation that are redeemed
shall ordinarily be made by the corporation to the stockholder within seven days
after the date upon which the request for redemption has been received by the
corporation or its duly designated agent accompanied by the share certificates,
duly endorsed for transfer, in acceptable form if such have been issued.

The right of any holder of shares of the corporation to receive dividends
thereon and all other rights of such
<PAGE>

stockholder with respect to the shares so redeemed by the corporation shall
cease and determine from and after the time as of which the redemption price of
such shares shall be fixed, as provided above, except the right of such
stockholder to receive payment for such shares as provided for herein. Payment
for shares so redeemed by the corporation, either in cash or by delivery of
corporate assets as provided for above, shall be binding and effective, upon
receipt and acceptance thereof by any stockholder whose shares shall be redeemed
by the corporation, as a discharge and release, as of the time when the purchase
price of such shares shall be fixed, as provided above, to the corporation, to
the Board of Directors, and to all holders of other shares of the Common Stock
of the corporation, past, present and future, in respect of any liability
hereunder, except for willful misfeasance, gross negligence or fraud.

NINTH: At any time and from time to time any of the provisions of these
- -----
Articles of Incorporation and any amendments thereto may be amended, altered or
repealed, and other provisions authorized by the statutes of the State of
Maryland, at the time in force, may be added or inserted in the manner at the
time prescribed by such statutes, and all rights of any kind conferred upon the
shareholders of the corporation by its Articles of Incorporation are granted
subject to the provisions of this Article Ninth.

TENTH: Subject to the Investment Company Act of 1940, as amended, the
- -----
corporation may take or authorize any action upon the concurrence of such
proportion of votes entitled to be cast thereon as specified in the by-laws of
the corporation, notwithstanding any provisions of the Maryland General
Corporation Law requiring a greater proportion, provided that such provisions of
law allow a corporation to act by a lesser proportion.

IN WITNESS WHEREOF, the undersigned incorporator of Delchester Bond Fund,
Inc. who executed the foregoing Articles of Incorporation hereby acknowledged
the same to be his act and further acknowledge that, to the best of his
knowledge the matters and facts set forth therein are true and all material
respects under the penalties of perjury.

Dated the 4th day of March, 1983.

/s/George M. Chamberlain, Jr.
- -----------------------------
George M. Chamberlain, Jr.
<PAGE>

AGREEMENT AND ARTICLES OF MERGER
--------------------------------

AGREEMENT AND ARTICLES OF MERGER, dated as of the 4th day of March, 1983
(hereinafter referred to as the "Agreement"), by and between DELCHESTER BOND
FUND, INC., a Maryland Corporation (hereinafter referred to as "Maryland
Corporation" or the "Surviving Corporation"), and DELCHESTER BOND FUND, INC., a
Delaware Corporation (hereinafter referred to as "Delaware Corporation"), said
corporations being hereinafter sometimes collectively referred to as the
"Constituent Corporations."

BACKGROUND
----------

Maryland Corporation is a corporation duly organized and existing under the
laws of the State of Maryland, having been incorporated on March 4, 1983 under
the General Corporation Law of the State of Maryland, and has authorized capital
stock consisting of 10,000,000 common shares, par value $1.00 per share, with an
aggregate par value of $10,000,000.

Delaware Corporation is a corporation duly organized and existing under the
laws of the State of Maryland, having been incorporated on May 11, 1970 under
the General Corporation Law of the State of Delaware, and has authorized capital
stock consisting of 10,000,000 shares of common stock, par value $1.00 per
share, with an aggregate par value of $10,000,000.

The principal office of Maryland Corporation in the State of Maryland is
located in Baltimore City. Delaware Corporation has no principal office in the
State of Maryland and is not registered or qualified to do business in the State
of Maryland. Delaware Corporation does not possess any interest in real property
situated in the State of Maryland, the title to which could be affected by
recording an instrument in the Maryland land records.

The Boards of Directors of each of the Constituent Corporations have
adopted this Agreement as a Plan of Reorganization intended to qualify as such
under the provisions of Section 368(a)(1)(F) of the Internal Revenue Code of
1954, as amended.

The Board of Directors of Maryland Corporation and the Board of Directors
of Delaware Corporation have, by resolutions duly adopted, approved this
Agreement and the merger of the Delaware Corporation into Maryland Corporation
as being advisable and in the best interests of their respective corporations
and stockholders, and have directed the submission of this Agreement to their
respective stockholders.
<PAGE>

NOW THEREFORE, in consideration of the premises and the mutual covenants
and conditions hereinafter contained, and intending to be legally bound, the
parties hereto agree as follows:

ARTICLE I
---------

1.1 Delaware Corporation and Maryland Corporation agree that Delaware
Corporation shall be merged into Maryland Corporation (hereinafter the
"Merger"). Maryland Corporation shall be the Surviving Corporation and shall be
governed by the laws of the State of Maryland. The terms and conditions of the
Merger and the mode of carrying the same into effect are as herein set forth in
this Agreement.

1.2 The Articles of Incorporation of Maryland Corporation as they shall
exist on the Effective Date of the Merger (as hereinafter defined) shall
constitute the Articles of Incorporation of the Surviving Corporation.

1.3 The By-laws of Maryland Corporation as they exist on the Effective Date
of the Merger shall constitute the By-laws of the Surviving Corporation.

1.4 The Directors of Delaware Corporation on the Effective Date of the
Merger shall constitute the Board of Directors of the Surviving Corporation and
shall hold office until their terms expire at the annual meeting of stockholders
of the Surviving Corporation in 1984, and until their successors are elected and
shall qualify.

1.5 Arthur Young & Company shall continue as auditors to report upon the
financial condition of the Surviving Corporation for the fiscal year ending July
31, 1983 provided the appointment of Arthur Young & Company for the Delaware
Corporation is approved by the stockholders of Delaware Corporation.

ARTICLE II
----------

2.1 The manner and basis of converting the issued and outstanding shares of
the common stock of Delaware Corporation into the shares of common stock of the
Maryland Corporation shall be as follows:

Each share or fraction thereof of common stock of Delaware Corporation
issued and outstanding on the Effective Date of the Merger (excluding any
Treasury shares of Delaware Corporation which shares shall cease to exist) shall
thereupon be converted into an equal number of whole and fractional shares of
common stock of Maryland Corporation and
<PAGE>

each certificate representing shares of Delaware Corporation shall represent the
same number of shares of Maryland Corporation. Each holder of a Delaware
Corporation stock certificate representing shares of Maryland Corporation shall
at any time thereafter have the right to surrender the same to Maryland
Corporation and to receive in exchange a certificate representing equal number
of shares of common stock of Maryland Corporation.

2.2 Each of the shares of Maryland Corporation common stock outstanding on
the Effective Date of the Merger shall be retired and restored to the status of
authorized but unissued.

ARTICLE III
-----------

3.1 The Merger shall become effective when, subject to the terms and
conditions hereof, the following actions shall have in all respects been
completed:

(i) this Agreement shall have been adopted by the stockholders of Maryland
Corporation and Delaware Corporation in accordance with the requirements of the
laws of the States of Maryland and Delaware, respectively, which adoption shall
have been certified hereon by the Secretary or an Assistant Secretary of
Delaware Corporation, and

(ii) this Agreement, certified as aforesaid, shall have been executed,
acknowledged and filed in accordance with the requirements of the laws of the
States of Maryland and Delaware.

The date and time when the Merger shall become effective as aforesaid is
herein referred to as the "Effective Date of the Merger." As soon as practicable
after the Effective Date of the Merger, the Surviving Corporation shall,
pursuant to Section 103(c)(5) of the General Corporation Law of the State of
Delaware, cause a copy of this Agreement, certified by the Secretary of State of
the State of Delaware, to be recorded in the Office of Recorder of the County of
New Castle, Delaware.

3.2 On the Effective Date of the Merger, the separate existence of Delaware
Corporation shall cease, except to the extent, if any, continued by statute. All
the assets, rights, privileges, powers and franchises of Delaware Corporation
and all debts due on whatever account to it, shall be taken and deemed to be
transferred to and vested in the Surviving Corporation without further act or
deed; and all such assets, rights, privileges, powers and franchises, and all
and every other interest of Delaware Corporation shall be thereafter as
effectually the property of the Surviving Corporation as they were of Delaware
Corporation;
<PAGE>

and the title to and interest in any real estate vested by deed, lease or
otherwise, unto either of the Constituent Corporations, shall not revert or be
in any way impaired. The Surviving Corporation shall be responsible for all the
liabilities and obligations of Delaware Corporation, but the liabilities of the
Constituent Corporations or of their stockholders, directors, or officers shall
not be affected by the Merger, nor shall the right of the creditors thereof or
any persons dealing with such corporations, or any liens upon the property of
such corporations, be impaired by the Merger, and any claim existing or action
or proceeding pending by or against either of such corporations may be
prosecuted to judgment as if the Merger had not taken place, or the Surviving
Corporation may be proceeded against or substituted in place of Delaware
Corporation. Except as otherwise specifically set forth in this Agreement, the
identity, existence, purposes, powers, franchise, rights, immunities and
liabilities of Maryland Corporation shall continue unaffected and unimpaired by
the merger.

3.3 All corporate acts, plans, policies, resolutions, approvals, and
authorizations of the stockholders, Board of Directors, committees of the Board
of Directors and agents of Delaware Corporation, which were effective
immediately prior to the Effective Date of the Merger shall be taken for all
purposes as the acts, plans, policies, resolutions, approvals and authorizations
of the Surviving Corporation and shall be as effective and binding thereon as
the same were with respect to Delaware Corporation.

3.4 Prior to the Effective Date of the Merger the Constituent Corporations
shall take such action as shall be necessary or appropriate in order to effect
the Merger. In case at any time after the Effective Date of the Merger the
Surviving Corporation shall determine that any further conveyance, assignment or
other documents or any further action is necessary or desirable to vest in or
confirm to Surviving Corporation full title to all the properties, assets,
rights, privileges, and franchises of the Constituent Corporations, the officers
and directors of the Constituent Corporations, at the expense of the Surviving
Corporation, shall execute and deliver all such instruments and take all such
action as the Surviving Corporation may determine to be necessary or desirable
in order to vest in and confirm to the Surviving Corporation title to and
possession of all such cash and securities and other properties, assets, rights,
privileges and franchises, and otherwise to carry out the purpose of this
Agreement.

3.5 The Surviving Corporation hereby (1) agrees that it may be served with
process in the State of Delaware in any proceeding for the enforcement of any
obligation of Delaware Corporation as well as for the enforcement of any
obligation of the Surviving Corporation arising from the Merger,
<PAGE>

including any suit or other proceeding to enforce the right of any stockholder
as determined in appraisal proceedings pursuant to the provisions of Section 262
of the General Corporation Law of the State of Delaware, (2) irrevocably
appoints the Secretary of State of the State of Delaware as its agent to accept
service of process in any such suit or other proceedings, and (3) specifies the
following as the address to which a copy of such process shall be mailed by the
Secretary of State of the State of Delaware: Donald M. Allen, Corporate Vice
President and Secretary, Delchester Bond Fund, Inc., Ten Penn Center Plaza,
Philadelphia, PA 19103.

ARTICLE IV
----------

4.1 Each of the Constituent Corporations represents and warrants to the
other that:
(a) Such corporation is duly organized and existing in good standing under
the laws of its jurisdiction of incorporation.
(b) It has full power and authority to carry on its business as it is
presently being conducted and to enter into the Merger.

(c) There is no suit, action or legal or administrative proceeding
pending, or to its knowledge threatened, against it which, if adversely
determined, might materially and adversely affect its financial condition or the
conduct of its business.

(d) At the Effective Date of the Merger, consummation of the transactions
contemplated hereby will not result in the breach of or constitute a default
under any agreement or instrument by which it is bound.

(e) All of its presently outstanding shares are validly issued, fully paid
and non-assessable.

(f) Immediately prior to the Effective Date of the Merger such corporation
will have valid and unencumbered title to its cash, securities, and other
assets, if any.

ARTICLE V
---------

5.1 The obligations of each of the Constituent Corporations to consummate
the Merger shall be subject to the following conditions:

(a) the representations and warranties of the other corporation contained
herein shall be true as of and at the Effective Date of the Merger with the same
effect as though made at such date and such other Constituent Corporation shall
have performed all obligations required by this
<PAGE>

Agreement to be performed by it prior to the Effective Date;

(b) Such authority and orders from the Securities and Exchange Commission
(the "Commission") and state securities commissions as may be necessary to
permit the parties to carry out the transactions contemplated by this Agreement
shall have been received;

(c) One or more post-effective amendments to the Delaware Corporation's
Registration Statement on Form N-1 under the Securities Act of 1933 and the
Investment Company Act of 1940, containing (i) such amendments to such
Registration Statement as are determined by the Maryland Corporation to be
necessary and appropriate as a result of the Merger, and (ii) the adoption by
the Maryland Corporation as its own of such Registration Statement, as so
amended, shall have been filed with the Commission, and such post-effective
amendment or amendments to the Registration Statement shall have become
effective, and no stop-order suspending the effectiveness of the Registration
statement shall have been issued, and not proceeding for that propose shall have
been initiated or threatened by the Commission (other that any such stop-order,
proceeding or threatened proceeding which shall have been withdrawn or
terminated);

(d) Confirmation shall have been received from the Commission or the staff
thereof that the Maryland Corporation shall, effective upon or before the
Effective Date of the Merger, be duly registered as a diversified, open-end
management investment company under the Investment Company Act of 1940, as
amended;

(e) Each party shall have received an opinion of Stradley, Ronon, Stevens
& Young, Philadelphia, Pennsylvania, to the effect that the Merger contemplated
by this Agreement qualifies as a "reorganization" under Section 368(a)(1)(F) of
the Internal Revenue Code of 1954, as amended, and as such no gain or loss will
be recognized by either Constituent Corporation or to the stockholders thereof;

(f) Each party shall have received an opinion from Stradley, Ronon,
Stevens & Young in the form and substance satisfactory to it, relating to its
authority to engage in the transactions contemplated hereby and to the effect
(i) that this Agreement has been duly authorized, executed and delivered by the
Constituent Corporations and constitutes a legal, valid and binding agreement of
each such party in accordance with its terms; (ii) the shares of common stock of
the Maryland Corporation to be issued pursuant to the terms of this Agreement,
have been duly authorized, and when issued and delivered as provided in this
Agreement, will have been validly issued and fully paid and will be
nonassessable; (iii) the Maryland Corporation is duly organized and validly
existing under the laws of the State of Maryland.
<PAGE>

(g) The shares of common stock of the Maryland Corporation shall have been
duly qualified for offering to the public in those states of the United States
and jurisdictions in which they are presently qualified, so as to permit the
transfers contemplated by this Agreement to be consummated;

(h) The holders of at least a majority of the outstanding shares of common
stock of Delaware Corporation and of Maryland Corporation shall have each voted
in favor of the adoption of this Agreement and the Merger at an annual or
special meeting or any adjournment thereof.

ARTICLE VI
----------

Each of the Constituent Corporations agree that each shall bear such
expenses as have been incurred by it in connection with the Merger.

ARTICLE VII
-----------

7.1 Anything contained in this Agreement to the contrary notwithstanding,
this Agreement may be terminated and the Merger abandoned at any time (whether
before or after adoption hereof by the stockholders of the Constituent
Corporations) prior to the Effective date of the Merger:

(a) by mutual consent of the Constituent Corporations;

(b) by either of the Constituent Corporations if any condition set forth
in Article V hereof has not been fulfilled or waived by it.

7.2 An election by a Constituent Corporation to terminate this Agreement
and abandon the Merger shall be exercised by its Board of Directors.

7.3 At any time prior to the filing of this Agreement, any of the terms or
conditions of this Agreement may be waived by the Constituent Corporation
entitled to the benefit thereof by action taken by its Board of Directors or its
President if, in the judgment of the Board of Directors or President taking such
action, such waiver will not have a material adverse effect on the benefits
intended under this Agreement to the stockholders of the Constituent Corporation
on behalf of which such action is taken.

ARTICLE VIII
------------

The respective representations and warranties of the Constituent
Corporations contained in Article IV hereof shall expire with, and be terminated
by, the Merger and neither the
<PAGE>

respective Constituent Corporations nor any of their directors or officers shall
be under any liability with respect to any such representations or warranties
after the Effective Date of the Merger. This provision shall not protect any
director or officer of either of the Constituent Corporations against any
liability to such corporation or to its stockholders to which he would otherwise
be subject.

ARTICLE IX
----------

9.1 This Agreement constitutes the entire agreement between the parties and
there are no agreements, understandings, restrictions or warranties between the
parties other than those set forth herein or herein provided for.

9.2 This Agreement may be executed in any number of counterparts each of
which shall be deemed to be an original but all of such counterparts together
shall constitute but one instrument.

IN WITNESS WHEREOF, each of the Constituent Corporations has caused this
Agreement and Articles of Merger to be executed on its behalf by its President
and its corporate seal to be affixed thereto and attested by its Secretary all
as of the day and year first above written.

DELCHESTER BOND FUND, INC.,
Attest: a Maryland Corporation

/s/Donald M. Allen By:/s/John H. Durham
- ------------------ -----------------
Donald M. Allen John H. Durham
Secretary President

Attest: DELCHESTER BOND FUND, INC.,
a Delaware Corporation

/s/Donald M. Allen By:/s/John H. Durham
- ------------------ -----------------
Donald M. Allen John H. Durham
Secretary President
<PAGE>

CERTIFICATION OF ADOPTION
OF
AGREEMENT AND ARTICLES OF MERGER
--------------------------------

The undersigned hereby certify that the terms and conditions of the merger
as set forth in the foregoing Agreement and Articles of Merger were advised,
authorized and approved by each of the constituent corporations in the manner
and by the vote required by its charter and the laws of the state where it is
organized, to wit, by the Board of Directors and stockholders of Delaware
Corporation and Maryland Corporation.

Attest: DELCHESTER BOND FUND, INC.,
a Maryland Corporation

/s/Donald M. Allen By:/s/John H. Durham
- ------------------ -----------------
Donald M. Allen John H. Durham
Secretary President

Attest: DELCHESTER BOND FUND, INC.,
a Delaware Corporation

/s/Donald M. Allen By:/s/John H. Durham
- ------------------ -----------------
Donald M. Allen John H. Durham
Secretary President

THE UNDERSIGNED, President of DELCHESTER BOND FUND, INC., a Maryland
corporation, who executed on behalf of said corporation the foregoing Agreement
and Articles of Merger and the Certification of Adoption of Agreement and
Articles of Merger, hereby acknowledges, in the name and on behalf of said
corporation, the foregoing Agreement and Articles of Merger and Certificate of
Adoption of Agreement and Articles of Merger to be the corporate act of said
corporation and further certifies that, to the best of his knowledge,
information and belief, the matters and facts set forth therein are true in all
material respects, under the penalties of perjury.

/s/John H. Durham
- -----------------
John H. Durham

THE UNDERSIGNED, President of DELCHESTER BOND FUND,
<PAGE>

INC., a Delaware corporation, who executed on behalf of said corporation the
foregoing Agreement and Articles of Merger and the Certification of Adoption of
Agreement and Articles of Merger, hereby acknowledges, in the name and on behalf
of said corporation, the foregoing Agreement and Articles of Merger and
Certificate of Adoption of Agreement and Articles of Merger to be the corporate
act of said corporation and further certifies that, to the best of his
knowledge, information and belief the matters and facts set forth therein with
respect to the approval thereof are true in all material respects, under the
penalties of perjury.

/s/John H. Durham
- -----------------
John H. Durham

I, DONALD M. ALLEN, Secretary of DELCHESTER BOND FUND, INC., a Delaware
corporation, hereby certify that a majority of the outstanding shares of capital
stock of said corporation entitled to vote hereon voted for the adoption of this
Agreement and Articles of Merger.

/s/Donald M. Allen
- ------------------
Donald M. Allen
<PAGE>

ARTICLES OF MERGER
MERGING
DELCHESTER BOND FUND, INC. (DEL CORP)
INTO
DELCHESTER BOND FUND, INC. (MD. CORP)

Survivor approved and received for record by the State Department of
Assessments and Taxation of Maryland April 29, 1983 at 4:30 o'clock P.M. as in
conformity with law and ordered recorded.

____________________

Recorded in Liber /s/ 2589, folio 02584, one of the Charter Records of the
State Department of Assessments and taxation of Maryland.

____________________

Bonus tax paid $_____ Recording fee paid $ 32.00
------
Special Fee paid $ _____

___________________

To the clerk of the Circuit Court of Baltimore City

IT IS HEREBY CERTIFIED, that the within instrument, together with all
indorsements thereon, has been received, approved and recorded by the State
Department of Assessments and Taxation of Maryland.

AS WITNESS my hand and seal of the said Department at Baltimore.

______________________________

<PAGE>

DELAWARE GROUP DELCHESTER HIGH-YIELD BOND FUND, INC.

ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION

Delaware Group Delchester High-Yield Bond Fund, Inc., a Maryland
corporation having its principal office in Baltimore, Maryland (the
"Corporation"), hereby certifies, in accordance with Section 2-208 of the
Maryland General Corporation Law, to the State Department of Assessments and
Taxation of Maryland that:

FIRST: The Corporation has authority to issue a total of Five
Hundred Million (500,000,000) shares of common stock with a par value of One
Dollar ($1.00) per share of the Corporation (the "Common Stock"), having an
aggregate par value of Five Hundred Million Dollars ($500,000,000). Of such Five
Hundred Million (500,000,000) shares of Common Stock, Five Hundred Million
(500,000,000) shares have been allocated to the Common Stock series of the
Common Stock as follows: (1) Fifty Million (50,000,000) shares have been
allocated to each of the Delchester Fund (Institutional) class and Delchester
Fund B Class and (2) Four Hundred Million (400,000,000) shares have been
allocated to the Delchester Fund class.

SECOND: The Board of Directors of the Corporation, at a meeting held
on July 20, 1995, adopted a resolution classifying a fourth class of shares of
the Common Stock series of the Common Stock as the Delchester Fund C Class (the
"C Class") and reclassifying and allocating Fifty Million (50,000,000) shares of
authorized and unissued Common Stock, previously classified allocated to the
Delchester Fund class of the Common Stock series of the Common Stock, to the C
Class.

THIRD: The shares of the C Class shall represent proportionate
interests in the same portfolio of investments as the shares of the Delchester
Fund (Institutional) class, Delchester Fund B Class and Delchester Fund class of
the Common Stock series of the Common Stock. The shares of the C Class shall
have the same preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, or terms or
conditions of redemption as the shares of the Delchester Fund (Institutional)
class, Delchester Fund B Class and Delchester Fund class of the Common Stock
series of the Common Stock, all as set forth in the Articles of Incorporation of
the Corporation, except for the differences hereinafter set forth:
<PAGE>

1. The dividends and distributions of investment income and capital
gains with respect to shares of the C Class shall be in such amounts
as may be declared from time to time by the Board of Directors, and
such dividends and distributions may vary with respect to such class
from the dividends and distributions of investment income and capital
gains with respect to shares of the other classes of the Common Stock
series of the Common Stock to reflect differing allocations of the
expenses of the Corporation among the shares of such classes and any
resultant difference among the net asset values per share of the
shares of such classes, to such extent and for such purposes as the
Board of Directors may deem appropriate. The allocation of investment
income and capital gains and expenses and liabilities of the
Corporation among the four classes of the Common Stock series of the
Common Stock shall be determined by the Board of Directors in a manner
that is consistent with the order, as applicable, dated September 6,
1994 (Investment Company Act of 1940 Release No. 20529) issued by the
Securities and Exchange Commission, and any amendments to such order,
any future order or any Multiple Class Plan adopted by the Corporation
in accordance with Rule 18f-3 under the Investment Company Act of
1940, as amended, that modifies or supersedes such order.

2. Except as may otherwise be required by law pursuant to any
applicable order, rule or interpretation issued by the Securities and
Exchange Commission, or otherwise, the holders of shares of the C
Class shall have (i) exclusive voting rights with respect to any
matter submitted to a vote of stockholders that affects only holders
of shares of the C Class, including without limitation the provisions
of any Distribution Plan adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended (a "Distribution Plan")
applicable to shares of the C Class, and (ii) no voting rights with
respect to the provisions of any Distribution Plan applicable to any
other class of Common Stock or with regard to any other matter
submitted to a vote of stockholders which does not affect holders of
shares of the C Class.

3. The shares of the C Class shall not automatically convert into
shares of the Delchester Fund class of the Common Stock series of the
Common Stock as do the shares of the Delchester Fund B Class of the
Common Stock series of the Common Stock.

FOURTH: The shares of the Delchester Fund class of the Common Stock
series of the Common Stock reclassified as

-2-
<PAGE>

shares of the C Class pursuant to these Articles Supplementary have been
reclassified by the Board of Directors pursuant to authority contained in the
Articles of Incorporation of the Corporation.

FIFTH: These Articles Supplementary shall become effective on
November 28, 1995.

IN WITNESS WHEREOF, Delaware Group Delchester High-Yield Bond Fund,
Inc. has caused these Articles Supplementary to be signed in its name and on its
behalf this ___ day of November, 1995.

DELAWARE GROUP DELCHESTER HIGH-YIELD
BOND FUND, INC.

By:
-------------------------------------------
George M. Chamberlain, Jr.
Senior Vice President

ATTEST:

- ------------------------------
Assistant Secretary

-3-
<PAGE>

THE UNDERSIGNED, Senior Vice President of DELAWARE GROUP DELCHESTER
HIGH-YIELD BOND FUND, INC., who executed on behalf of the said Corporation the
foregoing Articles Supplementary, of which this instrument is made a part,
hereby acknowledges, in the name of and on behalf of said Corporation, said
Articles Supplementary to be the corporate act of said Corporation and further
certifies that, to the best of his knowledge, information and belief, the
matters and facts set forth therein with respect to the authorization and
approval thereof are true in all material respects, under the penalties of
perjury.

------------------------------------------
George M. Chamberlain, Jr.
Senior Vice President

-4-

<PAGE>

DELAWARE GROUP DELCHESTER HIGH-YIELD BOND FUND, INC.

CERTIFICATION OF AMENDMENT TO BY-LAWS

AMENDING SECTION 7 OF ARTICLE III

JANUARY 28, 1995

The Undersigned Secretary of Delaware Group Delchester High-
Yield Bond Fund, Inc. does hereby certify that at the Board of Directors of the
Fund at a meeting duly called and held on January 28, 1995 did adopt the
following resolution amending Section 7 of Article III of the Fund's by-laws:

RESOLVED, that Article III,
Section 7, be amended in its
entirely to read as follows:

Section 7. At any
meeting of the stockholders
of the Corporation every
stockholder having the right
to vote shall be entitled, in
person or by proxy appointed
by an instrument in writing
subscribed by such stockholder
or by his duly authorized
attorney-in-fact and bearing
a date not more than eleven
months prior to said meeting
unless such instrument provides
for a longer period, to one
vote for each share of stock
having voting power registered
in his name on the books of
the Corporation.

IN WITNESS WHEREOF, I have hereto subscribed my name this 28th day of
January, 1995.

/s/George M. Chamberlain, Jr.
- -----------------------------
George M. Chamberlain, Jr.
Secretary

<PAGE>

DELAWARE GROUP DELCHESTER HIGH-YIELD BOND FUND, INC.

CERTIFICATION OF AMENDMENT TO BY-LAWS

AMENDING SECTION 2 OF ARTICLE VI

NOVEMBER 21, 1991

The Undersigned Secretary of Delaware Group Delchester High-Yield Bond Fund,
Inc. does hereby certify that at the Board of Directors of the Fund at a meeting
duly called and held on November 21, 1991 did adopt the following resolution
amending Section 2 of Article VI of the Fund's by-laws:

RESOLVED, that Article VI, Section 2 of the Fund's by-laws be amended to read
in its entirely as follows:

Section 2. The Chairman of the Board shall be elected from the
membership of the Board of Directors, but other officers need not be members
of the Board of Directors. Any two or more offices may be held by the same
person except the offices of President and Vice President. All officers of
the Corporation shall serve for one year and until their successors shall
have been duly elected and shall have qualified; provided, however, that any
officer may be removed at any time, either with our without cause, by action
by the Board of Directors.

AND FURTHER RESOLVED, that the appropriate officers of the Fund are hereby
authorized to take such other steps as may be necessary to implement the
aforesaid amendment.

IN WITNESS WHEREOF, I have hereto subscribed my name this 21st day of
November, 1991.

/s/George M. Chamberlain, Jr.
- -----------------------------
George M. Chamberlain, Jr.
<PAGE>

DELAWARE GROUP DELCHESTER HIGH-YIELD BOND FUND, INC.

CERTIFICATION OF AMENDMENT TO BY-LAWS

AMENDING SECTION 8 OF ARTICLE IV

JULY 22, 1991

The Undersigned Secretary of Delaware Group Delchester High-Yield Bond Fund,
Inc. does hereby certify that at the Board of Directors of the Fund at a meeting
duly called and held on July 22, 1991 did adopt the following resolution
amending Section 8 of Article IV of the Fund's by-laws:

RESOLVED, that Article IV, Section 8, be amended in its entirely to read as
follows:

Section 8. The Board of Directors may hold their meetings and
keep the books of the Corporation outside of the State of Maryland at
such place or places as it may from time to time determine.

AND FURTHER RESOLVED, that the Secretary of the Fund is hereby authorized and
directed to include a certified copy of this Amendment with the corporate
records of the Fund; and further

RESOLVED, that the books and records of the Fund shall be maintained at the
offices of the Fund in the City of Philadelphia.

IN WITNESS WHEREOF, I have hereto subscribed my name this 22nd day of July,
1991.

/s/George M. Chamberlain, Jr.
- -----------------------------
George M. Chamberlain, Jr.
<PAGE>

DELAWARE GROUP DELCHESTER HIGH-YIELD BOND FUND, INC.

CERTIFICATION OF AMENDMENT TO BY-LAWS

AMENDING SECTION 2 OF ARTICLE III

JANUARY 17, 1991

The Undersigned Secretary of Delaware Group Delchester High-Yield Bond Fund,
Inc. does hereby certify that at the Board of Directors of the Fund at a meeting
duly called and held on January 17, 1991 did adopt the following resolution
amending Section 2 of ARTICLE III of the Fund's by-laws:

WHEREAS, the Board of Directors of the Fund deems it to be in the best
interests of the Fund to amend the By-Laws of the Fund to provide that
holders of at least 10% of the Fund's shares be permitted, at the Fund's
cost, to call a special stockholders meeting for any purpose, in order to
enable the Fund's shares to be qualified and sold in the State of California;
and therefore be it

RESOLVED, that the By-Laws of the Fund are hereby amended by inserting, as
amended Section 2 of ARTICLE III, the following:

IN WITNESS WHEREOF, I have hereto subscribed my name this 17th day of
January, 1991.

/s/George M. Chamberlain, Jr.
- -----------------------------
George M. Chamberlain, Jr.
<PAGE>

DELAWARE GROUP DELCHESTER HIGH YIELD BOND FUND, INC.

CERTIFICATION OF AMENDMENT TO BY-LAWS

INSERTING A NEW ARTICLE VII AND RENUMBERING THE SUBSEQUENT
ARTICLES

FEBRUARY 16, 1989

The Undersigned Secretary of Delaware Group Delchester High Yield Bond Fund,
Inc. does hereby certify that the Board of Directors of the Fund at a meeting
duly called and held on February 16, 1989 did adopt the following resolutions
inserting a new Article VII and renumbering the subsequent articles of the
Fund's by-laws:

WHEREAS, the Board of Directors of the Fund deems it to be in the best
interests of the Fund to amend the By-Laws of the Fund to allow indemnification
of officers and directors to the full extent provided by Maryland law;

NOW THEREFORE, BE IT RESOLVED, that the By-Laws of the Fund are hereby
amended by renumbering ARTICLES VIII, IX, X, XI, XII AND XIII as ARTICLES IX, X,
XI, XII, XIII AND XIV, and by inserting as ARTICLE VII, the following:

"INDEMNIFICATION OF OFFICERS AND DIRECTORS

Section 1. The Corporation shall indemnify each Officer and
Director made party to a proceeding, by reason of service in such
capacity, to the fullest extent, and in the manner provided, under
Section 2-418 of the Maryland General Corporation Law: (i) unless it is
proved that the person seeking indemnification did not meet the standard
of conduct set forth in subsection (b)(1) of such section; and (ii)
provided, that the Corporation shall not indemnify any Officer or
Director for any liability to the Corporation or its security holders
arising from the wilful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such
person's office.

Section 2. The provisions of clause (i) of Section 1 herein
notwithstanding, the Corporation shall indemnify each Officer and
Director against reasonable expenses incurred in connection with the
successful defense of any proceeding to which each such Officer or
Director is a party by reason of service in such capacity.

Section 3. The Corporation, in the manner and to the extent
provided by applicable law, shall advance to each Officer and Director
who is made party to a proceeding by
<PAGE>

reason of service in such capacity the reasonable expenses incurred by
such person in connection therewith."

IN WITNESS WHEREOF, I have hereto subscribed my name this 16th day
of February, 1989.

/s/George M. Chamberlain, Jr.
- -----------------------------
George M. Chamberlain, Jr.
Secretary
<PAGE>

DELAWARE GROUP DELCHESTER HIGH-YIELD BOND FUND, INC.

CERTIFICATION OF AMENDMENT TO BY-LAWS

ARTICLE 3, SECTION 2

JUNE 16, 1988

The Undersigned Secretary of Delaware Group Delchester High-Yield Bond Fund,
Inc. does hereby certify that the Board of Directors of the Fund at a meeting
duly called and held on June 16, 1988 did adopt the following resolution
amending Article 3, Section 2 of the Fund's by-laws:

RESOLVED, that Article III, Section 2 of the By-laws of the Fund be amended
to read as follows:

Section 2. Special meetings of the stockholders may be called at any time by
the Chairman, President or a majority of the members of the Board of
Directors and shall be called by the Secretary upon the written request of
the holders of at least twenty-five percent of the shares of the capital
stock of the Corporation issued and outstanding and entitled to vote at such
meeting; provided, if the matter proposed to be acted on is substantially the
same as a matter voted on at any special meeting held during the preceding
twelve months, such written request shall be made by holders of at least a
majority of the capital stock of the Corporation issued and outstanding and
entitled to vote at such meetings. A special meeting of the stockholders
shall also be called by the Secretary upon the written request of at least
ten percent of the shares of the capital stock of the Corporation issued and
outstanding and entitled to vote at such meeting, for the express purpose of
voting upon the question of removal of a director or directors. Upon receipt
of a written request from such holders entitled to call a special meeting,
which shall state the purpose of the meeting and the matter proposed to be
acted on at it, the Secretary shall inform the holders who made such request
of the reasonably estimated cost of preparing and mailing a notice of a
meeting and upon payment of such costs to the Corporation the Secretary shall
issue notice of such meeting. Special meetings of the stockholders shall be
held at the principal office of the Corporation, or at such other place
within or without the State of Maryland as the Board of Directors may from
time to time direct, or at such place within or without the State of Maryland
as shall be specified in the notice of such meeting.

IN WITNESS WHEREOF, I have hereto subscribed my name this 16th day of
June, 1988.

/s/George M. Chamberlain, Jr.
- -----------------------------
George M. Chamberlain, Jr.
Secretary
<PAGE>

DELAWARE GROUP DELCHESTER HIGH-YIELD BOND FUND, INC.

CERTIFICATION OF AMENDMENT TO BY-LAWS

ARTICLE 3, SECTION 1
AND
ARTICLE 4, SECTION 2 AND 4

JUNE 14, 1988

The Undersigned Secretary of Delaware Group Delchester High-Yield Bond Fund,
Inc. does hereby certify that the Shareholders of the Fund at a meeting duly
called and held on June 14, 1988 did adopt the following resolution amending
Article 3, Section 1 and Article 4, Section 2 and 4 of the Fund's by-laws:

ARTICLE III

Section 1. An annual meeting of the shareholders of the Corporation for
the election of directors and for the transaction of general business shall
not be required to be held in any year except that an annual meeting must be
held in any year if any of the following items is required to be acted upon
by shareholders under the Investment Company Act of 1940; election of
directors, approval of the investment advisory agreement, ratification of the
selection of independent public accountants, or approval of a distribution
agreement. Any such meeting shall be held at the principal office of the
Corporation, or at such o!her place within or without the State of Maryland
as the Board of Directors may from time to time prescribe, on the third
Tuesday in April at 10:00 am. or at such other date and time as the Board of
Directors may from time to time prescribe. A notice of any change in the
place of the annual meeting shall be given to each shareholder not less than
ten days before the election is held.

ARTICLE IV

* * *

Section 2. The directors shall be elected by the shareholders of the
Corporation at an annual meeting, if held, or at a special meeting called for
such purpose, and shall hold office until their successors shall be duly
elected and qualified.

* * *
<PAGE>

Section 4. The Board of Directors shall have power to fill vacancies
occurring on the Board, whether by death, resignation or otherwise. A vacancy
on the Board of Directors resulting from any cause except an increase in the
number of directors may be filled by a vote of the majority of the remaining
members of the Board, though less than a quorum. A vacancy on the Board of
Directors resulting from an increase in the number of directors may be filled
by a majority of the entire Board of Directors. A director elected by the
Board of Directors to fill a vacancy shall serve until the next annual
meeting, whenever held, or special meeting called for that purpose, and until
his successor is elected and qualifies.

IN WITNESS WHEREOF, I have hereunto subscribed my name this 14th day of June,
1988.

/s/George M. Chamberlain, Jr.
- -----------------------------
George M. Chamberlain, Jr.
Secretary
<PAGE>

DELCHESTER BOND FUND, INC.

BY-LAWS

ARTICLE I
OFFICES

Section 1. The principal office of the Corporation shall be in the City
of Baltimore, State of Maryland. The Corporation shall also have offices at such
other places as the Board of Directors may from time to time determine or the
business of the Corporation may require.

ARTICLE II
STOCKHOLDERS AND STOCK CERTIFICATES

Section 1. Every stockholder of record shall be entitled to a stock
certificate representing the shares owned by him. Stock certificates shall be in
such form as may be required by law and as the Board of Directors shall
prescribe. Every stock certificate shall be signed by the Chairman or the
President or a Vice President and by the Treasurer or an Assistant Treasurer, or
the Secretary or an Assistant Secretary, and sealed with the corporate seal,
which may be a facsimile, either engraved or printed. Stock certificates may
bear the facsimile signatures of the officers authorized to sign such
certificates.

Section 2. Shares of the capital stock of the Corporation shall be
transferable only on the books of the Corporation by the person in whose name
such shares are registered, or by his duly authorized attorney or
representative. In all cases of transfer by an attorney-in-fact, the original
power of attorney, or an official copy thereof duly certified, shall be
deposited and remain with the Corporation or its duly authorized transfer agent.
In case of transfers by executors, administrators, guardians or other legal
representatives, duly authenticated evidence of their authority shall be
produced, and may be required to be deposited and remain with the Corporation or
its duly authorized transfer agent. No transfer shall be made unless and until
the certificate issued to the transferor shall be delivered to the Corporation
or its duly authorized transfer agent, properly endorsed.

Section 3. Any person desiring a certificate for shares of the capital
stock of the Corporation to be issued in lieu of one lost or destroyed shall
make an affidavit or affirmation setting forth the loss or destruction of such
stock certificate, and shall advertise such loss or destruction in such manner
as the Board of Directors may require, and shall, if the Board of Directors
shall so
<PAGE>

require, give the Corporation a bond or indemnity, in such form and with such
security as may be satisfactory to the Board, indemnifying the Corporation
against any loss that may result upon the issuance of a new stock certificate.
Upon receipt of such affidavit and proof of publication of the advertisement of
such loss or destruction, and the bond, if any, required by the Board of
Directors, a new stock certificate may be issued of the same tenor and for the
number of shares as the one alleged to have been lost or destroyed.

Section 4. The Corporation shall be entitled to treat the holder of
record of any share or shares of its capital stock as the owner thereof and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
the Corporation shall have express or other notice thereof.

ARTICLE III
MEETINGS OF STOCKHOLDERS

Section 1. The annual meeting of the stockholders of the Corporation for
the election of Directors and for the transaction of general business shall be
held at the principal office of the Corporation, or at such other place within
or without the State of Maryland as the Board of Directors may from time to time
prescribe, on the third Tuesday in April at 10:00 a.m. in each year after the
year 1985, unless that day shall be duly designated as a legal holiday, in which
event the annual meeting of the stockholders shall be held on the first day
following which is not a legal holiday. A notice of any change in the place of
the annual meeting shall be given to each stockholder not less than ten days
before the election is held.

preparing and mailing a notice of a meeting and upon payment of such costs to
the Corporation the Secretary shall issue notice of such meeting. Special
meetings of the stockholders shall be held at the principal office of the
Corporation, or at such other place within or without the State of Maryland as
the Board of Directors may from time to time direct, or at such place within or
without the State of Maryland as shall be specified in the notice of such
meeting.

Section 3. Notice of the time and place of the annual or any special
meeting of the stockholders shall be given to each stockholder entitled to
notice of such meeting not less than ten days nor more than ninety days prior to
the date of such meeting. In the case of special meetings of the stockholders,
the notice shall specify the object or objects of such meeting, and no business
shall be transacted at such meeting other than that mentioned in the call.

Section 4. The Board of Directors may close the stock transfer books of
the Corporation for a period not exceeding twenty days preceding the date of any
meeting of stockholders, or the date for payment of any dividend, or the date
for the allotment of rights, or the date when any change or conversion or
exchange of capital stock shall go into effect, or for a period of not exceeding
twenty days in connection with the obtaining of the consent of stockholders for
any purpose; provided, however, that in lieu of closing the stock transfer books
as aforesaid, the Board of Directors may fix in advance a date, not exceeding
ninety days preceding the date of any meeting of stockholders, or the date for
payment of any dividend, or the date for the allotment of rights, or the date
when any change or conversion or exchange of capital stock shall go into effect,
or a date in connection with obtaining such consent, as a record date for the
determination of the stockholders entitled to notice of, and to vote at any such
meeting and any adjournment thereof, or entitled to receive payment of any such
dividend, or to any such allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of capital stock or to give
such consent, and in such case such stockholders and only such stockholders as
shall be stockholders of record on the date so fixed shall be entitled to such
notice of, and to vote at, such meeting and any adjournment thereof, or to
receive payment of such dividend or to receive such allotment of rights or to
exercise such rights, or to give such consent, as the case may be,
notwithstanding any transfer of any stock on the books of the Corporation after
any such record date fixed as aforesaid.

Section 5. At all meetings of the stockholders a quorum shall consist of
the holders of a majority of the outstanding shares of the capital stock of the
Corporation entitled to vote at such meeting. In the absence of a quorum
<PAGE>

no business shall be transacted except that the stockholders present in person
or by proxy and entitled to vote at such meeting shall have power to adjourn the
meeting from time to time to a date not more than one hundred twenty days after
the original record date without further notice other than announcement at the
meeting. At any such adjourned meeting at which a quorum shall be present any
business may be transacted which might have been transacted at the meeting on
the date specified in the original notice. If a quorum is present at any
meeting, the holders of a majority of the shares of capital stock of the
Corporation issued and outstanding and entitled to vote at the meeting who shall
be present in person or by proxy at such meeting shall have power to approve any
matter properly before the meeting, except a plurality of all votes cast at a
meeting at which a quorum is present shall be sufficient for the election of a
director. The holders of such majority shall also have power to adjourn the
meeting to any specific time or times, and no notice of any such adjourned
meeting need be given to stockholders absent or otherwise.

Section 6. At all meetings of the stockholders the following order of
business shall be substantially observed, as far as it is consistent with the
purpose of the meeting:

Election of Directors;
Ratification of Selection of Auditors;
New business.

Section 7. At any meeting of the stockholders of the Corporation every
stockholder having the right to vote shall be entitled, in person or by proxy
appointed by an instrument in writing subscribed by such stockholder and bearing
a date not more than eleven months prior to said meeting unless such instrument
provides for a longer period, to one vote for each share of stock having voting
power registered in his name on the books of the Corporation.

ARTICLE IV
DIRECTORS

Section 1. The Board of Directors shall consist of not less than three
nor more than twelve members. The Board of Directors may by a vote of the entire
board increase or decrease the number of directors without a vote of the
stockholders; provided, that any such decrease shall not affect the tenure of
office of any director. Directors need not hold any shares of the capital stock
of the Corporation.

Section 2. The directors shall be elected annually by the stockholders of
the Corporation at their annual meeting, and shall hold office for the term of
one year and until their successors shall be duly elected and shall qualify.
<PAGE>

Section 3. The Board of Directors shall have the control and management
of the business of the Corporation, and in addition to the powers and authority
by these By-Laws expressly conferred upon them, may exercise, subject to the
provisions of the laws of the State of Maryland and of the Articles of
Incorporation of the Corporation, all such powers of the Corporation and do all
such acts and things as are not required by law or by the Articles of
Incorporation to be exercised or done by the stockholders.

Section 4. The Board of Directors shall have power to fill vacancies
occurring on the Board, whether by death, resignation or otherwise. A vacancy on
the Board of Directors resulting from any cause except an increase in the number
of directors may be filled by a vote of the majority of the remaining members of
the Board, though less than a quorum. A vacancy on the Board of Directors
resulting from an increase in the number of directors may be filled by a
majority of the entire Board of Directors. A director elected by the Board of
Directors to fill a vacancy shall serve until the next annual meeting of
stockholders and until his successor is elected and qualifies. If less than a
majority of the directors in office shall have been elected by the stockholders,
a meeting of the stockholders shall be called as required under the Investment
Company Act of 1940, as amended.

Section 5. The Board of Directors shall have power to appoint, and at its
discretion to remove or suspend, any officers, managers, superintendents,
subordinates, assistants, clerks, agents and employees, permanently or
temporarily, as the Board may think fit, and to determine their duties and to
fix, and from time to time to change, their salaries or emoluments, and to
require security in such instances and in such amounts as it may deem proper.

Section 6. In case of the absence of an officer of the Corporation, or
for any other reason which may seem sufficient to the Board of Directors, the
Board may delegate his powers and duties for the time being to any other officer
of the Corporation or to any director.

Section 7. The Board of Directors may, by resolution or resolutions
passed by a majority of the whole Board, designate one or more committees, each
committee to consist of two or more of the directors of the Corporation which,
to the extent provided in such resolution or resolutions and by applicable law,
shall have and may exercise the powers of the Board of Directors in the
management of the business and affairs of the Corporation. Such committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the Board of Directors. Any such committee shall keep
regular minutes of its proceedings, and shall report the same to the Board when
required.
<PAGE>

Section 8. The Board of Directors may hold their meetings and keep the
books of the Corporation, except the original or a duplicate stock ledger and
the original or a certified copy of these By-Laws, outside of the State of
Maryland, at such place or places as they may from time to time determine.

Section 9. The Board of Directors shall have power to fix, and from time
to time to change the compensation, if any, of the directors of the Corporation.

Section 10. Upon retirement of a Director, the Board may elect him or her
to the position of Director Emeritus. Said Director Emeritus shall serve for one
year and may be re-elected by the Board from year to year thereafter. Said
Director Emeritus shall not vote at meetings of Directors and shall not be held
responsible for actions of the Board but shall receive fees paid to Board
members for serving as such.

ARTICLE V
DIRECTORS MEETINGS

Section 1. The first regular meeting of the Board of Directors shall be
held each year within seven business days following the annual meeting of
stockholders at which the Directors are elected. Regular meetings of the Board
of Directors shall also be held without notice at such times and places as may
be from time to time prescribed by the Board.

Section 2. Special meetings of the Board of Directors may be called at
any time by the Chairman, and shall be called by the Chairman upon the written
request of a majority of the members of the Board of Directors. Unless notice is
waived by all the members of the Board of Directors, notice of any special
meeting shall be given to each director at least twenty-four hours prior to the
date of such meeting, and such notice shall provide the time and place of such
special meeting.

Section 3. One-third of the entire Board of Directors shall constitute a
quorum for the transaction of business at any meeting; except that if the number
of directors on the Board is less than six, two members shall constitute a
quorum for the transaction of business at any meeting. The act of a majority of
the directors present at any meeting where there is a quorum shall be the act of
the Board of Directors except as may be otherwise

Section 4. The order of business at meetings of the Board of Directors
shall be prescribed from time to time by the Board.
<PAGE>

ARTICLE VI
OFFICERS AND AGENTS

Section 1. At the first meeting of the Board of Directors after the
election of Directors in each year, the Board shall elect a Chairman, a
President and Chief Executive Officer, one or more Vice Presidents, a Secretary
and a Treasurer and may elect or appoint one or more Assistant Secretaries, one
or more Assistant Treasurers, and such other officers and agents as the Board
may deem necessary and as the business of the Corporation may require.

Section 2. The Chairman of the Board and the President shall be elected
from the membership of the Board of Directors, but other officers need not be
members of the Board of Directors. Any two or more offices may be held by the
same person except the offices of President and Vice President. All officers of
the Corporation shall serve for one year and until their successors shall have
been duly elected and shall have qualified; provided, however, that any officer
may be removed at any time, either with or without cause, by action by the Board
of Directors.

ARTICLE VII
DUTIES OF OFFICERS
CHAIRMAN OF THE BOARD

Section 1. The Chairman of the Board shall preside at all meetings of the
stockholders and the Board of Directors and shall be a member ex officio of all
standing committees. He shall have those duties and responsibilities as shall be
assigned to him by the Board of Directors. In the absence, resignation,
disability or death of the President, the Chairman shall exercise all the powers
and perform all the duties of the President until his return, or until such
disability shall be removed or until a new President shall have been elected.

PRESIDENT

Section 2. The President shall be the Chief Executive Officer and head of
the Corporation, and in the recess of the Board of Directors shall have the
general control and management of its business and affairs, subject, however to
the regulations of the Board of Directors.

The President shall, in the absence of the Chairman, preside
at all meetings of the stockholders and the Board of Directors. In the event of
the absence, resignation, disability or death of the Chairman, the President
shall exercise all powers and perform all duties of the Chairman
<PAGE>

until his return, or until such disability shall have been removed or until a
new Chairman shall have been elected.

VICE PRESIDENTS

Section 3. The Executive Vice President, and the Vice Presidents, shall
have those duties and responsibilities as shall be assigned to them by the
Chairman or the President. In the event of the absence, resignation, disability
or death of the Chairman and President, the Executive Vice President shall
exercise all the powers and perform all the duties of the President until his
return, or until such disability shall be removed or until a new President shall
have been elected.

THE SECRETARY AND ASSISTANT SECRETARIES

Section 4. The Secretary shall attend all meetings of the stockholders
and shall record all the proceedings thereof in a book to be kept for that
purpose, and he shall be the custodian of the corporate seal of the Corporation.
In the absence of the Secretary, an Assistant Secretary or any other person
appointed or elected by the Board of Directors, as is elsewhere in these Bylaws
provided, may exercise the rights and perform the duties of the Secretary.

Section 5. The Assistant Secretary, or, if there be more than one
Assistant Secretary, then the Assistant Secretaries in the order of their
seniority, shall, in the absence or disability of the Secretary, perform the
duties and exercise the powers of the secretary. Any Assistant Secretary elected
by the Board shall also perform such other duties and exercise such other powers
as the Board of Directors shall from time to time prescribe.

THE TREASURER AND ASSISTANT TREASURERS

Section 6. The Treasurer shall keep full and correct accounts of the
receipts and expenditures of the Corporation in books belonging to the
Corporation, and shall deposit all monies and valuable effects in the name and
to the credit of the Corporation and in such depositories as may be designated
by the Board of Directors, and shall, if the Board shall so direct, give bond
with sufficient security and in such amount as may be required by the Board of
Directors for the faithful performance of his duties.

the Board, or whenever they may require it, an account of all his transactions
as the chief fiscal officer of the Corporation and of the financial condition of
the Corporation, and shall present each year before the annual meeting of the
stockholders a full financial report of the preceding fiscal year.

Section 7. The Assistant Treasurer, or, if there be more than one
Assistant Treasurer, then the Assistant Treasurers in the order of their
seniority, shall, in the absence or disability of the Treasurer, perform the
duties and exercise the powers of the Treasurer. Any Assistant Treasurer elected
by the board shall also perform such duties and exercise such powers as the
Board of Directors shall from time to time prescribe.

ARTICLE VIII
CHECKS, DRAFTS, NOTES, ETC.

Section 1. All checks shall bear the signature of such person or persons
as the Board of Directors may from time to time direct.

Section 2. All notes and other similar obligations and acceptances of
drafts by the Corporation shall be signed by such person or persons as the Board
of Directors may from time to time direct.

Section 3. Any officer of the Corporation or any other employee, as the
Board of Directors may from time to time direct, shall have full power to
endorse for deposit all checks and all negotiable paper drawn payable to his or
their order or to the order of the Corporation.

ARTICLE IX
CORPORATE SEAL

Section 1. The corporate seal of the Corporation shall have inscribed
thereon the name of the Corporation, the year of its organization, and the words
"Corporate Seal, Maryland." Such seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.

ARTICLE X
DIVIDENDS

Section 1. Dividends upon the shares of the capital stock of the
Corporation may, subject to the provisions of
<PAGE>

the Articles of Incorporation of the Corporation, if any, be declared by the
Board of Directors at any regular or special meeting, pursuant to law. Dividends
may be paid in cash, in property, or in shares of the capital stock of the
Corporation.

Section 2. Before payment of any dividend there may be set aside out of
any funds of the Corporation available for dividends such sum or sums as the
Board of Directors may, from time to time, in their absolute discretion, think
proper as a reserve fund to meet contingencies, or for equalizing dividends, or
for repairing or maintaining any property of the Corporation, or for such other
purpose as the Board of Directors shall deem to be for the best interests of the
Corporation, and the Board of Directors may abolish any such reserve in the
manner in which it was created.

ARTICLE XI
FISCAL YEAR

Section 1. The fiscal year of the Corporation shall begin on August 1 of
each year, and end on July 31 of each year.

ARTICLE XII
NOTICES

Section 1. Whenever under the provisions of these By-Laws notice is
required to be given to any director or stockholder, such notice is deemed given
when it is personally delivered, left at the residence or usual place of
business of the director or stockholder, or mailed to such director or
stockholder at such address as shall appear on the books of the Corporation and
such notice, if mailed, shall be deemed to be given at the time it shall be so
deposited in the United States mail postage prepaid. In the case of directors,
such notice may also be given orally by telephone or by telegraph or cable.

Section 2. Any notice required to be given under these By-Laws may be
waived in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein.

ARTICLE XIII
AMENDMENTS

Section 1. These By-Laws may be amended, altered or repealed by the
affirmative vote of the holders of a majority of the shares of capital stock of
the Corporation issued and outstanding and entitled to vote thereon, or by a
majority of the Board of Directors, as the case may be.
<PAGE>

AMENDMENT TO BY-LAWS

DELCHESTER BOND FUND, INC.

At the meeting of the Board of Directors held September 20, 1984 the
following Resolutions amending the By-Laws were adopted:

RESOLVED, that Article VI, Section 1 be amended as of September 30, 1984
to read as follows:

Section 1. At the first meeting of the Board of Directors after
the election of Directors in each year the Board shall elect a
Chairman, a President and Chief Executive Officer, one or more Vice
Presidents, a Secretary and a Treasurer, and may elect or appoint
one or more Assistant Secretaries, one or more Assistant
Treasurers, and such other officers and agents as the Board may
deem necessary and as the business of the Corporation may require.

RESOLVED, that Article VII, Section 1 be amended as of September 30,
1984 to read as follows:

Section 1. The Chairman of the Board shall preside at all meetings
of the stockholders and the Board of Directors and shall be a
member ex-officio of all standing committees. He shall have those
duties and responsibilities as shall be assigned to him by the
Board of Directors. In the absence, resignation, disability or
death of the President, the Chairman shall exercise all the powers
and perform all the duties of the President until his return, or
until such disability shall be moved or until a new President shall
have been elected.

FURTHER RESOLVED, that Article VII, Section 3 be amended as of September
30, 1984 to read as follows:

Section 3. The President shall be the Chief Executive Officer and
head of the Corporation, and in the recess of the Board of
Directors shall have the general control and management of its
business and affairs, subject, however, to the regulations of the
Board of Directors.

exercise all powers and perform all duties of the Chairman until
his return, or until such disability shall have been removed or
until a new Chairman shall have been elected.

FURTHER RESOLVED, that Article VII, Section 4 be amended as of September
30, 1984 to read as follows:

Section 4. The Executive Vice President, and the Vice Presidents,
shall have those duties and responsibilities as shall be assigned
to them by the Chairman or the President. In the event of the
absence, resignation, disability or death of the Chairman and
President, the Executive Vice President shall exercise all the
powers and perform all the duties of the President until his
return, or until such disability shall be removed or until a new
President shall have been elected.

I, Donald M. Allen, Secretary of Delchester Bond Fund, Inc., do hereby
certify that the foregoing is a true and correct copy of the Resolutions adopted
by the Board of Directors at their meeting held September 20, 1984.

/s/Donald M. Allen
- ------------------
Donald M. Allen
<PAGE>

DELAWARE GROUP DELCHESTER HIGH YIELD BOND, INC.

BY-LAWS

ARTICLE I
OFFICES

Section 1. The principal office of the Corporation shall be in
the City of Baltimore, State of Maryland. The Corporation shall also have
offices at such other places as the Board of Directors may from time to time
determine or the business of the Corporation may require.

ARTICLE II
STOCKHOLDERS AND STOCK CERTIFICATES

Section 1. Every stockholder of record shall be entitled to a
stock certificate representing the shares owned by him. Stock certificates shall
be in such form as may be required by law and as the Board of Directors shall
prescribe. Every stock certificate shall be signed by the Chairman or the
President or a Vice President and by the Treasurer or an Assistant Treasurer, or
the Secretary or an Assistant Secretary, and sealed with the corporate seal,
which may be a facsimile, either engraved or printed. Stock certificates may
bear the facsimile signatures of the officers authorized to sign such
certificates.

Section 2. Shares of the capital stock of the Corporation shall
be transferable only on the books of the Corporation by the person in whose name
such shares are registered, or by his duly authorized attorney or
representative. In all cases of transfer by an attorney-in-fact, the original
power of attorney, or an official copy thereof duly certified, shall be
deposited and remain with the Corporation or its duly authorized transfer agent.
In case of transfers by executors, administrators, guardians or other legal
representatives, duly authenticated evidence of their authority shall be
produced, and may be required to be deposited and remain with the Corporation or
its duly authorized transfer agent. No transfer shall be made unless and until
the certificate issued to the transferor shall be delivered to the Corporation
or its duly authorized transfer agent, properly endorsed.

Section 3. Any person desiring a certificate for shares of the
capital stock of the Corporation to be issued in lieu of one lost or destroyed
shall make an affidavit or affirmation setting forth the loss or destruction of
such stock certificate, and shall advertise such loss or destruction in such
manner as the Board of Directors may require, and shall, if the Board of
Directors
<PAGE>

shall so require, give the Corporation a bond or indemnity, in such form and
with such security as may be satisfactory to the Board, indemnifying the
Corporation against any loss that may result upon the issuance of a new stock
certificate. Upon receipt of such affidavit and proof of publication of the
advertisement of such loss or destruction, and the bond, if any, required by the
Board of Directors, a new stock certificate pay be issued of the same tenor and
for the number of shares as the one alleged to have been lost or destroyed.

Section 4. The Corporation shall be entitled to treat the
holder of record of any share or shares of its capital stock as the owner
thereof and, accordingly, shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not the Corporation shall have express or other notice thereof.

ARTICLE III
MEETINGS OF STOCKHOLDERS

Section 1. The annual meeting of the stockholders of the
Corporation for the election of Directors and for the transaction of general
business shall be held at the principal office of the Corporation, or at such
other place within or without the State of Maryland as the Board of Directors
may from time to time prescribe, on the third Tuesday in April at 10:00 a.m. in
each year after the year 1985, unless that day shall be duly designated as a
legal holiday, in which event the annual meeting of the stockholders shall be
held on the first day following which is not a legal holiday. A notice of any
change in the place of the annual meeting shall be given to each stockholder not
less than ten days before the election is held.

estimated cost of preparing and mailing a notice of a meeting and upon payment
of such costs to the Corporation the Secretary shall issue notice of such
meeting. Special meetings of the stockholders shall be held at the principal
office of the Corporation, or at such other place within or without the State of
Maryland as the Board of Directors may from time to time direct, or at such
place within or without the State of Maryland as shall be specified in the
notice of such meeting.

Section 3. Notice of the time and place of the annual or any
special meeting of the stockholders shall be given to each stockholder entitled
to notice of such meeting not less than ten days nor more than ninety days prior
to the date of such meeting. In the case of special meetings of the
stockholders, the notice shall specify the object or objects of such meeting,
and no business shall be transacted at such meeting other than that mentioned in
the call.

Section 4. The Board of Directors may close the stock transfer
books of the Corporation for a period not exceeding twenty days preceding the
date of any meeting of stockholders, or the date for payment of any dividend, or
the date for the allotment of rights, or the date when any change or conversion
or exchange of capital stock shall go into effect, or for a period of not
exceeding twenty days in connection with the obtaining of the consent of
stockholders for any purpose; provided, however, that in lieu of closing the
stock transfer books as aforesaid, the Board of Directors may fix in advance a
date, not exceeding ninety days preceding the date of any meeting of
stockholders, or the date for payment of any dividend, or the date for the
allotment of rights, or the date when any change or conversion or exchange of
capital stock shale go into effect, or a date in connection with obtaining such
consent, as a record date for the determination of the stockholders entitled to
notice of, and to vote at any such meeting and any adjournment thereof, or
entitled to receive payment of any such dividend, or to any such allotment of
rights, or to exercise the rights in respect of any such change, conversion or
exchange of capital stock or to give such consent, and in such case such
stockholders and only such stockholders as shall be stockholders of record on
the date so fixed shall be entitled to such notice of, and to vote at, such
meeting and any adjournment thereof, or to receive payment of such dividend or
to receive such allotment of rights or to exercise such rights, or to give such
consent, as the case may be, notwithstanding any transfer of any stock on the
books of the Corporation after any such record date fixed as aforesaid.

Section 5. At all meetings of the stockholders a quorum shall
consist of the holders of a
<PAGE>

majority of the outstanding shares of the capital stock of the Corporation
entitled to vote at such meeting. In the absence of a quorum no business shall
be transacted except that the stockholders present in person or by proxy and
entitled to vote at such meeting shall have power to adjourn the meeting from
time to time to a date not more than one hundred twenty days after the original
record date without further notice other than announcement at the meeting. At
any such adjourned meeting at which a quorum shall be present any business may
be transacted which might have been transacted at the meeting on the date
specified in the original notice. If a quorum is present at any meeting, the
holders of a majority of the shares of capital stock of the Corporation issued
and outstanding and entitled to vote at the meeting who shall be present in
person or by proxy at such meeting shall have power to approve any matter
properly before the meeting, except a plurality of all votes cast at a meeting
at which a quorum is present shall be sufficient for the election of a director.
The holders of such majority shall also have power to adjourn the meeting to any
specific time or times, and no notice of any such adjourned meeting need be
given to stockholders absent or otherwise.

Section 6. At all meetings of the stockholders the following
order of business shall be substantially observed, as far as it is consistent
with the purpose of the meeting:

Election of Directors;
Ratification of Selection of Auditors;
New business.

Section 7. At any meeting of the stockholders of the
Corporation every stockholder having the right to vote shall be entitled, in
person or by proxy appointed by an instrument in writing subscribed by such
stockholder and bearing a date not more than eleven months prior to said meeting
unless such instrument provides for a longer period, to one vote for each share
of stock having voting power registered in his name on the books of the
Corporation.

ARTICLE IV
DIRECTORS

Section 1. The Board of Directors shall consist of not less
than three nor more than twelve members. The Board of Directors may by a vote of
the entire board increase or decrease the number of directors without a vote of
the stockholders; provided, that any such decrease shall not affect the tenure
of office of any director. Directors need not hold any shares of the capital
stock of the Corporation.
<PAGE>

Section 2. The directors shall be elected annually by the
stockholders of the Corporation at their annual meeting, and shall hold office
for the term of one year and until their successors shall be duly elected and
shall qualify.

Section 3. The Board of Directors shall have the control and
management of the business of the Corporation, and in addition to the powers and
authority by these By-Laws expressly conferred upon them, may exercise, subject
to the provisions of the laws of the State of Maryland and of the Articles of
Incorporation of the Corporation, all such powers of the Corporation and do all
such acts and things as are not required by law or by the Articles of
Incorporation to be exercised or done by the stockholders.

Section 4. The Board of Directors shall have power to fill
vacancies occurring on the Board, whether by death, resignation or otherwise. A
vacancy on the Board of Directors resulting from any cause except an increase in
the number of directors may be filled by a vote of the majority of the remaining
members of the Board, though less than a quorum. A vacancy on the Board of
Directors resulting from an increase in the number of directors may be filled by
a majority of the entire Board of Directors. A director elected by the Board of
Directors to fill a vacancy shall serve until the next annual meeting of
stockholders and until his successor is elected and qualifies. If less than a
majority of the directors in office shall have been elected by the stockholders,
a meeting of the stockholders shall be called as required under the Investment
Company Act of 1940, as amended.

Section 5. The Board of Directors shall have power to appoint,
and at its discretion to remove or suspend, any officers, managers,
superintendents, subordinates, assistants, clerks, agents and employees,
permanently or temporarily, as the Board may think fit, and to determine their
duties and to fix, and from time to time to change, their salaries or
emoluments, and to require security in such instances and in such amounts as it
may deem proper.

Section 6. In case of the absence of an officer of the
Corporation, or for any other reason which may seem sufficient to the Board of
Directors, the Board may delegate his powers and duties for the time being to
any other officer of the Corporation or to any director.

which, to the extent provided in such resolution or resolutions and by
applicable law, shall have and may exercise the powers of the Board of Directors
in the management of the business and affairs of the Corporation. Such committee
or committees shall have such name or names as may be determined from time to
time by resolution adopted by the Board of Directors. Any such committee shall
keep regular minutes of its proceedings, and shall report the same to the Board
when required.

Section 8. The Board of Directors may hold their meetings and
keep the books of the Corporation, except the original or a duplicate stock
ledger and the original or a certified copy of these By-Laws, outside of the
State of Maryland, at such place or places as they may from time to time
determine.

Section 9. The Board of Directors shall have power to fix, and
from time to time to change the compensation, if any, of the directors of the
Corporation.

Section 10. Upon retirement of a Director, the Board may elect
him or her to the position of Director Emeritus. Said Director Emeritus shall
serve for one year and may be re-elected by the Board from year to year
thereafter. Said Director Emeritus shall not vote at meetings of Directors and
shall not be held responsible for actions of the Board but shall receive fees
paid to Board members for serving as such.

ARTICLE V
DIRECTORS MEETINGS

Section 1. The first regular meeting of the Board of Directors
shall be held each year within seven business days following the annual meeting
of stockholders at which the Directors are elected. Regular meetings of the
Board of Directors shall also be held without notice at such times and places as
may be from time to time prescribed by the Board.

Section 2. Special meetings of the Board of Directors may be
called at any time by the Chairman, and shall be called by the Chairman upon the
written request of a majority of the members of the Board of Directors. Unless
notice is waived by all the members of the Board of Directors, notice of any
special meeting shall be given to each director at least twenty-four hours prior
to the date of such meeting, and such notice shall provide the time and place of
such special meeting.

Section 3. One-third of the entire Board of Directors shall
constitute a quorum for the transaction of
<PAGE>

business at any meeting; except that if the number of directors on the Board is
less than six, two members shall constitute a quorum for the transaction of
business at any meeting. The act of a majority of the directors present at any
meeting where there is a quorum shall be the act of the Board of Directors
except as may be otherwise

Section 4. The order of business at meetings of the Board of
Directors shall be prescribed from time to time by the Board.

ARTICLE VI
OFFICERS AND AGENTS

Section 1. At the first meeting of the Board of Directors after
the election of Directors in each year, the Board shall elect a Chairman, a
President and Chief Executive Officer, one or more Vice Presidents, a Secretary
and a Treasurer and may elect or appoint one or more Assistant Secretaries, one
or more Assistant Treasurers, and such other officers and agents as the Board
may deem necessary and as the business of the Corporation may require.

Section 2. The Chairman of the Board and the President shall be
elected from the membership of the Board of Directors, but other officers need
not be members of the Board of Directors. Any two or more offices may be held by
the same person except the offices of President and Vice President. All officers
of the Corporation shall serve for one year and until their successors shall
have been duly elected and shall have qualified; provided, however, that any
officer may be removed at any time, either with or without cause, by action by
the Board of Directors.

ARTICLE VII
DUTIES OF OFFICERS
CHAIRMAN OF THE BOARD

Section 1. The Chairman of the Board shall preside at all
meetings of the stockholders and the Board of Directors and shall be a member ex
officio of all standing committees. He shall have those duties and
responsibilities as shall be assigned to him by the Board of Directors. In the
absence, resignation, disability or death of the President, the Chairman shall
exercise all the powers and perform all the duties of the President until his
return, or until such disability shall be removed or until a new president shall
have been elected.

<PAGE>

PRESIDENT

Section 2. The President shall be the Chief Executive Officer
and head of the Corporation, and in the recess of the Board of Directors shall
have the general control and management of its business and affairs, subject,
however to the regulations of the Board of Directors.

The President shall, in the absence of the Chairman, preside at all
meetings of the stockholders and the Board of Directors. In the event of the
absence, resignation, disability or death of the Chairman, the President shall
exercise all powers and perform all duties of the Chairman until his return, or
until such disability shall have been removed or until a new Chairman shall have
been elected.

VICE PRESIDENTS

Section 3. The Executive Vice President, and the Vice
Presidents, shall have those duties and responsibilities as shall be assigned to
them by the Chairman or the President. In the event of the absence, resignation,
disability or death of the Chairman and President, the Executive Vice President
shall exercise all the powers and perform all the duties of the President until
his return, or until such disability shall be removed or until a new President
shall have been elected.

THE SECRETARY AND ASSISTANT SECRETARIES

Section 4. The Secretary shall attend all meetings of the
stockholders and shall record all the proceedings thereof in a book to be kept
for that purpose, and he shall be the custodian of the corporate Seal of the
Corporation. In the absence of the Secretary, an Assistant Secretary or any
other person appointed or elected by the Board of Directors, as is elsewhere in
these Bylaws provided, may exercise the rights and perform the duties of the
Secretary.

Section 5. The Assistant Secretary, or, if there be more than
one Assistant Secretary, then the Assistant Secretaries in the order of their
seniority, shall, in the absence or disability of the Secretary, perform the
duties and exercise the powers of the secretary. Any Assistant Secretary elected
by the Board shall also perform such other duties and exercise such other powers
as the Board of Directors shall from time to time prescribe.

THE TREASURER AND ASSISTANT TREASURERS

Section 6. The Treasurer shall keep full and correct accounts
of the receipts and expenditures of the
<PAGE>

Corporation in books belonging to the Corporation, and shall deposit all monies
and valuable effects in the name and to the credit of the Corporation and in
such depositories as may be designated by the Board of Directors, and shall, if
the Board shall so direct, give bond with sufficient security and in such amount
as may be required by the Board of Directors for the faithful performance of his
duties.

He shall disburse funds of the Corporation as may be ordered by the
Board of Directors, taking proper vouchers for such disbursements, and shall
render to the President and Board of Directors at the regular meetings of the
Board, or whenever they may require it, an account of all his transactions as
the chief fiscal officer of the Corporation and of the financial condition of
the Corporation, and shall present each year before the annual meeting of the
stockholders a full financial report of the preceding fiscal year.

Section 7. The Assistant Treasurer, or, if there be more than
one Assistant Treasurer, then the Assistant Treasurers in the order of their
seniority, shall, in the absence or disability of the Treasurer, perform the
duties and exercise the powers of the Treasurer. Any Assistant Treasurer elected
by the board shall also perform such duties and exercise such powers as the
Board of Directors shall from time to time prescribe.

ARTICLE VIII
CHECKS, DRAFTS, NOTES, ETC.

Section 1. All checks shall bear the signature of such person
or persons as the Board of Directors may from time to time direct.

Section 2. All notes and other similar obligations and
acceptances of drafts by the Corporation shall be signed by such person or
persons as the Board of Directors may from time to time direct.

Section 3. Any officer of the Corporation or any other
employee, as the Board of Directors may from time to time direct, shall have
full power to endorse for deposit all checks and all negotiable paper drawn
payable to his or their order or to the order of the Corporation.

ARTICLE IX
CORPORATE SEAL

Section 1. The corporate seal of the Corporation shall have
inscribed thereon the name of the Corporation, the year of its organization, and
the words "Corporate Seal, Maryland." Such seal may be used by causing
<PAGE>

it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.

ARTICLE X
DIVIDENDS

Section 1. Dividends upon the shares of the capital stock of
the Corporation may, subject to the provisions of the Articles of Incorporation
of the Corporation, if any, be declared by the Board of Directors at any regular
or special meeting, pursuant to law. Dividends may be paid in cash, in property,
or in shares of the capital stock of the Corporation.

Section 2. Before payment of any dividend there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the Board of Directors may, from time to time, in their absolute
discretion, think proper as a reserve fund to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for such other purpose as the Board of Directors shall deem to
be for the best interests of the Corporation, and the Board of Directors may
abolish any such reserve in the manner in which it was created.

ARTICLE XI
FISCAL YEAR

Section 1. The fiscal year of the Corporation shall begin on
August 1 of each year, and end on July 31 of each year.

ARTICLE XII
NOTICES

Section 1. Whenever under the provisions of these By-Laws
notice is required to be given to any director or stockholder, such notice is
deemed given when it is personally delivered, left at the residence or usual
place of business of the director or stockholder, or mailed to such director or
stockholder at such address as shall appear on the books of the Corporation and
such notice, if mailed, shall be deemed to be given at the time it shall be so
deposited in the United States mail postage prepaid. In the case of directors,
such notice may also be given orally by telephone or by telegraph or cable.
<PAGE>

Section 2. Any notice required to be given under these By-Laws
may be waived in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated therein.

ARTICLE XIII
AMENDMENTS

Section 1. These By-Laws may be amended, altered or repealed by
the affirmative vote of the holders of a majority of the shares of capital stock
of the Corporation issued and outstanding and entitled to vote thereon, or by a
majority of the Board of Directors, as the case may be.

<PAGE>

DELAWARE GROUP

DELCHESTER HIGH-YIELD BOND FUND, INC.

INVESTMENT MANAGEMENT AGREEMENT

AGREEMENT, made by and between DELAWARE GROUP DELCHESTER HIGH-YIELD BOND
FUND, INC., a Maryland corporation (the "Fund"), and DELAWARE MANAGEMENT
COMPANY, INC., a Delaware corporation (the "Investment Manager").

W I T N E S S E T H:

WHEREAS, the Fund has been organized and operates as an investment company
registered under the Investment Company Act of 1940 and engages in the business
of investing and reinvesting its assets in securities; and

WHEREAS, the Investment Manager is a registered Investment Adviser under
the Investment Advisers Act of 1940 and engages in the business of providing
investment management services; and

WHEREAS, the indirect parent company of the Investment Manager completed on
the date of this Agreement a merger transaction which resulted in a change of
control of the Investment Manager and an automatic termination of the previous
Investment Management Agreement dated as of the 29th day of June, 1988; and

WHEREAS, the Board of Directors and shareholders of the Fund have
determined to enter into a new Investment
<PAGE>

Management Agreement with the Investment Manager to be effective as of the date
hereof.

NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and each of the parties hereto intending to be legally bound, it is agreed as
follows:

1. The Fund hereby employs the Investment Manager to manage the
investment and reinvestment of the Fund's assets and to administer its affairs,
subject to the direction of the Board and officers of the Fund for the period
and on the terms hereinafter set forth. The Investment Manager hereby accepts
such employment and agrees during such period to render the services and assume
the obligations herein set forth for the compensation herein provided. The
Investment Manager shall, for all purposes herein, be deemed to be an
independent contractor, and shall, unless otherwise expressly provided and
authorized, have no authority to act for or represent the Fund in any way, or in
any way be deemed an agent of the Fund. The Investment Manager shall regularly
make decisions as to what securities to purchase and sell on behalf of the Fund
and shall give written instructions to the Trading Department maintained by the
Fund for implementation of such decisions and shall furnish the Board of
Directors of the Fund with such information and reports regarding the Fund's
investments as the Investment Manager deems appropriate or as the Directors of
the Fund may reasonably request.
<PAGE>

2. The Fund shall conduct its own business and affairs and shall bear the
expenses and salaries necessary and incidental thereto including, but not in
limitation of the foregoing, the costs incurred in: the maintenance of its
corporate existence; the maintenance of its own books, records and procedures;
dealing with its own shareholders; the payment of dividends; transfer of stock,
including issuance, redemption and repurchase of shares; preparation of share
certificates; reports and notices to shareholders; calling and holding of
shareholders' meetings; miscellaneous office expenses; brokerage commissions;
custodian fees; legal and accounting fees; and taxes. Directors, officers and
employees of the Investment Manager may be directors, officers and employees of
the funds of which Delaware Management Company, Inc. is Investment Manager.
Directors, officers and employees of the Investment Manager who are directors,
officers and/or employees of the funds shall not receive any compensation from
the funds for acting in such dual capacity.

In the conduct of the respective businesses of the parties hereto and
in the performance of this Agreement, the Fund and Investment Manager may share
facilities common to each, with appropriate proration of expenses between them.

3. (a) The Fund shall place and execute its own orders for the purchase
and sale of portfolio securities with broker/dealers. Subject to the primary
objective of obtaining the best available prices and execution, the Fund will
place
<PAGE>

orders for the purchase and sale of portfolio securities with such
broker/dealers selected from among those designated from time to time by the
Investment Manager, who provide statistical, factual and financial information
and services to the Fund, to the Investment Manager, or to any other fund for
which the Investment Manager provides investment advisory services and/or with
broker/dealers who sell shares of the Fund or who sell shares of any other fund
for which the Investment Manager provides investment advisory services.
Broker/dealers who sell shares of the funds of which Delaware Management
Company, Inc. is Investment Manager, shall only receive orders for the purchase
or sale of portfolio securities to the extent that the placing of such orders is
in compliance with the Rules of the Securities and Exchange
Commission and the National Association of Securities
Dealers, Inc.

(b) Notwithstanding the provisions of subparagraph (a) above and
subject to such policies and procedures as may be adopted by the Board of
Directors and officers of the Fund, the Investment Manager may ask the Fund and
the Fund may agree to pay a member of an exchange, broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount of
commission another member of an exchange, broker or dealer would have charged
for effecting that transaction, in such instances where it and the Investment
Manager have determined in good faith that such amount of commission was
reasonable in relation to the value
<PAGE>

of the brokerage and research services provided by such member, broker or
dealer, viewed in terms of either that particular transaction or the Investment
Manager's overall responsibilities with respect to the Fund and to other funds
for which the Investment Manager exercises investment discretion.

4. As compensation for the services to be rendered to the Fund by the
Investment Manager under the provisions of this Agreement, the Fund shall pay to
the Investment Manager monthly a fee based on the daily average net assets of
the Fund. Such fee shall be calculated in accordance with the following rates
and provisions, less all amounts paid to members of the Board of Directors of
the Fund during the same period.

<TABLE>
<CAPTION>
Average Daily
Monthly Rate Equivalent Annual Rate Net Assets
<S> <C> <C>
6/120 of 1% .600% on the first $500,000,000

5.75%/120 of 1% .575% on the next $250,000,000

5.5/120 of 1% .550% on assets over $750,000,000
</TABLE>

If this Agreement is terminated prior to the end of any calendar
month, the management fee shall be prorated for the portion of any month in
which this Agreement is in effect according to the proportion which the number
of calendar days during which the Agreement is in effect bears to the number of
calendar days in the month, and shall be payable within 10 days after the date
of termination.

5. The services to be rendered by the Investment Manager to the Fund
under the provisions of this Agreement are not to
<PAGE>

be deemed to be exclusive, and the Investment Manager shall be free to render
similar or different services to others so long as its ability to render the
services provided for in this Agreement shall not be impaired thereby.

6. The Investment Manager, its directors, officers, employees, agents and
shareholders may engage in other businesses, may render investment advisory
services to other investment companies, or to any other corporation,
association, firm or individual, and may render underwriting services to the
Fund or to any other investment company, corporation, association, firm or
individual.

7. In the absence of willful misfeasance, bad faith, gross negligence, or
a reckless disregard of the performance of duties of the Investment Manager to
the Fund, the Investment Manager shall not be subject to liabilities to the Fund
or to any shareholder of the Fund for any action or omission in the course of,
or connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security, or otherwise.

8. This Agreement shall be executed and become effective as of the date
written below if approved by the vote of a majority of the outstanding voting
securities of the Fund. It shall continue in effect for a period of two years
and may be renewed thereafter only so long as such renewal and continuance is
specifically approved at least annually by the Board of Directors or by vote of
a majority of the outstanding voting securities of the Fund and only if the
<PAGE>

terms and the renewal hereof have been approved by the vote of a majority of the
Directors of the Fund, who are not parties hereto or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on such
approval. No amendment to this Agreement shall be effective unless the terms
thereof have been approved by the vote of a majority of the outstanding voting
securities of the Fund and by the vote of a majority of Directors of the Fund
who are not parties to the Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such approval.
Notwithstanding the foregoing, this Agreement may be terminated by the Fund at
any time, without the payment of a penalty, on sixty days' written notice to the
Investment Manager of the Fund's intention to do so, pursuant to action by the
Board of Directors of the Fund or pursuant to vote of a majority of the
outstanding voting securities of the Fund. The Investment Manager may terminate
this Agreement at any time, without the payment of penalty on sixty days'
written notice to the Fund of its intention to do so. Upon termination of this
Agreement, the obligations of all the parties hereunder shall cease and
terminate as of the date of such termination, except for any obligation to
respond for a breach of this Agreement committed prior to such termination, and
except for the obligation of the Fund to pay to the Investment Manager the fee
provided in paragraph 4 hereof, prorated to the date
<PAGE>

of termination. This Agreement shall automatically terminate in the event of
its assignment.

9. The Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.

10. For the purposes of this Agreement, the terms "vote of a majority of
the outstanding voting securities;" "interested persons;" and "assignment" shall
have the meanings defined in the Investment Company Act of 1940.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
having it signed by their duly authorized officers as of the 3rd day of April,
1995.
DELAWARE GROUP DELCHESTER
HIGH-YIELD BOND FUND, INC.

Attest:/s/Eric E. Miller By:/s/Brian F. Wruble
-------------------- ------------------------------
Eric E. Miller Brian F. Wruble

DELAWARE MANAGEMENT COMPANY, INC.

Attest:/s/Richelle S. Maestro By:/s/Wayne A. Stork
---------------------- -----------------------------
Richelle S. Maestro Wayne A. Stork

<PAGE>

[FORM OF DISTRIBUTION AGREEMENT]

[FUND NAME]
[SERIES NAME, IF APPLICABLE]
DISTRIBUTION AGREEMENT

Distribution Agreement (the "Agreement") made as of this 3rd
day of April, 1995 by and between [FUND NAME], a [Maryland
corporation/Pennsylvania common law trust] (the "Fund")[, for the [SERIES NAME]
(the "Series")] and DELAWARE DISTRIBUTORS, L.P. (the "Distributor"), a Delaware
limited partnership.

WITNESSETH
WHEREAS, the Fund is an investment company regulated by
Federal and State regulatory bodies, and
WHEREAS, the Distributor is engaged in the business of
promoting the distribution of the securities of investment companies and, in
connection therewith and acting solely as agent for such investment companies
and not as principal, advertising, promoting, offering and selling their
securities to the public, and
WHEREAS, the Fund and the Distributor (or its predecessor)
were the parties to a contract under which the Distributor acted as the national
distributor of the shares of the [Fund/Series], which contract was amended and
restated as of the [date] and subsequently readopted as of January 3, 1995 (the
"Prior Distribution Agreement"), and
WHEREAS, Delaware Management Holdings, Inc. ("Holdings"),
the indirect parent company of the Distributor, completed on the
date of this Agreement a merger transaction with a newly-formed
subsidiary of Lincoln National Corporation, pursuant to which
Holdings became a wholly-owned subsidiary of Lincoln National
Corporation, and
<PAGE>

WHEREAS, the merger transaction resulted in a change of
control of the Distributor and an automatic termination of the Prior
Distribution Agreement, and
WHEREAS, the Board of [Directors/Trustees] of the Fund has
determined to enter into a new agreement with the Distributor as of the date
hereof, pursuant to which the Distributor shall continue to be the national
distributor of the [Fund's/Series'] ____________ class (now doing business as
___________ A Class and hereinafter referred to as the "Class A Shares"), the
Fund's ___________ B Class (the "Class B Shares") and the Fund's ______________
(Institutional) class (now doing business as _____________ Institutional Class
and hereinafter referred to as the "Institutional Class Shares"), which classes
may do business under these or such other names as the Board of
[Directors/Trustees] may designate from time to time, on the terms and
conditions set forth below,
NOW, THEREFORE, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. The Fund hereby engages the Distributor to promote the distribution of
the [Fund's/Series'] shares and, in connection therewith and as agent
for the Fund and not as principal, to advertise, promote, offer and
sell the [Fund's/Series'] shares to the public.

<PAGE>

2. (a) The Distributor agrees to serve as distributor of the
[Fund's/Series'] shares and, as agent for the Fund and
not as principal, to advertise, promote and use its best
efforts to sell the [Fund's/Series'] shares wherever
their sale is legal, either through dealers or otherwise,
in such places and in such manner, not inconsistent with
the law and the provisions of this Agreement and the
Fund's Registration Statement under the Securities Act of
1933, including the Prospectus contained therein and the
Statement of Additional Information contained therein, as
may be mutually determined by the Fund and the
Distributor from time to time.
(b) For the Institutional Class Shares, the Distributor will bear
all costs of financing any activity which is primarily
intended to result in the sale of that class of shares,
including, but not necessarily limited to, advertising,
compensation of underwriters, dealers and sales personnel, the
printing and mailing of sales literature and distribution of
that class of shares.
(c) For its services as agent for the Class A Shares and Class B
Shares, the Distributor shall be entitled to compensation on
each sale or redemption, as appropriate, of shares of such
classes equal to any front-end or deferred sales charge
described in the Prospectus from time to time and may allow
concessions to dealers in such amounts and on such terms as
are therein set forth.

<PAGE>

(d) For the Class A Shares and Class B Shares, the Fund
shall, in addition, compensate the Distributor for its
services as provided in the Distribution Plan as adopted
on behalf of the Class A Shares and Class B Shares,
respectively, pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (the "Plans"), copies of
which as presently in force are attached hereto as,
respectively, Exhibit "A" and "B".
3. (a) The Fund agrees to make available for sale by the Fund
through the Distributor all or such part of the authorized but
unissued shares [of the Series] as the Distributor shall
require from time to time, and except as provided in Paragraph
3(b) hereof, the Fund will not sell [its/the Series'] shares
other than through the efforts of the Distributor.
(b) The Fund reserves the right from time to time (1) to sell
and issue shares other than for cash; (2) to issue shares
in exchange for substantially all of the assets of any
corporation or trust, or in exchange of shares of any
corporation or trust; (3) to pay stock dividends to its
shareholders, or to pay dividends in cash or stock at the
option of its stockholders, or to sell stock to existing
stockholders to the extent of dividends payable from time
to time in cash, or to split up or combine its
outstanding shares of common stock; (4) to offer shares
for cash to its stockholders as a whole, by the use of
transferable rights or otherwise, and to sell and issue shares
pursuant to such offers; and (5) to act as its own distributor
in any jurisdiction in which the Distributor is not registered
as a broker-dealer.

<PAGE>

4. The Fund warrants the following:
(a) The Fund is, or will be, a properly registered investment
company, and any and all [Series] shares which it will sell
through the Distributor are, or will be, properly registered
with the Securities and Exchange Commission ("SEC").
(b) The provisions of this Agreement do not violate the terms of
any instrument by which the Fund is bound, nor do they violate
any law or regulation of any body having jurisdiction over the
Fund or its property.
5. (a) The Fund will supply to the Distributor a conformed copy
of the Registration Statement, all amendments thereto,
all exhibits, and each Prospectus and Statement of
Additional Information.
(b) The Fund will register or qualify the shares for sale in
such states as is deemed desirable.
(c) The Fund, without expense to the Distributor,
(1) will give and continue to give such financial
statements and other information as may be required
by the SEC or the proper public bodies of the
states in which the [Fund's/Series'] shares may be
qualified;

(2) from time to time, will furnish the Distributor as
soon as reasonably practicable true copies of its
periodic reports to stockholders;

<PAGE>

(3) will promptly advise the Distributor in person or by
telephone or telegraph, and promptly confirm such
advice in writing, (a) when any amendment or
supplement to the Registration Statement becomes
effective, (b) of any request by the SEC for
amendments or supplements to the Registration
Statement or the Prospectus or for additional
information, and (c) of the issuance by the SEC of
any Stop Order suspending the effectiveness of the
Registration Statement, or the initiation of any
proceedings for that purpose;

(4) if at any time the SEC shall issue any Stop Order
suspending the effectiveness of the Registration
Statement, will make every reasonable effort to
obtain the lifting of such order at the earliest
possible moment;

(5) will from time to time, use its best effort to keep a
sufficient supply of [Series] shares authorized, any
increases being subject to approval of the Fund's
shareholders as may be required;

(6) before filing any further amendment to the
Registration Statement or to the Prospectus, will
furnish the Distributor copies of the proposed
amendment and will not, at any time, whether before
or after the effective date of the Registration
Statement, file any amendment to the Registration
Statement or supplement to the Prospectus of which
the Distributor shall not previously have been
advised or to which the Distributor shall reasonably
object (based upon the accuracy or completeness
thereof) in writing;

(7) will continue to make available to its stockholders
(and forward copies to the Distributor) of such
periodic, interim and any other reports as are now,
or as hereafter may be, required by the provisions of
the Investment Company Act of 1940; and

(8) will, for the purpose of computing the offering price
of [its/the Series'] shares, advise the Distributor
within one hour after the close of the New York Stock
Exchange (or as soon as practicable thereafter) on
each business day upon which the New York Stock
Exchange may be open of the net asset value per share
of [its/the Series'] shares of common stock outstand-
ing, determined in accordance with any applicable
provisions of law and the provisions of the Articles
of Incorporation, as amended, of the Fund as of the
close of business on such business day. In the event
that prices are to be calculated more than once
daily, the Fund will promptly advise the Distributor
of the time of each calculation and the price
computed at each such time.

<PAGE>

6. The Distributor agrees to submit to the Fund, prior to its
use, the form of all sales literature proposed to be generally
disseminated by or for the Distributor, all advertisements
proposed to be used by the Distributor, all sales literature
or advertisements prepared by or for the Distributor for such
dissemination or for use by others in connection with the sale
of the [Fund's/Series'] shares, and the form of dealers' sales
contract the Distributor intends to use in connection with
sales of the [Fund's/Series'] shares. The Distributor also
agrees that the Distributor will submit such sales literature
and advertisements to the NASD, SEC or other regulatory agency
as from time to time may be appropriate, considering practices
then current in the industry. The Distributor agrees not to
use such form of dealers' sales contract or to use or to
permit others to use such sales literature or advertisements
without the written consent of the Fund if any regulatory
agency expresses objection thereto or if the Fund delivers to
the Distributor a written objection thereto.
7. The purchase price of each share sold hereunder shall be the offering
price per share mutually agreed upon by the parties hereto, and as
described in the Fund's Prospectus, as amended from time to time,
determined in accordance with any applicable provision of law, the
provisions of its Articles of Incorporation and the Rules of Fair
Practice of the National Association of Securities Dealers, Inc.

<PAGE>

8. The responsibility of the Distributor hereunder shall be
limited to the promotion of sales of [Fund/Series] shares. The
Distributor shall undertake to promote such sales solely as
agent of the Fund, and shall not purchase or sell such shares
as principal. Orders for [Series] shares and payment for such
orders shall be directed to the Fund's agent, Delaware Service
Company, Inc. for acceptance on behalf of the Fund. The
Distributor is not empowered to approve orders for sales of
shares or accept payment for such orders. Sales of [Fund/
Series] shares shall be deemed to be made when and where
accepted by Delaware Service Company, Inc. on behalf of the
Fund.
9. With respect to the apportionment of costs between the Fund
and the Distributor of activities with which both are
concerned, the following will apply:
(a) The Fund and the Distributor will cooperate in preparing
the Registration Statements, the Prospectus, the
Statement of Additional Information, and all amendments,
supplements and replacements thereto. The Fund will pay
all costs incurred in the preparation of the Fund's
Registration Statement, including typesetting, the costs
incurred in printing and mailing Prospectuses and Annual,
Semi-Annual and other financial reports to its own
shareholders and fees and expenses of counsel and
accountants.

<PAGE>

(b) The Distributor will pay the costs incurred in printing
and mailing copies of Prospectuses to prospective
investors.
(c) The Distributor will pay advertising and promotional
expenses, including the costs of literature sent to
prospective investors.
(d) The Fund will pay the costs and fees incurred in
registering or qualifying the shares with the various
states and with the SEC.
(e) The Distributor will pay the costs of any additional copies of
Fund financial and other reports and other Fund literature
supplied to the Distributor by the Fund for sales promotion
purposes.
10. The Distributor may engage in other business, provided such other
business does not interfere with the performance by the Distributor of
its obligations under this Agreement.
11. The Fund agrees to indemnify, defend and hold harmless the
Distributor and each person, if any, who controls the
Distributor within the meaning of Section 15 of the Securities
Act of 1933, from and against any and all losses, damages, or
liabilities to which, jointly or severally, the Distributor or
such controlling person may become subject, insofar as the
losses, damages or liabilities arise out of the performance of
its duties hereunder except that the Fund shall not be liable

<PAGE>

for indemnification of the Distributor or any controlling person
thereof for any liability to the Fund or its security holders to which
they would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of their duties under
this Agreement.
12. Copies of financial reports, Registration Statements and
Prospectuses, as well as demands, notices, requests, consents,
waivers, and other communications in writing which it may be
necessary or desirable for either party to deliver or furnish
to the other will be duly delivered or furnished, if delivered
to such party at its address shown below during regular
business hours, or if sent to that party by registered mail or
by prepaid telegram filed with an office or with an agent of
Western Union or another nationally recognized telegraph
service, in all cases within the time or times herein
prescribed, addressed to the recipient at 1818 Market Street,
Philadelphia, Pennsylvania 19103, or at such other address as
the Fund or the Distributor may designate in writing and
furnish to the other.
13. This Agreement shall not be assigned, as that term is defined in the
Investment Company Act of 1940, by the Distributor and shall terminate
automatically in the event of its attempted assignment by the
Distributor. This Agreement shall not be assigned by the Fund without
the written consent of the Distributor signed by its duly authorized
officers and delivered to the Fund. Except as specifically provided in

<PAGE>

the indemnification provision contained in Paragraph 11 herein, this
Agreement and all conditions and provisions hereof are for the sole and
exclusive benefit of the parties hereto and their legal successors and
no express or implied provision of this Agreement is intended or shall
be construed to give any person other than the parties hereto and their
legal successors any legal or equitable right, remedy or claim under or
in respect of this Agreement or any provisions herein contained.
14. (a) This Agreement shall remain in force for a period of two
years from the date hereof and from year to year
thereafter, but only so long as such continuance is
specifically approved at least annually by the Board of
[Directors/Trustees] or by vote of a majority of the
outstanding voting securities of the Fund and only if the
terms and the renewal thereof have been approved by the
vote of a majority of the [Directors/Trustees] of the
Fund, who are not parties hereto or interested persons of
any such party, cast in person at a meeting called for
the purpose of voting on such approval.
(b) The Distributor may terminate this Agreement on written notice
to the Fund at any time in case the effectiveness of the
Registration Statement shall be suspended, or in case Stop
Order proceedings are initiated by the SEC in respect of the
Registration Statement and such proceedings are not withdrawn
or terminated within thirty days. The Distributor may also

<PAGE>

terminate this Agreement at any time by giving the Fund
written notice of its intention to terminate the Agreement at
the expiration of three months from the date of delivery of
such written notice of intention to the Fund.
(c) The Fund may terminate this Agreement at any time on at
least thirty days prior written notice to the Distributor
(1) if proceedings are commenced by the Distributor or
any of its stockholders for the Distributor's liquidation
or dissolution or the winding up of the Distributor's
affairs; (2) if a receiver or trustee of the Distributor
or any of its property is appointed and such appointment
is not vacated within thirty days thereafter; (3) if, due
to any action by or before any court or any federal or
state commission, regulatory body, or administrative
agency or other governmental body, the Distributor shall
be prevented from selling securities in the United States
or because of any action or conduct on the Distributor's
part, sales of the shares are not qualified for sale. The
Fund may also terminate this Agreement at any time upon
prior written notice to the Distributor of its intention
to so terminate at the expiration of three months from
the date of the delivery of such written notice to the
Distributor.

<PAGE>

15. The validity, interpretation and construction of this
Agreement, and of each part hereof, will be governed by the
laws of the Commonwealth of Pennsylvania.
16. In the event any provision of this Agreement is determined to
be void or unenforceable, such determination shall not affect
the remainder of the Agreement, which shall continue to be in
force.

DELAWARE DISTRIBUTORS, L.P.

By: DELAWARE DISTRIBUTORS, INC.,
----------------------------------------
General Partner

Attest:

By:
- -------------------------------- --------------------------------------
Name: Name:
Title: Title:

[FUND NAME]
[for the SERIES NAME]
Attest:

By:
- -------------------------------- --------------------------------------
Name: Name:
Title: Title:

<PAGE>

[FORM OF 12b-1 PLAN FOR CLASS A SHARES]

Exhibit A

12b-1 PLAN
----------

The following Distribution Plan (the "Plan") has been adopted pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by [FUND NAME]
(the "Fund")[, for the [SERIES NAME] (the "Series")] on behalf of the _________
class [(now doing business as __________ A Class and] hereinafter referred to as
the "Class"), which Fund[, Series] and Class may do business under these or such
other names as the Board of [Directors/Trustees] of the Fund may designate from
time to time. The Plan has been approved by a majority of the Board of
[Directors/Trustees], including a majority of the [Directors/Trustees] who are
not interested persons of the Fund and who have no direct or indirect financial
interest in the operation of the Plan or in any agreements related thereto, cast
in person at a meeting called for the purpose of voting on such Plan. Such
approval by the [Directors/Trustees] included a determination that in the
exercise of reasonable business judgment and in light of their fiduciary duties,
there is a reasonable likelihood that the Plan will benefit the Class and its
shareholders. If the Plan has not yet been approved by a majority of the
outstanding voting securities as required in the Act, the Plan will be presented
to the public shareholders at the next regular annual or special meeting.

<PAGE>

The Fund is a [corporation/common law trust] organized under the laws of
the [State of Maryland/Commonwealth of Pennsylvania], is authorized to issue
different series and classes of securities and is an open-end management
investment company registered under the Act. [Delaware Management Company, Inc.
("DMC")/Delaware International Advisers Ltd. ("DIA Ltd.")] serves as the
[Fund's/Series'] investment adviser and manager pursuant to an Investment
Management Agreement. Delaware Service Company, Inc. serves as the
[Fund's/Series'] shareholder servicing, dividend disbursing and transfer agent.
Delaware Distributors, L.P. ("the Distributor") is the principal underwriter and
national distributor for the [Fund's/Series'] shares, including shares of the
Class, pursuant to the Distribution Agreement between the Distributor and the
[Fund/Series] ("Distribution Agreement").
The Distributor may enter into agreements with other registered
broker-dealers substantially in the form of the Dealer Agreement approved by the
Fund in the implementation of this Plan and of the Distribution Agreement
between it and the [Fund/Series]. The [Fund/Series] may, in addition, enter into
arrangements with persons other than broker-dealers which are not "affiliated
persons" or "interested persons" of the Fund, [DMC/DIA Ltd.] or the Distributor
to provide to the [Fund/Series] services in the [Fund's/Series'] marketing of
the shares of the Class, such arrangements to be reflected by Service
Agreements.

<PAGE>

The Plan provides that:
l. The Fund shall pay a monthly fee not to exceed 0.3% (3/10
of 1%) per annum of the [Fund's/Series'] average daily net assets represented by
shares of the Class (the "Maximum Amount") as may be determined by the Fund's
Board of [Directors/Trustees] from time to time. Such monthly fee shall be
reduced by the aggregate sums paid by the Fund to persons other than
broker-dealers (the "Service Providers") pursuant to Service Agreements referred
to above.
2. (a) The Distributor shall use the monies paid to it
pursuant to paragraph l above to furnish, or cause or encourage others to
furnish, services and incentives in connection with the promotion, offering and
sale of Class shares and, where suitable and appropriate, the retention of Class
shares by shareholders.
(b) The Service Providers shall use the monies paid
respectively to them to reimburse themselves for the actual costs they have
incurred in confirming that their customers have received the Prospectus and
Statement of Additional Information, if applicable, and as a fee for (l)
assisting such customers in maintaining proper records with the Fund (2)
answering questions relating to their respective accounts and (3) aiding in
maintaining the investment of their respective customers in the Class.
3. The Distributor shall report to the Fund at least monthly
on the amount and the use of the monies paid to it under the Plan. The Service
Providers shall inform the Fund monthly and in writing of the amounts each
claims under the Service Agreements and the Plan; both the Distributor and the

<PAGE>

Service Providers shall furnish the Board of [Directors/Trustees] of the Fund
with such other information as the Board may reasonably request in connection
with the payments made under the Plan and the use thereof by the Distributor and
the Service Providers, respectively, in order to enable the Board to make an
informed determination of the amount of the Fund's payments and whether the Plan
should be continued.
4. The officers of the Fund shall furnish to the Board of
[Directors/Trustees] of the Fund, for their review, on a quarterly basis, a
written report of the amounts expended under the Plan and the purposes for which
such expenditures were made.
5. This Plan shall take effect at such time as the Distributor
shall notify the Fund in writing of the commencement of the Plan, which time
shall not be before the first annual or special meeting of the public
shareholders at which the Plan is or was approved by the vote of a majority of
the outstanding voting securities as required in the Act (the "Commencement
Date"); thereafter, the Plan shall continue in effect for a period of more than
one year from the Commencement Date only so long as such continuance is
specifically approved at least annually by a vote of the Board of
[Directors/Trustees] of the Fund, and of the [Directors/Trustees] who are not
interested persons of the Fund and have no direct or indirect financial interest
in the operation of the Plan or in any agreements related to the Plan
("non-interested [Directors/Trustees]"), cast in person at a meeting called for
the purpose of voting on such Plan.

<PAGE>

6. (a) The Plan may be terminated at any time by vote
of a majority of the non-interested [Directors/Trustees] or by vote
of a majority of the outstanding voting securities of the Class.
(b) The Plan may not be amended to increase
materially the amount to be spent for distribution pursuant to paragraph l
thereof without approval by the shareholders of the Class.
7. The Distribution Agreement between the [Fund/Series] and
the Distributor, and the Service Agreements between the [Fund/ Series] and the
Service Providers, shall specifically have a copy of this Plan attached to, and
its terms and provisions incorporated respectively by reference in, such
agreements.
8. All material amendments to this Plan shall be approved by
the non-interested [Directors/Trustees] in the manner described in paragraph 5
above.
9. So long as the Plan is in effect, the selection and
nomination of the Fund's non-interested [Directors/Trustees] shall be committed
to the discretion of such non-interested [Directors/Trustees].
10. The definitions contained in Sections 2(a)(3), 2(a)(4),
2(a)(l9) and 2(a)(42) of the Act shall govern the meaning of "affiliated
person," "assignment," "interested person(s)" and "vote of a majority of the
outstanding voting securities," respectively, for the purposes of this Plan.
This Plan shall take effect on the Commencement Date, as
previously defined.

<PAGE>

[FORM OF 12b-1 PLAN FOR CLASS B SHARES]

Exhibit B

12b-1 Plan
----------

The following Distribution Plan (the "Plan") has been adopted pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by [FUND NAME]
(the "Fund"), [for the [SERIES NAME] (the "Series")] on behalf of the _________
B Class (the "Class"), which Fund[, Series] and Class may do business under
these or such other names as the Board of [Directors/Trustees] of the Fund may
designate from time to time. The Plan has been approved by a majority of the
Board of [Directors/Trustees], including a majority of the [Directors/Trustees]
who are not interested persons of the Fund and who have no direct or indirect
financial interest in the operation of the Plan or in any agreements related
thereto, cast in person at a meeting called for the purpose of voting on such
Plan. Such approval by the [Directors/Trustees] included a determination that in
the exercise of reasonable business judgment and in light of their fiduciary
duties, there is a reasonable likelihood that the Plan will benefit the Class
and its shareholders. The Plan has been approved by a vote of the holders of a
majority of the outstanding voting securities of the Class, as defined in the
Act.
The Fund is a [corporation/common law trust] organized under the laws of
the [State of Maryland/Commonwealth of Pennsylvania], is authorized to issue
different series and classes of securities and is an open-end management
investment company registered under the Act. [Delaware Management Company,
Inc./Delaware International Advisers Ltd.] serves as the [Fund's/Series']
investment adviser and manager pursuant to an Investment Management Agreement.
Delaware Service Company, Inc. serves as the [Fund's/Series'] shareholder
servicing, dividend disbursing and transfer agent. Delaware Distributors, L.P.
(the "Distributor") is the principal underwriter and national distributor for
the [Fund's/Series'] shares, including shares of the Class, pursuant to the
Distribution Agreement between the Distributor and the [Fund/Series]
("Distribution Agreement").
<PAGE>

The Plan provides that:
1. (a) The Fund shall pay to the Distributor a monthly fee not
to exceed 0.75% (3/4 of 1%) per annum of the [Fund's/ Series'] average daily net
assets represented by shares of the Class as may be determined by the Fund's
Board of [Directors/Trustees] from time to time.
(b) In addition to the amounts described in (a) above, the
Fund shall pay (i) to the Distributor for payment to dealers or others, or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
[Fund's/Series'] average daily net assets represented by shares of the Class, as
a service fee pursuant to dealer or servicing agreements, the forms of which
have been approved from time to time by the Fund's Board of
[Directors/Trustees].

2. (a) The Distributor shall use the monies paid to it
pursuant to paragraph 1(a) above to assist in the distribution and
promotion of shares of the Class. Payments made to the Distributor under the
Plan may be used for, among other things, preparation and distribution of
advertisements, sales literature and prospectuses and reports used for sales
purposes, as well as compensation related to sales and marketing personnel, and
holding special promotions. In addition, such fees may be used to pay for
advancing the commission costs to dealers with respect to the sale of Class
shares.
<PAGE>

(b) The monies to be paid pursuant to paragraph 1(b) above
shall be used to pay dealers or others for, among other things, furnishing
personal services and maintaining shareholder accounts, which services include
confirming that customers have received the Prospectus and Statement of
Additional Information, if applicable; assisting such customers in maintaining
proper records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.

3. The Distributor shall report to the Fund at least monthly
on the amount and the use of the monies paid to it under paragraph 1(a) above.
In addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
any others receiving fees under the Plan shall furnish the Board of
[Directors/Trustees] of the Fund with such other information as the Board may
reasonably request in connection with the payments made under the Plan and the
use thereof by the Distributor and others in order to enable the Board to make
an informed determination of the amount of the Fund's payments and whether the
Plan should be continued.

<PAGE>

4. The officers of the Fund shall furnish to the Board of
[Directors/Trustees] of the Fund, for their review, on a quarterly basis, a
written report of the amounts expended under the Plan and the purposes for which
such expenditures were made.
5. This Plan shall take effect at such time as the Distributor
shall notify the Fund of the commencement of the Plan (the "Commencement Date");
thereafter, the Plan shall continue in effect for a period of more than one year
from the Commencement Date only so long as such continuance is specifically
approved at least annually by a vote of the Board of [Directors/Trustees] of the
Fund, and of the [Directors/Trustees] who are not interested persons of the Fund
and have no direct or indirect financial interest in the operation of the Plan
or in any agreements related to the Plan ("non-interested
[Directors/Trustees]"), cast in person at a meeting called for the purpose of
voting on such Plan.

<PAGE>

7. The Distribution Agreement between the [Fund/Series] and
the Distributor, and any dealers or servicing agreements between the Distributor
and brokers or others or between the [Fund/Series] and others receiving a
servicing fee, shall specifically have a copy of this Plan attached to, and its
terms and provisions incorporated respectively by reference in, such agreements.

8. All material amendments to this Plan shall be approved by
the non-interested [Directors/Trustees] in the manner described in paragraph 5
above.
9. So long as the Plan is in effect, the selection and
nomination of the Fund's non-interested [Directors/Trustees] shall be committed
to the discretion of such non-interested [Directors/Trustees].
10. The definitions contained in Sections 2(a)(3), 2(a)(4),
2(a)(19) and 2(a)(42) of the Act shall govern the meaning of "affiliated
person," "assignment," "interested person(s)" and "vote of a majority of the
outstanding voting securities," respectively, for the purposes of this Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.

<PAGE>

[Form of Amendment to Distribution Agreement]

[FUND NAME]
[SERIES NAME, IF APPLICABLE]

AMENDMENT NO. 1 TO DISTRIBUTION AGREEMENT

This Amendment No. 1 to Distribution Agreement (this "Agreement") is

made as of the_____day of___________, 1995, by and between____________(the

"Fund"),[for the____________(the "Series"),] and DELAWARE DISTRIBUTORS, L.P.

(the "Distributor").

WITNESSETH

WHEREAS, the Fund[, for the Series,] and the Distributor are parties to

that certain Distribution Agreement made as of the 3rd day of April, 1995 (the

"Distribution Agreement"); and

WHEREAS, the Board of Directors of the Fund has established [CLASS C

SHARES NAME] (the "Class C Shares") as an additional class of [the Series]

[shares of the Fund] and the Fund and the Distributor desire to amend the

Distribution Agreement to provide that the Distributor shall act as the national

distributor of the Class C Shares pursuant thereto;

NOW, THEREFORE, the parties hereto, intending to be legally bound

hereby, agree as follows:

1. The Class C Shares are hereby included among the shares to which the

Distribution Agreement relates and the Distributor shall act as distributor for

the Class C Shares pursuant to and in accordance with the Distribution

Agreement, as amended hereby.

2. Hereafter, each reference to "Class A Shares and Class B Shares" in

Section 2 (c) and (d) of the Distribution Agreement [compensation of the

Distributor] shall be deemed to include the Class C Shares, provided that the

<PAGE>

Distribution Plan adopted pursuant to Rule 12b-1 under the Investment Company

Act of 1940 for the Class C Shares and presently in force is attached hereto as

Exhibit "A."

DELAWARE DISTRIBUTORS, L.P.

By: Delaware Distributors, Inc.,
General Partner

ATTEST:

By:
- ------------------------------ --------------------------------
Name: Name:
Title: Title:

[FUND NAME][,for the [SERIES NAME]]

ATTEST:

By:
- ------------------------------ ---------------------------------
Name: Name:
Title: Title:

<PAGE>

EXHIBIT A

[FORM OF 12b-1 PLAN

C CLASS SHARES]

DISTRIBUTION PLAN

The following Distribution Plan (the "Plan") has been adopted pursuant

to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by the Fund

(the "Fund"), on behalf of the Fund's C Class (the "Class"). The Plan has been

approved by a majority of the Board of Directors, including a majority of the

Directors who are not interested persons of the Fund and who have no direct or

indirect financial interest in the operation of the Plan or in any agreements

related thereto, cast in person at a meeting called for the purpose of voting on

such Plan. Such approval by the Directors included a determination that in the

exercise of reasonable business judgment and in light of their fiduciary duties,

there is a reasonable likelihood that the Plan will benefit the Fund and its

shareholders. The Plan has been approved by a vote of the holders of a majority

of the outstanding voting securities of the Class, as defined in the Act.

The Fund is a [corporation/business trust] organized under the laws of

the [State of Maryland/Commonwealth of Pennsylvania], is authorized to issue

different series and classes of securities and is an open-end management

investment company registered under the Act. [Delaware Management Company, Inc.

A-1

<PAGE>

("DMC") or Delaware International Advisers Ltd. ("Delaware International"), an

affiliate of DMC,] serves as the Fund's investment adviser and manager pursuant

to an Investment Management Agreement. Delaware Service Company, Inc. serves as

the Fund's shareholder servicing, dividend disbursing and transfer agent.

Delaware Distributors, L.P. (the "Distributor") is the principal underwriter and

national distributor for the Fund's shares, including shares of the Class,

pursuant to the Distribution Agreement between the Distributor and the Fund

("Distribution Agreement").

The Plan provides that:

1.(a) The Fund shall pay to the Distributor a monthly fee not to exceed

0.75% (3/4 of 1%) per annum of the Fund's average daily net assets represented

by shares of the Class as may be determined by the Fund's Board of Directors

from time to time.

(b) In addition to the amounts described in paragraph 1(a) above, the

Fund shall pay: (i) to the Distributor for payment to dealers or others; or (ii)

directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the

Fund's average daily net assets represented by shares of the Class, as a service

fee pursuant to dealer or servicing agreements.

2.(a) The Distributor shall use the monies paid to it pursuant to

paragraph 1(a) above to assist in the distribution and promotion of shares of

the Class. Payments made to the Distributor under the Plan may be used for,

among other things, preparation and distribution of advertisements, sales

literature and prospectuses and reports used for sales purposes, as well as

compensation related to sales and marketing personnel, and holding special

A-2

<PAGE>

promotions. In addition, such fees may be used to pay for advancing the

commission costs to dealers with respect to the sale of Class shares.

(b) The monies to be paid pursuant to paragraph 1(b) above shall be

used to pay dealers or others for, among other things, furnishing personal

services and maintaining shareholder accounts, which services include confirming

that customers have received the Prospectus and Statement of Additional

Information, if applicable; assisting such customers in maintaining proper

records with the Fund; answering questions relating to their respective

accounts; and aiding in maintaining the investment of their respective customers

in the Fund.

3. The Distributor shall report to the Fund at least monthly on the

amount and the use of the monies paid to it under paragraph 1(a) above. In

addition, the Distributor and others shall inform the Fund monthly and in

writing of the amounts paid under paragraph 1(b) above; both the Distributor and

any others receiving fees under the Plan shall furnish the Board of Directors of

the Fund with such other information as the Board may reasonably request in

connection with the payments made under the Plan and the use thereof by the

Distributor and others in order to enable the Board to make an informed

determination of the amount of the Fund's payments and whether the Plan should

be continued.

A-3

<PAGE>

4. The officers of the Fund shall furnish to the Board of Directors of

the Fund, and the Directors shall review, on a quarterly basis, a written report

of the amounts expended under the Plan and the purposes for which such

expenditures were made.

5. This Plan shall take effect at such time as the Distributor shall

notify the fund in writing of the commencement of the Plan (the "Commencement

Date"); thereafter, the Plan shall continue in effect for a period of more than

one year from the Commencement Date only so long as such continuance is

specifically approved at least annually by a vote of the Board of Directors of

the Fund, and of the Directors who are not interested persons of the Fund and

have no direct or indirect financial interest in the operation of the Plan or in

any agreements related to the Plan ("non-interested Directors"), cast in person

at a meeting called for the purpose of voting on such Plan.

6.(a) The Plan may be terminated at any time by vote of a majority of

the non-interested Directors or by vote of a majority of the outstanding voting

securities of the Class.

(b) The Plan may not be amended to increase materially the amount to

be spent for distribution pursuant to paragraph 1 thereof without approval by

the shareholders of the Class.

7. All material amendments to this Plan shall be approved by the

non-interested Directors in the manner described in paragraph 5 above.

A-4

<PAGE>

8. So long as the Plan is in effect, the selection and nomination of

the Fund's non-interested Directors shall be committed to the discretion of such

non-interested Directors.

9. The definitions contained in Sections 2(a)(3), 2(a)(19) and

2(a)(42) of the Act shall govern the meaning of "affiliated person,"

"interested person(s)" and "vote of a majority of the outstanding voting

securities," respectively, for the purposes of this Plan.

This Plan shall take effect on the Commencement Date, as previously

defined.

November 29, 1995

A-5

<PAGE>

DELAWARE GROUP

Administration and Service Agreement

Gentlemen:

We are the national distributor of the shares of all of the classes

(now existing or hereafter added) of all of the Funds in the Delaware Group of

Funds. The term "Fund" as used in this Agreement refers to each fund in the

Delaware Group which retains the Distributor to promote and sell its shares, and

any fund which may hereafter be added to the Delaware Group and retain us as

national distributor. You have indicated that you wish to provide certain

services to your customers relating to their ownership of Fund shares, in

accordance with the terms of this Agreement.

TERMS

1. With respect to any Fund that offers shares of classes for which

Distribution Plans have been adopted under Rule 12b-1 (individually a "12b-1

Plan") of the Investment Company Act of 1940 (the "1940 Act"), which 12b-1 Plans

provide for the payment of service fees, we expect you to provide administrative

and other services, including, but not limited to, furnishing personal and other

services and assistance to your customers who own Fund shares, answering routine

inquiries regarding a Fund, assisting in changing dividend options, account

designations and addresses, maintaining such accounts, or such other services as

a Fund may require, to the extent permitted by applicable statutes, rules, or

regulations. For such services, we shall pay you a fee, as established by us

from time to time, based on the value of the shares of each class of each Fund

which are attributable to customers of your firm. We are permitted to make this

payment under the terms of the 12b-1 Plans adopted by certain of the Funds, as

such Plans may be in effect from time to time.

2. You shall furnish us and each Fund with such information as shall

reasonably be requested by the Board of Directors or Trustees with respect to

the fees paid to you pursuant to this Agreement.

3. We shall furnish to the Board of Directors or Trustees, for their

review, on a quarterly basis, a written report of the amounts expended under

<PAGE>

the Plan by us with respect to the relevant Fund and the purposes for which

such expenditures were made.

4. This Agreement may be terminated by either party at any time by

written notice to that effect and will terminate without notice upon any act of

insolvency by you. Notwithstanding the termination of this Agreement, you shall

remain liable for any amounts otherwise owing to the Distributor or the Funds

and for your portion of any transfer tax or other liability which may be

asserted or assessed against the Distributor or the Fund, or upon any one or

more of the Distributor's dealers, based upon a claim that you and such dealers

or any of them constitute a partnership, an unincorporated business or other

separate entity.

5. Any obligation assumed by a Fund pursuant to this Agreement shall be

limited in all cases to the assets of such Fund and no person shall seek

satisfaction thereof from shareholders of a Fund.

6. The 12b-1 Plans in effect on the date of this Agreement are

described in the Funds' Prospectuses. Each Fund reserves the right to terminate

or suspend its 12b-1 Plan(s) at any time as specified in such Plan(s) and we

reserve the right, at any time, without notice, to modify, suspend or terminate

payments hereunder in connection with such 12b-1 Plan(s).

7. This Agreement shall take effect on the date set forth below.

8. The terms and provisions of the current Prospectus and Statement of

Additional Information for each relevant Fund are hereby accepted and agreed to

by the parties hereto as evidenced by our execution hereof.

GENERAL

9. Governing Law. This Agreement will be governed by and construed in

accordance with the law of the State of Pennsylvania, without reference to that

state's choice of law doctrine.

10. Counterparts. This Agreement may be executed in any number of

counterparts, each of which shall be deemed to be an original, but such

counterparts shall, together, constitute only one Agreement.

11. Severability. In the event that any provision of this Agreement,

or the application of any such provision to any person or set of circumstances,

shall be determined to be invalid, unlawful, void or unenforceable to any

extent, the remainder of this Agreement, and the application of such provision

<PAGE>

to persons or circumstances other than those as to which it is determined to be

invalid, unlawful, void or unenforceable, shall not be impaired or otherwise

affected and shall continue to be valid and enforceable to the fullest extent

permitted by law.

12. Entire Agreement. This Agreement sets forth the entire

understanding of the parties hereto and supersedes all prior agreements and

understandings between the parties hereto relating to the subject matter hereof.

13. Headings. The underlined headings contained herein are for

convenience of reference only, shall not be deemed to be a part of this

Agreement and shall not be referred to in connection with the interpretation

hereof.

DELAWARE DISTRIBUTORS, L.P.

By: DELAWARE DISTRIBUTORS, INC.,
General Partner

By:
--------------------------------

Agreed and Accepted:

- ------------------------------
(Name)

By:
---------------------------
(Authorized Officer)

Date:
-------------------------

<PAGE>

DEALER'S AGREEMENT

We invite you, as a selected dealer, to participate as principal in the

distribution of the shares of all of the classes (now existing or hereafter

added) of all of the Funds in the Delaware Group of Investment Companies which

retain us, Delaware Distributors, L.P., to act as exclusive national

distributor. The term "Fund" as used in this Agreement, refers to each Fund in

the Delaware Group which retains us to promote and sell its shares, and any Fund

which may hereafter be added to the Delaware Group and retain us as national

distributor. Such additional Funds will be included in this Agreement upon our

providing you with written notice of such inclusion.

OFFERING PRICE TO PUBLIC: Orders for shares received from you and accepted by a

Fund or its agent, Delaware Service Company, Inc., will be at the public

offering price applicable to each order as set forth in that Fund's Prospectus.

The manner of computing the net asset value of shares, the public offering price

and the effective time of orders received from you are described in the

Prospectus for each Fund. We reserve the right, at any time and without notice,

to suspend the sale of Fund shares.

CONCESSIONS TO YOU: You will be entitled to deduct the applicable concession as

set forth in the then current Prospectus of a Fund from the purchase price of

certain purchase orders placed by you for shares of a Fund having a sales

charge. We reserve the right from time to time, without prior notice, to modify,

suspend or eliminate such concessions by amendment, sticker or supplement to the

Prospectus for the Fund. If any shares confirmed to you under the terms of this

Agreement are redeemed or repurchased by the Fund or by us as agent for the

Fund, or are tendered for redemption or repurchase, within seven business days

after the date of our confirmation of the original purchase order, you shall

promptly refund to us the concession allowed to you on such shares.

PURCHASE PLANS: The purchase price on all orders placed by you and any

concessions or other fees otherwise due to you under this Agreement will be

subject to the then current terms and provisions of any applicable special plans

and accounts (e.g., volume purchases, letters of intent, rights of accumulation,

combined purchases privilege, exchange and reinvestment privileges and

<PAGE>

retirement plan accounts) as set forth from time to time in the Prospectus. We

must be notified when an order is placed if it qualifies for a reduced sales

charge under any of these plans. We reserve the right, at any time, without

prior notice, to modify, suspend or eliminate any such plans or accounts by

amendment, sticker or supplement to the Prospectus for the Fund.

SALES, ORDERS AND CONFIRMATIONS: In offering Fund shares to the public or

otherwise, you shall act as dealer for your own account, and in no transaction

shall you have any authority to act as agent for the Fund, for any other

selected dealer or for us. No person is authorized to make any representations

concerning the shares to the Fund except those contained in the Prospectus and

in written information issued by the Fund or by us as a supplement to such

Prospectus. In purchasing Fund shares, you shall rely only on such

representations.

All sales must be made subject to confirmation and orders are subject

to acceptance or rejection by the Fund in its sole discretion. Your orders must

be wired, telephoned or written to the Fund or its agent. You agree to place

orders for the same number of shares sold by you at the price at which such

shares are sold. You agree that you will not purchase Fund shares except for

investment or for the purpose of covering purchase orders already received and

that you will not, as principal, sell Fund shares unless purchased by you from

the Fund under the terms hereof. You also agree that you will not withhold

placing with us orders received from your customers so as to profit yourself

from such withholding. Each of your orders shall be confirmed by you in writing

on the same day.

PAYMENT AND ISSUANCE OF CERTIFICATES: The shares purchased by you hereunder

shall be paid for in full at the public offering price, less any concession to

you as set forth above, by check payable to the Fund, at its office, within

three business days after our acceptance of your order. If not so paid, we

reserve the right to cancel the sale and to hold you responsible for any loss

sustained by us or the Fund (including lost profit) in consequence. Certificates

representing the Fund's shares will not be issued unless (i) the Fund's

Prospectus indicates that certificates may be issued for the class of shares

being purchased, and (ii) a specific request is received from the purchaser.

Certificates, if requested, will be issued in the names indicated by

registration instructions accompanying your payment.

-2-

<PAGE>

REDEMPTION: The Prospectus describes the provisions whereby the Fund, under all

ordinary circumstances, will redeem shares held by shareholders on demand. You

agree that you will not make any representations to shareholders relating to the

redemption of their shares other than the statements contained in the Prospectus

and the underlying organizational documents of the Fund, to which it refers, and

that you will quote as the redemption price only the price determined by the

Fund. You shall not repurchase any shares from your customers at a price below

that next quoted by the Fund for redemption. You may charge a reasonable fee for

services in connection with the repurchase by you from your customers of shares.

You may hold such repurchased shares only for investment purposes or submit such

shares to the Fund for redemption.

12b-1 PLAN: With respect to any Fund that offers shares of classes for which

Distribution Plans have been adopted under Rule 12b-1 (individually a "12b-1

Plan") of the Investment Company Act of 1940 (the "1940 Act"), we expect you to

provide distribution and marketing services in the promotion of the Fund's

shares. In connection with the receipt of distribution fees and/or the receipt

of service fees as set forth under the 12b-1 Plan(s) applicable to the class or

classes of Fund shares purchased by your customers, we expect you to provide

administrative and other services to your customers who own Fund shares,

including, but not limited to, furnishing personal and other services and

assistance, answering routine inquiries regarding a Fund, assisting in changing

dividend options, account designations and addresses, maintaining such accounts,

or such other services as the Fund may require, to the extent permitted by

applicable statutes, rules, or regulations. For such services we will pay you a

fee, as established by us from time to time, based on a portion of the net asset

value of the accounts of your clients in the Fund. We are permitted to make this

payment under the terms of the 12b-1 Plans adopted by certain of the Funds, as

such Plans may be in effect from time to time. The 12b-1 Plans in effect on the

date of this Agreement are described in the Funds' Prospectuses. Each Fund

reserves the right to terminate or suspend its 12b-1 Plan at any time as

specified in the Plan and we reserve the right, at any time, without notice, to

modify, suspend or terminate payments hereunder in connection with such 12b-1

Plan. You will furnish the Fund and us with such information as may be

-3-

<PAGE>

reasonably requested by the Fund or its directors or trustees or by us with

respect to such fees paid to you pursuant to this Agreement.

LEGAL COMPLIANCE: This Agreement and any transaction with, or payment to, you

pursuant to the terms hereof is conditioned on your representation to us that,

as of the date of this Agreement you are, and at all times during its

effectiveness you will be: (a) a registered broker/dealer under the Securities

Exchange Act of 1934 and qualified under applicable state securities laws in

each jurisdiction in which you are required to be qualified to act as a

broker/dealer in securities, and a member in good standing of the National

Association of Securities Dealers, Inc. (the "NASD"); or (b) a foreign

broker/dealer not eligible for membership in the NASD and otherwise in

compliance with applicable U.S. federal and state securities laws. You agree to

notify us promptly in writing and immediately suspend sales of Fund shares if

this representation ceases to be true. You also agree that, whether you are a

member of the NASD or a foreign broker/dealer not eligible for such membership,

you will comply with the rules of the NASD including, in particular, Sections 2

and 26 of Article III thereof, and that you will maintain adequate records with

respect to your transactions with the Funds.

BLUE SKY MATTERS: We shall have no obligation or responsibility with respect to

your right to sell Fund shares in any state or jurisdiction. From time to time

we may furnish you with information identifying the states and jurisdictions

under the securities laws of which it is believed a Fund's shares may be sold.

You will not transact orders for Fund shares in states or jurisdictions in which

we indicate Fund shares may not be sold. You agree to offer and sell Fund shares

outside the United States only in compliance with all applicable laws, rules and

regulations of any foreign government having jurisdiction over such transactions

in addition to any applicable laws, rules and regulations of the United States.

LITERATURE: We will furnish you with copies of each Fund's Prospectus, sales

literature and other information made publicity available by the Fund, in

reasonable quantities upon your request. You agree to deliver a copy of the

current Prospectus in accordance with the provisions of the Securities Act of

1933 to each purchaser of Fund shares for whom you act as broker. We shall file

Fund sales literature and promotional material with the NASD and SEC as

required.
-4-

<PAGE>

You may not publish or use any sales literature or promotional materials with

respect to the Funds without our prior review and written approval.

NOTICES AND COMMUNICATIONS: All communications from you should be addressed to

us at One Commerce Square, 2005 Market Street, Philadelphia, PA 19103. Any

notice from us to you shall be deemed to have been duly given if mailed or

telegraphed to you at the address set forth below. Each of us may change the

address to which notices shall be sent by notice to the other in accordance with

the terms hereof.

TERMINATION: This Agreement may be terminated by either party at any time by

written notice to that effect and will terminate without notice upon the

appointment of a trustee for you under the Securities Investor Protection Act,

or any other act of insolvency by you. Notwithstanding the termination of this

Agreement, you shall remain liable for any amounts otherwise owing to us or the

Funds and for your portion of any transfer tax or other liability which may be

asserted or assessed against the Fund, or us, or upon any one or more of the

selected dealers based upon the claim that the selected dealers or any of them

constitute a partnership, an unincorporated business or other separate entity.

AMENDMENT: This Agreement may be amended or revised at any time by us upon

notice to you and, unless you notify us in writing to the contrary, you will be

deemed to have accepted such modifications.

GENERAL: Your acceptance hereof will constitute an obligation on your part to

observe all the terms and conditions hereof. In the event you breach any of the

terms and conditions of this Agreement, you will indemnify us, the Funds, and

our affiliates for any damages, losses, costs and expenses (including reasonable

attorneys' fees) arising out of or relating to such breach and we may offset any

such damages, losses, costs and expenses against any amounts due to you

hereunder. Nothing contained herein shall constitute you, us and any dealers an

association or partnership. All references in this Agreement to the "Prospectus"

refer to the then current version of the Prospectus and include the Statement of

Additional Information incorporated by reference therein and any stickers or

supplements thereto. This Agreement supercedes and replaces any prior agreement

-5-

<PAGE>

between us and you with respect to your purchase and sale of Fund shares and is

to be construed in accordance with the laws of the State of Delaware.

Please confirm this Agreement by executing one copy of this Agreement

below and returning it to us. Keep the enclosed duplicate copy for your records.

DELAWARE DISTRIBUTORS, L.P.

By: Delaware Distributors, Inc.,
General Partner

By:/s/Keith E. Mitchell
----------------------
Name: Keith E. Mitchell
Title: President/Chief Executive Officer

-6-

<PAGE>

DEALER'S AGREEMENT ACCEPTANCE

DELAWARE DISTRIBUTORS, L.P.

The undersigned hereby confirms the Dealer's Agreement and acknowledges

that any purchase of Fund shares made during the effectiveness of this Agreement

is subject to all the applicable terms and conditions set forth in this

Agreement, and agrees to pay for the shares at the price and upon the terms and

conditions stated in the Agreement. The undersigned hereby acknowledges receipt

of Prospectuses relating to the Fund shares and confirms that, in executing the

Dealer's Agreement, it has relied on such Prospectuses and not on any other

statement whatsoever, written or oral.

INVESTMENT DEALER PLEASE SIGN HERE AND COMPLETE BELOW

By: DATE
------------------------------- ----------------------------

Name:
-----------------------------

Title:
----------------------------

- ----------------------------------
FIRM

- ----------------------------------
FIRM'S TAX IDENTIFICATION NUMBER

- ----------------------------------
STREET ADDRESS

- ----------------------------------
CITY/STATE/ZIP

<PAGE>

MUTUAL FUND AGREEMENT
FOR THE DELAWARE GROUP OF FUNDS

Gentlemen:

We are the national distributor for the Delaware Group of Funds with exclusive
right to sell and distribute Fund shares. (The term "Funds" in this Agreement
refers to each or any of the Funds that from time to time comprise the Delaware
Group and for whom we act as distributor.) You have indicated that you wish to
act as agent for your customers in connection with the purchase, sale and
redemption of Fund shares and desire to provide certain services to your
customers relating to their ownership of Fund shares, all in accordance with the
terms of this Agreement.

AGENT FOR CUSTOMERS: In placing orders for the purchase and sale of Fund shares,
you will be acting as agent for your customers and will not have any authority
to act as agent for us, any of the Funds or any of our affiliates or
representatives. Neither you nor any of your employees or agents are authorized
to make any representations concerning the Funds or Fund shares except those
contained in the then current "Prospectus" and in written information issued by
the Fund or by us as a supplement to the Prospectus. In purchasing Fund shares
your customers may rely only on such authorized information.

OFFERING PRICE TO PUBLIC: Orders for shares received from you and accepted by
the Fund or its agent, Delaware Service Co. Inc., will be at the public offering
price applicable to each order as set forth in the Prospectus. The manner of
computing the net asset value, the public offering price and the effective time
of orders received from you are described in the Prospectus for each Fund. We
reserve the right at any time, without notice, to suspend the sale of Fund
shares or withdraw the public offering.

SALES, ORDERS AND CONFIRMATIONS: All orders must be made subject to
confirmation. Your orders must be wired, telephoned or written to the Fund or
its agent. You agree to place orders on behalf of your customers for the number
of shares, and at the price, as in bona fide orders from your customers. We will
not accept any conditional orders. We will send a written confirmation of each
trade indicating that the trade was on a fully disclosed basis to your customer.
It is agreed and understood that, whether shares are registered in the
purchaser's name, in your name or in the name of your nominee, your customer
will have full beneficial ownership of the Fund shares.

AGENCY FEES: On each order accepted by us for a Fund with a sales charge, we
understand that you will charge your customer an agency commission or agency
transaction fee ("agency fee") as set forth in the schedule of sales concessions
and agency fees set forth in that Fund's Prospectus, as it may be amended from
time to time. This fee shall be subject to the provisions of all terms set forth
in the Prospectus for volume purchases and special plans and accounts (e.g.
retirement plans, letters of intent, etc.) You will not receive from us a
dealer's concession or similar allowance out of the sales charge. In accordance
with interpretations by the Staff of the Securities and Exchange Commission (the
"Commission"), the agency fee will be your sole charge to your customers for
placing such orders. You may elect to make payments in either of two ways: (a)
you may send us the public offering price for the Fund shares purchased less the
amount of the agency fee due you or (b) you or your customer may send us the
entire public offering price for the Fund shares and we will, on a periodic
basis, remit to you the agency fee due. You will notify us in writing of which
method of payment you elect. If any shares sold to your customer under the terms
of this Agreement are repurchased by the Fund or by us, or are tendered to a
Fund for redemption or repurchase, within seven (7) business days after the date
of the confirmation of the original purchase order, you will promptly refund to
us full agency fee paid or allowed to you on such shares.

<PAGE>

PAYMENT AND ISSUANCE OF CERTIFICATES: Regardless of the payment method elected,
Fund shares purchased by you for your customers hereunder shall be paid for in
fully by check payable to the Fund at its office within five business days after
our acceptance of your order. If not so paid, the Fund reserves the right,
without notice, to cancel the sale and to hold you responsible for any loss,
including lost profit, sustained by us or the Fund in consequence. Certificates
representing Fund shares will not be issued unless a specific request is
received from you or your customer. Certificates, if requested, will be issued
in the names indicated by registration instructions accompanying payment.

REDEMPTION: The Prospectus describes the provisions whereby the Fund, under all
ordinary circumstances, will repurchase its shares from shareholders on demand.
You agree that you will not make any representations to shareholders relating to
the purchase of their Fund shares other than the statements contained in the
Prospectus and the underlying organizational documents of the Fund, to which it
refers, and that you will quote to your customers as the redemption price only
the price determined by the Fund.

12b-1 PLAN: With respect to any Fund that has a Distribution Plan under Rule
12b-1 (a "12b-1 Plan") of the Investment Company Act of 1940 (the "1940 Act"),
we expect you will provide shareholder and administrative services to your
customers, such as: answering inquiries regarding the Fund; assisting in
changing dividend options, account designations and addresses; performing
sub-accounting; establishing and maintaining shareholder accounts and records;
processing purchase and redemption transactions; providing periodic statements
and/or updates showing a customer's account balance and integrating such
statements with those of other transactions and balances in the customer's other
accounts serviced by you; and arranging for bank wires. You will transmit
promptly to customers all communications sent to you for transmittal to clients
by or on behalf of us, any Fund or such Fund's investment advisor, custodian or
transfer or dividend disbursing agent. You will promptly answer all written
complaints received by you relating to Fund accounts or promptly forward such
complaints to us and assist us in answering such complaints. For such services
we will pay you a fee as set by us from time to time, based on a portion of the
net asset value of the accounts of your clients in the Fund. We are permitted to
make this payment under the terms of the 12b-1 Plan adopted by certain of the
Funds, as such 12b-1 Plans may be in effect from time to time, provided,
however, that no payments shall be due and paid to you hereunder with respect to
a Fund unless and until the form of this Agreement shall have been approved by a
majority of the Board of Directors or Trustees of that Fund and by a majority of
the directors or trustees who are not "interested persons" of us, the Fund or
its investment manager, as such term is defined in the 1940 Act (i.e., non-
interested directors) by vote cast in person at a meeting called for the purpose
of voting on this form of Agreement. Each Fund reserves the right, at any time,
to suspend payments under its 12b-1 plan. You will furnish the Fund and us with
such information as may be reasonably requested by the Fund or its directors or
trustees or by us with respect to fees paid to you pursuant to this Agreement.
In accordance with interpretations and rulings to the Staff of the Commission,
you will not charge your customers any fees for services for which you are being
compensated under a 12b-1 Plan of a Fund.

SALE OF NO-LOAD - NON 12B-1 PLAN FUNDS: In connection with any orders placed by
you on behalf of your customers for shares of Funds that do not charge a sales
load and do not have a 12b-1 Plan, we understand that you may charge your
customers a limited service or transaction fee, in accordance with
interpretations and rulings of the Staff of the Commission.

<PAGE>

LEGAL COMPLIANCE: This Agreement and any transaction with or payment to you
pursuant to the terms hereof is conditioned on your representation to us that,
as of the date of this Agreement you are and at all times during its
effectiveness yo will be (a) a registered broker-dealer under the Securities
Exchange Act of 1934 and qualified under applicable state securities laws, if
any, to act as a broker or dealer in securities, and a member in good standing
of the National Association of Securities Dealers, Inc. (the "NASD"); or (b) a
"bank" as defined in Section 3(a)(6) of the Securities Exchange Act of 1934 (or
other financial institution) and not otherwise required to register as a broker
or dealer under such Act. You agree to notify us promptly in writing if this
representation ceases to be true. You also agree that you will comply with the
rules of the NASD including, in particular, Sections 2 and 26 of Article III
thereof, to the extent applicable, that you will maintain adequate records with
respect to your customers and their transactions, and that such transactions
will be without recourse against you by your customers. We recognize that, in
addition to applicable provisions of state and federal securities laws, you may
be subject to the provisions of the Glass-Steagall Act and other laws governing,
among other things, the conduct of activities by federal and state chartered and
supervised financial institutions and their affiliated organizations. Because
you will be the only one having a direct relationship with the customer, yo will
be responsible in that relationship for insuring compliance with all laws and
regulations, including those of all applicable federal and state regulatory
authorities and bodies having jurisdiction over you or your customers to the
extent applicable to securities purchases hereunder.

BLUE SKY MATTERS: We shall have no obligation or responsibility with respect to
your right to sell Fund shares in any state or jurisdiction. From time to time
we shall furnish you with information identifying the states under the
securities laws of which it is believed a Fund's shares may be sold. You will
not transact orders for Fund shares in states in which we indicate Fund shares
may not be sold.

LITERATURE: We will furnish you with copies of each Fund's Prospectus, sales
literature and other information made publicly available by the Fund, in
reasonable quantities upon your request. We shall file Fund sales literature and
promotional material with the NASD and SEC as required. You may not publish or
use any sales literature or promotional materials with respect to the Funds
without our prior review and written approval.

CUSTOMERS: The names of your customers will remain your sole property and will
not be used by us except for servicing or informational mailings and other
correspondence in the normal course of business.

NOTICES AND COMMUNICATIONS: All communications from you should be addressed to
us at 1818 Market Street, Philadelphia, PA 19103. Any notice from us to you
shall be deemed to have been duly given if mailed or telegraphed to you at the
address set forth above. Each of us may change the address to which notices
shall be sent by notice to the other in accordance with the terms hereof.

TERMINATION: This Agreement may be terminated by either party at any time by
written notice to that effect. Notwithstanding the termination of this
Agreement, you shall remain liable for any amounts otherwise owing to us or the
Fund and for your portion of any transfer tax or other liability which may be
asserted or assessed against the Fund, us or any one or more of our dealers,
based upon the claim that you and such dealers or any of them constitute a
partnership, an unincorporated business or other separate entity.

AMENDMENT: This Agreement may be amended or revised at any time by us upon
notice to you and, unless you promptly notify us in writing to the contrary, you
will be deemed to have accepted such modifications.

<PAGE>

GENERAL: Your acceptance hereof will constitute an obligation on your part to
observe all the terms and conditions hereof. In the event you breach any of the
terms and conditions of this Agreement, you will indemnify us, the Funds, and
our affiliates for any damages, losses, costs and expenses (including reasonable
attorneys' fees) arising out of or relating to such breach. Nothing contained
herein shall constitute you, us and any dealers an association or partnership.
All references in this Agreement to the "Prospectus" include the Statement of
Additional Information incorporated by reference therein and any stickers or
supplements thereto, provided that any requirement in this Agreement to deliver
a copy of the Prospectus shall not include the Statement of Additional
Information unless requested by the customer. This Agreement is to be construed
in accordance with the laws of the State of Delaware.

Please confirm this Agreement by executing one copy of this Agreement below and
returning it to us. Keep the enclosed duplicate copy for your records.

Date:________________ DELAWARE DISTRIBUTORS, L.P.

BY: DELAWARE DISTRIBUTORS, INC.,
General Partner

Accepted and Agreed to:

- ---------------------------
(Name of Firm)

BY:________________________
Name:
Title:

<PAGE>

PROFIT SHARING PLAN

DELAWARE GROUP DELAWARE FUND, INC.

SECOND AMENDMENT AND RESTATEMENT
EFFECTIVE APRIL 1, 1989

<PAGE>

PROFIT SHARING PLAN
OF
DELAWARE GROUP DELAWARE FUND, INC.

SECOND AMENDMENT AND RESTATEMENT
EFFECTIVE APRIL 1, 1989

TABLE OF CONTENTS
-----------------
PAGE
----
ARTICLE I
PURPOSE CLAUSE . . . . . . . . . . . . . . . . . . . . 1

ARTICLE II
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE III
ELIGIBILITY OF EMPLOYEES
TO PARTICIPATE IN THE PLAN . . . . . . . . . . . . . . 6

ARTICLE IV
CONTRIBUTIONS TO PLAN . . . . . . . . . . . . . . . . . 7

ARTICLE V
ALLOCATION OF CONTRIBUTIONS . . . . . . . . . . . . . . 12

ARTICLE VI
RETIREMENT BENEFITS . . . . . . . . . . . . . . . . . . 14

ARTICLE VII
DISABILITY BENEFITS . . . . . . . . . . . . . . . . . . 14

ARTICLE VIII
DEATH BENEFITS . . . . . . . . . . . . . . . . . . . . 14

ARTICLE IX
OTHER SEPARATION FROM SERVICE . . . . . . . . . . . . . 16

ARTICLE X
METHOD OF PAYMENT . . . . . . . . . . . . . . . . . . . 18

ARTICLE XI
ADMINISTRATION OF PLAN . . . . . . . . . . . . . . . . 26

ARTICLE XII
AMENDMENT, CONSOLIDATION, MERGER
OR TERMINATION . . . . . . . . . . . . . . . . . . . . 29

(i)

<PAGE>

ARTICLE XIII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 30

ARTICLE XIV
LOANS . . . . . . . . . . . . . . . . . . . . . . . . . 31

ARTICLE XV
LIMITATIONS ON ALLOCATIONS . . . . . . . . . . . . . . 32

ARTICLE XVI
TOP HEAVY DEFINITIONS AND RULES . . . . . . . . . . . . 36

(ii)

<PAGE>

PROFIT SHARING PLAN
OF
DELAWARE GROUP DELAWARE FUND, INC.
SECOND AMENDMENT AND RESTATEMENT
EFFECTIVE APRIL 1, 1989

ARTICLE I

PURPOSE CLAUSE
--------------
This Profit Sharing Plan and the Trust Agreement forming a part hereof are
established for the benefit of the employees of Delaware Group Delaware Fund,
Inc. and the other investment companies of the Delaware Group of Funds to
promote in them a strong interest in the successful operation of the business
and to provide for them an opportunity for accumulation of funds for their
retirement benefit.

ARTICLE II

DEFINITIONS
-----------
When used herein, the following words shall have the following meanings
unless the context clearly indicates otherwise:

2.1 "Administrative Committee" or "Committee" shall mean the Administrative
Committee with authority and responsibility to manage and direct the operation
and administration of this Plan. "Administrative Committee" shall be deemed to
also mean "Administrator" and "Plan Administrator" as defined in ERISA.

2.2 "Anniversary Date" shall mean the first day of each Plan Year.

2.3 "Beneficiary" shall mean the person or persons designated by a
Participant to receive benefits upon the death of said Participant pursuant to
Article VIII.

2.4 "Board of Directors" shall mean the Board of Directors of the Employer.

2.5 "Code" shall mean the Internal Revenue Code of 1986, as amended.

2.6 "Effective Date" of the Plan shall mean October 1, 1983. The Effective
Date of this amended and restated Plan shall mean April 1, 1989, except where
indicated otherwise.

2.7 "Eligibility Computation Period" shall mean the period of twelve (12)

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<PAGE>

consecutive months beginning on the date an Employee first performs an Hour of
Service upon hire or rehire after a One Year Break in Service, and any Plan Year
following such date of hire or date of rehire following a One Year Break in
Service.

2.8 "Eligibility Year of Service" shall mean the Eligibility Computation
Period during which the Employee performs one thousand (1,000) or more Hours of
Service. Eligibility Years of Service shall include an Employee's prior service
with Delaware Management Company, Inc. or any Entity required to be aggregated
with Delaware Management Company, Inc. under Sections 414(b) or(c) of the Code.

2.9 "Employee" shall mean any person employed by the Employer or by any
affiliated Entity which adopts this Plan; provided, however, no person covered
by a collective bargaining agreement under which the Employer has participated
in good faith bargaining concerning retirement benefits shall be considered an
Employee for the purposes of this Plan. Any Leased Employee shall not be
considered an Employee for purposes of the Plan.

2.10 "Employer" shall mean Delaware Group Delaware Fund, Inc. and any other
affiliated investment company which adopts this Plan. Effective October 1, 1987,
and solely for purposes of determining periods of service for eligibility for
participation and vesting, the term "Employer" shall include any corporation
which is a member of a controlled group of corporations (as defined in Section
414(b) of the Code) which includes the Employer; any trade or business (whether
or not incorporated) which is under common control (as defined in Section 414(c)
of the Code) with the Employer; any organization (whether or not incorporated)
which is a member of an affiliated service group (as defined in Section 414(m)
of the Code) which includes the Employer; and any other Entity required to be
aggregated with the Employer pursuant to regulations under Section 414(o) of the
Code.

2.11 "Employer Contribution Account" shall mean a Participant's account
derived from Employer contributions and the earnings thereon.

2.12 "Entity" shall mean an individual, partnership, corporation or
unincorporated organization.

2.13 "ERISA" shall mean the Employee Retirement Income Security Act of 1974
and the Regulations promulgated thereunder by either the Department of Labor or
Treasury.

2.14 "Hour of Service" shall mean:

-5-

<PAGE>

(a) Each hour for which an Employee is paid, or entitled to payment, for
the performance of duties for the Employer. These hours will be credited to the
Employee for the computation period in which the duties are performed; and

(b) Each hour for which an Employee is paid, or entitled to payment, by the
Employer on account of a period of time during which no duties are performed
(irrespective of whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including disability), layoff, jury
duty, military service or leave of absence. No more than 501 Hours of Service
will be credited under this paragraph for any single continuous period (whether
or not such period occurs in a single computation period); and

(c) Each hour for which back pay, regardless of mitigation of damages, is
either awarded or agreed to by the Employer. The same Hours of Service will not
be credited both under paragraph (a) or paragraph (b), as the case may be, and
under this paragraph (c). These hours will be credited to the Employee for the
computation period or periods to which the award or agreement pertains rather
than the computation period in which the award, agreement or payment is made.

(d) Hours of Service will be calculated on the basis described in
Department of Labor Regulations Section 2530.200b-2(b) and (c).

(e) Solely for purposes of determining whether a Break in Service has
occurred, for participation and vesting purposes, an individual who is absent
from work for maternity or paternity reasons will receive credit for the Hours
of Service which would otherwise have been credited to such individual. In the
event these hours cannot be determined, eight (8) Hours of Service per day will
be used. For purposes of this paragraph, an absence from work for maternity or
paternity reasons means an absence (i) by reason of the pregnancy of the
individual, (ii) by reason of the birth of a child of the individual, (iii) by
reason of the placement of a child with the individual in connection with the
adoption of the child by such individual, or (iv) for purposes of caring for the
child for a period beginning immediately following such birth or placement.
However, in no event will the hours treated as Hours of Service under this
paragraph (e), by reason of any pregnancy or placement, exceed 501 hours. The
Hours of Service credited under this paragraph will be credited (i) in the Plan
Year in which the absence begins if the crediting is necessary to prevent a
Break in Service in that period, or (ii) in all other cases, in the following
Plan Year.

(f) Effective for Plan Years beginning on or after April 1, 1994, an
Employee shall be credited with 45 Hours of Service for each week for which he
would be required to be credited with at least one Hour of Service under
paragraphs (a)-(e) above.

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<PAGE>

2.15 "Leased Employee" shall mean any person described in Section 414(n) of
the Code who is not an employee of the Employer who, pursuant to an agreement
between the Employer and any other person, has performed service for the
Employer (or for any related persons determined in accordance with Section
414(n)(6) of the Code) on a substantially full-time basis for a period of at
least one year and such services are of a type historically performed by
employees in the Employer's business field.

2.16 "Named Fiduciary" shall be the Administrative Committee and the
Trustee or Trustees serving from time to time and any other person who is
specifically so designated by the Board of Directors.

2.17 "Normal Retirement Date" shall mean the date on which a Participant
shall reach age 65.

2.18 "One Year Break in Service" or "Break in Service" shall mean a Plan
Year during which an Employee has or was separated from employment with Employer
and has completed 500 or less Hours of Service.

2.19 "Participant" shall mean any Employee who meets the eligibility
requirements under Article III or any Employee who is or may become eligible to
receive a benefit under the Plan or whose Beneficiaries may be eligible to
receive any such benefit.

2.20 "Participant Contribution Account" shall mean a Participant's account
derived from his voluntary contributions and the earnings thereon.

2.21 "Plan" shall mean the Employer's Profit Sharing Plan set forth in this
document and all subsequent amendments thereto.

2.22 "Plan Compensation" shall mean as of each Anniversary Date, the basic
compensation received by an Employee from the Employer during the preceding Plan
Year, including salary, draw, overtime and bonuses, but excluding contributions
to this or any other deferred compensation plan. Plan Compensation includes
salary reduction contributions paid by the Employer on the Employee's behalf to
a cafeteria plan, within the meaning of Section 125 of the Code, maintained by
the Employer. Effective for Plan Years beginning on or after April 1, 1994, Plan
Compensation shall mean the sum of (a) the total earnings which are received by
the Employee from the Employer for the preceding Plan Year and which are
required to be reported as wages on the Employee's Form W-2 (in the wages, tips
and other compensation box) and (b) the total amount contributed by the

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<PAGE>

Employer on behalf of the Employee pursuant to a salary reduction agreement
which is not includable in the gross income of the Employee under Sections 125
or 402 (e)(3) of the Code, but excluding all of the following items (even if
includable in gross income): reimbursements or other expense allowances, fringe
benefits (cash and non-cash), moving expenses, deferred compensation and welfare
benefits.

For Plan Years beginning on or after April 1, 1989, the Plan Compensation
of each Participant taken into account under the Plan shall not exceed $200,000,
as adjusted by the Secretary of the Treasury. In determining the Plan
Compensation of a Participant for purposes of the limitations set forth in the
preceding sentence, the rules of Section 414(q)(6) of the Code shall apply,
except in applying such rules, the term "family" shall include only the spouse
of the Participant and any lineal descendants of the Participant who have not
attained age 19 before the close of the Plan Year. If, as a result of the
application of such rules, the adjusted $200,000 limitation is exceeded, then
the limitation shall be prorated among the affected individuals in proportion to
each such individual's Plan Compensation as determined under this Section 2.22
prior to the application of this limitation. Effective for Plan Years beginning
on or after January 1, 1994, the Plan Compensation of a Participant shall not
exceed $150,000, as adjusted at the time and manner prescribed by Section 401
(a)(17)(B) of the Code.

2.23 "Plan Year" shall mean a twelve-month period beginning on April 1st
and ending on March 31st. For the Plan Years beginning before April 1, 1989 and
after December 31, 1986, the term Plan Year means a twelve month period
beginning October 1st and ending September 30th, except that the Plan Year
beginning October 1, 1988 is a short year which ends March 31, 1989.

2.24 "Total and Permanent Disability" shall mean incapacity, resulting from
injury or disease, of a Participant to perform any work for Employer and shall
be presumed permanent after the same has continued uninterrupted for six months
as certified by a qualified physician selected by the Administrative Committee.

2.25 "Trustee" or "Trustees" shall mean the trustee or trustees named in
the Trust Agreement attached hereto and forming a part hereof, or any successor
thereto.

2.26 "Trust Fund" or "Fund" shall mean all property held pursuant to the
Trust Agreement.

2.27 "Valuation Date" means the last day of each Plan Year and such other
quarterly, monthly or daily dates as determined by the Administrative Committee.

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<PAGE>

2.28 "Year of Service" shall mean a Plan Year during which an Employee
completes at least 1,000 Hours of Service; provided, however, that for the
period from October 1, 1988 through March 31, 1990, an Employee shall be given
credit for a Year of Service if he completes 1,000 Hours of Service during the
period October 1, 1988 to September 30, 1989 and shall be given credit for an
additional Year of Service if he completes 1,000 Hours of Service during the
period April 1, 1989 to March 31, 1990. For purposes of determining a
Participant's nonforfeitable right to his Employer Contribution Account, Years
of Service shall include an Employee's prior service with Delaware Management
Company, Inc. or any other Entity required to be aggregated with Delaware
Management Company, Inc. under Sections 414(b) or (c) of the Code. An Employee
shall also receive credit for a Year of Service if he completes 1000 or more
Hours of Service during his initial Eligibility Computation Period.

2.29 Whenever used herein, the masculine provision includes the feminine
and the singular includes the plural.

ARTICLE III

ELIGIBILITY OF EMPLOYEES
TO PARTICIPATE IN THE PLAN
--------------------------
3.1 Each Employee who was a Participant on March 31, 1989 shall continue as
a Participant. Each other Employee shall be eligible to participate in this Plan
on the first day of the Plan Year within which he completes one Eligibility Year
of Service.

3.2 Any Participant who returns to service after a Break in Service shall
be admitted to the Plan as a Participant on his date of re-employment.

3.3 Within 60 days of each Anniversary Date of this Plan, the Employer
shall furnish the Administrator a list showing all eligible Employees, the date
of employment, the Years of Service, the Plan Compensation of each eligible
Employee and the date of termination of any terminated Employees.

3.4 Notwithstanding the provisions of Section 3.1 to the contrary, if an
Employee is employed by the Employer on March 31, 1989 and has completed by such
date 1,000 or more Hours of Service during an Eligibility Computation Period
which began on or before October 1, 1988, such Employee shall be eligible to
participate in the Plan on October 1, 1988.

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<PAGE>

ARTICLE IV

CONTRIBUTIONS TO PLAN
---------------------
4.1 Each participating Employer may contribute to the Plan's Trust Fund for
each taxable year an amount, if any, determined in accordance with a resolution
of the Board of Directors adopted before the date prescribed by law for filing
its Federal income tax return for such taxable year (including extensions
thereof); provided, however, that no contributions shall be made for any year in
excess of the amount deductible for such year under provisions of the Code and
regulations thereunder as then in effect. For Plan Years beginning on or after
April 1, 1989, the Employer may make contributions regardless of whether or not
it has Net Profits and Earnings for its tax year.

4.2 For Plan Years beginning before April 1, 1989, Net Profits and Earnings
in any one year of operations means the net income before provisions for Federal
and State income taxes as determined by the certified public accountants
employed by the Employer in accordance with generally accepted accounting
principles of open-end management investment companies.

4.3 For each taxable year, the contributions shall accrue on the
Anniversary Date thereof, but shall not be considered as accruing during the
said taxable year prior to the Anniversary Date thereof.

4.4 The Trust Fund shall not be diverted to any use other than the
exclusive benefit of eligible Employees and their Beneficiaries.

4.5 Effective August 1, 1991, a Participant may not make voluntary
contributions to his Participant Contribution Account. Prior to August 1, 1991,
a Participant may make voluntary contributions to his Participant Contribution
Account. Such contributions may be made by payroll deductions or in such other
manner and subject to such procedures as the Administrator may prescribe. No
Participant may contribute more than ten percent of his aggregate Plan
Compensation for all Plan Years during which he participated in the Plan.

4.6 Notwithstanding the provisions of Article IX, a Participant shall have
a nonforfeitable interest in all voluntary contributions made by him and in any
increase in his account attributable to such contributions.

4.7 A Participant shall have the right to withdraw the total amount of his
voluntary contributions at any time; provided, however, that such withdrawal

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<PAGE>

shall be permissible only with respect to the amount of such Participant's
voluntary contributions and not to any increase in his account attributable to
such contributions. No Participant shall be permitted to make withdrawals of
his voluntary contributions more than four times in any one calendar year.
Effective as of the date of adoption of this amended and restated Plan, a
Participant shall be permitted to make withdrawals as frequently as monthly of
all or a portion of his voluntary contributions, including the earnings
thereon.

4.8 The Fund may accept rollover contributions on behalf of an Employee
(including an Employee who has not satisfied the requirements to be eligible to
participate) from any other plan maintained for his benefit which satisfies the
requirements of a tax-qualified plan, or a rollover individual retirement
account; provided, however, that such rollovers are permitted by and effected in
accordance with the requirements of the Code. The Administrative Committee may
as a condition of acceptance of such rollovers demand such information, opinions
and statements as it deems necessary to assure that such rollovers conform to
the requirements of the federal tax laws.

4.9 An Employee for whom a rollover has been made shall be deemed a
Participant with respect to the amount contributed and shall have a
nonforfeitable interest in such amount and any increases attributable to it. Any
such rollovers shall be held in a special account for the Participant segregated
from other assets held by the fund. Such contributions will be administered and
distributed pursuant to the provisions of this Plan.

4.10 The following special non-discrimination rules pertaining to voluntary
contributions shall be applicable for Plan Years beginning on or after October
1, 1987 and before April 1, 1990.

(a) For any Plan Year, the Contribution Percentage for all Highly
Compensated Employees will not exceed the greater of (i) or (ii) as follows:

(i) The Contribution Percentage for all Non-Highly Compensated Employees,
times 1.25; or

(ii) The lesser of the Contribution Percentage for all Non-Highly
Compensated Employees, times 2.0, provided that the Contribution Percentage for
all Highly Compensated Employees may not exceed the Contribution Percentage for
all Non-Highly Compensated Employees by more than two (2) percentage points or
such lesser amount as the Secretary of Treasury will prescribe to prevent the
multiple use of this alternative limitation with respect to any Highly
Compensated Employee.

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<PAGE>

(b) Distribution of Excess Aggregate Contributions.

(i) Excess Aggregate Contributions, plus any income and minus any loss
allocable thereto, will be distributed no later than the last day of each Plan
Year to Participants to whose accounts Excess Aggregate Contributions were
allocated for the preceding Plan Year.

(ii) For the Plan Year beginning on October 1, 1987, the income or loss
allocable to Excess Aggregate Contributions shall be determined under any
reasonable method, which method shall be applied on a consistent basis for all
Participants. For Plan Years beginning after 1987, the income or loss allocable
to Excess Aggregate Contributions shall be the sum of (A) and (B) below:

(A) The income or loss for the Plan Year allocable to the Participant's
voluntary contribution Account multiplied by a fraction, the numerator of which
is the Participant's Excess Aggregate Contributions for the year, and the
denominator of which is the balance of the Participant's voluntary contribution
account as of the end of the Plan Year, minus income (or plus losses) allocable
to such account.

(B) The income or loss for the period between the end of the Plan Year and
the date of the distribution allocable to the Participant's voluntary
contribution account multiplied by the fraction described in (A), above.

In lieu of using the formula described in (B), the income or loss for the
period between the end of the Plan Year and the date of the distribution
allocable to Excess Aggregate Contributions for the year may be calculated under
the following alternative method, provided such method is applied on a
consistent basis for all Participants: ten percent (10%) of the amount
determined under (A), above, multiplied by the number of whole calendar months
that have elapsed since the end of the Plan Year. For this purpose, if a
distribution of Excess Aggregate Contributions is made after the 15th day of a
month, that month will be counted as a whole month.

(i) "Contribution Percentage" means, for a group of Participants, the
average of the following ratios (calculated separately) for each Participant in
the group:

(A) The sum of voluntary contributions made on behalf of each Participant
for the Plan Year; over

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<PAGE>

(B) The Participant's Compensation for that Plan Year, whether or not the
Participant was a Participant for the entire Plan Year.

The Contribution Percentage for any Participant who is a Highly Compensated
Employee for the Plan Year and who is eligible to have voluntary employee
contributions or employer matching contributions allocated to his account under
two or more plans described in Section 401(a) of the Code or arrangements
described in Section 401(k) of the Code that are maintained by the employer or
an entity that is required to be aggregated with the employer pursuant to
Sections 414(b), (c), (m), or (o) of the Code will be determined as if all such
contributions were made under a single plan. If a Highly Compensated Employee
participates in two or more arrangements described in Section 401(k) of the Code
that have different plan years, all such arrangements ending with or within the
same calendar year shall be treated as a single arrangement.

For purposes of determining the Contribution Percentage of a Participant
who is a five-percent owner or one of the ten most Highly Compensated Employees,
the Contribution Percentage and compensation of such Participant will include
the Contribution Percentage and Compensation of Family Members, and such Family
Members will be disregarded in determining the Contribution Percentage for
Participants who are Non-Highly Compensated Employees.

Voluntary contributions will be considered made for a Plan Year if made by
the date specified in the applicable regulations and allocated to a
Participant's account for the Plan Year.

The determination and treatment of the Contribution Percentage of any
Participant will satisfy such other requirements as may be prescribed by
Secretary of the Treasury.

In the event that this Plan satisfies the requirements of Sections 401(m),
401(a)(4) or 410(b) of the Code only if aggregated with one or more other plans,
or if one or more other plans satisfy the requirements of such Sections only if
aggregated with this Plan, then this Section 4.10 will be applied by determining
the Contribution Percentages of eligible Participants as if all such plans were
a single plan. For plan years beginning after December 31, 1989, plans may be
aggregated in order to satisfy Section 401(m) of the Code only if they have the
same plan year.

(ii) "Excess Aggregate Contributions" means, with respect to any Plan Year,
the excess of:

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<PAGE>

(A) The aggregate Contribution Percentage amounts taken into account in
computing the numerator of the Contribution Percentage actually made on behalf
of Highly Compensated Employees for such Plan Year; over

(B) The maximum Contribution Percentage amounts permitted by the
Contribution Percentage limits set forth in this Section 4.10 (determined by
reducing contributions made on behalf of Highly Compensated Employees in order
of their Contribution Percentages beginning with the highest of such
percentages).

(iii) "Family Member" means an individual described in Section 414(q)(6)(B)
of the Code.

(iv) "Highly Compensated Employee" means a highly compensated active
employee or a highly compensated former employee, as described below.

A highly compensated active employee includes any employee who performs
service for the employer during the determination year and who, during the
look-back year: (i)received compensation from the employer in excess of $75,000
(as adjusted pursuant to Section 415(d) of the Code); (ii) received compensation
from the employer in excess of $50,000 (as adjusted pursuant to Section 415(d)
of the Code) and was a member of the top-paid group for such year; or (iii) was
an officer of the employer and received compensation during such year that is
greater than 50 percent of the dollar limitation in effect under Section
415(b)(1)(A) of the Code. The term Highly Compensated Employee also includes:
(i) employees who are both described in the preceding sentence if the term
"determination year" is substituted for the term "look-back year" and the
employee is one of the 100 employees who received the most compensation from the
Employer during the determination year; and (ii) employees who are five percent
owners at any time during the look-back year or determination year.

If no officer has satisfied the compensation requirement of (iii) above
during either a determination year or a look-back year, the highest paid officer
for such year shall be treated as a Highly Compensated Employee.

For this purpose, the determination year shall be the Plan Year. The
look-back shall be the twelve (12)-month period immediately preceding the
determination year.

A highly compensated former employee includes any employee who separated
from service (or was deemed to have separated) prior to the determination year,
performs no service for the employer during the determination year, and was a
highly compensated active employee for either the separation year or any
determination year ending on or after the employee's fifty-fifth (55th)
birthday.

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<PAGE>

If an employee is, during a determination year or look-back year, a Family
Member of either a five percent owner who is an active or former employee or a
Highly Compensated Employee who is one of the ten (10) most Highly Compensated
Employees ranked on the basis of compensation paid by the Employer during such
year, then the Family Member and the five percent owner or top-ten (10) Highly
Compensated Employee shall be aggregated. In such case, the Family Member and
five percent owner or top-ten Highly Compensated Employee shall be treated as a
single employee receiving compensation and Plan contributions or benefits equal
to the sum of such compensation and contributions or benefits of the Family
Member and five percent owner or ten (10) most Highly Compensated Employee.

The determination of who is a Highly Compensated Employee, including the
determinations of the number and identity of employees in the top-paid group,
the top one hundred (100) employees, a five percent owner, the number of
employees treated as officers and the compensation that is considered, will be
made in accordance with Section 414(q) of the Code and the regulations
thereunder.

(v) "Compensation" means all of an Employee's compensation, as that term is
defined in Article XV, Limitations on Allocations, and shall include elective
contributions that are made by the Employer on behalf of the Employee and which
are not includable in income under Section 125 of the Code. Compensation shall
be subject to the limitation of Section 401(a)(17) of the Code.

ARTICLE V

ALLOCATION OF CONTRIBUTIONS
---------------------------
5.1 A separate and complete accounting shall be maintained for each
Participant which shall set forth the amount credited to or forfeited from his
Employer Contribution Account and his Participant Contribution Account. Employer
contributions and Participant contributions shall be allocated among investment
companies managed by Delaware Management Company, Inc. Each Participant shall
file a written notice with the Committee thereby making an election as to what
proportion of his contributions, including both contributions made by the
Employer and voluntary contributions, shall be allocated to the eligible
investment company funds, as announced from time to time by the Committee. Each
Participant shall have the right to change the investment allocation of his
contributions and his accumulated account balance, in accordance with rules and
procedures as announced from time to time by the Committee, provided changes are
subject to any limitations imposed on the right of exchange by the investment
media.

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5.2 The Employer's contributions and any forfeitures for each Plan Year
shall be credited to the Employer Contribution Accounts of Participants who are
employed by the Employer on the Anniversary Date and allocated in the proportion
that the Plan Compensation of each Participant bears to the total Plan
Compensation of all Participants for such Plan Year. A Participant who
terminates employment on the Anniversary Date shall be treated as employed by
the Employer on the Anniversary Date. All voluntary contributions made by a
Participant prior to August 1, 1991 shall be credited to his Participant
Contribution Account.

5.3 As of the Anniversary Date, each Participant's Employer Contribution
Account and his Participant Contribution Account shall be valued at its fair
market value. For the purposes of paying benefits to a Participant, his accounts
shall be valued on the most recent Valuation Date as determined by the
Administrative Committee.

5.4 Income when earned less expenses, if any, when charged, shall be
credited to or charged against each Participant's account, in accordance with
the self-directed investments selected by the Participant.

5.5 The Committee shall, as of each Anniversary Date, determine the total
amount of forfeitures which accrued during the Plan Year and shall add the
forfeited amount to the Employer's annual contribution for the purposes of
reallocation to the remaining Participants as provided in Section 5.2.

5.6 Any allocation made and credited to the account of a Participant under
this Article shall not cause such Participant to have any right, title or
interest in or to any assets of the Trust Fund except at the time or times, and
under the terms and conditions, expressly provided for in this Plan.

5.7 (a) In the case of a contribution to the Plan which is made by the
Employer because of a mistake of fact, the Employer may, within one year after
the payment of such contribution, withdraw such contribution from the Trust
Fund.

(b) Employer contributions to the Plan are expressly conditioned on the
deductibility of such contributions under Section 404 of the Code. To the extent
such contributions are disallowed, the Employer may, within one year of the
disallowance of the deduction, withdraw such contribution from the Trust Fund.

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ARTICLE VI

RETIREMENT BENEFITS
-------------------
6.1 Upon attaining Normal Retirement Date, a Participant shall have a fully
vested and nonforfeitable right to his entire Employer Contribution Account and
shall be entitled to retire and upon so retiring shall be entitled to the
commencement of the payment of his benefits, consisting of the balance of his
accounts, in accordance with the method of payment elected pursuant to Article
X.

6.2 A Participant who retires after his Normal Retirement Date shall
continue to be a Participant in the Plan until his actual retirement and shall
be eligible to share in the allocation of Employer contributions as provided in
Section 5.2.

ARTICLE VII

DISABILITY BENEFITS
-------------------
7.1 If the employment of a Participant has been terminated prior to his
retirement date because of Total and Permanent Disability, such Participant
shall be entitled to receive his entire Participant Contribution Account and his
entire Employer Contribution Account in accordance with the manner elected under
Article X.

7.2 Upon a Participant's cessation of Total and Permanent Disability and
upon his return to work for Employer before all of his account has been
distributed, no further payments shall be made therefrom by reason of the
disability. A Participant shall have no right or obligation to repay any amount
distributed to him pursuant to Section 7.1.

ARTICLE VIII

DEATH BENEFITS
--------------
8.1 Notwithstanding anything stated in the Plan to the contrary, if a
Participant dies prior to receiving the entire nonforfeitable amount credited to
his accounts, all such undistributed nonforfeitable amounts shall be paid to the
Participant's surviving spouse, unless there is no surviving spouse or the
surviving spouse consents in writing to the payment of death benefits to another
Beneficiary. A spouse's consent must satisfy the following requirements:

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(a) the consent must be in writing;

(b) the consent must be witnessed by a member of the Administrative
Committee or a notary public;

(c) the consent must approve a designation of a specific Beneficiary,
including any class of Beneficiaries or any contingent Beneficiaries, which may
not be changed without spousal consent, or the spouse expressly permits
designations by the Participant without any further spousal consent; and

(d) the consent acknowledges the effect of the Participant's designation of
Beneficiary. If a consent permits designations by the Participant without any
requirement of further consent by such spouse, it must acknowledge that the
spouse has the right to limit consent to a specific Beneficiary and that the
spouse voluntarily elects to relinquish such right.

Written consent of a spouse need not be obtained if the Participant
establishes to the satisfaction of the Committee that there is no spouse or that
the spouse cannot be located. Any such designation may be changed from time to
time by the Participant by filing a new designation with the Committee, provided
the spousal consent requirements above are satisfied.

8.2 Each Participant may file with the Committee a designation of
Beneficiary to receive amounts payable under this Plan upon his death. The
designation may be changed from time to time by the Participant, except that a
married Participant may not name a Beneficiary other than his spouse without a
written consent which satisfies the requirements of Section 8.1. If no
designation has been filed, or all designated Beneficiaries have predeceased the
Participant, then any amounts payable shall be paid to his surviving spouse. If
there is no surviving spouse, any amounts payable shall be paid to his estate.

8.3 If at, after or during the time when a benefit is payable to any
Beneficiary, the Administrative Committee, upon request of the Trustee or at its
own instance, mails by registered or certified mail to the Beneficiary at the
Beneficiary's last known address a written demand for his then address, or for
satisfactory evidence of his continued life or both, and, if the Beneficiary
shall fail to furnish the information to the Committee within 3 years from the
mailing of the demand, then the Committee shall distribute the remaining
benefits to the Beneficiary next entitled thereto under Section 8.3 above as if
the Beneficiary designated by the Participant or Section 8.3 were then deceased.

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ARTICLE IX

OTHER SEPARATION FROM SERVICE
-----------------------------
9.1 (a) If a Participant separates from service other than under Articles
VI, VII or VIII, he shall be entitled to receive a lump sum distribution of his
entire Participant Contribution Account and his entire nonforfeitable Employer
Contribution Account. Such distribution shall be made upon the written request
of the Participant and shall be made as soon as practicable following the
Participant's separation from service, but not later than the close of the
second Plan which such separation occurs.

(b) If the non-forfeitable portion of the Participant's Employer
Contribution Account and his Participant Contribution Account exceeds $3500 (or
ever exceeded $3500 at the time of an earlier distribution), and the Participant
does not consent in writing to receive a lump sum distribution of his accounts
by the close of the second Plan Year following his separation from service, no
distribution shall be made to the Participant until he attains his Normal
Retirement Date. Regardless of whether the Participant consents in writing, if
the non-forfeitable portion of the Participant's Employer Contribution Account
and Participant Contribution Account does not exceed $3500 (or did not exceed
$3500 at the time of a prior distribution), a lump sum distribution shall be
made to the Participant of the entire value of the non-forfeitable portion of
his accounts not later than the end of the second Plan Year following his
separation from service.

(c) If a distribution is made to the Participant of the nonforfeitable
portion of his Employer Contribution Account upon his separation from service,
the non-vested portion of his Account, if any, will be treated as a forfeiture
and reallocated to remaining Participants as provided in Section 5.2. If the
Participant does not receive a distribution of his Employer Contribution Account
upon his separation from service, such Account shall be held for the Participant
until he attains Normal Retirement Date and the non-vested portion of the
Account shall be treated as a forfeiture when the Participant sustains five
consecutive One Year Breaks in Service.

(d) In the event a Participant who is less than fully vested in his
Employer Contribution Account receives a distribution of his vested interest in
such Account upon his separation from service, and such Participant subsequently
returns to employment of the Employer, the Participant's Employer Contribution
Account will be restored to the value of the Account on the date of the
distribution if the Participant repays to the Trustees the full amount of such

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<PAGE>

distribution before the earlier of five consecutive One-Year Breaks in Service
or five years after the Participant's date of reemployment. Restoration of the
forfeited amount of a Participant's Account shall be made from forfeitures or
Employer contributions.

9.2 (a) In the event a Participant separates from service with the Employer
for reasons other than retirement, disability, death or a layoff by the
Employer, he shall have a nonforfeitable right to the amount credited to his
Employer Contribution Account in accordance with the following schedule:

Completed Years of Service Percentage
-------------------------- ----------
At least But less than
0 1 0%
1 2 20%
2 3 40%
3 4 60%
4 5 80%
5 or more 100%

(b) A Participant shall have a wholly vested and nonforfeitable right to
his Employer Contribution Account upon separation from service on account of
retirement on or after the Normal Retirement Date, Total and Permanent
Disability, death while in the employ of the Employer or layoff by the Employer.
For purposes of this Section 9.2, the term "layoff" shall mean any involuntary
separation from service other than separation due to cause. If a Participant
separates from service with the Employer, the non-vested portion of his Employer
Contribution Account, if any, shall be forfeited upon the death of the
Participant.

(c) If the Employer amends the Plan in a manner which directly or
indirectly affects the computation of a Participant's nonforfeitable percentage,
each Participant who completes an Hour of Service in any Plan Year beginning
after December 31, 1988 and who has at least three Years of Service may elect
after the adoption of such amendment to have his nonforfeitable interest
computed under the Plan without regard to such amendment. The period during
which the election may be made shall commence the day the amendment is adopted
and shall end on later of:

(i) sixty (60) days after the amendment is adopted;

(ii) sixty (60) days after the amendment becomes effective; or

(iii) sixty (60) days after the Participant is issued written notice of the
amendment by the Employer or the Committee.

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9.3 (a) In the case of a Participant who has a Break in Service, Years of
Service completed before such Break shall not be counted until the Participant
has completed a Year of Service for the purpose of determining his
nonforfeitable percentage of the amount credited to his Employer Contribution
Account after such Break in Service.

(b) Years of Service completed on reemployment and after separation from
service with the Employer in connection with which he has five consecutive One
Year Breaks in Service shall not be counted for purposes of determining such
Participant's nonforfeitable percentage right to amounts credited to his
Employer Contribution Account before such Break in Service.

ARTICLE X

METHOD OF PAYMENT
-----------------
10.1 At the request of a Participant, the form of benefit payments may be
one of the following in cash:

(a) in a lump sum payment; or

(b) in periodic, monthly, quarterly, semi-annual or annual installments
over a period certain not exceeding the Participant's life expectancy or the
joint life expectancy of the Participant and his designated Beneficiary. If
periodic installments are to be paid, a Participant's account shall be invested
in the investment company funds available under the Plan as designated by the
Participant.

If periodic installments are paid over the life expectancy of the
Participant or joint life expectancy of the Participant and a designated
Beneficiary, a Participant may elect, prior to the time distributions begin,
whether or not to have his life expectancy and his Beneficiary's life expectancy
(if the Beneficiary is his spouse) annually recalculated. In the absence of such
election, life expectancies will not be recalculated.

10.2 In no event shall payments of benefits under this Plan commence later
than sixty (60) days after the close of the Plan Year in which the latest of the
following events occur:

(a) the Participant attains age sixty-five (65); or

(b) the Participant completes ten years of participation in the Plan; or

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10.3 (a) Notwithstanding the other requirements of this Plan, distributions
on behalf of any Participant, including a five percent (5%) owner, may be made
in accordance with all of the following requirements (regardless of when such
distribution commences):

(i) The distribution by the Trust Fund is one which would not have
disqualified such Trust under Section 401(a)(9) of the Code as in effect prior
to amendment by the Deficit Reduction Act of 1984.

(ii) The distribution is in accordance with a method of distribution
designated by the Participant whose interest is being distributed or, if the
Participant is deceased, by a Beneficiary of such Participant.

(iii) Such designation was in writing, was signed by the Participant or the
Beneficiary, and was made before January 1, 1984.

(iv) The Participant had accrued a benefit under the Plan as of December
31, 1983.

(v) The method of distribution designated by the Participant or the
Beneficiary specifies the time at which distribution will commence, the period
over which distributions will be made, and in the case of any distribution upon
the Participant's death, the Beneficiaries of the Participant listed in order of
priority.

(b) A distribution upon death will not be covered by this Section unless
the information in the designation contains the required information described
above with the respect to the distributions to be made upon the death of the
Participant.

(c) For any distribution which commenced before January 1, 1984, but
continues after December 31, 1983, the Participant, or the Beneficiary, to whom
such distribution is being made, will be presumed to have designated the method
of distribution under which the distribution is being made if the method of
distribution was specified in writing and the distribution satisfies the
requirements in subsections (a)(i) and (v) above.

(d) If a designation is revoked, any subsequent distribution must satisfy
the requirements of Section 401(a)(9) of the Code. Any changes in the
designation will be considered to be revocation of the designation. However, the
mere substitution or addition of another Beneficiary (one not named in the

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designation) under the designation will not be considered to be revocation
of the designation, so long as such substitution or addition does not alter the
period over which distributions are to be made under the designation, either
directly or indirectly (for example, by altering the relevant measuring life).

10.4 Required Distributions. All distributions required under this Section
10.4 shall be determined and made in accordance with the proposed regulations
under Section 401(a)(9) of the Code, including the minimum distribution
incidental benefit requirement of Section 1.401(a)(9)-2 of the proposed
regulations.

(a) Required beginning date. The entire interest of a Participant must be
distributed or begin to be distributed no later than the Participant's required
beginning date.

(b) Limits on Distribution Periods. As of the first distribution calendar
year, distributions, if not made in a single-sum, may only be made over one of
the following periods (or a combination thereof):

(1) a period certain not extending beyond the life expectancy of the
Participant, or

(2) a period certain not extending beyond the joint and last survivor
expectancy of the Participant and a designated beneficiary.

(c) Determination of amount to be distributed each year. If the
Participant's interest is to be distributed in other than a single sum, the
following minimum distribution rules shall apply on or after the required
beginning date:

(1) If a Participant's benefit is to be distributed over (i) a period not
extending beyond the life expectancy of the Participant or the joint life and
last survivor expectancy of the Participant and the Participant's designated
beneficiary or (ii) a period not extending beyond the life expectancy of the
designated beneficiary, the amount required to be distributed for each calendar
year, beginning with distributions for the first distribution calendar year,
must at least equal the quotient obtained by dividing the Participant's benefit
by the applicable life expectancy.

(2) For calendar years beginning before January 1, 1989, if the
Participant's spouse is not the designated beneficiary, the method of
distribution selected must assure that at least fifty percent (50%) of the
present value of the amount available for distribution is paid within the life
expectancy of the Participant.

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(3) For calendar years beginning after December 31, 1988, the amount to be
distributed each year, beginning with distributions for the first distribution
calendar year, shall not be less than the quotient obtained by dividing the
Participant's benefit by the lesser of (1) the applicable life expectancy or (2)
if the Participant's spouse is not the designated beneficiary, the applicable
divisor determined from the table set forth in Q&A-4 of Section 1.401(a)(9)-2 of
the proposed regulations. Distributions after the death of the Participant shall
be distributed using the applicable life expectancy in (c)(i)(A) above as the
relevant divisor without regard to proposed regulations Section 1.401(a)(9)-2.

(4) The minimum distribution required for the Participant's first
distribution calendar year must be made on or before the Participant's required
beginning date. The minimum distribution for other calendar years, including the
minimum distribution for the distribution calendar year in which the
Participant's required beginning date occurs, must be made on or before December
31 of that distribution calendar year.

(d) Death Distribution Provisions.

(1) Distribution beginning before death. If the Participant dies after
distribution of his or her interest has begun, the remaining portion of such
interest will continue to be distributed at least as rapidly as under the method
of distribution being used prior to the Participant's death.

(2) Distribution beginning after death. If the Participant dies before
distribution of his or her interest begins, distribution of the Participant's
entire interest shall be completed by December 31 of the calendar year
containing the fifth (5th) anniversary of the Participant's death except to the
extent that the Participant or his designated beneficiary elects to receive
distributions in accordance with (i) or (ii) below:

(i) if any portion of the Participant's interest is payable to a designated
beneficiary, distributions may be made over a period certain not greater than
the life expectancy of the designated beneficiary commencing on or before
December 31 of the calendar year immediately following the calendar year in
which the Participant died;

(ii) if the designated beneficiary is the Participant's surviving spouse,
the date distributions are required to begin in accordance with (i) above shall
not be earlier than the later of (1) December 31 of the calendar year
immediately following the calendar year in which the Participant died and (2)
December 31 of the calendar year in which the Participant would have attained
age 70 1/2.

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<PAGE>

If the Participant has not made an election pursuant to Section 10.4(d)(2)
by the time of his or her death, the Participant's designated beneficiary must
elect the method of distribution no later than the earlier of (1) December 31 of
the calendar year in which distributions would be required to begin under this
Section 10.4(d), or (2) December 31 of the calendar year which contains the
fifth (5th) anniversary of the date of death of the Participant. If the
Participant has no designated beneficiary, or if the designated beneficiary does
not elect a method of distribution, distribution of the Participant's entire
interest must be completed by December 31 of the calendar year containing the
fifth (5th) anniversary of the Participant's death.

(3) For purposes of Section 10.4(d)(2) above, if the surviving spouse dies
after the Participant, but before payments to such spouse begin, the provisions
of Section 10.4(d)(2), with the exception of subparagraph (ii) therein, shall be
applied as if the surviving spouse were the Participant.

(4) For purposes of Section 10.4(d), distribution of a Participant's
interest is considered to begin on the Participant's required beginning date
(or, if Section 10.4(d)(3) above is applicable, the date distribution is
required to begin to the surviving spouse pursuant to Section 10.4(d)(3) above).

(e) Definitions.

(1) Applicable life expectancy. The life expectancy (or joint and last
survivor expectancy) calculated using the attained age of the Participant (or
designated beneficiary) as of the Participant's (or designated beneficiary's)
birthday in the applicable calendar year reduced by one for each calendar year
which has elapsed since the date life expectancy was first calculated. If life
expectancy is being recalculated, the applicable life expectancy will be the
life expectancy as so recalculated. The applicable calendar year shall be the
first distribution calendar year and if life expectancy is being recalculated,
such succeeding calendar year.

(2) Designated beneficiary. The individual who is designated as the
beneficiary under the Plan in accordance with Section 401(a)(9) and the proposed
regulations thereunder.

(3) Distribution calendar year. A calendar year for which a minimum
distribution is required. For distributions beginning before the Participant's
death, the first distribution calendar year is the calendar year immediately
preceding the calendar year which contains the Participant's required beginning
date. For distributions beginning after the Participant's death, the first
distribution calendar year is the calendar year in which distributions are
required to begin pursuant to Section 10.4(d) above.

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<PAGE>

(4) Life expectancy. Life expectancy and joint and last survivor expectancy
are computed by use of the expected return multiples in Tables V and VI of
Section 1.72-9 of the income tax regulations. Unless otherwise elected by the
Participant by the time distributions are required to begin, life expectancies
shall not be recalculated annually. Such election shall be irrevocable as to the
Participant (or spouse) and shall apply to all subsequent years. The life
expectancy of a nonspouse designated beneficiary may not be recalculated. A
spousal designated beneficiary may not elect to have his or her life expectancy
recalculated with respect to any distribution paid pursuant to Section
10.4(d)(2).

(5) Participant's benefit.

(i) The Participant's account balance as of the last valuation date in the
calendar year immediately preceding the distribution calendar year (valuation
calendar year) increased by the amount of any contributions or forfeitures
allocated to the account balance as of dates in the valuation calendar year
after the valuation date and decreased by distributions made in the valuation
calendar year after the valuation date.

(ii) For purposes of paragraph (i) above, if any portion of the minimum
distribution for the first distribution calendar year is made in the second
distribution calendar year on or before the required beginning date, the amount
of the minimum distribution made in the second distribution calendar year shall
be treated as if it had been made in the immediately preceding distribution
calendar year.

(6) Required beginning date.

(i) General rule. The required beginning date of a Participant is the first
day of April of the calendar year following the calendar year in which the
Participant attains age 70 1/2.

(ii) Transitional rules. The required beginning date of a Participant who
attains age 70 1/2 before January 1, 1988, shall be determined in accordance
with (A) or (B) below:

(A) Non-five (5)-percent owners. The required beginning date of a
Participant who is not a five (5)-percent owner is the first day of April of the
calendar year following the calendar year in which the later of retirement or
attainment of age 70 1/2 occurs.

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(B) Five (5)-percent owners. The required beginning date of a Participant
who is a five (5)-percent owner during any year beginning after December 31,
1979, is the first day of April following the later of:

(I) the calendar year in which the Participant attains age 70 1/2, or

(II) the earlier of the calendar year with or within which ends the Plan
Year in which the Participant becomes a five (5)-percent owner, or the calendar
year in which the Participant retires.

The required beginning date of a Participant who is not a five (5)-percent
owner who attains age 70 1/2 during 1988 and who has not retired as of January
1, 1989, is April 1, 1990.

(iii) Five (5)-percent owner. A Participant is treated as a five
(5)-percent owner for purposes of this section if such Participant is a five
(5)-percent owner as defined in Section 416(i) of the Code (determined in
accordance with Section 416 but without regard to whether the Plan is top-heavy)
at any time during the Plan Year ending with or within the calendar year in
which such owner attains age 66 1/2 or any subsequent Plan Year.

(iv) Once distributions have begun to a five (5)-percent owner under this
section, they must continue to be distributed, even if the Participant ceases to
be a five (5)-percent owner in a subsequent year.

10.5 Restrictions on Distributions Prior to Normal Retirement Date. If the
value of a Participant's vested account balance exceeds (or at the time of any
prior distribution exceeded) $3,500, the Participant must consent to any
distribution made to him before he attains the Normal Retirement Date. The
consent of the Participant shall be obtained in writing within the 90-day period
ending on the date benefits are paid. The Committee shall notify the Participant
of his right to defer any distribution until the Participant attains the Normal
Retirement Date (or would have attained the Normal Retirement Date if not
deceased). Such notification shall include a general description of the material
features, and an explanation of the relative values of, the optional forms of
benefit available under the Plan in a manner that would satisfy the notice
requirements of Section 417(a)(3) of the Code below, and shall be provided no
less than 30 days and no more than 90 days prior to the date benefits are paid.
The consent of the Participant shall not be required to the extent that a
distribution is required to satisfy Sections 401(a)(9) or 415 of the Code. A
distribution may be paid to the Participant less than 30 days after the notice
described in this Section 10.5 is given to him, provided that the Administrative
Committee clearly informs the Participant that he has the right to a period of

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<PAGE>

at least 30 days after receiving the notice to consider the decision of
whether or not to elect the distribution and the Participant, after receiving
the notice, affirmatively elects to receive a distribution. In addition, subject
to Section 10.7, upon termination of this Plan, the Participant's entire account
balance may be distributed without the Participant's consent to the Participant
or transferred to another defined contribution plan (other than an employee
stock ownership plan, as defined in Section 4975(e)(7) of the Code) within the
same controlled group as the Employer.

10.6 Withdrawals upon Attainment of Age 59-1/2. Upon the attainment of age
59-1/2, a Participant who is fully vested in his Employer Contribution Account
will be entitled to withdraw once a Plan Year all or any portion of his account
balance in a single sum. Any withdrawal by a Participant under this Section 10.6
will be made only after the Participant files a written request with the
Administrative Committee pursuant to such terms and conditions as the Committee
may prescribe.

10.7 Direct Rollovers

(a) This Section applies to distributions made on or after January 1, 1993.
Notwithstanding any provision of the Plan to the contrary that would otherwise
limit a distributee's election under this Section, a distributee may elect, at
the time and in the manner prescribed by the Administrative Committee to have
any portion of an eligible rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct rollover.

(b) Definitions.

(i) Eligible rollover distribution: An eligible rollover distribution is
any distribution of all or any portion of the balance to the credit of the
distributee, except that an eligible rollover distribution does not include: any
distribution that is one of a series of substantially equal periodic payments
(not less frequently than annually) made for the life (or life expectancy) of
the distributee or the joint lives (or joint life expectancies) of the
distributee and the distributee's designated beneficiary, or for a specified
period of ten years or more; any distribution to the extent such distribution is
required under section 401(a)(9) of the Code; and the portion of any
distribution that is not includable in gross income (determined without regard
to the exclusion for net unrealized appreciation with respect to employer
securities).

(ii) Eligible retirement plan: An eligible retirement plan is an individual
retirement account described in section 408(a) of the Code, an individual

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retirement annuity described in section 408(b) of the Code, an annuity plan
described in section 403(a) of the Code, or a qualified trust described in
section 401(a) of the Code, that accepts the distributee's eligible rollover
distribution. However, in the case of an eligible rollover distribution to the
surviving spouse, an eligible retirement plan is an individual retirement
account or individual retirement annuity.

(iii) Distributee: A distributee includes an Employee or former Employee.
In addition, the Employee's or former Employee's surviving spouse or former
spouse who is the alternate payee under a qualified domestic relations order, as
defined in section 414(p) of the Code, are distributees with regard to the
interest of the spouse or former spouse.

(iv) Direct rollover: A direct rollover is a payment by the Plan to the
eligible retirement plan specified by the distributee.

ARTICLE XI

ADMINISTRATION OF PLAN
----------------------
11.1 (a) This Plan shall be administered by a Committee which shall consist
of not less than two nor more than five members.

(b) The Committee shall serve without compensation from the Plan. Vacancies
may be filled by the Chief Executive Officer of Delaware Group Delaware Fund,
Inc. on an interim basis, until action to fill the vacancy is taken by the Board
of Directors of Delaware Group Delaware Fund, Inc.

(1) shall act by affirmative vote of a majority of its members at a meeting
called with five days notice or in writing without a meeting;

(2) shall appoint a Secretary who may be but need not be one of its own
members. He shall keep complete records of the administration of the Plan;

(3) may authorize each and any one of its members to perform routine acts
and to sign documents on its behalf.

11.2 The Committee may appoint such persons or committees, employ such
attorneys, agents, accountants, investment managers, consultants, actuaries, and
other specialists as it deems necessary or desirable to advise or assist

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it in the performance of its duties hereunder and the Committee may rely upon
their respective written opinions or certificates. To the extent such persons
are empowered by written notification from the Committee to perform duties
defined in ERISA as fiduciary duties, such empowerment shall constitute a
delegation of fiduciary responsibility for purposes of determining the
co-fiduciary liability under ERISA. The Committee shall review the performance
of any such persons periodically.

11.3 Administration of the Plan shall consist of interpreting and carrying
out the provisions of this Plan. The Committee shall determine the eligibility
of Employees to participate in this Plan, their rights while Participants in
this Plan and the nature and amount of benefits to be received therefrom. The
Committee shall decide any disputes which may arise under this Plan and the
Trust Agreement. The Committee may provide rules and regulations for the
administration of the Plan consistent with its terms and provisions. Any
construction or interpretation of the Plan and any determination of fact in
administering the Plan made in good faith by the Committee shall be final and
conclusive for all Plan purposes. The Committee shall have the discretionary
authority to determine eligibility for benefits and to construe the terms of the
Plan.

11.4 (a) The Committee shall prescribe a form for the presentation of
claims under the terms of this Plan and/or Trust Agreement.

(b) Upon presentation to the Committee of a claim on the prescribed form,
the Committee shall make a determination of the validity thereof. If the
determination is adverse to the claimant, the Committee shall furnish to the
claimant within 90 days after the receipt of the claim a written notice setting
forth the following:

(1) The specific reason or reasons for the denial;

(2) Specific reference to pertinent provisions of the Plan on which the
denial is based;

(3) A description of any additional material or information necessary for
the claimant to perfect the claim and an explanation of why such material or
information is necessary; and

(4) Appropriate information as to the steps to be taken if the claimant
wishes to submit his or her claim for review.

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(c) In the event of a denial of a claim, the claimant or his duly
authorized representative may appeal such denial to the Committee for a full and
fair review of the adverse determination. Claimant's request for review must be
in writing and made to the Committee within 60 days after receipt by claimant of
the written notification required under Section 11.4(b); provided, however, such
60 day period shall be extended if circumstances so warrant. Claimant or his
duly authorized representative may submit issues and comments in writing which
shall be given full consideration by the Committee in his review.

(d) The Committee may, in its sole discretion, conduct a hearing. A request
for a hearing made by claimant will be given full consideration. At such
hearing, the claimant shall be entitled to appear and present evidence and be
represented by counsel.

(e) A decision on a request for review shall be made by the Committee not
later than 60 days after receipt of the request; provided, however, in the event
of a hearing or other special circumstances, such decision shall be made not
later than 120 days after receipt of such request. If it is necessary to extend
the period of time for making a decision beyond 60 days after the receipt of the
request, the claimant shall be notified in writing of the extension of time
prior to the beginning of such extension.

(f) The Committee's decision on review shall state in writing the specific
reasons and references to the Plan provisions on which it is based. Such
decision shall be promptly provided to the claimant. If the decision on review
is not furnished in accordance with the foregoing, the claim shall be deemed
denied on review.

11.5 The Committee shall have the power to allocate its responsibilities
among its several members, except that all matters involving the hearing of and
decision on the claims and the review of the determination of benefits shall be
made by the full Committee; provided, however, that no member of the Committee
shall participate in any matter relating solely to himself.

11.6 To the extent required by law, the Committee shall give notice in
writing to all interested parties of any amendment of this Plan and/or Trust
Agreement and of any application to any government agency for any determination
of the effect of any such amendment on the Plan within the jurisdiction of that
agency.

11.7 (a) The Committee shall administer the Plan and the Trust Agreement
forming a part thereof under uniform rules of general application.

(b) The Committee or any member thereof:

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(1) May serve under the Plan and/or the Trust Agreement in one or more
fiduciary capacities, as that term is defined in ERISA; and

(2) May resign by giving written notice thereof to the Chief Executive
Officer of Delaware Group Delaware Fund, Inc. not less than fifteen (15) days
before the effective date of such resignation; and

(3) May be removed at any time, without cause, by the Board of Directors of
Delaware Group Delaware Fund, Inc.

ARTICLE XII

AMENDMENT, CONSOLIDATION, MERGER OR TERMINATION
-----------------------------------------------
12.1 Delaware Group Delaware Fund, Inc. may amend the Plan and the Trust
Agreement in any manner and at any time by action of its Board of Directors;
provided, however, that no amendment shall deprive any Participant or his
Beneficiary of any vested interest he may have hereunder unless the amendment is
for the purpose of conforming the Plan to the requirements of the Code or any
other applicable law. No amendment which affects the rights, responsibilities or
duties of the Trustee may be made without the Trustee's written consent. No
amendment shall be made to the Plan which has the effect of eliminating or
reducing an early retirement benefit or a retirement-type subsidy, eliminating
an optional form of benefit or decreasing a Participant's account balance with
respect to benefits attributable to service before the amendment. Further, if
the vesting schedule of the Plan is amended, in the case of an Employee who is a
Participant as of the later of the date such amendment is adopted or the date it
becomes effective, the nonforfeitable percentage (determined as of such date) of
such Employee's right to his Employer derived account balance will not be less
than his percentage computed under the Plan without regard to such amendment.

12.2 Any Participant on the effective date of an amendment who is not
actively participating in the Plan on such effective date shall not benefit from
an amendment unless otherwise required by law or unless such amendment is
specifically made applicable to such Participant.

12.3 In the event of any merger or consolidation with, or transfer of
assets or liabilities to, any other plan, each Participant shall be entitled to
a benefit after the merger, consolidation or transfer (if the Plan then
terminated) which is not less than the benefits he would have been entitled to
receive immediately before the merger, consolidation or transfer (if the Plan
had then terminated).

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12.4 The Employer intends to continue the Plan indefinitely but reserves
the right to discontinue contributions, terminate or partially terminate the
Plan at any time. In the event of a complete discontinuance of contributions,
termination or partial termination of the Plan, the interests of all
Participants affected shall become nonforfeitable. Upon termination of the Plan,
the Employer shall in its complete discretion notify the Trustee to either hold
all assets of the Trust Fund and make payments in accordance with the terms of
the Plan or distribute to each Participant his net account balance in a lump sum
payment in cash or kind. The Employer's contribution to the Trust Fund or the
income thereof shall not be paid to, or shall not revert to Employer and shall
not be used for any purpose other than the exclusive benefit of the Participants
or their Beneficiaries.

ARTICLE XIII

MISCELLANEOUS
-------------
13.1 To the extent permitted by law, it is a condition of the Plan that the
benefits provided hereunder shall not be subject to assignment, anticipation,
alienation, attachment, levy or transfer, and any attempt to do so shall not be
recognized. The preceding sentence shall also apply to the creation, assignment
or recognition of a right to any benefit payable with respect to a Participant
pursuant to a domestic relations order, unless such order is determined to be a
qualified domestic relations order as defined in Section 414(p) of the Code. If
provided by the terms of a qualified domestic relations order, a distribution of
benefits may be made from the Plan to the alternate payee under such order in a
single lump sum as soon as practicable following the determination by the
Administrative Committee that the order constitutes a qualified domestic
relations order. Payment of benefits may be made to the alternate payee even
though the Participant identified in the order has not attained the earliest
retirement age under the Plan. For purposes of this Section 13.1, the "earliest
retirement age" means the earlier of (i) the date in which the Participant is
entitled to a distribution under the Plan or (ii) the later of the date the
Participant attains age 50 or the earliest date on which the Participant would
begin receiving benefits if the Participant separated from service.

13.2 Nothing herein contained shall be deemed to give any Employee the
right to be retained in the employ of Employer or to interfere with the right of
the Employer to discharge any Employee at any time, nor shall it be deemed to
give the Employer the right to require any Employee to remain in its employ, nor
shall it interfere with the Employee's right to terminate his employment at any
time.

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13.3 All expenses incurred by the Trustees in the administration of the
Fund, including but not limited to the compensation of counsel, accountants,
Trustees, other agents or fiduciaries, shall be charged against the Employer,
unless otherwise paid by the Fund.

13.4 This Plan shall be interpreted in accordance with the laws of the
Commonwealth of Pennsylvania, except to the extent superseded by ERISA as in
effect from time to time.

ARTICLE XIV

LOANS
-----
14.1 The Committee, in its sole discretion, may direct the Trustees to make
a loan to a Participant, who is a party-in-interest, as defined in Section 3(14)
of ERISA, from the Participant's account balance upon receipt of a written
request from the Participant. The total amount of any such loan (when added to
the outstanding balance of all other loans to the Participant under the Plan or
any other qualified plan of the Employer) shall not exceed the lesser of $50,000
or 50% of the Participant's vested account balance. The $50,000 limitation shall
be reduced by the excess, if any, of the highest outstanding balance of loans to
the Participant from the Plan during the one-year period ending on the day
before the date on which such loan was made over the outstanding balance of
loans from the Plan to the Participant on the date that such loan was made.

14.2 A request by a Participant for a loan shall be made in writing to the
Committee and shall specify the amount of the loan. The terms and conditions on
which the Committee shall approve loans under the Plan shall be applied on a
reasonably equivalent basis with respect to all Participants. If a Participant's
request for a loan is approved by the Committee, the Committee shall furnish the
Trustees with written instructions directing the Trustees to make the loan in a
lump sum payment of cash to the Participant. In making any loan payment under
this Article XIV, the Trustees shall be fully entitled to rely on the
instructions furnished by the Committee, and shall be under no duty to make any
inquiry or investigation with respect thereto.

14.3 Loans shall be made on such terms and subject to such limitations as
the Committee may prescribe from time to time, provided that any such loan shall
be evidenced by a written note, shall bear a reasonable rate of interest on the
unpaid principal thereof, shall be adequately secured, and shall be repaid by
the Participant over a period not to exceed five years.
-34-

<PAGE>

14.4 Any loan to a Participant under the Plan shall be secured by the
pledge of not more than 50% percent of the Participant's right, title and
interest in his vested account balance. Such pledge shall be evidenced by the
execution of a promissory note by the Participant.

14.5 The Committee shall have the sole responsibility for insuring that a
Participant timely makes all loan repayments, and for notifying the Trustees in
the event of any default by the Participant on the loan. Each loan repayment
shall be paid to the Trustees, and shall be accompanied by written instructions
from the Committee that identifies the Participant on whose behalf the loan
repayment is being made. Repayment of loans shall be made solely by means of
payroll deductions, or such other manner approved by the Committee.

14.6 In the event of a default by a Participant on a loan repayment, all
remaining principal payments on the loan shall be immediately due and payable.
The Committee shall be authorized (to the extent permitted by law) to take any
and all actions necessary and appropriate to enforce collection of an unpaid
loan. However, in the event of a default, foreclosure on the note and attachment
of security will not occur until a distributable event occurs under the Plan.

14.7 Upon the occurrence of a Participant's retirement or death, or earlier
distribution of benefits, the unpaid balance of any loan, including any unpaid
interest, shall be deducted from any payment or distribution from the Trust Fund
to which such Participant or his Beneficiary may be entitled and his vested
interest in his account shall be reduced.

14.8 A loan to a Participant shall be considered an investment of the
separate account(s) of the Participant from which the loan is made. All loan
repayments shall be credited to such separate account(s) and reinvested in the
investment company fund designated by the Participant.

14.9 A loan may not be made to a Participant who owns (or is considered as
owning within the meaning of Section 318(a)(1) of the Internal Revenue Code)
more than 5% of the outstanding stock of the Employer.

14.10 For loans granted or renewed on or after the last day of first Plan
Year beginning on or after January 1, 1989, the Committee shall issue written
loan guidelines, which shall form part of the Plan, describing the procedures
and conditions for making loans, and may revise those guidelines at any time,
and for any reason.

-35-

<PAGE>

ARTICLE XV

LIMITATIONS ON ALLOCATIONS
--------------------------
15.1 The provisions of this Article XV shall be effective for limitation
years beginning after December 31, 1986.

(a) Notwithstanding any provisions of this Plan to the contrary, the annual
additions which may be credited to a Participant's account for any limitation
year will not exceed the lesser of the maximum permissible amount or any other
limitation contained in this Plan.

(b) As soon as is administratively feasible after the end of the limitation
year, the maximum permissible amount for the limitation year will be determined
on the basis of the Participant's actual compensation for the limitation year.

(c) In the event that it is determined that because of the allocation of
forfeitures, a reasonable error in estimating a Participant's annual
compensation or under other limited facts and circumstances permitted by the
Commissioner of the Internal Revenue Service, if there is an excess amount the
excess will be disposed of as follows:

(1) If the Participant is covered by the Plan at the end of the limitation
year, the excess amount shall be used to reduce employer contributions
(including any allocation of forfeitures) for such Participant in the next
limitation year, and each succeeding limitation year if necessary;

(2) If the Participant is not covered by the Plan at the end of the
limitation year, the excess amount will be held unallocated in a suspense
account. The suspense account will be applied to reduce future employer
contributions (including allocation of any forfeitures) for all remaining
Participants in the next limitation year, and each succeeding limitation year if
necessary;

(3) If a suspense account is in existence at any time during the limitation
year pursuant to this Section, it will not participate in the allocation of
investment gains and losses. The entire amount allocated to Participants from a
suspense account, including any such gains or other income or less any losses is
considered an annual addition.

(d) For the purpose of applying the limitations under this Article, all
defined contribution plans maintained by the employer are to be considered as a
single plan.

15.2 Definitions. For purposes of this Article only, the following
definitions and rules of interpretation will apply:

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<PAGE>

(a) "annual additions" -- The sum of the following amounts credited to a
Participant's account for the limitation year:

(1) employer contributions;

(2) forfeitures;

(3) voluntary Employee contributions;

(4) amounts allocated after March 31, 1984, to an individual medical
account, as defined in Section 415(1)(1) of the Code, which is part of a pension
or annuity maintained by the employer;

(5) amounts derived from contributions paid or accrued after December 31,
1985, in taxable years ending after such date, which are attributable to
post-retirement medical benefits allocated to the separate account of a key
employee, as defined in Section 419A(d)(3) of the Code, under a welfare benefit
fund as defined in Section 419(e) of the Code, maintained by the employer; and

(6) excess amounts applied under this Article in the limitation year to
reduce employer contributions.

(b) "compensation" -- a Participant's earned income, wages, salaries, and
fees for professional services and other amounts received (without regard to
whether an amount is paid in cash) for personal services actually rendered in
the course of employment with the employer to the extent that the amounts are
includable in gross income (including, but not limited to, commissions paid
salesmen, compensation for services on the basis of a percentage of profits,
commissions on insurance premiums, tips, bonuses, fringe benefits,
reimbursements and expense allowances), and excluding the following:

(1) Employer contributions to a plan of deferred compensation which are not
includable in the Employee's gross income for the taxable year in which
contributed, or Employer contributions under a simplified employee pension to
the extent such contributions are deductible by the Employee, or any
distributions from a plan of deferred compensation;

(2) Amounts realized from the exercise of a nonqualified stock option, or
when restricted stock (or property) held by the Employee either becomes freely
transferable or is no longer subject to a substantial risk of forfeiture;

(3) Amounts realized from the sale, exchange or other disposition of stock
acquired under a qualified stock option; and

-37-

<PAGE>

(4) Other amounts which received special tax benefits, or contributions
made by the employer (whether or not under a salary reduction agreement) towards
the purchase of an annuity described in Section 403(b) of the Code (whether or
not the amounts are actually excludable from the gross income of the Employee);
and

(5) Any contribution for medical benefits (within the meaning of Section
419A(f)(2) of the Code) after separation from service which is otherwise treated
as an annual addition; and

(6) Any amount otherwise treated as an annual addition under Section
415(i)(1) of the Code.

For purposes of applying the limitations of this Article, compensation for
a limitation year is the compensation actually paid or includable in gross
income during such year.

Notwithstanding the preceding sentence, compensation for a Participant who
is permanently and totally disabled (as defined in Section 37(e)(3) of the Code)
is the compensation such Participant would have received for the limitation year
if the Participant had been paid at the rate of compensation paid immediately
before becoming permanently and totally disabled; such imputed compensation for
the disabled Participant may be taken into account only if the Participant is
not an officer, an owner, or highly compensated, and contributions made on
behalf of such Participant are nonforfeitable when made.

(c) "employer" -- The Employer that adopts this Plan, and all members of a
controlled group of corporations (as defined in Section 414(b) of the Code as
modified by Section 415(h) of the Code), all commonly controlled trades or
businesses (as defined in Section 414(c) of the Code as modified by Section
415(h) of the Code), or affiliated service groups (as defined in Section 414(m)
of the Code) of which the adopting Employer is a part.

(d) "excess amount" -- The excess of the Participant's annual additions for
the limitation year over the maximum permissible amount.

(e) "limitation year" -- Effective April 2, 1989, the twelve-month period
beginning April 2 and ending April 1. Prior to April 2, 1989, the limitation
year is the twelve-month period from November 1 through the following October
31, except the limitation year beginning November 1, 1988 shall end April 1,
1989.

-38-

<PAGE>

(f) "maximum permissible amount" -- The lesser of $30,000 (or, if greater,
1/4 of the dollar limitation in effect under Section 415(b)(1)(A) of the Code)
or twenty-five percent (25%) of the Participant's compensation for the
limitation year.

ARTICLE XVI

TOP HEAVY DEFINITIONS AND RULES
-------------------------------
16.1 Key employee. An Employee or former Employee, (or the Beneficiary of
such an Employee or former Employee) who at any time during the determination
period was:

(a) An officer of the Employer having an annual compensation greater than
fifty percent (50%) of the amount in effect under Section 415(b)(1)(A) of the
Code for any such Plan Year;

(b) One of the ten Employees having annual compensation from the Employer
of more than the limitation in effect under Section 415(c)(1)(A) of the Code and
owning (or considered as owning within the meaning of Section 318 of the Code)
the largest interests in the Employer;

(c) A person owning (or considered as owning within the meaning of Section
318 of the Code) more than five percent (5%) of the outstanding stock of the
Employer or stock possessing more then five percent (5%) of the total combined
voting power of ail stock of the Employer, or

(d) A person who has annual compensation from the Employer of more than
$150,000 and who would be described in (c) hereof if one percent (1%) were
substituted for five percent (5%).

For purposes of (a) above, no more than fifty (50) Employees (or, if lesser, the
greater of three or ten percent of the Employees will be treated as officers.)
For purposes of (b), if two Employees have the same interest in the Employer,
the Employee having greater annual compensation from the Employer will be
treated as having a larger interest. For purposes of this Article the term
"compensation" shall have the same meaning as provided for in Article XV.

The determination period is the Plan Year containing the determination date
as defined in Section 16.8, and the four (4) preceding Plan Years. The
determination of who is a key employee will be made in accordance with the rules
and regulations under Section 416(i)(1) of the Code.

16.2 Non-key employee. Any Employee who is not a key employee. In addition,
any Beneficiary of a non-key employee will be treated as a non-key employee.

-39-

<PAGE>

16.3 Permissive aggregation group. The required aggregation group of plans
plus any other plan or plans of the Employer, which considered as a group with
the required aggregation group, would continue to satisfy the requirements of
Sections 401(a)(4) and 410 of the Code.

16.4 Required aggregation group.

(a) Each qualified plan of the Employer in which at least one key employee
participates or participated at any time during the determination period
(regardless of whether the plan has terminated), and

(b) Any other qualified plan of the Employer which enables a plan described
in (a) to meet the requirements of Sections 401 (a)(4) and 410 of the Code.

16.5 Top-heavy plan. This Plan is top-heavy for any Plan Year if any of the
following conditions exist;

(a) If the top-heavy ratio for this Plan exceeds sixty percent (60%) and
this Plan is not part of any required aggregation group or permissive
aggregation group of plans.

(b) If this Plan is part of a required aggregation group of plans but not
part of a permissive aggregation group and the top-heavy ratio for the required
aggregation group of plans exceeds sixty percent (60%).

(c) If this Plan is a part of a permissive aggregation group of plans and
the top-heavy ratio for the required aggregation group exceeds sixty percent
(60%) and the top-heavy ratio for the permissive aggregation group exceeds sixty
percent (60%).

16.6 Super top-heavy plan. For any Plan Year in which this Plan would be a
Top-Heavy Plan pursuant to Section 16.5 above if "ninety percent (90%)" were
substituted for "sixty percent (60%)" at each place where "sixty percent (60%)"
appears therein.

16.7 Top-heavy ratio.

(a) If the Employer maintains one or more defined contribution plans
(including any simplified employee pension plan) and has not maintained any
defined benefit plan which during the five (5) year period ending on the
determination date has or has had accrued benefits, the top-heavy ratio for this
Plan alone or for the required or permissive aggregation group as appropriate is
a fraction, the numerator of which is the sum of the account balances of all key
employees as of the determination date (including any part of any account
balance distributed in the five (5) year period ending on the determination

-40-

<PAGE>

date), and the denominator of which is the sum of all account balances
(including any part of any account balance distributed in the five (5) Year
period ending on the determination date), both computed in accordance with
Section 416 of the Code and the regulations thereunder. Both the numerator and
denominator of the top-heavy ratio are increased to reflect any contribution not
actually made as of the determination date, but which is required to be taken
into account on that date under Section 416 of the Code and the regulations
thereunder.

(b) If the Employer maintains one or more defined contribution plans
(including any simplified employee pension plan) and maintains or has maintained
one or more defined benefit plans which during the five (5) year period ending
on the Determination Date has or has had any accrued benefits, the top-heavy
ratio for any required or permissive aggregation group as appropriate is a
fraction, the numerator of which is the sum of account balances under the
aggregated defined contribution plan or plans for all key employees determined
in accordance with (2) above, and the present value of accrued benefits under
the aggregated defined benefit plan or plans for all key employees as of the
determination date, and the denominator of which is the sum of the account
balances under the aggregated defined contribution plan or plans for all
Participants, determined in accordance with (a) above, and the present value of
accrued benefits under the aggregated defined benefit plan or plans for all
Participants as of the determination dates, all determined in accordance with
Section 416 of the Code and the regulations thereunder. The accrued benefits
under a defined benefit plan in both the numerator and denominator of the
top-heavy ratio are increased for any distribution of an accrued benefit made in
the five year period ending on the determination date.

(c) For the purposes of (a) and (b) above, the value of account balances
and the present value of accrued benefits will be determined as of the most
recent valuation date that falls within or ends with the twelve (12) month
period ending on the determination date, except as provided in Section 416 of
the Code and the regulations thereunder for the first and second plan years of a
defined benefit plan. The account balances and accrued benefits of a Participant
(1) who is a non-key employee but who was a key employee in a prior year, or (2)
who has not been credited with at least one Hour of Service with any Employer
maintaining the Plan at any time during the five (5) year period ending on the
determination date will be disregarded. The calculation of the top-heavy ratio,
and the extent to which distributions, rollovers, and transfers are taken into
account will be made in accordance with Section 416 of the Code and the
regulations thereunder. When aggregating plans the value of account balances and
accrued benefits will be calculated with reference to the determination dates
that fall within the same calendar year. If any individual has not received
-41-

<PAGE>

any compensation from any employer maintaining the plan (other than benefits
under the Plan) at any time during the five (5) year period ending on the
determination date, any accrued benefit for such individual (and the account
of such individual) will not be taken into account.

Effective for Plan Years beginning after December 31, 1986, the accrued
benefit of a Participant other than a key employee shall be determined under (i)
the method, if any, that uniformly applies for accrual purposes under all
defined benefit plans maintained by the Employer or (ii) if there is no such
method, as if such benefit accrued not more rapidly than the slowest accrual
rate permitted under the fractional rule of Section 411(b)(1)(C) of the Code.

16.8 Determination date. With respect to any Plan Year subsequent to the
first Plan Year, the last day of the preceding Plan Year. For the first Plan
Year of the Plan, the last day of that Plan Year.

16.9 Valuation date. The last day of the Plan Year.

16.10 Present value. Present value will be based upon the interest and
mortality rates specified in the Employer's defined benefit plan.

16.11 Minimum Allocation.

(a) If in any Plan Year the Plan is a Top Heavy Plan and the Employer does
not maintain any qualified defined benefit plan in addition to this Plan, except
as provided in (b) and (c) below, the Employer contributions and forfeitures
allocated on behalf of any Participant who is a non-key employee will not be
less than the lesser of three percent (3%) of such Participant's compensation or
the largest percentage of Employer contributions and forfeitures, as a
percentage of the first $200,000 of the key employee's compensation (as defined
in Section 15.2(b)), and as limited by Section 401(a)(17) of the Code, allocated
on behalf of any key employee for that year. The minimum allocation is
determined without regard to any Social Security contributions. This minimum
allocation will be made even though, under other Plan provisions, the
Participant would not otherwise be entitled to receive an allocation, or would
have received a lesser allocation for the year because of the Participant's
failure to complete 1,000 Hours of Service. The minimum allocation (if any)
required under this paragraph (a) shall be made to this Plan only to the extent
such allocation is not made for the Participant under any other defined
contribution plan(s) maintained by the Employer.

-42-

<PAGE>

(b) In the event the Employer maintains a qualified defined benefit plan(s)
in addition to this Plan, the Employer will provide a minimum allocation at
least equal to five percent (5%) of compensation (as defined in Section 15.2(b))
to each non-key employee, entitled under (a) above to receive a minimum
allocation, who is covered under this Plan and the qualified defined benefit
plan(s). If this Plan enables a defined benefit plan to meet the requirements of
Section 401(a) or 410 of the Code, the minimum allocation described in (a) above
must be at least three percent (3%) of a Participant's compensation, regardless
of the largest percentage of Employer contributions and forfeitures of a key
employee's compensation.

(c) The provisions in (a) and (b) above will not apply to any Participant
who was not employed by the Employer on the last day of the Plan Year.

(d) The minimum allocation required under this Section 16.11 (to the extent
required to be nonforfeitable under Section 416(b) of the Code) may not be
forfeited under Sections 411(a)(3)(B) or 411(a)(3)(D) of the Code.

IN WITNESS WHEREOF, Delaware Group Delaware Fund, Inc. has caused this
amended and restated Plan, effective April 1, 1989, to be executed by its duly
authorized officers and its corporate seal to be impressed hereon this 17th day
of November, 1994.

Attest: DELAWARE GROUP DELAWARE FUND, INC.

/s/ George M. Chamberlain, Jr. By: /s/Brian F. Wruble
- ------------------------------ -------------------------
George M. Chamberlain, Jr. Brian F. Wruble
Senior Vice President/Secretary President and Chief
Executive Officer

-43-

<PAGE>

EX-99.11 CONSENT OF AUDITORS

Consent of Independent Auditors

We consent to the references to our firm under the captions "Financial
Highlights" in the Prospectus and "Financial Statements" in the Statement of
Additional Information and to the incorporation by reference in this
Post-Effective Amendment No. 52 to the Registration Statement (Form N-1A) (No.
2-37707) of Delaware Group Delchester High-Yield Bond Fund, Inc. of our report
dated September 7, 1995, included in the 1995 Annual Report to Shareholders of
Delaware Group Delchester High-Yield Bond Fund, Inc.

/s/ Ernst & Young LLP
---------------------
Ernst & Young LLP

Philadelphia, Pennsylvania
November 20, 1995

Report of Independent Auditors

To the Shareholders and Board of Directors
Delaware Group Delchester High-Yield Bond Fund, Inc.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of July
31, 1995, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

Philadelphia, Pennsylvania /s/Ernst & Young LLP
--------------------
September 7, 1995 Ernst & Young LLP

<PAGE>

DELAWARE
GROUP
- ----------
IRA APPLICATION
AND TRANSFER FORM

|| PERSONAL IRA
|| SPOUSAL IRA
|| ROLLOVER IRA
(PHOTO OF LARGE KEY) || DIRECT ROLLOVER
|| PARTICIPANT'S SEP/IRA
|| PARTICIPANT'S SARSEP
||=======================================

RETIREMENT
LOGO PLANNING
IS THE KEY

<PAGE>

Welcome to the Delaware Group
DELAWARE Before completing your Individual Retirement Account (IRA)
GROUP Application, please review the following points so you can
========== take advantage of the many options available to you with
your Delaware Group Account.
________________________________________________________________________________

To Open Your Delaware Group IRA:

When opening both a Personal and Spousal IRA be sure to complete a separate
application for yourself and for your non-working spouse. The overall maximum
for both accounts is $2,250 per year with no more than $2,000 in either account.

When making Your Investment Selection, talk to your financial adviser to
determine whether Class A shares or Class B shares are more appropriate for you.
Please indicate which fund, or funds, you have selected for your IRA investments
by checking the appropriate selection box next to the fund(s). There is no limit
to the number of funds you may select as long as you meet the required minimum
investment of $25 per fund. And there is only one $15 annual maintenance fee,
regardless of the number of funds you select for your Delaware Group IRA. This
fee can either be prepaid by you, or debited from your IRA account. Your initial
contribution must total $250.

When making your contribution by check, make your check payable to: Delaware
Management Trust Company, the Custodian of your Delaware Group IRA.

If this is a Rollover IRA, and you received a distribution check made payable to
you, be sure to sign and endorse the back of the check, "Payable to Delaware
Management Trust Company."

For Direct Rollovers, in which he plan assets flow directly from the former
trustee/custodian to Delaware Management Trust Company, please be sure to
complete the separate "Direct Rollover" form included with this package.
Checks representing Direct Rollover assets should be made payable to Delaware
Management Trust Company.

Send your completed and signed Application, along with your contribution and/or
Transfer of Assets or Direct Rollover instructions to:

Delaware Service Company, Inc.
Attn: Retirement Plans Department
1818 Market Street
Philadelphia, PA 19103-3682

Additional IRA Services

To establish an Automatic Investing Plan, where regularly scheduled
contributions are taken directly from your personal checking account and
invested into your Delaware Group IRA, call our offices at the telephone number
listed below. Your Shareholder Services Representative will explain this
valuable program of automatic investing and send you the appropriate sign-up
materials.

If you wish to begin taking systematic withdrawals from your account, you will
also need to complete a Retirement Plan Systematic Withdrawal Plan Form. This
service is available for Class A shares only. Just call the telephone number
listed below to request the form.

If you are 70 1/2 or older and need to take Required Distributions from your
account, please ask for an IRA Required Distribution Election Form. Shareholders
cannot roll over or transfer the minimum amount they are required to receive
during a distribution calendar year.

For Simplified Employee Pension/IRA and
Salary Reduction SEP Participants:

SEP/IRA and SARSEP Participants can also arrange to open a personal Delaware
Group IRA at the same time they establish their plan participant account. No
matter how many different Delaware Group IRAs you open, you only pay one $15
annual maintenance fee.

If you are an Employer Participant in the plan, be sure to complete the
appropriate Employer Adoption Agreement as well as the Participant IRA
Application.

If you have any questions or would like assistance
in completing the Individual Retirement Account Application, please call us at
800-523-1918. In Philadelphia, call 215-988-1241.

Again, welcome to the Delaware Group.

<PAGE>

DELAWARE
GROUP
======== Individual Retirement Account Application =======

1 __________________________________ || || ||-|| ||-|| || || ||
Information Name Social Security Number
About You __________________________________ _____/______/_____
Address Date of Birth
Please __________________________________ ( )_____________( )__________
print. City State Zip Phone: Business Home

===============================================================================

2
Type of IRA
Check one.

| | Personal IRA ($2,000 annual limit)
| | Spousal IRA ($2,250 overall limit for you and your non-working spouse with
no more than $2,000 in either account. Separate applications required.)
| | Rollover IRA (No dollar limit; complete Rollover Information section below
and on page 4 of this Application)
| | Transfer of Assets (No dollar limit; complete the Transfer of Assets Form on
page 7 of this Application)
| | SEP/IRA -- Simplified Employee Pension/IRA Plan ($30,000 overall limit).
Must be accompanied by a Delaware Group SEP Plan Establishment Document
completed by the Employer.
| | Self-Directed SEP/IRA -- Simplified Employee Pension/IRA Plan ($30,000
overall limit). Must be accompanied by IRS Form 5305-SEP.
| | SARSEP -- Salary Reduction SEP/IRA Plan ($8,994 salary deferral limit in
1993, indexed each year). Must be accompanied by a Delaware Group SARSEP
Plan Establishment Document completed by the Employer.
| | Self-Directed SARSEP -- Salary Reduction SEP/IRA Plan ($8,994 salary
deferral limit in 1993, indexed each year). Must be accompanied by IRS Form
5305A-SEP.
For SEP/IRA & SARSEP plans, please complete the following:

________________________________________________________________________________
Company Name

________________________________________________________________________________
Address of Employer

________________________________________________________________________________
City State Zip

| | | | - | | | | | | | | | | | | | |
Employer Tax I.D. Number
| | Check here if you are a new participant in an existing
SEP/IRA or SARSEP plan.
<TABLE>
<CAPTION>
====================================================================================================================================
(Employer Contribution) (Salary
IRA SEP/IRA Reduction
Current Prior Rollover/ Current Prior Contribution)
3 Year Year Transfer Year Year SARSEP
------------------- --------- ------------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Your
Investment Initial Contribution $_____ $_____ $_____ $_____ $_____ $_____
Selections Delaware Group -- Equity Funds
| | Decatur Income || Class A
Minimum initial Fund || Class B _____% _____% _____% _____% _____% _____%
contribution: | | Decatur Total || Class A
$250. Minimum Return Fund || Class B _____% _____% _____% _____% _____% _____%
investment per | | DelCap Fund || Class A
fund: $25. || Class B _____% _____% _____% _____% _____% _____%

Remember to | | Trend Fund || Class A
check off your || Class B _____% _____% _____% _____% _____% _____%
fund(s) selection. | | Value Fund || Class A
|| Class B _____% _____% _____% _____% _____% _____%
Please do not | | International || Class A
use fractional Equity Fund || Class B _____% _____% _____% _____% _____% _____%
percentages, for | | Dividend || Class A
example 33 1/3, Growth Fund || Class B _____% _____% _____% _____% _____% _____%
and be sure | | Delaware Fund || Class A
percentages || Class B _____% _____% _____% _____% _____% _____%
total 100% Income Funds
| | Delchester Fund || Class A
Investing for || Class B _____% _____% _____% _____% _____% _____%
prior year can | | U.S. Govt. Fund || Class A
only be done || Class B _____% _____% _____% _____% _____% _____%
prior to the tax | | Treasury Reserves || Class A
filing deadline. Intermediate Fund || Class B _____% _____% _____% _____% _____% _____%
If no year is Money Market Funds
designated, | | Delaware || Class A
current year will Cash Reserve || Class B _____% _____% _____% _____% _____% _____%
be assumed. || Consultant Class

| | U.S. Govt. || Class A
Money Fund || Consultant Class_____% _____% _____% _____% _____% _____%
Other
| | __________ || Class A
|| Class B _____% _____% _____% _____% _____% _____%
| | __________ || Class A
|| Class B _____% _____% _____% _____% _____% _____%
TOTALS 100% 100% 100% 100% 100% 100%

</TABLE>

<PAGE>

================================================================================
4 Source of Your Contribution

| | Contribution by Check -- Total Dollar Amount of Initial Investment: $______
| | IRA to IRA Transfer of Assets -- Make sure you complete and sign the
attached Transfer of Assets Form on page 7.
| | Director Rollover -- Complete and sign the enclosed Direct Rollover Form.
| | Broker-Placed Phone Order

________________________________________________________________________________
Delaware Confirmation Number

________________________________________________________________________________
Order Date

________________________________________________________________________________
Number of Shares

________________________________________________________________________________
Name of Fund

| | Contributing from an Existing Delaware Group Account -- convert $__________
from my regular fund account #________________to this IRA account. If your
regular fund account is registered as a joint account, we require a
signature guarantee from the joint owner.

================================================================================
5 Rollover Information Complete all that apply. Includes Direct Rollovers from
Qualified plans or 403(b)s.

| | IRA Rollover -- I hereby elect to treat this contribution as a rollover
contribution. I understand that this is an irrevocable election. The source
of the rollover is from:
| | A Qualified Plan
| | A 403(b) Plan
| | Another IRA
| | A Qualified Plan or IRA or 403(b) by Beneficiary (spouse only)
| | Death Benefit IRA -- Surviving spouse does not elect to treat the death
benefit rollover as his or her own IRA
| | Rollover IRA -- Surviving Spouse does elect to treat the death benefit
rollover as his or her own IRA
| | Rollover after age 70 1/2 -- Pursuant to IRS Regulations, I hereby certify
that I am not rolling over any minimum amount required to be distributed to
me with respect to any applicable distribution calendar year. In order to
receive required minimum distributions in the future under your Delaware
Group IRA, please contact the Delaware Group and we will send you an IRA
Required Distribution Election Form.

================================================================================

6 Additional Services for Your Consideration

These optional services are available as special elections for your Delaware
Group IRA.

Consult the prospectus(es) of the fund(s) for more details on the terms of these
optional services.

If you have further questions, ask your financial adviser or call us at
800-523-1918. In Philadelphia call 215-988-1241.

| | Wealth Builder Option -- I authorize Delaware Group to transfer $__________
($100 or more) per month, through liquidation of shares in this fund, to one
or more other Delaware Group funds ($100 minimum per fund) under this IRA.
Note: For Class A accounts, Wealth Builder transactions must be directed to
another Class A account. For Class B accounts, Wealth Builder transactions
must be directed to another Class B account.

_______________________________________________________________________________
Name of Fund from Section 3

_______________________________________________________________________________
New Fund (new account will be established)

$_______________________________________________________________________________
Amount per month

| | Dividend Maximizer -- Dividends and any capital gains are reinvested in the
same fund automatically unless otherwise indicated. I elect to have
dividends and any capital gains under this IRA invested in another IRA
account.

| | New Account -- Name of Fund ________________________________________________

| | Systematic Withdrawal Plan -- If you wish to begin receiving periodic
distributions (available for Class A accounts only) under the Terms and
Conditions of the IRA, please contact our office and we will send you a
Retirement Plan Systematic Withdrawal Plan Form. Please note, if you are age
70 1/2 or older, you should request an IRA Required Distribution Election
Form.

| | Combined Purchases Privilege -- This privilege allows the combining of
shares currently owned in other non-money market Delaware Group funds with
the dollar amount of this IRA Account to determine a reduced sales charge,
if applicable.

Name of Fund Account Number Number of Shares
_____________________ _________________________________________________

_____________________ _________________________________________________

| | Letter of Intention -- This option allows the aggregation of anticipated
purchases by an individual in non-money market Delaware Group funds during a
13-month period, along with any existing assets listed in the Combined
Purchase Privilege Section, to obtain a reduced sales charge. This option is
available for funds with front-end sales charges only, though Class B shares
can be used for purposes of filling Class A Letters of Intention. To learn
more, please see your Fund's current prospectus and sales charge breakpoint
schedule. I have read and agree to the terms of the prospectus(es) of the
fund(s) I have selected on this application, and wish to establish a Letter
Of Intent, although I am not obligated to do so, where my investments in
non-money market funds will aggregate or exceed:

| | $100,000 | | $250,000 | | $500,000 | | $1,000,000

I understand that if I do not satisfy the investment level selected above
that my account will be adjusted to reflect the applicable sales charge.

Note to SEP/IRA SARSEP Participants: A separate Letter Of Intent Form must be
completed by your employer, on behalf of all participants in the Plan, to obtain
a reduced sales charge.

<PAGE>

If this is not a Personal or Spousal IRA, please contact Your financial adviser
or Delaware Group before completing this section.

| | Automatic Investing Plan -- Please transfer $____ ($25 or more for A Shares,
$100 or more for B Shares) from my bank account each month to invest in
_________________________________________. Date of Transfer each month:
Fund Name
| | 1st | | 5th | | 10th | | 15th | | 20th | | 25th

________________________________________________________________________________
Bank Name Bank Account #

________________________________________________________________________________
Name(s) on Bank Account

While we cannot guarantee that your bank will accept this offer, we will ask for
its cooperation. If you discontinue this plan at any time, and your banking
registration has not changed, we can reinstate it immediately via written or
telephone request.

Attach a voided check or deposit slip to avoid delays in processing.

================================================================================

7 Agreement And Beneficiary Designation

Your signature is required.

You can change your Beneficiary Designation at any time by completing a Change
of Beneficiary Designation Form and returning it to Delaware Service Company,
Inc. 1818 Market St. Philadelphia, PA 19103-3682.

Contact Delaware Group for the appropriate Change of Beneficiary Form.

By signing below, I designate the following person(s) to receive any benefit
from my Individual Retirement Account which may become due upon or after my
death according to the terms and conditions of the Plan. I understand that this
Beneficiary Designation will remain in full force and effect unless and until I
revoke this designation by completing a Change of Beneficiary Designation Form
for the Delaware Group Individual Retirement Custodial Account at a later date
and returning it to the Custodian.

Pay to: Primary Beneficiary ___________________________%

_______________________________________________________________________________
Name

_______________________________________________________________________________
Address

_______________________________________________________________________________
City State Zip

____________________________________________________ ____/_____/____________
Relationship Date of Birth

| | | | | | - | | | | - | | | | | | | |
Social Security Number

If more than one Primary Beneficiary is selected and no percentage of plan
benefits is indicated, the assets will be divided equally between the Primary
Beneficiaries.

If no Beneficiary is designated, assets will be paid to your estate.

If the Custodian receives satisfactory proof that the Primary Beneficiary is
deceased, or if more than one Primary Beneficiary is selected and both are
deceased, the assets will be paid to the Contingent Beneficiary as indicated.

Pay to: Primary Beneficiary ___________________________%

_______________________________________________________________________________
Name

_______________________________________________________________________________
Address

_______________________________________________________________________________
City State Zip

____________________________________________________ ____/_____/____________
Relationship Date of Birth

| | | | | | - | | | | - | | | | | | | |
Social Security Number
<PAGE>

Pay to: Contingent Beneficiary ___________________________%

_______________________________________________________________________________
Name

_______________________________________________________________________________
Address

_______________________________________________________________________________
City State Zip

____________________________________________________ ____/_____/____________
Relationship Date of Birth

| | | | | | - | | | | - | | | | | | | |
Social Security Number

If you are married and you do not designate your spouse as your sole Primary
Beneficiary, you should consult with an attorney as to whether applicable law
may require your spouse to sign a written consent to your designation or a
written declaration to give up community or marital property interests in your
IRA. The Custodian shall have no responsibility for determining whether your
Beneficiary Designation is valid under applicable law and shall have no
liability to any person for acting in accordance with your Beneficiary
Designation.

===============================================================================

By signing below, I hereby establish an Individual Retirement Account under
Section 408(a) of the Internal Revenue Code of 1986, as amended, ("the
Code") to provide for my retirement and for the support of my beneficiaries
after my death. I hereby acknowledge receipt of the Terms and Conditions and
Disclosure Statement for the Individual Retirement Account required under the
Income Tax Regulations under Section 408(i) of the Code and am in receipt of an
effective prospectus(es) for the Fund(s) I am investing in. I hereby appoint
Delaware Management Trust Company as Custodian and agree to pay the annual
maintenance fee, currently $15. (If this fee is not included or is not paid by
April 30th annually, it will be debited from your account each May.)

X ___________________________________________ _______________________________
Investor's Signature Date
===============================================================================
Please send your completed and signed application, along with your contribution,
to Delaware Service Company, Inc., Attn: Retirement Plan Department, 1818 Market
Street, Philadelphia, PA 19103-3682. Be sure to make your check payable to
Delaware Management Trust Company.

<PAGE>

================================================================================
Broker Information
To be completed by Investment Dealer.

________________________________________________________________________________
Name of Brokerage Firm

________________________________________________________________________________
Home Office Address

________________________________________________________________________________
Authorized Firm Signature

________________________________________________________________________________
Representative's Name/Number

________________________________________________________________________________
Branch Office Address

________________________________________________________________________________
Representative's Phone Number
================================================================================

Custodian Acceptance
For use by Custodian only.

/s/ Diane Anderson
________________________________________________________________________________
Authorized Officer of Delaware Management Trust Company

================================================================================
DELAWARE
GROUP
=======

The Delaware Group Of Funds

Delaware's family of funds enables investors to match their needs with a broad
range of investment objectives covering the risk-reward spectrum. The following
are available as investment vehicles for any Delaware Group retirement program.

| | Trend Fund
Seeks long-term capital appreciation by investing in securities issued by
small, growth-oriented companies exhibiting a strong potential for capital
appreciation.

| | DelCap Fund
Seeks long-term growth by investing in common stocks and securities
convertible into common stocks of mid-sized companies that have demonstrated
their ability to grow and demonstrate a potential for continued growth.

| | Value Fund
Seeks long-term growth by investing primarily in common stocks of small and
mid-size companies whose market values appear low relative to their
underlying value or potential value.

| | International Equity Fund
Seeks long-term growth without undue risk to principal by investing
primarily in a range of foreign equity securities that have potential for
capital appreciation and income.

| | Decatur Income Fund
Seeks highest possible current income by investing primarily in common
stocks of established companies with strong dividend histories that provide
the potential for income and capital appreciation without undue risk to
principal.

| | Decatur Total Return Fund
Seeks long-term total return by investing primarily in securities that
provide the potential for income and capital appreciation without undue risk
to principal.

| | Dividend Growth Fund
Seeks current income and capital appreciation by investing primarily in
income-producing common stocks. Focuses on common stocks believed to have
the potential for above-average dividend increases over time.

| | Delaware Fund
Seeks long-term growth through a balance of capital appreciation, income and
preservation of capital. Invests in common stock and investment grade bonds.

| | U.S. Government Fund
Seeks high current income consistent with safety of principal through
investment in securities issued by the U.S. government, its agencies or
instrumentalities.

| | Delchester Fund
Seeks high current income as is consistent with reasonable safety by
investing primarily in high-yielding, lower rated corporate bonds, U.S.
government securities and commercial paper issued by companies with the
ability to pay interest and repay principal.

| | Treasury Reserves Intermediate Fund
Seeks to provide a high, stable level of income with a high degree of
principal stability through investments in short- and intermediate-term
securities issued or guaranteed by the U.S. government, its agencies and
instrumentalities.

| | U.S. Government Money Fund
Seeks a high current income with a goal of maintaining a constant share
price by investing in short-term securities issued and/or guaranteed by the
U.S. government, its agencies and instrumentalities.

| | Delaware Cash Reserve
Seeks high current income with a goal of maintaining a constant share price
by investing in high-quality money market instruments with maturities of no
more than one year.

All funds, except U.S. Government Money Fund, currently offer Class A and B
shares. Please consult your financial adviser about which class is more
appropriate for you.

===============================================================================
The Delaware Group investor can seek total return through equity-oriented
investments, stability and current income through fixed-income investments, or
combine these styles to achieve the desired investment balance. As the
investor's needs or objectives change, the exchange privilege enables
investments to be transferred from one fund to another within the Delaware Group
without losing their tax-advantaged status.

<PAGE>

DELAWARE
GROUP
========

IRA Transfer of Assets Form
Use this form to transfer your IRA assets to a Delaware Group IRA. If you don't
have an existing Delaware Group IRA, please fill out an application. If you are
transferring IRA assets from more than one custodial account, please complete a
separate Transfer Form for each transfer. Please note, you must complete a
separate Transfer of Assets Form for each plan trustee/ custodian and/or for
each CD maturity date, if applicable. If you wish to make a direct rollover of
assets from a qualified plan or 403(b), please complete a Direct Rollover form.
================================================================================
Information About Your Delaware Group IRA

_______________________________________________________________________________
Individual's Name

_______________________________________________________________________________
Address

_______________________________________________________________________________
City State Zip

(__________)___________________________________________________________________
Telephone: Home

(__________)___________________________________________________________________
Business

| | | | | | - | | | | - | | | | | | | |
Social Security Number

Select One

| | 1. This is a transfer to a new Delaware Group IRA. My investment choices are
on page 3 of this IRA application.

| | 2. Invest the amount to be transferred into my existing Delaware Group IRA
as follows:

Information About Your IRA to Be Transferred

_______________________________________________________________________________
Name of Present Custodian

_______________________________________________________________________________
Address

_______________________________________________________________________________
City State Zip

___________________________________ (____________)_________________________
Contact Person Phone Number

IRA Account # _________________________________________________________________

Investment Fund # _____________________________________________________________

For Certificates of Deposit:

_______________________________________________________________________________
Maturity Date

| | Please do not transfer until my CD matures.
| | Please roll over immediately. I am aware of the early withdrawal penalty.

Type of account you are transferring: | | Personal | | Rollover IRA (With
Qualified Plan or 403(b) assets) | | SEP or SARSEP Please note, you must
complete a separate Transfer of Assets Form for each plan trustee/custodian
and/or for each maturity date, if applicable. If you wish to make a direct
rollover of assets from a qualified plan of 403(b), please complete a Direct
Rollover form.
================================================================================

Your Authorization to Transfer

Your present Custodian may require additional documentation such as a
signature guarantee. Please check with them for their requirements.

<PAGE>

I have established an IRA with Delaware Management Trust Company as the
Custodian. Please roll over the amount listed below to them as successor
Custodian.

| | Complete -- Liquidate ALL of the above referenced account(s)
transfer IN CASH.
| | Partial -- Liquidate assets totaling $ ________________and transfer IN CASH.
| | Re-registration (Transfer in Kind) -- My IRA includes the Delaware Group
fund(s) listed below. Please re-register with Delaware Management Trust
Company as the Custodian. Send Delaware Group any outstanding Delaware Group
Fund certificates and proper documentation to re-register these shares.
Note, the Delaware Management Trust Company can accept only Delaware Group
funds for re-registration.

_____________________________________ _______________________________________
Fund Name Account Number

| | Transfer on or after age 70 1/2 -- Pursuant to IRS Regulations, I hereby
certify that this Transfer will not included any minimum amount required to
be distributed to me with respect to any applicable distribution calendar
year. In order to receive required minimum distributions in the future under
your Delaware Group IRA, please contact the Delaware Group and we will send
you an IRA Required Distribution Election Form.

SIGN HERE

X ____________________________________ _________________________
Your Signature - must be in ink Date
===============================================================================
Custodian Acceptance
For use by Custodian only.

Please be advised that the Delaware Management Trust Company is acting as
Custodian and is willing to accept the proceeds from the above referenced
Custodial Account.

Please make check payable to: Delaware Management Trust
Company, For the Benefit Of: (Participant), and mail to Delaware Management
Trust Company, Transfer of Assets Department, 1818 Market Street, Suite 1604,
Philadelphia, PA 19103-3682.

________________________________________________________ _________________
Authorized Officer of Delaware Management Trust Company Date

<PAGE>

DELAWARE
GROUP
========

Information About Your Delaware Group IRA

_______________________________________________________________________________
Individual's Name

_______________________________________________________________________________
Address

_______________________________________________________________________________
City State Zip

(__________)___________________________________________________________________
Telephone: Home

(__________)___________________________________________________________________
Business

| | | | | | - | | | | - | | | | | | | |
Social Security Number

Select One

| | 1. This is a transfer to a new Delaware Group IRA. My investment choices
are on page 3 of this IRA application.
| | 2. Invest the amount to be transferred into my existing Delaware Group IRA
as follows:
Fund:________ | | Class A | | Class B Percent:_____ Account#:
Fund:________ | | Class A | | Class B Percent:_____ Account#:
Fund:________ | | Class A | | Class B Percent:_____ Account#:
================================================================================

Information About Your IRA to Be Transferred

_______________________________________________________________________________
Name of Present Custodian

_______________________________________________________________________________
Address

_______________________________________________________________________________
City State Zip

___________________________________ (____________)_________________________
Contact Person Phone Number

IRA Account # _________________________________________________________________

Investment Fund # _____________________________________________________________

For Certificates of Deposit:

_______________________________________________________________________________
Maturity Date

| | Please do not transfer until my CD matures.
| | Please roll over immediately. I am aware of the early withdrawal penalty.

Your present Custodian may require additional documentation such as a signature
guarantee. Please check with them for their requirements.

<PAGE>

I have established an IRA with Delaware Management Trust Company as the
Custodian. Please roll over the amount listed below to them as successor
Custodian.

| | Complete -- Liquidate ALL of the above referenced account(s)
transfer IN CASH.
| | Partial -- Liquidate assets totaling $________________ and transfer IN CASH.
| | Re-registration (Transfer in Kind) -- My IRA includes the Delaware Group
fund(s) listed below. Please re-register with Delaware Management Trust Company
as the Custodian. Send Delaware Group any outstanding Delaware Group Fund
certificates and proper documentation to re-register these shares. Note, the
Delaware Management Trust Company can accept only Delaware Group funds for
re-registration.
______________________________________ ________________________________________
Fund Name Account Number

| | Transfer on or after age 70 1/2 -- Pursuant to IRS Regulations, I hereby
certify that this Transfer will not included any minimum amount required to be
distributed to me with respect to any applicable distribution calendar year. In
order to receive required minimum distributions in the future under your
Delaware Group IRA, please contact the Delaware Group and we will send you an
IRA Required Distribution Election Form.

SIGN HERE

X ________________________________________ ____________________________
Your Signature - must be in ink Date

===============================================================================

Custodian Acceptance
For use by Custodian only.
Please be advised that the Delaware Management Trust Company is acting as
Custodian and is willing to accept the proceeds from the above referenced
Custodial Account.

Please make check payable to: Delaware Management Trust Company, For the Benefit
Of: (Participant), and mail to Delaware Management Trust Company, Transfer of
Assets Department, 1818 Market Street, Suite 1604, Philadelphia, PA 19103-3682.

_______________________________________________________ _____________________
Authorized Officer of Delaware Management Trust Company Date

<PAGE>

DELAWARE GROUP

| | Delaware Management Company, Inc.
Investment Manager
| | Delaware Distributors, L.P.
National Distributor
| | Delaware Service Company, Inc.
Shareholder Servicing, Dividend
Disbursing and Transfer Agent
| | Delaware Management Trust Company
Custodian

DELAWARE
GROUP
========

1818 Market Street
Philadelphia, PA 19103-3682
800-523-1918 Nationwide
215-988-1241 in Philadelphia

Use of this material with the public, either in written or oral form, can only
be made in conjunction with the prospectuses of the funds in the Delaware Group
being offered. The prospectus contains further information, including sales
charges and expenses.
Be sure to consult your financial adviser when making investments. Mutual funds
can be a valuable part of your financial plan; however, they are not obligations
of or guaranteed by any bank and are not FDIC or government insured. In
addition, they involve risk, including possible loss of principal.
RL-102-10/94

<PAGE>

DELAWARE
GROUP
========

IRA Direct Rollover Form
Use this form to roll over the assets in your Qualified Plan or 403(b) plan to a
Delaware Group IRA. Please note, you must complete a separate IRA Direct
Rollover Form for each plan trustee/custodian and/or for each CD maturity date,
if applicable.

Information About Your Delaware Group IRA

________________________________________________________________________________
Name

________________________________________________________________________________
Address

________________________________________________________________________________
City State Zip

| | | | | | - | | | | - | | | | | | | |
Social Security Number

(__________)____________________________________________________________________
Phone: Home

(__________)____________________________________________________________________
Phone: Business

| | This is a rollover to a new Delaware Group IRA. My investment choices are
on page 3 of the enclosed IRA application.
| | Invest the amount to be rolled over into my existing Delaware Group IRA
as follows:

Fund Name: _________ Percent/Amt: _________ Account #: __________
Fund Name: _________ Percent/Amt: _________ Account #: __________
Fund Name: _________ Percent/Amt: _________ Account #: __________
================================================================================
Information About Your Qualified Plan or 403(b) to be Rolled Over

________________________________________________________________________________
Name of Employer

________________________________________________________________________________
Address

________________________________________________________________________________
City State Zip

____________________________________(________)__________________________________
Contact Person Phone Number

Account Number: ________________________________________________________________

Type of account: | | Qualified Plan | | 403(b)

For Certificates of Deposit:

________________________________________________________________________________
Maturity Date
| | Please do not roll over until my CD matures.
| | Please roll over immediately. I am aware of the early withdrawal penalty.

Name of Financial Institution:

________________________________________________________________________________

<PAGE>

================================================================================

Your Authorization to Roll Over

Your present Custodian may require additional documentation such as a signature
guarantee. Please check with them for their requirements.

I have established an IRA with Delaware Management Trust Company as the
Custodian. Please roll over the amount listed below to them as IRA Custodian.

| | Partial -- Liquidate assets totaling $___________ and directly roll over
IN CASH.
| | Complete -- Liquidate ALL of the above referenced account(s) and directly
roll over IN CASH.
| | Check here if you are age 70 1/2 or older.
Pursuant to IRS Regulations, I hereby certify that I am not rolling over any
minimum amount required to be distributed to me with respect to any
applicable distribution calendar year. In order to receive required minimum
distributions in the future under your Delaware Group IRA, please contact
the Delaware Group and we will send you an IRA Required Distribution
Election Form.

X ______________________________ __________________
Your Signature - must be in ink Date

================================================================================

Custodian Acceptance

For use by Delaware Management Trust Company only.

Please be advised that the Delaware Management Trust Company, as Custodian, is
willing to accept the proceeds from the above-referenced plan as an IRA account
pursuant to Internal Revenue Code Section 408.

Please make check payable to: Delaware Management Trust Company, For the Benefit
Of: (Participant), Direct Rollover; and mail to Delaware Management Trust Co.,
1818 Market Street, Philadelphia, PA 19103-3682.

________________________________________________________ _______________
Authorized Officer of Delaware Management Trust Company Date

RL-102B - 10/93

<PAGE>
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
TABLE OF CONTENTS

Terms and Conditions
Article I. Contributions ....................... 2
Article II. Nonforfeitability .................. 2
Article III. Prohibited Investments ............ 2
Article IV. Required Distributions ............. 2
1. Required Beginning Date ................... 2
2. Changing Method of Payment ................ 2
3. Lifetime Distributions .................... 3
4. Death Distributions ....................... 3
5. Multiple individual Retirement Accounts ... 4
Article V. Reporting ........................... 4
Article VI. Amendment of Plan .................. 4
Article VII. The Custodian ..................... 4
1. Appointment of Agents ..................... 4
2. No Investment Responsibility .............. 4
3. Entire Contract ........................... 4
4. Delaware Service Company, Inc. ............ 5
5. Designation of Beneficiary ................ 5
6. Taxes and Expenses ........................ 5
7. Termination of Account .................... 5
8. Resignation or Removal of Custodian ....... 5
9. Custodian's Fees .......................... 5
10. Agreements with Investment Advisers ....... 5
11. Applicable Law ............................ 5
Disclosure Statement
Revocation ..................................... 6
Requirements of an Individual Retirement Account 6
Eligibility .................................... 6
Contributions .................................. 7
(A) Deductible Contributions .................. 7
(B) Non-deductible Contributions .............. 8
(C) Spousal IRA Contributions ................. 8
(D) Excess Contributions ...................... 8
(E) Rollover Contributions .................... 9
Distributions .................................. 10
(A) Normal Distributions ...................... 10
(B) Required Distributions .................... 10
(C) Distributions After Death ................. 10
Tax Treatment of Distributions ................. 11
(A) Income Tax ................................ 11
(B) Federal Income Tax Withholding ............ 11
(C) Early Withdrawal Tax ...................... 11
(D) Gift Tax .................................. 12
(E) Estate Tax ................................ 12
Borrowing/Prohibited Transactions .............. 12
Reporting to the IRS ........................... 12
(A) Form 5329 ................................. 12
(B) Form 8606 ................................. 12
IRS Approval ................................... 12
IRA Account Balance ............................ 12
Fees and Charges ............................... 13
(A) IRA Fees .................................. 13
(B) Mutual Fund Sales Charges ................. 13
(C) Redemption and Repurchase Charges ......... 13
(D) Further Details ........................... 13
Qualified Tax Advice ........................... 13

<PAGE>
DELAWARE MANAGEMENT COMPANY, INC.
Individual Retirement Custodial Account

The Delaware Management Company, Inc. Individual Retirement Custodial
Account (the "Plan"), including the Application which is a part thereof, is
established for the exclusive benefit of the individual ("Applicant") designated
in the Application, or his/her beneficiaries.

W I T N E S S E T H:

WHEREAS, the Applicant desires to provide for retirement and for the
support of his/her beneficiaries upon death; and

WHEREAS, to accomplish this purpose, the Applicant desires to establish an
individual Retirement Account (the "Account") as described in Section 408(a) of
the Internal Revenue Code of 1986, as amended, or any successor statute
(hereinafter referred to as "the Code").

NOW, THEREFORE, for the purposes aforesaid, the Account is established,
effective as of the date of the Application, as follows:

ARTICLE I. CONTRIBUTIONS

Except in the case of a rollover contribution described in Sections 402(c),
403(a)(4), 403(b)(8), 408(d)(3) of the Code, or an employer contribution to a
simplified employee pension plan as described in Section 408(k), the Custodian
will only accept cash and will not accept contributions on behalf of the
Applicant in excess of $2,000 for any taxable year. In no event shall the
Custodian accept a rollover of property other than shares of the Delaware Group
of Funds. Rollover contributions before January 1, 1993 include rollovers
described in Sections 402(a)(5), 402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8), or
408(d)(3).

ARTICLE II. NONFORFEITABILITY

The Applicant's interest in the balance in the Account is nonforfeitable.

ARTICLE III. PROHIBITED INVESTMENTS

1. No part of the Account shall be invested in life insurance contracts; nor may
assets of the Account be commingled with other property except in a common trust
fund or common investment fund (within the meaning of Section 408(a)(5) Code).

2. No part of the Account shall be invested incollectibles as defined in
Section 408(m) of the Code.

ARTICLE IV. REQUIRED DISTRIBUTIONS

1. Required Beginning Date. The Applicant's interest in the Account will be
distributed to him/her upon his/her providing Delaware Service Company, Inc.
with instructions as to the method of distribution. The entire interest of the
Applicant in the Account must be or commence to be distributed no later than the
first day of April following the calendar year in which the Applicant attains
age 70 1/2 (the "Required Beginning Date"). Not later than the Required
Beginning Date, the Applicant may elect to have the balance in the Account
distributed:

(a) In a lump sum;

(b) In monthly, quarterly or annual payments or over a period certain not
extending beyond the life expectancy of such Applicant or the joint life
and last survivor expectancy of the Applicant and his/her designated
beneficiary.

2. Changing Method of Payment. Even though distributions may have commenced
pursuant to 1(b) above, the Applicant may receive a distribution of the balance
in the Account in a lump sum or receive distributions under another method of
payment available in 1(b), by providing written notice to Delaware Service
Company, Inc. The Applicant may change the method of payment in 1(b) once a
year, provided: (i) written notice is given to Delaware Service Company, Inc. no
later than December 15 preceding the year in which the method of payment will be
changed and (ii) that distributions are made in accordance with the requirements
of Section 408(a)(6) of the Code and the regulations thereunder.

<PAGE>

3. Lifetime Distributions. If the Applicant is living on his/her Required
Beginning Date, the following distribution provisions shall apply:

(a) Required Minimum Distributions. If the Applicant's entire interest in the
account is to be distributed in a manner other than a lump sum, then the
amount to be distributed each year, commencing with the Required Beginning
Date and each year thereafter, must be at least equal to the quotient
obtained by dividing the Applicant's entire interest in the Account on the
December 31 of the preceding year by the applicable life expectancy.

(b) Minimum Distributions before 1989. For calendar years beginning before
January 1, 1989, if the Applicant's spouse is not the designated
beneficiary, the method of distribution selected must ensure that at least
50% of the present value of the amount available for distribution is paid
within the life expectancy of the Applicant.

(c) Minimum Distributions after 1988. For calendar years beginning after
December 31, 1988, the amount to be distributed each year, beginning with
the first calendar year for which distributions are required and then for
each succeeding calendar year, shall not be less than the quotient obtained
by dividing the balance in the Account as of the preceding December 31 by
the lesser of (1) the applicable life expectancy or (2) if the Applicant's
spouse is not the designated beneficiary, the applicable divisor determined
from the table set forth in Q & A-4 of Section 1.401 (a)(9)-2 of the
Proposed Income Tax Regulations. Distributions after the death of the
Applicant shall be calculated using the applicable life expectancy as the
relevant divisor without regard to Section 1401 (a)(9)-2 of the proposed
regulations.

(d) Computation of Life Expectancy. Life expectancy is computed by use of the
expected return multiples in Tables V and VI of Section 1.72-9 of the
Income Tax Regulations. Unless otherwise elected by the Applicant by the
time distributions are required to begin, life expectancies shall not be
recalculated annually. Such election shall be irrevocable as to the
Applicant and will apply to all subsequent years. The life expectancy of a
non-spouse beneficiary may not be recalculated; rather, life expectancy
shall be calculated using the attained age of the beneficiary during the
calendar year in which distributions are required to begin pursuant to this
Section 3, and payments for subsequent years shall be calculated based on
such life expectancy reduced by one for each calendar year which has
elapsed since the calendar year life expectancy was first calculated.

4. Death Distributions. If the Applicant dies before the entire interest is
distributed, the following distribution provisions shall apply:

(a) Distributions beginning before death. If the Applicant dies after
distribution of his/her interest in the Account has begun, the remaining
portion of such interest will continue to be distributed at least as
rapidly as under the method of distribution being used prior to the
Applicant's death. However, if the designated beneficiary is the
Applicant's surviving spouse, the spouse may elect to treat the Account as
his/her own individual retirement account. This election will be deemed to
have been made if such surviving spouse makes a regular contribution to the
Account, makes a rollover to or from the Account, or fails to elect any of
the provisions in paragraph (b) below. Distributions under this Section 4
are considered to have begun if the distributions are made on account of
the individual reaching his or her required beginning date. If the
individual receives distributions prior to the required beginning date and
the individual dies, distributions will not be considered to begin.

(b) Distributions beginning after death. If the Applicant dies before the
distribution of his/her interest in the Account begins, the Applicant's
entire interest will be distributed by December 31 of the calendar year
containing the fifth anniversary of the applicant's death unless the
applicant elects or, if the Applicant has not so elected, the designated
beneficiary or beneficiaries elect that the entire interest be distributed
in accordance with one of the following three provisions:

(i) The Applicant's entire interest will be distributed over a period
certain not greater than the life expectancy of the Applicant's
designated beneficiary commencing on or before December 31 of the
calendar year immediately following the calendar year in which the
Applicant died. The designated beneficiary may elect at any time to
receive greater payments.

(ii) If the designated beneficiary of the Applicant is the Applicant's
surviving spouse, payments may be made to the surviving spouse over
his/her life expectancy commencing on any date prior to the later of (1)
the December 31 of the calendar year immediately following the calendar
year in which the Applicant died and (2) the December 31

<PAGE>

of the calendar year in which the Applicant would have attained age
70 1/2. The surviving spouse may accelerate these payments at any time
(i.e., increase the frequency or amount of such payments).

(iii) If the designated beneficiary is the Applicant's surviving spouse, the
spouse may elect to treat the Account as his/her own individual
retirement account. This election will be deemed to have been made if
the surviving spouse makes a regular contribution to the Account, makes
a rollover to or from the Account, or fails to elect any of the above
two provisions.

(c) Computation of Life Expectancy. Life expectancy is computed by use of the
expected return multiples in Tables V and VI of Section 1.72-9 of the
Income Tax Regulations. For purposes of distributions beginning after the
Applicant's death, unless otherwise elected by the surviving spouse by the
time distributions are required to begin, life expectancy shall not be
recalculated annually. Such election shall be irrevocable as to the
surviving spouse and shall apply to all subsequent years. In the case of
any other designated beneficiary, life expectancy shall be calculated using
the attained age of the beneficiary during the calendar year in which
distributions are required to begin in accordance with this Section 4, and
payments for any subsequent calendar year shall be calculated based on such
life expectancy reduced by one for each calendar year which has elapsed
since the calendar year life expectancy was first calculated.

5. Multiple individual Retirement Accounts. An individual may satisfy the
minimum distribution requirements described above by receiving a distribution
from one IRA that is equal to the amount required to satisfy the minimum
distribution requirements for two or more IRAs. For this purpose, the owner
of two or more IRAs may use the "alternative method" described in Notice
88-38, 1988-1 C.B. 524, to satisfy the minimum distribution requirements
described above.

ARTICLE V. REPORTING

1. The Applicant agrees to provide the Custodian with information necessary for
the Custodian to prepare any reports required under Section 408(i) of the Code
and related regulations.

2. The Custodian agrees to submit reports to the Internal Revenue Service and
the Applicant as prescribed by the Internal Revenue Service. The Custodian shall
furnish the Applicant with an annual calendar year report concerning the value
of the Account.

ARTICLE VI. AMENDMENT OF PLAN

Delaware Management Company, Inc. may amend this Plan from time to time to
comply with the applicable provisions of the Code and related regulations and
to make any other changes determined by Delaware Management Company, Inc. to
be necessary and desirable.

ARTICLE VII. THE CUSTODIAN

1. Appointment of Agents. The Custodian appoints Delaware Service Company, Inc.
as its agent to receive the Applicant's contributions under this Plan. Delaware
Service Company, Inc., as the Custodian's agent, will deliver the Applicant's
contributions to the Custodian to be invested as provided in the Application.
The Custodian may also appoint one or more broker-dealers as its agent(s),
pursuant to a legally binding agency agreement with such broker-dealer(s), for
purposes of receiving the Applicant's contributions hereunder and receiving
contributions made on behalf of the Applicant pursuant to a simplified employee
pension plan (including a salary reduction SEP).

2. No Investment Responsibility. The Custodian shall have no investment
responsibility or discretion with respect to this Account. The Custodian shall
vote the regulated investment company shares held therein as directed by the
Applicant. If the Applicant does not provide voting instructions to the
Custodian, the Custodian shall vote Account shares in direct proportion to those
voting instructions, on an issue by issue basis, received by the Custodian from
other Individual Retirement Account shareholders of the fund.

3. Entire Contract. This Plan and Application constitute the entire contract
between Applicant and Custodian and, except as provided herein, no
representative of Delaware Management Company, Inc., Delaware Service Company,
Inc., Delaware Distributors, Inc., the Delaware Group of Funds nor any
broker-dealer shall be deemed to be a representative of or acting on
behalf of Custodian, nor shall any such representative have any

<PAGE>

authority to make representations or to bind the Custodian beyond the terms of
this document. The Custodian, Delaware Management Company, Inc., Delaware
Service Company, Inc., Delaware Distributors, Inc., the Delaware Group of Funds
and their affiliates shall not be responsible for any liability arising out of
this Plan and Application except such liability as is occasioned by their own
negligence or wilful misconduct. The Custodian and Delaware Service Company,
Inc. shall not be responsible for any action or omission taken in accordance
with any notice, request, instruction, certificate, beneficiary designation or
other instrument reasonably believed by Custodian or Delaware Service Company,
Inc. to be genuine.

4. Delaware Service Company, Inc. The Custodian may employ Delaware Service
Company, Inc. to carry out certain of the Custodian's administrative
functions hereunder in accordance with an agreement between Custodian and
Delaware Service Company, Inc.

5. Designation of Beneficiary. The Applicant shall have the right, by written
notice to Delaware Service Company, Inc., to designate or to change a
beneficiary to receive any benefit to which the Applicant may be entitled in the
event of death prior to the complete distribution of such benefits. If no such
designation is in effect upon the Applicant's death, the beneficiary shall be
the Applicant's estate. The Custodian and Delaware Service Company, Inc. shall
have no responsibility to determine whether any person or persons other than the
Applicant's designated beneficiary may be entitled, under applicable law, to
receive amounts from the Account on account of the death of the Applicant and
shall have no liability to any person for acting in accordance with Applicant's
beneficiary designation.

6. Taxes and Expenses. Any income taxes or other taxes of any kind whatsoever
that may be levied or assessed upon or in respect to the Account, any transfer
taxes incurred in connection with the investment and reinvestment of the assets
of the Account, other administrative expenses incurred by the Custodian in the
performance of its duties, including fees for legal services rendered to the
Custodian, and the compensation to the Custodian shall be paid from the assets
of the Account, unless paid by the Applicant.

7. Termination of Account. This Account shall terminate upon the complete
distribution of the Account to the Applicant or his/her beneficiaries or to
successor individual retirement accounts or annuities.

8. Resignation or Removal of Custodian. The Custodian may resign at any time
upon ninety (90) days notice in writing to the Applicant and to Delaware
Management Company, Inc. or may be removed by Delaware Management Company,
Inc. at any time upon ninety (90) days notice in writing to the Custodian.
Upon such resignation or removal, Delaware Management Company, Inc. will
appoint a successor Custodian. If within sixty (60) days after the
Custodian's resignation or removal, Delaware Management Company, Inc. has not
appointed a successor Custodian which has accepted such appointment, the
Custodian may appoint such successor itself.

9. Custodian's Fees. The Custodian's fees shall be as published or amended
from time to time.

10. Agreements with Investment Advisers. The Custodian, in its discretion, may
enter into an agreement with an investment adviser, registered under the
Investment Adviser's Act of 1940, for the purpose of redeeming investment
company shares held hereunder to pay for market timer services rendered by the
adviser with respect to the Applicant's Account.

11. Applicable Law. This Plan shall be construed under the laws of the
Commonwealth of Pennsylvania, without giving effect to conflict of laws
principles, and shall become effective only upon execution by Custodian at its
offices in Philadelphia, Pennsylvania. The Custodian shall not be called upon to
take any action outside the Commonwealth of Pennsylvania.

<PAGE>

DISCLOSURE STATEMENT

REVOCATION

You are entitled to revoke your individual retirement account ("IRA"), for
any reason and without penalty, by mailing or delivering written notice of
revocation to Delaware Service Company, Inc. within seven days after your
receipt of the IRA Disclosure Statement or within seven days after you establish
your IRA; however, if your IRA is established more than seven days after receipt
of the IRA Disclosure Statement, you may not revoke your IRA. If you wish to
revoke your IRA, mail or deliver your written notice to Delaware Service Co.,
Inc., Retirement Plans Department, 1818 Market Street, Philadelphia, PA 19103.
If mailed, the revocation notice will be considered mailed on the date of
postmark (or if sent by certified or registered mail, the date of certification
or registration) if it is deposited in the mail in the United States in an
envelope or other appropriate wrapper, first class postage prepaid, properly
addressed. While oral revocations are not accepted, you may contact us at (800)
523-1918 (In Philadelphia call 988-1241) if you have any questions with respect
to this procedure. If you should choose to revoke your IRA, the entire amount of
your contribution will be refunded without adjustment for administrative
expenses or any other amount.

REQUIREMENTS OF AN INDIVIDUAL
RETIREMENT ACCOUNT

An Individual Retirement Account investing contributions in any of the Funds
in the Delaware Group is a Custodial Account created in the United States for
the exclusive benefit of an individual or his/her beneficiaries. The written
instrument creating the Custodial Account must satisfy the following
requirements:

1. Except in the case of a rollover contribution (explained below),
contributions must be in cash and may not exceed $2,000, or $2,250 if a
spousal IRA, for any taxable year;

2. The Custodian must be a bank or other person approved by the Secretary of
the Treasury;

3. No part of the IRA funds may be invested in life insurance contracts;

4. The interest of an individual in the IRA must be nonforfeitable;

5. The assets of the IRA may not be commingled with other property except in
a common trust fund or common investment fund; and

6. The entire interest of an individual must be distributed in accordance with
certain rules (explained below under "Distributions").

ELIGIBILITY

You are eligible to establish and contribute to an IRA for any year in which
you work and receive compensation for such work, provided that you have not
attained age 70 1/2 in the year in question. If eligible, both a husband and
wife may each have their own separate IRA. If either spouse is ineligible to
establish an IRA, because the spouse has no "compensation," the other spouse may
be permitted to establish a Spousal IRA.

"Compensation" includes wages, salaries, professional fees, and other
amounts received for personal services, including such items as commissions paid
to salesmen, compensation for services on the basis of a percentage of profits,
commissions on insurance premiums, tips and bonuses. Compensation also includes
earned income of a self-employed person and any amount includable in an
individual's income as alimony or separate maintenance payments. Compensation
does not include amounts derived from or received as earnings or profits from
property, such as interest, dividends and rent, or any amount not includable in
gross income.

If you satisfy certain requirements, you may also establish an IRA for the
purpose of transferring retirement savings distributed from another individual
retirement account, individual retirement annuity, tax-sheltered annuity or
qualified retirement plan maintained by your employer.

You may have an IRA whether or not you are a participant in any other
retirement plan. However, if you or your spouse are an active participant in
another retirement plan, the amount of your annual contribution which is tax
deductible may be reduced (explained below under "Contributions").

<PAGE>

CONTRIBUTIONS

(A) Deductible Contributions

You may make an annual contribution to your IRA up to a maximum of $2,000(1)
or 100% of your compensation, whichever is less. If neither you nor your spouse
is an "active participant" in an employer maintained retirement plan at any time
during the year, the entire amount of your contribution (within the above
limits) will be tax deductible.

As explained below, if either you or your spouse is an active participant in
an employer maintained retirement plan, but you have adjusted gross income (AGI)
below the "applicable dollar amount," your entire contribution will still be tax
deductible. However, if either you or your spouse is an active participant and
your AGI is above the applicable dollar amount, the amount of your contribution
which is tax deductible will be reduced or eliminated as illustrated by the
chart below:

Tax Deductible Contributions:
Who Qualifies:

If you are not an active participant in
an employer-sponsored retirement plan:
100% deductible at any income level
If you are an active participant in
an employer-sponsored retirement plan:

Adjusted Gross Income Contribution
Married Single Deductibility
--------------- --------------- ---------------
below $40,000 below $25,000 Full
$40,000-$50,000 $25,000-$35,000 Partial
over $50,000 over $35,000 No

In order to be deductible for a taxable year, annual contributions must be
made not later than the due date (without regard to extensions) of your tax
return for the year for which the deduction is claimed.

Definition of Active Participant

You are an "active participant" for a year if you are "covered" by any of the
following retirement plans:

1. A qualified plan described in Section 401(a) of the Internal Revenue Code
(hereinafter the "Code");

2. An annuity plan described in Section 403(a) of the Code;
- ------------
(1) An additional $250 may be contributed to a Spousal IRA for a total of $2,250
for a working and non-working spouse.

3. A plan established for its employees by the United States, by a state or
local government or by an agency or instrumentality thereof (other than an
eligible deferred compensation plan as defined in Section 457(b) of the Code);

4. An annuity contract or custodial account described in Section 403(b) of
the Code;

5. A simplified employee pension (SEP) and salary reduction SEP described in
Section 408(k) of the Code;

6. A trust described in Section 501(c)(18) of the code.

You are considered "covered" by a retirement plan for a year if your employer
or union has a retirement plan of a type described above under which money is
added to your account or you are eligible to earn retirement credits. You are an
active participant for a year even if you are not yet vested in your retirement
benefit. Also, if you make required contributions or voluntary employee
contributions to a retirement plan, you are an active participant. In certain
plans, you may be an active participant even if you were only with the employer
for part of the year. Your active participant status should be indicated on your
Form W-2.

You are not considered an active participant if you are covered by a plan
only because of your service as (1) an Armed Forces Reservist, for less than
ninety (90) days of active service; or (2) a volunteer fire fighter covered for
fire fighting service by a government plan. Of course, if you are covered under
any other plan, these exceptions do not apply.

If you would like specific advice as to whether you are an active participant
in a retirement plan, you should consult with your attorney or a qualified tax
adviser.

AGI Threshold Level

If you or your spouse are an active participant, you must calculate your
adjusted gross income (AGI) for the year (if you and your spouse file a joint
tax return, you must use your combined AGI) to determine whether your IRA
contribution will be deductible. The instructions to your tax return will show
you how to calculate your AGI for this purpose. If you are at or below a certain
AGI level, called the "Threshold Level," you are treated as if you were not an
active participant and can make a deductible contribution under the same rules
as a person who is not an active participant.

If you are single, your AGI Threshold Level is $25,000. If you are married
and file a joint tax return, the Threshold Level is $40,000. If you are married
but file a separate tax return, the Threshold Level is $0. If you and your
spouse file separate tax returns and you live apart at all times during the
year, both you and your spouse will be treated as single in determining the
deductibility of your IRA contributions and your spouse's IRA contributions.

<PAGE>
Calculation of Deduction Limit

If your AGI is less than $10,000 above your Threshold Level, you will still
be able to make a deductible contribution, but it will be limited in amount. The
amount by which your AGI exceeds your Threshold Level (AGI minus Threshold
Level) is called your Excess AGI. The maximum allowable deduction is $2,000 (or
a total of $2,250 for a Spousal IRA). You may calculate your deduction limit by
using the following formula:

$10,000 -- Excess AGI x Maximum Allowable = Deduction
- ---------------------
$10,000 Deduction Limit

You must round up the result to the next highest $10 level. For example, if
the result is $1,525, you must round it up to $1,530. If the final result is
below $200 but above $0, your deduction limit is $200. Your deduction limit
cannot, in any event, exceed 100% of your compensation.

The following examples illustrate the above formula.

Example One: Bob, a single individual, is an active participant in his
employer's retirement plan and has AGI of $28,000. Bob has contributed $2,000 to
his IRA for the current year. Bob will calculate the deductible portion of his
IRA contribution as follows:

1. Bob must first determine the amount of his Excess AGI. His Excess AGI is
equal to his AGI minus his Threshold Level. Because Bob is a single
individual his Threshold Level is $25,000. Thus, his Excess AGI is $3,000
($28,000 -- $25,000).

2. Bob will now determine his deduction limit as follows:

$10,000 -- $3,000 x $2,000 = $1,400
----------------
$10,000

Example Two: Jack and Jane are a married couple who file a joint income tax
return and have a combined AGI of $45,000. Jack is not covered by his employer's
retirement plan. Jane is an active participant in her employer's retirement
plan. Jack and Jane have each contributed $2,000 to their separate IRAs. Jack
and Jane will calculate the deductible portion of their contributions as
follows:

1. Jack and Jane must first determine the amount of their Excess AGI. Since they
are a married couple filing a joint return their Threshold Level is $40,000.
Thus, their Excess AGI is $5,000 ($45,000 -- $40,000).

2. Jack and Jane will each determine their individual deduction limit as
follows:

$10,000 -- $5,000 x $2,000 = $1,000
----------------
$10,000

(B) Non-deductible Contributions

Even if your deduction limit is less than $2,000 ($2,250 for a Spousal IRA),
you may still contribute to your IRA up to the lesser of 100% of your
compensation or $2,000 ($2,250 for a Spousal IRA). The amount of your
contribution which is not deductible will be treated as a non-deductible
contribution to your IRA. You may also choose to treat a contribution as
non-deductible even if you could have deducted part or all of the contribution.
Interest or other earnings on your contribution, whether from deductible or non-
deductible contributions, will not be taxed until distributed to you from the
IRA.

You may make your $2,000 contribution at any time during the year, if your
compensation for the year will be at least $2,000, without having to designate
at such time how much of your contribution will be deductible. When you complete
your tax return, you must then determine how much of your contribution is
deductible. If you determine that all or a portion of your contribution is
non-deductible, you must report such amount to the Internal Revenue Service on
your tax return for the year.

If you and your spouse file a joint income tax return and your spouse either
has no compensation for the taxable year or elects to be treated as having no
compensation for the taxable year, you may establish an IRA for the benefit of
your spouse. If you make contributions on behalf of yourself and your spouse for
a given tax year, the aggregate amount of the contributions to both your IRA and
your spouse's IRA may not exceed the lesser of $2,250 or the amount of your
compensation for such year. The contribution does not have to be split equally
between the IRAs belonging to you and your spouse. However, the total
contributions to either of your IRAs may not exceed $2,000.

You are not permitted to make contributions to your IRA in the year in which
you attain age 70 1/2 and subsequent years; however, you may continue to deduct
contributions to your non-working spouse's IRA until the year in which your
spouse reaches age 70 1/2.

(D) Excess Contributions

If you make a contribution to your IRA in excess of the deductible and
non-deductible limits, whichever is applicable, such amount is an "excess
contribution." A non-deductible 6% excise tax is imposed upon the excess
contribution for the year in which it is made and also for each following year
until it is eliminated. However, the amount of the tax for any year cannot
exceed 6% of the value of your IRA as of the close of the tax year.

You may avoid the imposition of such 6% tax if you withdraw any excess
contributions from your IRA before the due date for filing your federal

<PAGE>
tax return (not including extensions) for the year for which the excess
contribution is made. The earnings attributable to the excess contribution also
must be withdrawn by that date and must be included in your gross income in the
year for which the excess contribution was made. A timely withdrawal of the
excess contributions will permit you to avoid not only the 6% excise tax but
also the 10% penalty tax on premature distributions.

A withdrawal of an excess contribution after the tax return filing date will
avoid the 10% penalty tax on premature distributions, provided that the total
contribution for the year did not exceed $2,250 and no deduction was allowed for
the excess contribution.

As an alternative to withdrawing such excess contribution, you may eliminate
the excess by reducing your future annual contributions below the maximum
allowable amount. However, you will continue to be subject to the 6% excise tax
for each year until the excess contribution is completely eliminated.

(E) Rollover Contributions

A rollover contribution must consist of cash or other assets distributed from
one retirement program and "rolled over" tax free to another. There are two
types of rollover contributions to an IRA. The first type involves the
distribution of cash or other assets from one IRA which is "rolled over" to
another IRA. For this purpose, the term "IRA" includes individual retirement
accounts and individual retirement annuities. The second type involves the
distribution of cash or other assets from a tax-sheltered annuity or custodial
account or from a qualified retirement plan which is "rolled over" to an IRA. A
rollover contribution is neither includable in your income nor deductible.
Unlike annual contributions, rollover contributions are not subject to the
annual $2,000 limitation (or $2,250 in the case of the Spousal IRA) or 100% of
compensation limitation. A rollover contribution may not include any minimum
amounts required to be distributed to you during the calendar year in which you
attain age 70 1/2 or during any subsequent year. A rollover contribution must be
in cash or in shares of the Delaware Group of Funds.

IRA to IRA

If you receive a distribution from another individual retirement account or
individual retirement annuity, you may redeposit all or part of the amount you
receive into your IRA. You must roll over such amount within the sixty (60)-day
period following your receipt of the distribution in order for such amount to
qualify for rollover treatment and in order for such amount to avoid being
treated as a taxable distribution. Amounts not rolled over may also be subject
to the 10% penalty tax on premature distributions. A surviving spouse
beneficiary of an IRA may roll over a distribution from the IRA to the spouse's
own IRA; a non-spouse beneficiary is not eligible to roll over such a
distribution.

A rollover from each separate individual retirement account or individual
retirement annuity is allowed only once a year. The one-year period begins on
the date that you receive the distribution and not on the date it is rolled over
into another IRA. A rollover from one IRA to another should not be confused with
a direct transfer of your IRA assets from one IRA custodian or trustee to
another IRA custodian or trustee. A transfer from one IRA custodian to another
is not considered a rollover and, consequently, is not affected by the
once-a-year limitation on rollovers.

Qualified Retirement Plan to IRA

You may also be eligible for tax-free rollover treatment when you receive a
distribution from your employer's qualified retirement plan or from a
tax-sheltered annuity or custodial account.

In order to qualify for tax-free rollover treatment, a distribution from a
qualified retirement plan must constitute an "eligible rollover distribution."

Any distribution from an employer-sponsored tax-qualified retirement plan or
tax-sheltered annuity or custodial account will qualify as an eligible rollover
distribution unless it is one of the following:

(i) A distribution which is one of a series of substantially equal periodic
payments (not less frequently than annually) made for the life (or life
expectancy) of the employee or the lives (or joint life expectancies) of
the employee and the employee's designated beneficiary, or for a specified
period of 10 years or more.

(ii) The portion of a distribution representing the minimum annual distribution
required after an employee attains age 70 1/2 or dies.

(iii) The non-taxable portion of a distribution representing after-tax
contributions to the plan.

(iv) Certain corrective distributions of elective deferrals, after-tax
contributions and matching contributions.

(v) A distribution to a non-spouse beneficiary of a deceased participant.

(vi) A distribution pursuant to a qualified domestic relations order to an
alternate payee who is neither the participant's spouse or former spouse.

(vii) A distribution to a surviving spouse to the extent the distribution is
subject to the Death Benefit Exclusion under Code section 101(b).
9
<PAGE>
If an eligible rollover distribution is paid to you, it wiII be subject to
mandatory 20% federal income tax withholding. You cannot elect to waive this
withholding tax, even if you intend to take advantage of tax-free rollover
treatment. If cash is available from some other source equal to the amount
withheld and you transfer that amount plus the net amount of the distribution to
your IRA within sixty (60) days after the distribution, no portion of the
eligible rollover distribution will be taxable to you. You may be entitled to a
full refund of the 20% withheld, depending upon your tax situation for the year.
If you roll over only the amount of the distribution actually received by you
and do not roll over an amount equal to the 20% withheld, you will be taxed on
the 20% withheld, and may be subject to a 10% additional tax on premature
distributions if you are younger than age 59 1/2.

However, the 20% withholding can be avoided by making a "direct rollover" to
your IRA. A direct rollover is a direct payment by the distributing
tax-qualified retirement plan or tax-sheltered annuity or custodial account to
your IRA rather than to you. If your eligible rollover distribution is at least
$200, your employer's plan must give you the option to make a direct rollover of
your eligible rollover distribution to an IRA.

The eligible rollover distribution rules also apply to distributions to a
surviving spouse who is a beneficiary of a deceased participant. These rules
also apply to distributions to a spouse or former spouse who is an alternate
payee with respect to a participant's benefits under a qualified domestic
relations order.
DISTRIBUTIONS

The IRA distribution rules are similar to the rules for distributions from
qualified retirement plans, in accordance with proposed regulations issued by
the Secretary of the Treasury. As of the date of issuance of this Disclosure
Statement, the regulations have not been finalized. Accordingly, the description
below of the distribution rules will be subject to modification upon issuance of
final regulations.

(A) Normal Distributions

Your IRA is intended to provide a source of income to you upon your
retirement on or after age 59 1/2 or if you become disabled. Distributions other
than amounts rolled over into another IRA or qualified plan are taxed as
ordinary income in the year received by you. With certain exceptions,
distributions which occur prior to age 59 1/2 will be subject to a 10%
additional tax on premature distributions (explained below).

(B) Required Distributions

While distributions from your IRA may commence any time, such distributions
must commence on or before the first day of April of the year following the year
in which you attain age 70 1/2 (known as the "Required Beginning Date").
Distributions must be paid to you in accordance with one of the following
methods:

(i) A single lump sum payment; or

(ii) In monthly, quarterly or annual payments over a period certain not
extending beyond your life expectancy or the joint and last survivor
expectancy of you and your designated beneficiary.

Even though distributions may have commenced in the method explained in
option (ii) above, you may receive a distribution of the balance in your IRA at
any time. Distributions may be received in a single payment or in installment
payments (but distributions which will be rolled over must exclude any minimum
amount required to be distributed during that calendar year).

If you elect to have your IRA distributed in other than a single payment, the
amount to be distributed each year, beginning with the first calendar year for
which distributions are required and for each succeeding year, must be at
least equal to the amount determined by dividing the entire amount of your IRA
as of the preceding December 31 by your life expectancy or by the joint and last
survivor life expectancies of you and your designated beneficiary. If your
designated benficiary is not your spouse and is more than 10 years younger than
you, your beneficiary will be treated as if he/she were only 10 years younger
than you for purposes of determining the joint life expectancy of you and your
beneficiary. In order to enforce such minimum distribution requirements, a 50%
tax is imposed on the amount, if any, by which the minimum required distribution
exceeds the actual amount distributed. If the failure to make the minimum
distribution is due to a reasonable error and steps are taken to remedy such
error, the 50% tax may be waived by the Internal Revenue Service.

If you have more than one IRA, you can satisfy the minimum distribution
requirements by taking from one IRA the amount required to satisfy the
requirement for all other IRAs.

At the time that you establish your IRA, you have the right to select a
beneficiary who will be entitled to receive the balance in your IRA if you
should die prior to the complete distribution of your IRA. You have the right,
prior to the complete distribution of your IRA, to change your designation of
beneficiary. If you fail to properly designate a beneficiary, your estate will
be treated as your designated beneficiary.
10

<PAGE>

If you should die after the distribution of your IRA has commenced, the
remaining portion of your IRA will continue to be distributed at least as
rapidly as under the method of distribution being used prior to your death. If
you should die before the distribution of your IRA has commenced, the entire
interest in your IRA must be distributed in accordance with one of the following
provisions:

(i) The entire balance of your IRA is distributed by the December 31 of the
year containing the fifth anniversary of your death;

(ii) If the balance of your IRA is payable to a designated beneficiary, such
amount may be distributed in substantially equal periodic installments
over the life expectancy of the beneficiary commencing no later than the
December 31 of the year after your death;

(iii) If the designated beneficiary is your surviving spouse, your spouse may
elect to receive periodic payments over his/her life expectancy,
commencing at any date prior to the later of (1) the December 31 of the
year following your death or (2) the December 31 of the year in which you
would have attained age 70 1/2;

(iv) If the designated beneficiary is your surviving spouse, your spouse may
elect to treat your IRA as his/her own IRA and receive distributions under
the general distribution rules discussed above.

TAX TREATMENT OF DISTRIBUTIONS

(A) Income Tax

As a general rule, distributions from your IRA are taxable to you as ordinary
income. However, if non-deductible contributions have been made to your IRA,
the portion of your IRA distribution consisting of non-deductible contributions
will not be taxed again when received by you. If you make any non-deductible IRA
contributions, each distribution from your IRA will consist of a non-taxable
portion (return of non-deductible contributions) and a taxable portion (return
of deductible contributions, if any, and earnings). Thus, you may not take a
distribution which is entirely tax-free. The following formula is used to
determine the non-taxable portion of your distributions for a tax year:

Non-deductible Non-taxable
Contributions x Total Distribution = Distributions
---------------------- (for the year) (for the year)
Year-end IRA Balance

In determining your year-end IRA balance, you add back all distributions
taken during the year.

The following example illustrates how you will determine the non-taxable
portion of your distributions for a taxable year.

Example: Mary has made the following contributions to her IRA:

YEAR DEDUCTIBLE NON-DEDUCTIBLE
1985 $2,000 $0
1986 $2,000 $0
1987 $2,000 $0
1988 $1,000 $1,000
1989 $0 $2,000
------ ------
$7,000 $3,000

During 1990, Mary receives a $1,000 distribution from her IRA. On December
31, 1990 the total value of Mary's IRA is $11,000. The non-taxable portion of
the distribution she received during 1990 is determined as follows:

$3,000 x $1,000 = $250
--------------
11,000 + 1,000

To determine your year end balance you treat all of your IRAs as a single
IRA. This includes all regular IRAs, as well as simplified employee pension
(SEP) IRAs, salary reduction SEPs, and rollover IRAs.

A single lump sum distribution from your IRA is not entitled to special
10-year averaging, five-year averaging or capital gains treatment.

(B) Federal Income Tax Withholding

Distributions from your IRA are subject to Federal income tax withholding
unless the recipient elects in writing that no taxes be withheld. If the total
account balance or a portion of the account balance is distributed, then the
withheld amount will equal 10% of the distribution. If the distribution is part
of a series of periodic payments, the withheld amount will be calculated as if
the distribution were wages, and Form W-4P must be completed.

In general, distributions from your IRA which occur prior to age 59 1/2 will
be subject to adverse tax consequences. Not only will such distributions be
fully taxable to you as ordinary income (subject to the formula described above
for determining the non-taxable portion of your distribution), such
distributions will also be subject to a 10% additional premature distribution
tax.

In addition to the exceptions for rollovers and the return of excess
contributions discussed above, distributions on account of your death or
disability will be exempt from the 10% additional tax. You are considered

<PAGE>

disabled if you are unable to engage in any substantial gainful activity because
of a medically determinable physical or mental impairment which can be expected
to result in death or to be of long, continued and indefinite duration. In
addition, distributions before age 59 1/2 are not subject to the 10% tax if made
in the form of substantially equal periodic payments and are made for your life
(or life expectancy) or the joint lives (or joint life expectancies) of you and
your designated beneficiary.

A transfer of amounts held in your IRA to your spouse's or former spouse's
IRA pursuant to a divorce or separation instrument will not be taxable as
ordinary income or subject to the 10% additional tax.

(D) Gift Tax

Your designation of a beneficiary for your IRA will not be treated as a gift
and will not subject you to Federal gift taxes.

(E) Estate Tax

Any amounts remaining in your IRA after your death will be included in your
gross estate and may be subject to Federal estate tax.

BORROWING/PROHIBITED TRANSACTIONS

You may not use the IRA or any portion of the IRA as security for a loan. If
you do, the portion pledged as security will be treated as distributed to you,
and will thus be includable in your taxable income for that year. Certain other
transactions (called "prohibited transactions" in the Code) may also result in
the disqualification of your IRA and the inclusion in income of the fair market
value of the IRA. Neither you, nor your beneficiary, may engage in any of the
following prohibited transactions with the IRA:

(a) a sale, exchange, or leasing of any property;

(b) lending of money or other extension of credit;

(d) the transfer or use of income or assets of the IRA by you or your
beneficiary.

If such transactions are engaged in, your IRA will be disqualified and will
lose its tax-exempt status. Under such circumstances, your IRA will be
considered to have been distributed to you and will be subject to the income and
additional taxes discussed above.

REPORTING TO THE IRS

(A) FORM 5329

If a transaction has occurred upon which a special penalty tax is imposed,
such as an excess contribution, a premature distribution or a failure to make a
timely distribution, you are required to file Form 5329 with your income tax
return for the year of the transaction. Form 5329 need not be filed if the only
activity for the year is the making of contributions or the distribution of
permissible benefits.

(B) FORM 8606

You are required to file Form 8606 if you make a non-deductible IRA
contribution.

IRS APPROVAL

The Delaware Group Prototype IRA has previously been approved by the Internal
Revenue Service as to its written form. Since that time, it has been amended to
conform to changes in the law and has been resubmitted to the Internal Revenue
Service for approval. At the time this Disclosure Statement was prepared, the
Internal Revenue Service had not reviewed the amendments.

Please be aware that the Internal Revenue Service's approval is a
determination only as to the form of the IRA and does not represent a
determination as to the merits of your particular IRA.

IRA ACCOUNT BALANCE

Each of the mutual fund shares held in your IRA has an equal interest in the
assets, net investment income and capital gains of the mutual fund selected. The
value of the shares is dependent upon, among other things, the market values of
the securities in the mutual fund's investment portfolio, which are subject to
fluctuation; therefore, growth in the value of your IRA cannot be projected or
guaranteed. Dividends from net investment income and any capital gains
distributions paid by the mutual fund selected will be reinvested in fund shares
at the net asset value thereof as of the respective ex-dividend dates, and such
additional shares will be credited to your IRA.

<PAGE>

FEES AND CHARGES

(A) IRA Fees

In general, there is an annual maintenance fee (currently $15 per year) for
your IRA. If an investor owns more than one Delaware Group IRA or opens a
Delaware Group IRA and invests in multiple funds within the Delaware Group,
however, only one fee per Social Security number will be charged. IRA fees are
deducted from the IRA during May of each year, unless paid directly by the
shareholder to the Custodian prior to May of each calendar year. The IRA fees
are subject to change.

(B) Mutual Fund Sales Charges

A sales charge will be made against your investment except for Delaware Group
Cash Reserve and Delaware Group U.S. Government Money Fund. For investments
under $1 million, sales charge rates range from a maximum of 8.50% to 1.5% of
the offering price of the fund shares. Depending on the Delaware Group fund
selected, the maximum rate applicable to an initial $1,000 contribution would be
8.50%, 5.75%, 4.75% or 3.00%. The maximum rate is applicable to subsequent
contributions of $1,000 until the value of the fund shares meets or exceeds a
level that qualifies the shareholder to receive a reduced sales charge. An
account value of $10,000 reduces the sales charge for funds at the maximum 8.50%
level to 7.75%. The sales charge for funds with a maximum of 5.75% is reduced to
4.75% when the account reaches $100,000.

The sales charge for funds with a maximum of 4.75% is reduced to 3.75% when
the account reaches $100,000. The sales charge for funds with a maximum of 3.00%
is reduced to 2.50% when the account reaches $100,000. Further sales charge
reductions at lower rates are applicable on larger purchases and on purchases
under the fund's Right of Accumulation and Letter of Intention. Group purchases
that meet our minimum standard may be subject to a different sales charge.
Reduced sales charges also apply to the combination of shares of any of the
funds in the Delaware Group (except Delaware Group Cash Reserve and Delaware
Group U.S. Government Money Fund, unless they were acquired through an exchange
or unless the inclusion of such shares brings your total account balance to $1
million) held by you and those held in your IRA.

Neither the fund nor the national distributor makes a charge for redemptions
or repurchases.

(D) Further Details

Please refer to the prospectus of the fund or funds selected as your
investment for further details, including current charges and expenses.

QUALIFIED TAX ADVICE

The above is only a general description of taxation of IRAs. Because of the
unfavorable tax consequences which could result from the improper establishment
or use of an IRA, you may wish to consult with an attorney or qualified tax
adviser. Neither Delaware Management Company, Inc., Delaware Service Co., Inc.,
the Delaware Group of Funds nor the Custodian assumes any liability for tax
consequences to investors or beneficiaries arising from IRAs.

<PAGE>

DELAWARE
GROUP
========
IRA

(PHOTO OF LARGE KEY)

|| PLAN DOCUMENT
|| TERMS AND CONDITIONS
|| DISCLOSURE STATEMENT
||=========================

THE DELAWARE ORGANIZATION
| | Delaware Management Company, Inc.
Investment Manager

| | Delaware Distributors, L.P.
National Distributor

| | Delaware Service Company, Inc.
Shareholder Servicing, Dividend
Disbursing and Transfer Agent

| | Delaware Management Trust Company
Custodian

RETIREMENT
1818 Market Street PLANNING (LOGO)
Philadelphia, PA 19103-3682 IS THE KEY
800-523-4640
In Philadelphia 215-988-1333

RL-101-150M-12/93-U
Printed in the U.S.A.

<PAGE>

CLAIMS PROCEDURE

The Employer shall establish a claims procedure in accordance with the
requirements of the Employee Retirement Income Security Act of 1974, as amended,
if applicable, for the presentation of claims under the terms of the SEP
Document. A claim is a request for a plan benefit, including participation and
contributions, by an Employee or Beneficiary. The Employer shall make all
determinations as to the eligibility of any Employee for plan participation or
Employer contribution. In the event the claim is denied, the Employer shall
provide written notice of its determination to the Employee or Beneficiary
within ninety (90) days after receipt of the claim unless special circumstances
require an extension of time for processing the claim. If such an extension of
time for processing is required, written notice of the extension shall be
furnished to the claimant prior to the termination of the initial 90-day
period. The written notice will be set forth in a manner that may be understood
by the claimant and shall include:

1) The reason for the denial.

2) Specific reference to pertinent plan provisions on which the denial is
based.

3) Additional information necessary for the claimant to perfect the claim and
why the information is necessary.

4) Information about the procedures for submitting the denied claim for
review.

RL-210-1/93-5M-U

[FORM OF 12b-1 PLAN FOR CLASS A SHARES]

12b-1 Plan
Class A

The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule l2b-l under the Investment Company Act of l940 (the "Act") by [FUND
NAME] (the "Fund")[, now for the [SERIES NAME] (the "Series")] on behalf of the
_____________ class [now doing business as the _____________ A Class]
(hereinafter referred to as the "Class"), which Fund[, Series] and Class may do
business under these or such other names as the Board of [Directors/Trustees] of
the Fund may designate from time to time. The Plan has been approved by a
majority of the Board of [Directors/Trustees], including a majority of the
[Directors/Trustees] who are not interested persons of the Fund and who have no
direct or indirect financial interest in the operation of the Plan or in any
agreements related thereto ("non-interested [Directors/Trustees]"), cast in
person at a meeting called for the purpose of voting on such Plan. Such approval
by the [Directors/Trustees] included a determination that in the exercise of
reasonable business judgment and in light of their fiduciary duties, there is a
reasonable likelihood that the Plan will benefit the Class and its shareholders.
If the Plan has not yet been approved by a majority of the outstanding voting
securities as required in the Act, the Plan will be presented to the public
shareholders at the next regular annual or special meeting.

<PAGE>

The Plan provides that:

l. The Fund shall pay to the Distributor a monthly fee not to exceed
0.3% (3/10 of l%) per annum of the [Fund's/Series'] average daily net assets
represented by shares of the Class (the "Maximum Amount") as may be determined
by the Fund's Board of [Directors/Trustees] from time to time. Such monthly fee
shall be reduced by the aggregate sums paid by the Fund [on behalf of the
Series] to persons other than broker-dealers (the "Service Providers") who may,
pursuant to servicing agreements, provide to the [Fund/Series] services in the
[Fund's/Series'] marketing of shares of the Class.

2. (a) The Distributor shall use the monies paid to it pursuant to
paragraph l above to furnish, or cause or encourage others to furnish, services
and incentives in connection with the promotion, offering and sale of Class
shares and, where suitable and appropriate, the retention of Class shares by
shareholders.

(b) The Service Providers shall use the monies paid respectively to
them to reimburse themselves for the actual costs they have incurred in
confirming that their customers have received the Prospectus and Statement of
Additional Information, if applicable, and as a fee for (l) assisting such
customers in maintaining proper records with the Fund (2) answering questions
relating to their respective accounts and (3) aiding in maintaining the
investment of their respective customers in the Class.

<PAGE>

3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under the Plan. The Service
Providers shall inform the Fund monthly and in writing of the amounts each
claims under the Plan; both the Distributor and the Service Providers shall
furnish the Board of [Directors/Trustees] of the Fund with such other
information as the Board may reasonably request in connection with the payments
made under the Plan and the use thereof by the Distributor and the Service
Providers, respectively, in order to enable the Board to make an informed
determination of the amount of the Fund's payments and whether the Plan should
be continued.

5. This Plan shall take effect at such time as the Distributor shall
notify the Fund in writing of the commencement of the Plan, which time shall not
be before the first annual or special meeting of the public shareholders at
which the Plan is or was approved by the vote of a majority of the outstanding
voting securities as required in the Act (the "Commencement Date"); thereafter,
the Plan shall continue in effect for a period of more than one year from the
Commencement Date only so long as such continuance is specifically approved at
least annually by a vote of the Board of [Directors/Trustees] of the Fund, and
of the non-interested [Directors/Trustees], cast in person at a meeting called
for the purpose of voting on such Plan.

6. (a) The Plan may be terminated at any time by vote of a majority of
the non-interested [Directors/Trustees] or by vote of a majority of the
outstanding voting securities of the Class.

(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph l thereof without approval by
the shareholders of the Class.

7. All material amendments to this Plan shall be approved by the
non-interested [Directors/Trustees] in the manner described in paragraph 5
above.

<PAGE>

8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested [Directors/Trustees] shall be committed to the
discretion of such non-interested [Directors/Trustees].

9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
of the outstanding voting securities," respectively, for the purposes of this
Plan.

This Plan shall take effect on the Commencement Date, as previously
defined.

November 29, 1995

[FORM OF 12b-1 PLAN FOR CLASS B SHARES]

12b-1 Plan
Class B

The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by [FUND
NAME] (the "Fund") [,for the [SERIES NAME] (the "Series")] on behalf of the
_______________________ B Class (the "Class"), which Fund[, Series] and Class
may do business under these or such other names as the Board of
[Directors/Trustees] of the Fund may designate from time to time. The Plan has
been approved by a majority of the Board of [Directors/Trustees], including a
majority of the [Directors/Trustees] who are not interested persons of the Fund
and who have no direct or indirect financial interest in the operation of the
Plan or in any agreements related thereto ("non-interested
[Directors/Trustees]"), cast in person at a meeting called for the purpose of
voting on such Plan. Such approval by the [Directors/Trustees] included a
determination that in the exercise of reasonable business judgment and in light
of their fiduciary duties, there is a reasonable likelihood that the Plan will
benefit the Class and its shareholders. The Plan has been approved by a vote of
the holders of a majority of the outstanding voting securities of the Class, as
defined in the Act.

<PAGE>

The Plan provides that:

1. (a) The Fund shall pay to the Distributor a monthly fee not to
exceed 0.75% (3/4 of 1%) per annum of the [Fund's/Series'] average daily net
assets represented by shares of the Class as may be determined by the Fund's
Board of [Directors/Trustees] from time to time.

(b) In addition to the amounts described in (a) above, the Fund
shall pay (i) to the Distributor for payment to dealers or others, or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
[Fund's/Series'] average daily net assets represented by shares of the Class, as
a service fee pursuant to dealer or servicing agreements.

2. (a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for,
among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation related to sales and marketing personnel, and holding special
promotions. In addition, such fees may be used to pay for advancing the
commission costs to dealers with respect to the sale of Class shares.

(b) The monies to be paid pursuant to paragraph 1(b) above shall be
used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include confirming
that customers have received the Prospectus and Statement of Additional
Information, if applicable; assisting such customers in maintaining proper
records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.

3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under paragraph 1(a) above. In
addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
any others receiving fees under the Plan shall furnish the Board of
[Directors/Trustees] of the Fund with such other information as the Board may
reasonably request in connection with the payments made under the Plan and the
use thereof by the Distributor and others in order to enable the Board to make
an informed determination of the amount of the Fund's payments and whether the
Plan should be continued.

<PAGE>

5. This Plan shall take effect at such time as the Distributor shall
notify the Fund of the commencement of the Plan (the "Commencement Date");
thereafter, the Plan shall continue in effect for a period of more than one year
from the Commencement Date only so long as such continuance is specifically
approved at least annually by a vote of the Board of [Directors/Trustees] of the
Fund, and of the non-interested [Directors/Trustees], cast in person at a
meeting called for the purpose of voting on such Plan.

6.(a) The Plan may be terminated at any time by vote of a majority
of the non-interested [Directors/Trustees] or by vote of a majority of the
outstanding voting securities of the Class.

(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph 1 thereof without approval by
the shareholders of the Class.