SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
File No. 2-28871
File No. 811-1485
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No. _____
Post-Effective Amendment No. 57 X
_____
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 57 X
DELAWARE GROUP EQUITY FUNDS III, INC.
_______________________________________________________________________
(Exact Name of Registrant as Specified in Charter)
1818 Market Street, Philadelphia, Pennsylvania 19103
_______________________________________________________________________
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (215) 255-2923
__________________
George M. Chamberlain, Jr., 1818 Market Street, Philadelphia, PA 19103
_______________________________________________________________________
(Name and Address of Agent for Service)
Approximate Date of Public Offering: August 28, 1998
__________________
It is proposed that this filing will become effective:
_____ immediately upon filing pursuant to paragraph (b)
X on August 28, 1998 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
If appropriate:
_____ this post-effective amendment designates a new effective
date for a previously filed post-effective amendment
Title of Securities Being Registered
------------------------------------
Trend Fund A Class
Trend Fund B Class
Trend Fund C Class
Trend Fund Institutional Class
--- C O N T E N T S ---
This Post-Effective Amendment No. 57 to Registration File No. 2-28871
includes the following:
1. Facing Page
2. Contents Page
3. Cross-Reference Sheets
4. Part A - Prospectuses
5. Part B - Statement of Additional Information
6. Part C - Other Information
7. Signatures
CROSS-REFERENCE SHEET*
----------------------
PART A
-------
Location in
Item No. Description Prospectuses
- -------- --------------- ------------
A Class/ Institutional
B Class/ Class
C Class
1 Cover Page Cover Cover
2 Synopsis Synopsis; Synopsis;
Summary Summary
of Expenses of Expenses
3 Condensed
Financial Information Financial Financial
Highlights Highlights
4 General Description
of Registrant Investment Investment
Objective and Objective and
Policies; Shares; Policies;Shares;
Other Investment Other Investment
Policies and Risk Policies and Risk
Considerations Considerations
5 Management of the Fund Management of Management of
the Fund the Fund
6 Capital Stock and Other
Securities The Delaware Dividends and
Difference; Dividends Distributions
and Distributions; Taxes; Shares
Taxes; Shares (under (under Management
Management of the Fund) of the Fund)
7 Purchase of Securities
Being Offered Cover; Cover;
Classes of Shares; Classes of Shares;
How to Buy How to Buy
Shares; Calculation Shares;
of Offering Price Calculation of
and Net Asset Value Net Asset Value;
Per Share; Per Share;
Management of Management of
the Fund the Fund
8 Redemption or
Repurchase Classes of Shares; Classes of Shares;
How to Buy How to Buy
Shares; Redemption Shares; Redemption
and Exchange and Exchange
9 Legal Proceedings None None
* This filing relates to Registrant's Trend Fund A Class, Trend Fund B
Class, Trend Fund C Class and Trend Fund Institutional Class. Class A
Shares, Class B Shares and Class C Shares are combined in one prospectus,
and the Institutional Class of shares is described in a separate
prospectus. The four classes have a common Statement of Additional
Information and Part C.
CROSS-REFERENCE SHEET*
----------------------
PART B
-------
Location in Statement
Item No. Description of Additional Information
- -------- ----------- -------------------------
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
CROSS-REFERENCE SHEET
----------------------
PART C
-------
Location in
Item No. Description Part 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
[GRAPHIC OMITTED: LOGO OF DELAWARE INVESTMENTS
----------------------------
Philadelphia * London]
DELAWARE INVESTMENTS
A Class
B Class
C Class
TREND FUND
PROSPECTUS
AUGUST 28, 1998
[GRAPHIC OMITTED: ILLUSTRATION OF TWO MEN AND A WOMAN GARDENING]
Table of
Contents
COVER PAGE
SYNOPSIS
SUMMARY OF EXPENSES
FINANCIAL HIGHLIGHTS
INVESTMENT OBJECTIVE AND POLICIES
Suitability and Certain Risk Factors
Investment Strategy
THE DELAWARE DIFFERENCE
Plans and Services
CLASSES OF SHARES
HOW TO BUY SHARES
REDEMPTION AND EXCHANGE
DIVIDENDS AND DISTRIBUTIONS
TAXES
CALCULATION OF OFFERING PRICE AND
NET ASSET VALUE PER SHARE
MANAGEMENT OF THE FUND
OTHER INVESTMENT POLICIES AND
RISK CONSIDERATIONS
Trend Fund
A Class/B Class/C Class Prospectus
August 28, 1998
1818 Market Street, Philadelphia, PA 19103
For Prospectus and Performance:
Nationwide 800-523-1918
Information on Existing Accounts:
(SHAREHOLDERS ONLY)
Nationwide 800-523-1918
Dealer Services:
(BROKER/DEALERS ONLY)
Nationwide 800-362-7500
Representatives of Financial Institutions:
Nationwide 800-659-2265
This Prospectus describes shares of Trend Fund series (the "Fund")
of Delaware Group Equity Funds III, Inc. ("Equity Funds III, Inc."), a
professionally-managed mutual fund of the series type. The Fund's
objective is to achieve capital by investing primarily in securities of
emerging and other growth-oriented companies.
The Fund offers Trend Fund A Class ("Class A Shares"), Trend Fund B
Class ("Class B Shares") and Trend Fund C Class ("Class C Shares")
(individually, a "Class" and collectively, the "Classes").
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. The Fund's Statement of
Additional Information ("Part B" of Equity Funds III, Inc.'s
registration statement), dated August 28, 1998, 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 (the "SEC"). 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 SEC also maintains a Web site (http://www.sec.
gov) that contains Part B, material we incorporated by reference and
other information regarding registrants that electronically file with
the SEC.
The Fund also offers Trend Fund Institutional Class, which is available
for purchase only by certain investors. A prospectus for Trend Fund
Institutional Class can be obtained by writing to Delaware Distributors,
L.P. at the above address or by calling the above number.
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 THE PRINCIPAL AMOUNT INVESTED. SHARES OF THE FUND ARE NOT BANK OR
CREDIT UNION DEPOSITS.
Synopsis
Investment Objective
The investment objective of the Fund is to achieve capital
appreciation by investing primarily in securities of emerging and other
growth-oriented companies. For further details, see Investment Objective
and Policies and Other Investment Policies and Risk Considerations.
Risk Factors and Special Considerations
The prices of common stocks, especially those of smaller companies,
tend to fluctuate, particularly in the shorter term. Investors should be
willing to accept the risks associated with investments in emerging and
growth-oriented companies, some of the securities of which may be
speculative and subject the Fund to an additional investment risk. See
Suitability and Certain Risk Factors under Investment Objective and
Policies.
Investment Manager, Distributor
and Transfer Agent
Delaware Management Company (the "Manager") furnishes investment
management services to the Fund, subject to the supervision and
direction of Equity Funds III, Inc.'s Board of Directors. The Manager
also provides investment management services to certain of the other
funds in the Delaware Investments family. Delaware Distributors, L.P.
(the "Distributor") is the national distributor for the Fund and for all
of the other mutual funds in the Delaware Investments family. Delaware
Service Company, Inc. (the "Transfer Agent") is the shareholder
servicing, dividend disbursing, accounting services and transfer agent
for the Fund and for all of the other mutual funds in the Delaware
Investments family.
See Summary of Expenses and Management of the Fund for further
information regarding the Manager and the fees payable under the Fund's
Investment Management Agreement.
Sales Charges
The price of Class A Shares includes a maximum front-end sales
charge of 4.75% of the offering price. The front-end 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; if a dealer's commission is paid in connection
with those purchases, a contingent deferred sales charge ("Limited
CDSC") of 1% will be imposed if shares are redeemed during the first
year after the purchase and 0.50% will be imposed if shares are redeemed
during the second year after the purchase. See Contingent Deferred Sales
Charge for Certain Redemptions of Class A Shares Purchased at Net Asset
Value under Redemption and Exchange. Class A Shares are also subject to
annual 12b-1 Plan expenses for the life of the investment.
The price of 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; (iv) 1% if shares
are redeemed during the sixth year following purchase; and (v) 0%
thereafter. Class B Shares are subject to annual 12b-1 Plan expenses
which are assessed against such shares for approximately eight years
after purchase. See Deferred Sales Charge Alternative -- Class B Shares
and Automatic Conversion of Class B Shares under Classes of Shares.
The price of 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 12 months of purchase. Class C Shares are subject to annual
12b-1 Plan expenses which are assessed against such shares for the life
of the investment.
See Classes of Shares, and Distribution (12b-1) and Service under
Management of the Fund.
Purchase Amounts
The minimum initial investment for each Class generally is $1,000.
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 in Class A Shares and that Class A Shares are
subject to lower annual 12b-1 Plan expenses than Class B Shares and
Class C Shares and generally are not subject to a CDSC. The minimum and
maximum purchase amounts for retirement plans may vary. See How to Buy
Shares.
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 CDSC if a dealer's commission was paid in connection with such
purchases. See Front-End Sales Charge Alternative -- Class A Shares
under Classes of Shares.
Class B Shares and Class C Shares may be redeemed or exchanged at
the net asset value next 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 additional
charges for redemptions or exchanges of Class B Shares 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.
Open-End Investment Company
Equity Funds III, Inc. is an open-end management investment
company. The Fund's portfolio of assets is diversified as defined by the
Investment Company Act of 1940 (the "1940 Act"). Equity Funds III, Inc.
originally was organized as a Delaware corporation in 1966 and
reorganized as a Maryland corporation on March 4, 1983. See Shares under
Management of the Fund.
<TABLE>
<CAPTION>
Summary of
Expenses
A general comparison of the sales arrangements and other expenses applicable to
Class A Shares, Class B Shares and Class C Shares follows:
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,
whichever is lower) None(1) 4.00%(2) 1.00%(3)
Redemption Fees(4) None None None
<CAPTION>
Annual Operating Expenses
(as a percentage of Class A Class B Class C
average daily net assets) Shares Shares Shares
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fees 0.75% 0.75% 0.75%
12b-1 Expenses (including service fees)(5) 0.25%(6) 1.00% 1.00%
Other Operating Expenses 0.34% 0.34% 0.34%
-------- -------- --------
Total Operating Expenses 1.34% 2.09% 2.09%
======== ======== ========
1 Class A purchases of $1,000,000 or more may be made at net asset value. However,
if in connection with any such purchase a dealer commission is paid to the
financial adviser through whom such purchase is effected, a Limited CDSC of 1%
will be imposed on certain redemptions made during the first year after the
purchase and 0.50% will be imposed on certain redemptions made during the second
year after the purchase. Additional Class A purchase options involving the
imposition of a CDSC may be permitted as described in this Prospectus from time to
time. See Contingent Deferred Sales Charge for Certain Redemptions of Class A
Shares Purchased at Net Asset Value under Redemption and Exchange.
2 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 are redeemed during the sixth year following
purchase; and (v) 0% thereafter. See Deferred Sales Charge Alternative -- Class B
Shares and Contingent Deferred Sales Charge -- Class B Shares and Class C Shares
under Classes of Shares.
3 Class C Shares are subject to a CDSC of 1% if the shares are redeemed within 12
months of purchase. See Level Sales Charge Alternative -- Class C Shares and
Contingent Deferred Sales Charge -- Class B Shares and Class C Shares under
Classes of Shares.
4 CoreStates Bank, N.A. currently charges $7.50 per redemption for redemptions
payable by wire.
5 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.
6 The actual 12b-1 Plan expenses to be paid and, consequently, the Total Operating
Expenses of Class A Shares may vary because of the formula adopted by the Board of
Directors for use in calculating the 12b-1 Plan expenses for this Class beginning
June 1, 1992, but the 12b-1 Plan expenses will not be more than 0.30% nor less
than 0.10%. See Distribution (12b-1) and Service under Management of the Fund, and
Part B.
Investors utilizing the Asset Planner asset allocation service also typically
incur an annual maintenance fee of $35 per Strategy. However, the annual
maintenance fee is waived until further notice. Investors who utilize the Asset
Planner for an Individual Retirement Account ("IRA") will pay an annual IRA fee of
$15 per Social Security number. See Asset Planner in Part B.
For expense information about Trend Fund Institutional Class, see the separate
prospectus relating to that class.
The following example illustrates the expenses that an investor would pay on
a $1,000 investment in the Classes over various time periods assuming (1) a 5%
annual rate of return, (2) redemption and no redemption at the end of each time
period and (3) for Class B Shares and Class C Shares, payment of a CDSC at the time
of redemption, if applicable.
<CAPTION>
Assuming Redemption Assuming No Redemption
1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years
------ ------- ------- -------- ------ ------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A Shares $61 $88 $117 $201 $61 $88 $117 $201
Class B Shares $61 $95 $132 $223(2) $21 $65 $112 $223(2)
Class C Shares $31 $65 $112 $242 $21 $65 $112 $242
1 Generally, no redemption charge is assessed 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 two years after a
purchase. See Contingent Deferred Sales Charge for Certain Redemptions of Class A
Shares Purchased 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. The ten-year expense numbers for Class B Shares reflect the expenses of
Class B Shares for years one through eight and the expenses for Class A Shares for
years nine and ten. See Automatic Conversion of Class B Shares under Classes of
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.
The purpose of the above tables is to assist investors in understanding the
various costs and expenses that they will bear directly or indirectly in owning
shares of the Fund.
</TABLE>
<TABLE>
<CAPTION>
Financial
Highlights
The following financial highlights are derived from the financial statements of
Trend Fund of Delaware Group Equity Funds III, 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, 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 Equity Funds III, Inc. upon request at no charge.
Class A Shares
------------------------------------------------------------------------
Year Ended
6/30/98(1) 6/30/97(1) 6/30/96(1) 6/30/95(1) 6/30/94(1)
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $16.730 $18.160 $14.210 $12.210 $13.980
Income From
Investment Operations
Net Investment Income
(Loss)(2) (0.126) (0.075) (0.127) (0.074) (0.042)
Net Gain (Loss) on
Securities
(both realized and
unrealized) 3.886 0.155 4.977 2.864 0.212
-------- -------- -------- -------- --------
Total from Investment
Operations 3.760 0.080 4.850 2.790 0.170
-------- -------- -------- -------- --------
Less Dividends and
Distributions
Dividends from Net
Investment Income none none none none none
Distributions from
Net Realized Gains (1.940) (1.510) (0.900) (0.790) (1.940)
-------- -------- -------- -------- --------
Total Dividends and
Distributions (1.940) (1.510) (0.900) (0.790) (1.940)
-------- -------- -------- -------- --------
Net Asset Value,
End of Year $18.550 $16.730 $18.160 $14.210 $12.210
======== ======== ======== ======== ========
Total Return(3) 23.97% 1.67% 35.53% 24.40% 0.59%
Ratios and Supplemental
Data
Net Assets, End of Year
(000's omitted) $469,152 $428,309 $497,188 $318,933 $253,964
Ratio of Expenses to
Average Daily Net
Assets 1.34% 1.34% 1.31% 1.36% 1.37%
Ratio of Net Investment
Income (Loss) to
Average Daily Net
Assets (0.70%) (0.47%) (0.79%) (0.58%) (0.72%)
Portfolio Turnover Rate 114% 115% 90% 64% 67%
Average Commission Rate
Paid(4) $0.060 $0.059 $0.056 N/A N/A
- ------------------
1 Reflects 12b-1 distribution expenses beginning June 1, 1992.
2 1995, 1996, 1997 and 1998 per share information was based on the average shares
outstanding method.
3 Does not reflect any maximum front-end sales charge nor the Limited CDSC that
varies from 0.50%-1% depending on the holding period for Class A Shares, applicable
to certain redemptions made within two years after purchase. See Contingent
Deferred Sales Charge for Certain Redemptions of Class A Shares Purchased at Net
Asset Value.
4 Computed by dividing the total amount of commissions paid by the total number of
shares purchased and sold during the period for which there was a commission
charged.
<CAPTION>
Class A Shares
------------------------------------------------------------------------
Year Ended
<S> <C> <C> <C> <C> <C>
6/30/93(1) 6/30/92(1) 6/30/91 6/30/90 6/30/89
Net Asset Value,
Beginning of Year $11.380 $8.920 $9.970 $10.870 $8.130
Income From
Investment Operations
Net Investment Income
(Loss)(2) (0.004) (0.005) (0.020) 0.146 0.018
-------- -------- -------- -------- --------
Net Gain (Loss) on
Securities
(both realized and
unrealized) 3.754 2.625 (0.460) 1.224 3.042
-------- -------- -------- -------- --------
Total from Investment
Operations 3.750 2.620 (0.480) 1.370 3.060
-------- -------- -------- -------- --------
Less Dividends and
Distributions
Dividends from Net
Investment Income none none (0.050) (0.050) none
Distributions from
Net Realized Gains (1.150) (0.160) (0.520) (2.220) (0.320)
-------- -------- -------- -------- --------
Total Dividends and
Distributions (1.150) (0.160) (0.570) (2.270) (0.320)
-------- -------- -------- -------- --------
Net Asset Value,
End of Year $13.980 $11.380 $8.920 $9.970 $10.870
======== ======== ======== ======== ========
Total Return(3) 35.24% 29.31% (4.82%) 14.32% 39.27%
Ratios and Supplemental
Data
Net Assets, End of Year
(000's omitted) $219,826 $124,548 $78,631 $88,274 $67,111
Ratio of Expenses to
Average Daily Net
Assets 1.33% 1.18% 1.29% 1.27% 1.28%
Ratio of Net Investment
Income (Loss) to
Average Daily Net
Assets (0.61%) (0.43%) (0.24%) 0.82% 0.19%
Portfolio Turnover Rate 75% 76% 67% 80% 48%
Average Commission Rate
Paid(4) N/A N/A N/A N/A N/A
- ------------------
1 Reflects 12b-1 distribution expenses beginning June 1, 1992.
2 1995, 1996, 1997 and 1998 per share information was based on the average shares
outstanding method.
3 Does not reflect any maximum front-end sales charge nor the Limited CDSC that
varies from 0.50%-1% depending on the holding period for Class A Shares, applicable
to certain redemptions made within two years after purchase. See Contingent
Deferred Sales Charge for Certain Redemptions of Class A Shares Purchased at Net
Asset Value.
4 Computed by dividing the total amount of commissions paid by the total number of
shares purchased and sold during the period for which there was a commission
charged.
</TABLE>
<TABLE>
<CAPTION>
Class B Shares Class C Shares
---------------------- ----------------------
Period Period
9/6/94(1) 11/29/95(2)
Year Ended through Year Ended through
6/30/98 6/30/97 6/30/96 6/30/95 6/30/98 6/30/97 6/30/96
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset
Value,
Beginning
of Period $16.370 $17.920 $14.130 $12.110 $16.540 $18.090 $15.460
Income From
Investment
Operations
Net
Investment
Loss(3) (0.252) (0.189) (0.248) (0.142) (0.255) (0.197) (0.253)
Net Gains on
Securities
(both
realized
and
unrealized) 3.782 0.149 4.938 2.162 3.825 0.157 3.233
-------- -------- -------- -------- -------- -------- --------
Total from
Investment
Operations 3.530 (0.040) 4.690 2.020 3.570 (0.040) 2.980
-------- -------- -------- -------- -------- -------- --------
Less Dividends
and Distributions
Dividends
from Net
Investment
Income none none none none none none none
Distributions
from Net
Realized
Gains (1.940) (1.510) (0.900) none (1.940) (1.510) (0.350)
-------- -------- -------- -------- -------- -------- --------
Total
Dividends
and
Distributions (1.940) (1.510) (0.900) none (1.940) (1.510) (0.350)
-------- -------- -------- -------- -------- -------- --------
Net Asset Value,
End of Period $17.960 $16.370 $17.920 $14.130 $18.170 $16.540 $18.090
======== ======== ======== ======== ======== ======== ========
Total Return(4) 23.09% 0.96% 34.55% 16.68% 23.09% 0.95% 19.66%
Ratios and
Supplemental Data
Net Assets,
End of Period
(000's omitted) $71,470 $55,047 $35,090 $5,175 $14,259 $11,477 $6,359
Ratio of Expenses
to Average Daily
Net Assets 2.09% 2.09% 2.06% 2.12% 2.09% 2.09% 2.06%
Ratio of Net
Investment Loss
to Average Daily
Net Assets (1.45%) (1.25%) (1.54%) (1.34%) (1.45%) (1.28%) (1.54%)
Portfolio
Turnover Rate 114% 115% 90% 64% 114% 115% 90%
Average
Commission
Rate Paid(5) $0.060 $0.059 $0.056 N/A $0.060 $0.059 $0.056
1 Date of initial public offering; ratios have been annualized but total return for
the limited period between September 6, 1994 and June 30, 1995 has not been
annualized.
2 Date of initial public offering; ratios have been annualized but total return for
the limited period between November 29, 1995 and June 30, 1996 has not been
annualized.
3 1995, 1996, 1997 and 1998 per share information was based on the average shares
outstanding method.
4 Does not reflect the CDSC which varies from 1% -- 4% depending upon the holding
period for Class B Shares and 1% for Class C Shares for 12 months from the date
of purchase. See Contingent Deferred Sales Charge -- Class B Shares and Class C
Shares under Classes of Shares.
5 Computed by dividing the total amount of commissions paid by the total number of
shares purchased and sold during the period for which there was a commission
charged.
</TABLE>
Investment Objective
and Policies
SUITABILITY AND CERTAIN RISK FACTORS
The Fund may be suitable for investors interested in long-term
capital appreciation. The prices of common stocks, especially those of
smaller companies, tend to fluctuate, particularly in the shorter term.
The Fund's net asset value also 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 short-term
investors. Investors should be willing to accept the risks associated
with investments in securities of growth-oriented and emerging issuers,
some of which may be speculative and subject the Fund to an additional
investment risk.
* * *
Ownership of Fund shares can reduce the bookkeeping and
administrative inconvenience which is typically connected with direct
purchases of the types of securities in which the Fund invests.
Investors should not consider a purchase of shares of the Fund as
equivalent to a complete investment program. Delaware Investments offers
funds, generally available through registered dealers, which may be used
together to create a more complete investment program.
INVESTMENT STRATEGY
The objective of the Fund is long-term capital appreciation. The
Fund's strategy is to invest primarily in the common stocks and
securities convertible into common stocks of emerging and other growth-
oriented companies which, in the opinion of the Manager, are responsive
to changes within the marketplace and have the fundamental
characteristics to support growth.
The Fund will seek to identify changing and dominant trends within
the economy, the political arena and our society. The Fund will purchase
securities which it believes will benefit from these trends and which
have the fundamentals to exploit them. The fundamentals include
managerial skills, product development and sales and earnings.
In investing for capital appreciation, the Fund may hold securities
for any period of time. The Fund may also invest in foreign securities.
This Fund is designed primarily for capital appreciation. Providing
current income is not an objective of the Fund. Any income produced is
expected to be minimal. Though income is not an objective of the Fund,
should the market warrant a temporary defensive approach, the Fund may
also invest in cash equivalents, and fixed-income obligations issued or
guaranteed by the U.S. government, its agencies or instrumentalities, as
well as corporate bonds.
Although the Fund will constantly strive to attain the objective of
long-term capital growth, there can be no assurance that it will be
attained. The objective of the Fund may not be changed without
shareholder approval.
* * *
If there were a national credit crisis, an issuer became insolvent
or interest rates were to rise, principal values could be adversely
affected.
For additional information on the Fund's investment policies and
certain risks associated with investments in certain types of
securities, see Other Investment Policies and Risk Considerations.
Part B sets forth other more specific investment restrictions. A
brief discussion of those factors that materially affected the Fund's
performance during its most recently completed fiscal year appears in
the Fund's Annual Report.
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 funds in
the Delaware Investments family of funds.
SHAREHOLDER PHONE DIRECTORY
Shareholder Service Center and
Investor Information Center
800-523-1918
Information on Existing Regular Investment Accounts and Retirement Plan
Accounts;
Wire Investments; Wire Liquidations; Telephone Liquidations and
Telephone Exchanges;
Fund Information; Literature; Price; Yield and Performance Figures
Delaphone
800-362-FUND (800-362-3863)
Performance Information
During business hours, you can call the Investor Information Center
for current performance information.
Shareholder Services
During business hours, you can call Delaware Investments'
Shareholder Service Center. The representatives can answer any questions
about your account, the Fund, various service features and other funds
in the Delaware Investments family.
Delaphone Service
Delaphone is an account inquiry service for investors with Touch-
Tone(registered trademark) phone service. It enables you to get
information on your account faster than the mailed statements and
confirmations. Delaphone also provides current performance information
on the Fund, as well as other funds in the Delaware Investments family.
Delaphone is available seven days a week, 24 hours a day.
Dividend Payments
Dividends, capital gains and other distributions, if any, are
automatically reinvested in your account, unless you elect to receive
them in cash. You may also elect to have the dividends earned in one
fund automatically invested in another fund in the Delaware Investments
family with a different investment objective, subject to certain
exceptions and limitations.
For more information, see Additional Methods of Adding to Your
Investment -- Dividend Reinvestment Plan under How to Buy Shares or call
the Shareholder Service Center.
Retirement Planning
An investment in the Fund may be a suitable investment option for
tax-deferred retirement plans. Delaware Investments offers a full
spectrum of qualified and non-qualified retirement plans, including the
popular 401(k) Deferred Compensation Plan, IRA, and the new Roth IRA.
Please call Delaware Investments at 800-523-1918 for more information.
MoneyLine(SM) Services
Delaware Investments offers the following services for fast and
convenient transfer of funds between your personal bank account and your
fund account.
1. MoneyLine(SM) Direct Deposit Service
If you elect to have your dividends and distributions paid in cash
and such dividends and distributions are in an amount of $25 or more,
you may choose the MoneyLine(SM) Direct Deposit Service and have such
payments transferred from your Fund account to your predesignated bank
account. See Dividends and Distributions. In addition, you may elect to
have your Systematic Withdrawal Plan payments transferred from your Fund
account to your predesignated bank account through this service. See
Systematic Withdrawal Plans under Redemption and Exchange. This service
is not available for certain retirement plans.
2. MoneyLine(SM) On Demand
You or your investment dealer may request purchases and redemptions
of Fund shares by using MoneyLine(SM) On Demand. When you authorize the
Fund to accept such requests from you or your investment dealer, funds
will be withdrawn from (for share purchases) or deposited to (for share
redemptions) your predesignated bank account. Your request will be
processed the same day if you call prior to 4 p.m. Eastern time. There
is a $25 minimum and $50,000 maximum limit for MoneyLine(SM) On Demand
transactions. This service is not available for retirement plans, except
for purchases of shares by IRAs.
For each MoneyLine(SM) Service, it may take up to four business days
for the transactions to be completed. You can initiate either service by
completing an Account Services form. If your name and address on your
designated bank account are not identical to the name and address on
your Fund account, you must have your signature guaranteed. The Fund
does not charge a fee for any MoneyLine(SM) Service; however, your bank
may charge a fee. Please call the Shareholder Service Center for
additional information about these services.
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 dividends. You should examine statements and
confirmations immediately and promptly report any discrepancy by calling
the Shareholder Service Center.
Duplicate Confirmations
If your financial adviser or investment dealer is noted on your
investment application, we will send a duplicate confirmation to him or
her. This makes it easier for your adviser to help you manage your
investments.
Tax Information
Each year, Equity Funds III, Inc. will mail to you information on
the tax status of your dividends and distributions.
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 of the Fund to qualify for a
reduced front-end sales charge on such purchases of Class A Shares.
Under the Combined Purchases Privilege, you may also include certain
shares that you own in other funds in the Delaware Investment family.
See Classes of 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 shares of funds in the Delaware Investments
family over a 13-month period. See Classes of Shares and Part B.
12-Month Reinvestment Privilege
The 12-Month Reinvestment Privilege permits you to reinvest
proceeds from a redemption of Class A Shares, within one year of the
date of the redemption, without paying a front-end sales charge. See
Part B.
Exchange Privilege
The Exchange Privilege permits you to exchange all or part of your
shares into shares of the other mutual funds in the Delaware Investments
family, subject to certain exceptions and limitations. For additional
information on exchanges, see Investing by Exchange under How to Buy
Shares, and Redemption and Exchange.
Wealth Builder Option
You may elect to invest in the Fund through regular liquidations of
shares in your accounts in other funds in the Delaware Investments
family. Investments under this feature are exchanges and are therefore
subject to the same conditions and limitations as other exchanges of
Fund shares. See Additional Methods of Adding to Your Investment --
Wealth Builder Option and Investing by Exchange under How to Buy Shares,
and Redemption and Exchange.
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. Equity Funds III, Inc.'s
fiscal year ends on June 30.
Classes of
Shares
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 for Class
A Shares ("front-end sales charge alternative"), or on a contingent
deferred basis for 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, which 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 0.30% of average daily net assets of such
shares. Certain purchases of Class A Shares qualify for reduced front-
end sales charges. See Front-End Sales Charge Alternative -- Class A
Shares, below. See also Contingent Deferred Sales Charge for Certain
Redemptions of Class A Shares Purchased at Net Asset Value under
Redemption and Exchange, and Distribution (12b-1) and Service under
Management of the Fund.
Class B Shares. An investor who elects the deferred sales charge
alternative acquires Class B Shares, which do not incur a front-end
sales charge when they are purchased, but are subject to a contingent
deferred sales charge if they are redeemed within six years of purchase.
Class B Shares are subject to annual 12b-1 Plan expenses of up to a
maximum of 1% (0.25% of which are service fees to be paid to the
Distributor, dealers or others for providing personal service and/or
maintaining shareholder accounts) of average daily net assets of 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 Class A Shares. At the end of approximately eight
years after purchase, Class B Shares will automatically be converted
into Class A Shares, and, thereafter, for the remainder of the life of
the investment, the annual 12b-1 Plan fee of up to 0.30% for Class A
Shares will apply. See Automatic Conversion of Class B Shares, below.
Class C Shares. An investor who elects the level sales charge
alternative acquires Class C Shares, which do not incur a front-end
sales charge when they are purchased, but are subject to a contingent
deferred sales charge if they are redeemed within 12 months of purchase.
Class C Shares are subject to annual 12b-1 Plan expenses of up to a
maximum of 1% (0.25% of which are service fees to be paid to the
Distributor, dealers or others for providing personal service and/or
maintaining shareholder accounts) of average daily net assets of 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 Class A Shares. Unlike Class B
Shares, Class C Shares do not convert to another class.
The alternative purchase arrangements described above permit
investors 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 12 months of purchase. In addition, investors should
consider the level of annual 12b-1 Plan expenses applicable to each
Class. The higher 12b-1 Plan expenses on Class B Shares and Class C
Shares will be offset to the extent a return is realized on the
additional money initially invested upon the purchase of such shares.
However, there can be no assurance as to the return, if any, that will
be realized on such additional money, and the effect of earning a return
on such additional money will diminish over time. In comparing Class B
Shares to Class C Shares, investors should consider the duration of the
annual 12b-1 Plan expenses to which each of the Classes is subject and
the desirability of an automatic conversion feature, which is available
only for Class B Shares.
For the distribution and related services provided to, and the
expenses borne on behalf of, the Fund, the Distributor and others will
be paid, in the case of Class A Shares, from the proceeds of the front-
end sales charge and 12b-1 Plan fees and, in the case of Class B Shares
and Class C Shares, from the proceeds of the 12b-1 Plan fees and, if
applicable, the CDSC incurred upon redemption. Financial advisers may
receive different compensation for selling Class A Shares, Class B
Shares and Class C Shares. Investors should understand that the purpose
and function of the respective 12b-1 Plans and the CDSCs applicable to
Class B Shares and Class C Shares are the same as those of the 12b-1
Plan and the front-end sales charge applicable to Class A Shares in that
such fees and charges are used to finance the distribution of the
respective Classes. See Distribution (12b-1) and Service under
Management of the Fund.
Dividends, if any, paid on Class A Shares, Class B Shares and Class
C Shares will be calculated in the same manner, at the same time, on the
same day and will be in the same amount, except that the additional
amount of 12b-1 Plan expenses relating to Class B Shares and Class C
Shares will be borne exclusively by such shares. See Calculation of
Offering Price and Net Asset Value Per Share.
The NASD has adopted certain rules relating to investment company
sales charges. Equity Funds III, Inc. and the Distributor intend to
operate in compliance with these rules.
Front-End Sales Charge Alternative --
Class A Shares
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.
Trend Fund A Class
Front-End Sales Dealer's
Charge as % of Commission(3)
Amount of Purchase Offering Amount as % of
Price Invested(2) Offering Price
-------- -------- --------------
Less than $100,000 4.75% 5.01% 4.00%
$100,000 but under $250,000 3.75 3.88 3.00
$250,000 but under $500,000 2.50 2.59 2.00
$500,000 but under $1,000,000(1) 2.00 2.05 1.60
1 There is no front-end sales charge on purchases of Class A Shares
of $1,000,000 or more but, under certain limited circumstances, a
Limited CDSC of 1% may apply upon redemption of such shares made during
the first year after the purchase and 0.50% may apply upon redemption of
such shares made during the second year after the purchase.
2 Based on the net asset value per share of Class A Shares as of the
end of Equity Funds III, Inc.'s most recent fiscal year.
3 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 Investments products and services and who increase sales of
funds in the Delaware Investments family may receive an additional
commission of up to 0.15% 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 (the "1933 Act").
- ------------------------------------------------------------------------
Beginning July 1, 1998, 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:
Dealer's Commission
Amount of Purchase (as a percentage of amount purchased)
- ------------------ -------------------------------------
Up to $5 million 1.00%
Next $20 million up to $25 million 0.50
Amount over $25 million 0.25
Such Class A Shares are subject to a Limited CDSC of 1% if shares
are redeemed during the first year after the purchase and 0.50% if
shares are redeemed during the second year after the purchase.
For accounts with assets over $1 million, the dealer commission
resets annually to the highest incremental commission rate on the
anniversary of the first purchase. In determining a financial adviser's
eligibility for the dealer's commission, purchases of Class A Shares of
other funds in the Delaware Investments family as to which a Limited
CDSC applies 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.
An exchange from other funds in the Delaware Investments family
will not qualify for payment of the dealer's commission, unless a
dealer's commission or similar payment has not been previously paid on
the assets being exchanged. The schedule and program for payment of the
dealer's commission are subject to change or termination at any time by
the Distributor at its discretion.
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 Redemptions of
Class A Shares Purchased 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 other
funds in the Delaware Investments family, except as 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 Investments fund holdings. In addition,
assets held by investment advisory clients of the Manager or its
affiliates in any stable value account may be combined with other
Delaware Investments fund holdings. Shares of other funds that do not
carry a front-end sales charge or CDSC may not be included unless they
were acquired through an exchange from a fund in the Delaware
Investments family 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.
This privilege 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 result in 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, above.
Allied Plans
Class A Shares are available for purchase by participants in
certain defined contribution plans ("Allied Plans") which are made
available under a joint venture agreement between the Distributor and
another institution through which mutual funds are marketed and which
allow investments in Class A Shares of designated Delaware Investments
funds ("eligible Delaware Investments fund shares"), as well as shares
of designated classes of non-Delaware Investments funds ("eligible non-
Delaware Investments fund shares"). Class B Shares and Class C Shares
are not eligible for purchase by Allied Plans.
With respect to purchases made in connection with an Allied Plan,
the value of eligible Delaware Investments and eligible non-Delaware
Investments fund shares held by the Allied Plan may be combined with the
dollar amount of new purchases by that Allied Plan to obtain a reduced
front-end sales charge on additional purchases of eligible Delaware
Investments fund shares.
Participants in Allied Plans may exchange all or part of their
eligible Delaware Investments fund shares for other eligible Delaware
Investments fund shares or for eligible non-Delaware Investments fund
shares at net asset value without payment of a front-end sales charge.
However, exchanges of eligible fund shares, both Delaware Investments
and non-Delaware Investments, which were not subject to a front end
sales charge, will be subject to the applicable sales charge if
exchanged for eligible Delaware Investments fund shares to which a sales
charge applies. No sales charge will apply if the eligible fund shares
were previously acquired through the exchange of eligible shares on
which a sales charge was already paid or through the reinvestment of
dividends. See Investing
by Exchange.
A dealer's commission may be payable on purchases of eligible
Delaware Investments fund shares under an Allied Plan. In determining a
financial adviser's eligibility for a dealer's commission on net asset
value purchases of eligible Delaware Investments fund shares in
connection with Allied Plans, all participant holdings in the Allied
Plan will be aggregated.
The Limited CDSC is applicable to redemptions of net asset value
purchases from an Allied Plan on which a dealer's commission has been
paid. Waivers of the Limited CDSC, as described under Waiver of Limited
Contingent Deferred Sales Charge -- Class A Shares under Redemption and
Exchange, apply to redemptions by participants in Allied Plans except in
the case of exchanges between eligible Delaware Investments and non-
Delaware Investments fund shares. When eligible Delaware Investments
fund shares are exchanged into eligible non-Delaware Investments fund
shares, the Limited CDSC will be imposed at the time of the exchange,
unless the joint venture agreement specifies that the amount of the
Limited CDSC will be paid by the financial adviser or selling dealer.
See Contingent Deferred Sales Charge for Certain Redemptions of Class A
Shares Purchased at Net Asset Value under Redemption and Exchange.
Buying Class A Shares at Net Asset Value
Class A Shares of the Fund may be purchased at net asset value
under the Delaware Investments Dividend Reinvestment Plan and, under
certain circumstances, the Exchange Privilege and the 12-Month
Reinvestment Privilege. 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 families) of the Manager, any affiliate, any of the funds in the
Delaware Investments family, certain of their agents and registered
representatives and employees of authorized investment dealers and by
employee benefit plans for such entities. Individual purchases,
including those in retirement accounts, must be for accounts in the name
of the individual or a qualifying family member.
Purchases of Class A Shares may also be made by clients of
registered representatives of an authorized investment dealer at net
asset value within 12 months after the registered representative changes
employment, if the purchase is funded by proceeds from an investment
where a front-end sales charge, contingent deferred sales charge or
other sales charge has been assessed. Purchases of Class A Shares may
also be made at net asset value by bank employees who provide services
in connection with agreements between the bank and unaffiliated brokers
or dealers concerning sales of shares of funds in the Delaware
Investments family. Officers, directors and key employees of
institutional clients of the Manager or any of its affiliates may
purchase Class A Shares at net asset value. Moreover, purchases may be
effected at net asset value for the benefit of the clients of brokers,
dealers and registered investment advisers affiliated with a broker or
dealer, if such broker, dealer or investment adviser has entered into an
agreement with the Distributor providing specifically for the purchase
of Class A Shares in connection with special investment products, such
as wrap accounts or similar fee based programs. Investors may be charged
a fee when effecting transactions in Class A Shares through a broker or
agent that offers these special investment products.
Purchases of Class A Shares at net asset value may also be made by
the following: financial institutions investing for the account of their
trust customers if they are not eligible to purchase shares of the
Institutional Class of the Fund; any group retirement plan (excluding
defined benefit pension plans), or such plans of the same employer, for
which plan participant records are maintained on the Retirement
Financial Services, Inc. (formerly known as Delaware Investment &
Retirement Services, Inc.) proprietary record keeping system that (i)
has in excess of $500,000 of plan assets invested in Class A Shares of
funds in the Delaware Investments family and any stable value account
available to investment advisory clients of the Manager or its
affiliates; or (ii) is sponsored by an employer that has at any point
after May 1, 1997 had more than 100 employees while such plan has held
Class A Shares of a fund in the Delaware Investments family and such
employer has properly represented to, and has received written
confirmation back from, Retirement Financial Services, Inc. in writing
that it has the requisite number of employees. See Group Investment
Plans for information regarding the applicability of the Limited CDSC.
Purchases of Class A Shares at net asset value may also be made by
bank sponsored retirement plans that are no longer eligible to purchase
Institutional Class Shares as a result of a change in distribution
arrangements.
Investors in Delaware Investments Unit Investment Trusts may
reinvest monthly dividend checks and/or repayment of invested capital
into Class A Shares of any of the funds in the Delaware Investments
family at net asset value.
Investments in Class A Shares made by plan level and/or participant
retirement accounts that are for the purpose of repaying a loan taken
from such accounts will be made at net asset value. Loan repayments made
to a fund account in connection with loans originated from accounts
previously maintained by another investment firm will also be invested
at net asset value.
The Fund must be notified in advance that an investment qualifies
for purchase at net asset value.
Group Investment Plans
Group Investment Plans (e.g., SEP/IRA, SAR/SEP, SIMPLE IRA, SIMPLE
401(k), Profit Sharing, Money Purchase Pension, 401(k) Defined
Contribution Plans and 403(b)(7) and 457 Deferred Compensation Plans)
may benefit from the reduced front-end sales charges available on Class
A Shares based on total plan assets. If a company has more than one plan
investing in the funds of the Delaware Investments family, 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 investment accounts
available from Delaware Investments 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.
The Limited CDSC is applicable to any redemptions of net asset
value purchases made on behalf of any group retirement plan on which a
dealer's commission has been paid only if such redemption is made
pursuant to a withdrawal of the entire plan from a fund in the Delaware
Investments family. See Contingent Deferred Sales Charge for Certain
Redemptions of Class A Shares Purchased at Net Asset Value under
Redemption and Exchange.
For additional information on retirement plans, including plan
forms, applications, minimum investments and any applicable account
maintenance fees, contact your investment dealer or the Distributor.
For other retirement plans and special services, call the
Shareholder Service Center.
Deferred Sales Charge Alternative --
Class B Shares
Class B Shares may be purchased at net asset value without a front-
end sales charge and, as a result, the full amount of the investor's
purchase payment will be invested in Fund shares. The Distributor
currently compensates dealers or brokers for selling Class B Shares at
the time of purchase from its own assets in an amount equal to no more
than 4% of the dollar amount purchased. In addition, from time to time,
upon written notice to all of its dealers, the Distributor may hold
special promotions for specified periods during which the Distributor
may pay additional compensation to dealers or brokers for selling Class
B Shares at the time of purchase. As discussed below, however, Class B
Shares are subject to annual 12b-1 Plan expenses of up to a maximum of
1% for approximately eight years after purchase and, if redeemed within
six years of purchase, a CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees, if any, are
paid to the Distributor and others for providing distribution and
related services, and bearing related expenses, in connection with the
sale of Class B Shares. These payments support the compensation paid to
dealers or brokers for selling Class B Shares. Payments to the
Distributor and others under the Class B 12b-1 Plan may be in an amount
equal to no more than 1% annually. The combination of the CDSC and the
proceeds of the 12b-1 Plan fees makes it possible for the Fund to sell
Class B Shares without deducting a front-end sales charge at the time of
purchase.
Holders of Class B Shares who exercise the exchange privilege
described below will continue to be subject to the CDSC schedule for
Class B Shares described in this Prospectus, even after the exchange.
Such CDSC schedule may be higher than the CDSC schedule for Class B
Shares acquired as a result of the exchange. See Redemption and
Exchange.
Automatic Conversion of Class B Shares
Class B Shares, other than shares acquired through reinvestment of
dividends, held for eight years after purchase are eligible for
automatic conversion into Class A Shares. Conversions of Class B Shares
into Class A Shares will occur only four times in any calendar year, on
the last business day of the second full week of March, June, September
and December (each, a "Conversion Date"). If the eighth anniversary
after a purchase of Class B Shares falls on a Conversion Date, an
investor's Class B Shares will be converted on that date. If the eighth
anniversary occurs between Conversion Dates, an investor's Class B
Shares will be converted on the next Conversion Date after such
anniversary. Consequently, if a shareholder's eighth anniversary falls
on the day after a Conversion Date, that shareholder will have to hold
Class B Shares for as long as three additional months after the eighth
anniversary of purchase before the shares will automatically convert
into Class A Shares.
Class B Shares of a fund acquired through a reinvestment of
dividends will convert to the corresponding Class A Shares of that fund
(or, in the case of Delaware Group Cash Reserve, Inc., Delaware Cash
Reserve Consultant Class) pro-rata with Class B Shares of that fund not
acquired through dividend reinvestment.
All such automatic conversions of Class B Shares will constitute
tax-free exchanges for federal income tax purposes. See Taxes.
Level Sales Charge Alternative --
Class C Shares
Class C Shares may be purchased at net asset value without a front-
end sales charge and, as a result, the full amount of the investor's
purchase payment will be invested in Fund shares. The Distributor
currently compensates dealers or brokers for selling Class C Shares at
the time of purchase from its own assets in an amount equal to no more
than 1% of the dollar amount purchased. As discussed below, however,
Class C Shares are subject to annual 12b-1 Plan expenses and, if
redeemed within 12 months of purchase, a CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to
the Distributor and others for providing distribution and related
services, and bearing related expenses, in connection with the sale of
Class C Shares. These payments support the compensation paid to dealers
or brokers for selling Class C Shares. Payments to the Distributor and
others under the Class C 12b-1 Plan may be in an amount equal to no more
than 1% annually.
Holders of Class C Shares who exercise the exchange privilege
described below will continue to be subject to the CDSC schedule for
Class C Shares as described in this 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 12 months of purchase may be subject to a CDSC of 1%. A CDSC is
charged as a percentage of the dollar amount subject to the CDSC. The
charge will be assessed on an amount equal to the lesser of the net
asset value at the time of purchase of the shares being redeemed or the
net asset value of those shares at the time of redemption. No CDSC will
be imposed on increases in net asset value above the initial purchase
price, nor will a CDSC be assessed on redemptions of shares acquired
through 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 Class B Shares or Class C
Shares of the Fund, even if those shares are later exchanged for shares
of another fund in the Delaware Investments family. 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 Class B
Shares of the Fund:
Contingent Deferred
Sales Charge
(as a Percentage of
Year After Dollar Amount
Purchase Made Subject to Charge)
0-2 4%
3-4 3%
5 2%
6 1%
7 and thereafter None
During the seventh year after purchase and, thereafter, until
converted automatically into Class A Shares, Class B Shares will still
be subject to the annual 12b-1 Plan expenses of up to 1% of average
daily net assets of those shares. See Automatic Conversion of Class B
Shares, above. Investors are reminded that the Class A Shares into which
Class B Shares will convert are subject to ongoing annual 12b-1 Plan
expenses of up to a maximum of 0.30% of average daily net assets of
such shares.
In determining whether a CDSC applies to a redemption of Class B
Shares, it will be assumed that shares held for more than six years are
redeemed first, followed by shares acquired through the reinvestment of
dividends or distributions, and finally by shares held longest during
the six-year period. With respect to Class C Shares, it will be assumed
that shares held for more than 12 months are redeemed first followed by
shares acquired through the reinvestment of dividends or distributions,
and finally by shares held for 12 months or less.
All investments made during a calendar month, regardless of what
day of the month the investment occurred, will age one month on the last
day of that month and each subsequent month.
The CDSC is waived on certain redemptions of Class B Shares and
Class C Shares. See Waiver of Contingent Deferred Sales Charge -- Class
B Shares and Class C Shares under Redemption and Exchange.
Other Payments to Dealers -- Class A Shares, Class B Shares and Class C
Shares
From time to time at the discretion of the Distributor, all
registered broker/dealers whose aggregate sales of the Classes exceed
certain limits, as set by the Distributor, may receive from the
Distributor an additional payment of up to 0.25% of the dollar amount of
such sales. The Distributor may also provide additional promotional
incentives or payments to dealers that sell shares of the funds in the
Delaware Investments family. 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 Conduct Rules, in
connection with the promotion of shares of funds in the Delaware
Investments family, 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 SEC. It is likely
that the NASD's Conduct Rules will be amended such that the ability of
the Distributor to pay non-cash compensation as described above will be
restricted in some fashion. The Distributor intends to comply with the
NASD's Conduct Rules as they may be amended.
Trend Fund Institutional Class
In addition to offering Class A Shares, Class B Shares and Class C
Shares, the Fund also offers Trend Fund Institutional Class, which is
described in a separate prospectus and is available for purchase only by
certain investors. Trend 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 are not subject to 12b-1
Plan distribution expenses. To obtain the prospectus that describes
Trend Fund Institutional Class, contact the Distributor by writing to
the address or by calling the telephone number listed on the back cover
of this Prospectus.
HOW TO BUY SHARES
Purchase Amounts
Generally, the minimum initial purchase is $1,000 for Class A
Shares, Class B Shares and Class C Shares. Subsequent purchases of
shares of any Class generally must be $100 or more. For purchases under
the Uniform Gifts to Minors Act or Uniform Transfers to Minors Act
or through an Automatic Investing Plan, there is a minimum initial
purchase of $250 and a minimum subsequent purchase of $25. 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.
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.
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 Fund 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, Delaware Investments can refer you to one.
Investing by Mail
1. Initial Purchases -- An Investment Application or, in the case of a
retirement plan account, an appropriate retirement plan application,
must be completed, signed and sent with a check payable to Trend Fund A
Class, Trend Fund B Class or Trend Fund C Class, to Delaware Investments
at 1818 Market Street, Philadelphia, PA 19103.
2. Subsequent Purchases -- Additional purchases may be made at any time
by mailing a check payable to the specific Class selected. 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 Equity Funds III, Inc. 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
1412893401 (include your name(s) and your account number for the Class
in which you are investing).
1. Initial Purchases -- Before you invest, telephone the 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, for
the specific Class selected, to Delaware Investments 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 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.
Investing by Exchange
If you have an investment in another mutual fund in the Delaware
Investments family, you may write and authorize an exchange of part or
all of your investment into shares of 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. See
Redemption and Exchange for more complete information concerning your
exchange privileges.
Holders of Class A Shares may exchange all or part of their shares
for certain of the shares of other funds in the Delaware Investments
family, including other Class A Shares, but may not exchange their Class
A Shares for Class B Shares or Class C Shares of the Fund or of any
other fund in the Delaware Investments family. Holders of Class B Shares
of the Fund are permitted to exchange all or part of their Class B
Shares only into Class B Shares of other funds in the Delaware
Investments family. Similarly, holders of Class C Shares of the Fund are
permitted to exchange all or part of their Class C Shares only into
Class C Shares of other funds in the Delaware Investments family. Class
B Shares of the Fund and Class C Shares of the Fund acquired by exchange
will continue to carry the CDSC and, in the case of Class B Shares, the
automatic conversion schedule of the fund from which the exchange
is made. The holding period of Class B Shares of 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, except for exchanges of shares that
were not previously subject to a front-end sales charge (unless such
shares were acquired through the reinvestment of dividends). Permissible
exchanges into Class B Shares or Class C Shares of the Fund will be made
without the imposition of a CDSC by the fund from which the exchange is
being made at the time of the exchange.
See Allied Plans under Classes of Shares for information on
exchanges by participants in an Allied Plan.
Additional Methods of Adding
to Your Investment
Call the Shareholder Service Center for more information if you
wish to use the following services:
1. Automatic Investing Plan
The Automatic Investing Plan enables you to make regular monthly
investments without writing or mailing checks. You may authorize Equity
Funds III, Inc. to transfer a designated amount monthly from your
checking account to your Fund account. Many shareholders use
this as an automatic savings plan for IRAs and other purposes.
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, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money
Purchase Pension Plans, 401(k) Defined Contribution Plans, or 403(b)(7)
or 457 Deferred Compensation Plans.
2. Direct Deposit
You may have your employer or bank make regular investments
directly to your Fund 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.
* * *
Should investments through an automatic investing plan or by direct
deposit be reclaimed or returned for some reason, Equity Funds III, Inc.
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.
3. MoneyLine(SM) On Demand
Through the MoneyLine(SM) On Demand service, you or your investment
dealer may call the Fund to request a transfer of funds from your
predesignated bank account to your Fund account. See MoneyLine(SM)
Services under The Delaware Difference for additional information about
this service.
4. Wealth Builder Option
You can use the Wealth Builder Option to invest in the Fund through
regular liquidations of shares in your accounts in other funds in the
Delaware Investments family. You may also elect to invest in other
mutual funds in the Delaware Investments family through the Wealth
Builder Option through regular liquidations of shares in your Fund
account.
Under this automatic exchange program, you can authorize regular
monthly amounts (minimum of $100 per fund) to be liquidated from your
account in one or more funds in the Delaware Investments family and
invested automatically into any other account in a mutual fund available
from the Delaware Investments family that you may specify. If in
connection with the election of the Wealth Builder Option, you wish to
open a new account to receive the automatic investment, such new account
must meet the minimum initial purchase requirements described in the
prospectus of the fund that you select. All investments under this
option are exchanges and are therefore subject to the same conditions
and limitations as other exchanges noted above. You can terminate your
participation in Wealth Builder at any time by giving written notice to
the fund from which exchanges are made. See Redemption and Exchange.
This option is not available to participants in the following
plans: SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and
Money Purchase Pension Plans, 401(k) Defined Contribution Plans, or
403(b)(7) or 457 Deferred Compensation Plans.
5. 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 Fund
account. Or, you may invest your distributions in certain other funds in
the Delaware Investments family, 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 funds in the Delaware Investments family are made without a
front-end sales charge. Reinvestments of distributions into Class B
Shares of the Fund or of other funds in the Delaware Investments family
or into Class C Shares of the Fund or of other funds in the Delaware
Investments family 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 Classes of 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 Investments family, 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 Investments family which offer that
class of shares. Similarly, holders of Class C Shares of the Fund may
reinvest their distributions only into Class C Shares of the funds in
the Delaware Investments family which offer that class of shares. For
more information about reinvestments, call the Shareholder Service
Center.
Capital gains and/or dividend distributions to participants in the
following retirement plans are automatically reinvested into the same
fund in the Delaware Investment family in which their investments are
held: SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and
Money Purchase Pension Plans, 401(k) Defined Contribution Plans, or
403(b)(7) or 457 Deferred Compensation Plans.
Purchase Price and Effective Date
The offering price and net asset value of Class A Shares, Class B
Shares 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 is the date the order is received
by the Fund, its agent or designee. 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
Investments family. 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,
as a result of a redemption, have remained below the minimum stated
account balance for a period of three or more consecutive months.
Holders of such accounts may be notified of their insufficient account
balance and advised that they have until the end of the current calendar
quarter to raise their balance to the stated minimum. If the account has
not reached the minimum balance requirement by that time, the Fund will
charge a $9 fee for that quarter and each subsequent calendar quarter
until the account is brought up to the minimum balance. The service fee
will be deducted from the account during the first week of each calendar
quarter for the previous quarter, and will be used to help defray the
cost of maintaining low-balance accounts. No fees will be charged
without proper notice, and no CDSC will apply to such assessments.
The Fund also reserves the right, upon 60 days' written notice, to
involuntarily redeem accounts that remain under the minimum initial
purchase amount as a result of redemptions. An investor making the
minimum initial investment may be subject to involuntary redemption
without the imposition of a CDSC or Limited CDSC if he or she redeems
any portion of his or her account.
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 tax-advantaged funds, bond
funds, money market funds or other equity funds. This service is also
useful if you are anticipating a major expenditure and want to move a
portion of your investment into a fund that has the checkwriting
feature. Exchanges are subject to the requirements of each fund and all
exchanges of shares constitute taxable events. 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 available from the Delaware Investments family will best
meet your changing objectives and the consequences of any exchange
transaction. You may also call Delaware Investments directly for fund
information.
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.
Your shares will be redeemed or exchanged at a price based on the
net asset value next determined after the Fund receives your request in
good order, subject, in the case of a redemption, to any applicable CDSC
or Limited CDSC. For example, redemption or exchange requests received
in good order after the time the offering price and net asset value of
shares are determined will be processed on the next business day. See
Purchase Price and Effective Date under How to Buy Shares. A shareholder
submitting a redemption request may indicate that he or she wishes to
receive redemption proceeds of a specific dollar amount. In the case of
such a request, and in the case of certain redemptions from retirement
plan accounts, the Fund will redeem the number of shares necessary to
deduct the applicable CDSC in the case of Class B Shares and Class C
Shares, and, if applicable, the Limited CDSC in the case of Class A
Shares and tender to the shareholder the requested amount, assuming the
shareholder holds enough shares in his or her account for the redemption
to be processed in this manner. Otherwise, the amount tendered to the
shareholder upon redemption will be reduced by the amount of the
applicable CDSC or Limited CDSC. Redemption proceeds will be distributed
promptly, as described below, but not later than seven days after
receipt of a redemption request.
Except as noted below, for a redemption request to be in "good
order," you must provide your account number, account registration, and
the total number of shares or dollar amount of the transaction. For
exchange requests, you must also provide the name of the fund in which
you want to invest the proceeds. Exchange instructions and redemption
requests must be signed by the record owner(s) exactly as the shares are
registered. You may request a redemption or an exchange by calling the
Shareholder Service Center at 800-523-1918. The Fund may suspend,
terminate, or amend the terms of the exchange privilege upon 60 days'
written notice to shareholders.
The Fund will process written and telephone redemption requests to
the extent that the purchase orders for the shares being redeemed have
already settled. The Fund will honor redemption requests as to shares
for which a check was tendered as payment, but the Fund will not mail or
wire the proceeds until it is reasonably satisfied that the check has
cleared, which may take up to 15 days from the purchase date. You can
avoid this potential delay if you purchase shares by wiring Federal
Funds. 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 exchanges
involving assets that were previously invested in a fund with a front-
end sales charge and/or exchanges involving the reinvestment of
dividends.
Holders of Class B Shares or Class C Shares that exchange their
shares ("Original Shares") for shares of other funds in the Delaware
Investments family (in each case, "New Shares") in a permitted exchange,
will not be subject to a CDSC that might otherwise be due upon
redemption of 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 Original Shares as described in this
Prospectus and any CDSC assessed upon redemption will be charged by the
fund from which Original Shares were exchanged. In an exchange of Class
B Shares from the Fund, the Fund's CDSC schedule may be higher than the
CDSC schedule relating to New Shares acquired as a result of the
exchange. For purposes of computing the CDSC that may be payable upon a
disposition of New Shares, the period of time that an investor held
Original Shares is added to the period of time that an investor held New
Shares. With respect to Class B Shares, the automatic conversion
schedule of Original Shares may be longer than that of New Shares.
Consequently, an investment in New Shares by exchange may subject an
investor to the higher 12b-1 fees applicable to Class B Shares of the
Fund for a longer period of time than if the investment in New Shares
were made directly.
Various redemption and exchange methods are outlined below. Except
for the CDSC applicable to certain redemptions of Class B Shares and
Class C Shares and the Limited CDSC applicable to certain redemptions of
Class A Shares 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. A signature guarantee can be obtained from a commercial
bank, a trust company or a member of a securities transfer association
medallion program. A signature guarantee cannot be provided by a notary
public. A signature guarantee is designed to protect the shareholders,
the Fund and its agents from fraud. The Fund reserves the right to reject
a signature guarantee supplied by an 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 after receipt of
your redemption request. If your Class A Shares are in certificate form,
the certificate(s) must accompany your request and also be in good
order. Certificates are issued for Class A Shares only if a shareholder
submits a specific request. Certificates are not issued for Class B
Shares or Class C Shares.
Written Exchange
You may also write to 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 Investments family,
subject to the same conditions and limitations as other exchanges noted
above.
Telephone Redemption and Exchange
To get the added convenience of the telephone redemption and
exchange methods, you must have the Transfer Agent hold your shares
(without charge) for you. If you choose to have your Class A Shares in
certificate form, you may redeem or exchange only by written request and
you must return your certificate(s).
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 its 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 after receipt of the redemption
request. This service is only available to individual, joint and
individual fiduciary-type accounts.
Telephone Redemption -- Proceeds to Your Bank
Redemption proceeds of $1,000 or more can be transferred to your
predesignated bank account by wire or by check. You should authorize
this service when you open your account. If you change your
predesignated bank account, you must complete an Authorization Form and
have your signature guaranteed. For your protection, your authorization
must be on file. If you request a wire, your funds will normally be sent
the next business day. 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 after receipt of your
redemption request to your predesignated bank account. There are no
separate fees for this redemption method, but the mail time may delay
getting funds into your bank account. Simply call the Shareholder
Service Center prior to the time the offering price and net asset value
are determined, as noted above.
MoneyLine(SM) On Demand
Through the MoneyLine(SM) On Demand service, you or your investment
dealer may call the Fund to request a transfer of funds from your Fund
account to your predesignated bank account. See MoneyLine(SM) Services
under The Delaware Difference for additional information about this
service.
Telephone Exchange
The Telephone Exchange feature is a convenient and efficient way to
adjust your investment holdings as your liquidity requirements and
investment objectives change. You or your investment dealer of record
can exchange your shares into other funds in the Delaware Investments
family under the same registration, subject to the same conditions and
limitations as other exchanges noted 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. In the alternative, you may
elect to have your payments transferred from your Fund account to your
predesignated bank account through the MoneyLine(SM) Direct Deposit
Service. Through the MoneyLine(SM) Direct Deposit Service, it may take up
to four business days for the transaction to be completed. There are no
separate fees for this redemption method. See MoneyLine(SM) Services under
The Delaware Difference for more information about this service.
2. Retirement Plans
For shareholders eligible under the applicable retirement plan to
receive benefits in periodic payments, the 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(SM)
Direct Deposit Service described above is not available for certain
retirement plans.
* * *
Shareholders should not purchase additional shares while
participating in a Systematic Withdrawal Plan.
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 was paid on that purchase. See Contingent Deferred Sales
Charge for Certain Redemptions of Class A Shares Purchased at Net Asset
Value, below.
The applicable CDSC for Class B Shares and Class C Shares redeemed
via a Systematic Withdrawal Plan will be waived if, on the date that the
Plan is established, the annual amount selected to be withdrawn is less
than 12% of the account balance. If the annual amount selected to be
withdrawn exceeds 12% of the account balance on the date that the
Systematic Withdrawal Plan is established, all redemptions under the
Plan will be subject to the applicable CDSC. Whether a waiver of the
CDSC is available or not, the first shares to be redeemed for each
Systematic Withdrawal Plan payment will be those not subject to a CDSC
because they have either satisfied the required holding period or were
acquired through the reinvestment of distributions. The 12% annual limit
will be reset on the date that any Systematic Withdrawal Plan is
modified (for example, a change in the amount selected to be withdrawn
or the frequency or date of withdrawals), based on the balance in the
account on that date. See Waiver of Contingent Deferred Sales Charge --
Class B Shares and Class C Shares, below.
For more information on Systematic Withdrawal Plans, please call
the Shareholder Service Center.
Contingent Deferred Sales Charge for
Certain Redemptions of Class A Shares
Purchased at Net Asset Value
For purchases of $1,000,000 or more made on or after July 1, 1998,
a Limited CDSC will be imposed on certain redemptions of Class A Shares
(or shares into which such Class A Shares are exchanged) according to
the following schedule: (1) 1% if shares are redeemed during the first
year after the purchase; and (2) 0.50% if shares are redeemed during the
second year after the purchase, if such purchases were made at net asset
value and triggered the payment by the Distributor of the dealer's
commission previously described. See Classes of Shares.
The Limited CDSC will be paid to the Distributor and will be
assessed on an amount equal to the lesser of (1) the net asset value at
the time of purchase of 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 Class A Shares even if those
shares are later exchanged for shares of another fund in the Delaware
Investments family and, in the event of an exchange of Class A Shares,
the "net asset value of such shares at the time of redemption" will be
the net asset value of the shares acquired in the exchange.
Redemptions of such Class A Shares held for more than two years
will not be subjected to the Limited CDSC and an exchange of such Class
A Shares into another fund in the Delaware Investments family will not
trigger the imposition of the Limited CDSC at the time of such exchange.
The period a shareholder owns shares into which Class A Shares are
exchanged will count towards satisfying the two-year holding period. The
Limited CDSC is assessed if such two-year period is not satisfied
irrespective of whether the redemption triggering its payment is of
Class A Shares of the Fund or Class A Shares acquired in the exchange.
In determining whether a Limited CDSC is payable, it will be
assumed that shares not subject to the Limited CDSC are the first
redeemed followed by other shares held for the longest period of time.
The Limited CDSC will not be imposed upon shares representing reinvested
dividends or capital gains distributions, or upon amounts representing
share appreciation. All investments made during a calendar month,
regardless of what day of the month the investment occurred, will age
one month on the last day of that month and each subsequent month.
Waiver of Limited Contingent Deferred
Sales Charge -- Class A Shares
The Limited CDSC for Class A Shares on which a dealer's commission
has been paid will be waived in the following instances: (i) redemptions
that result from 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) periodic distributions from an IRA, SIMPLE
IRA, or 403(b)(7) or 457 Deferred Compensation Plan due to death,
disability, or attainment of age 59 1/2, and IRA distributions
qualifying under Section 72(t) of the Code; (v) returns of excess
contributions to an IRA; (vi) distributions by other employee benefit
plans to pay benefits; (vii) distributions described in (ii), (iv), and
(vi) above pursuant to a systematic withdrawal plan; and (viii)
redemptions by the classes of shareholders who are permitted to purchase
shares at net asset value, regardless of the size of the purchase (see
Buying Class A Shares at Net Asset Value under Classes of Shares).
Waiver of Contingent Deferred Sales Charge -- Class B Shares and Class C
Shares
The CDSC is waived on certain redemptions of Class B Shares in
connection with the following redemptions: (i) redemptions that result
from 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, SIMPLE IRA, SEP/IRA, or 403(b)(7) or 457
Deferred Compensation Plan; (iii) periodic distributions from an IRA,
SIMPLE IRA, SEP/IRA, or 403(b)(7) or 457 Deferred Compensation Plan due
to death, disability or attainment of age 59 1/2, and IRA distributions
qualifying under Section 72(t) of the Code; and (iv) distributions from
an account if the redemption results from the death of all registered
owners of the account (in the case of accounts established under the
Uniform Gifts to Minors or Uniform Transfers to Minors Acts or trust
accounts, the waiver applies upon the death of all beneficial owners) or
a total and permanent disability (as defined in Section 72 of the Code)
of all registered owners occurring after the purchase of the shares
being redeemed.
The CDSC on Class C Shares is waived in connection with the
following redemptions: (i) redemptions that result from 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, SIMPLE
IRA, 403(b)(7) or 457 Deferred Compensation Plan, Profit Sharing Plan,
Money Purchase Pension Plan or 401(k) Defined Contribution Plan; (iii)
periodic distributions from a 403(b)(7) or 457 Deferred Compensation
Plan upon attainment of age 59 1/2, Profit Sharing Plan, Money Purchase
Pension Plan, 401(k) Defined Contribution Plans upon attainment of age
70 1/2, and IRA distributions qualifying under Section 72(t) of the
Code; (iv) distributions from a 403(b)(7) or 457 Deferred Compensation
Plan, Profit Sharing Plan, or 401(k) Defined Contribution Plan, under
hardship provisions of the plan; (v) distributions from a 403(b)(7) or
457 Deferred Compensation Plan, Profit Sharing Plan, Money Purchase
Pension Plan or 401(k) Defined Contribution Plan upon attainment of
normal retirement age under the plan or upon separation from service;
(vi) periodic distributions from an IRA or SIMPLE IRA on or after
attainment of age 59 1/2; and (vii) distributions from an account if the
redemption results from the death of all registered owners of the
account (in the case of accounts established under the Uniform Gifts to
Minors or Uniform Transfers to Minors Acts or trust accounts, the waiver
applies upon the death of all beneficial owners) or a total and
permanent disability (as defined in Section 72 of the Code) of all
registered owners occurring after the purchase of the shares being
redeemed.
In addition, the CDSC will be waived on Class B Shares and Class C
Shares redeemed in accordance with a Systematic Withdrawal Plan if the
annual amount selected to be withdrawn under the Plan does not exceed
12% of the value of the account on the date that the Systematic
Withdrawal Plan was established or modified.
Dividends
and Distributions
The Fund will make payments from net investment income and net
realized securities profits, if any, 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 if
necessary to comply with certain requirements of the Code.
Each class of the Fund will share proportionately in the investment
income and expenses of the Fund, except that the per share dividends
from net investment income on Class A Shares, Class B Shares and 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 Shares 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 the United States Post Office or which
remains uncashed for a period of more than one year may be reinvested in
your 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 MoneyLine(SM) Direct
Deposit Service and have such payments transferred from your Fund
account to your predesignated bank account. This service is not
available for certain retirement plans. See MoneyLine(SM) Services under
The Delaware Difference for more information about this service.
Taxes
The tax discussion set forth below 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.
On August 5, 1997, President Clinton signed into law the Taxpayer
Relief Act of 1997 (the "1997 Act"). This new law makes sweeping changes
in the Code. Because many of these changes are complex, and only
indirectly affects the Fund and its distributions to you, they are
discussed in Part B. Changes in the treatment of capital gains, however,
are discussed in this section.
The Fund has qualified, and intends to continue to qualify, as a
regulated investment company under Subchapter M of 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
and it satisfies certain other requirements relating to the sources of
income and diversification of its assets.
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
those investors who are subject to income taxes as ordinary income,
whether received in cash or in additional shares. For corporate
investors, dividends from net investment income will generally qualify
in part for the corporate dividends-received deduction. The portion of
dividends, if any, paid by the Fund that so qualifies will be designated
each year in a notice from Equity Funds III, Inc. to the Fund's
shareholders.
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 by-product 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.
The Treatment of Capital Gain Distributions under the Taxpayer Relief
Act of 1997
The 1997 Act creates a category of long-term capital gain for
individuals that will be taxed at new lower tax rates. For investors who
are in the 28% or higher federal income tax brackets, these gains will
be taxed at a maximum rate of 20%. For investors who are in the 15%
federal income tax bracket, these gains will be taxed at a maximum rate
of 10%. Capital gain distributions will qualify for these new maximum
tax rates, depending on when the Fund's securities were sold and how
long they were held by the Fund before they were sold. The holding
periods for which the new rates apply were revised by the Internal
Revenue Service Restructuring and Reform Act of 1998. Investors who want
more information on holding periods and other qualifying rules relating
to these new rates should review the expanded discussion in Part B, or
should contact their own tax advisers.
Equity Funds III, Inc. will advise you in its annual information
reporting at calendar year end of the amount of its capital gain
distributions which will qualify for these maximum federal tax rates.
Although dividends generally will be treated as distributed when
paid, 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 the Fund and any other fund available from
the Delaware Investments family. Any loss incurred on a sale or exchange
of Fund shares that had been held for six months or less will be treated
as a long-term capital loss to the extent of capital gains 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 90 days
of their purchase (for purposes of determining gain or loss upon sale of
such shares) if the sale proceeds are reinvested in the Fund or in
another fund in the Delaware Investments family 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
Classes of Shares.
In addition to the federal taxes described above, shareholders may
or may not be subject to various state and local taxes on distributions.
For example, distributions of interest income and capital gains realized
from certain types of U.S. government securities may be exempt from
state personal income taxes. Because investors' state and local taxes
may be different than the federal taxes described above, investors
should consult their own tax advisers.
Each year, Equity Funds III, Inc. will mail to 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, if any, 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.
Equity Funds III, Inc. 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 Investment Application your proper Taxpayer Identification Number
and by certifying that you are not subject to backup withholding.
See Taxes in Part B for additional information on tax matters
relating to the Fund and its shareholders.
Calculation of
Offering Price and
Net Asset Value Per Share
The net asset value ("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. Portfolio securities for which market
quotations are available are priced at market value. 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 Equity Funds III, Inc.'s Board of Directors.
Class A Shares are purchased at the offering price per share, while
Class B Shares and Class C Shares are purchased at the 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 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 Trend Fund
Institutional Class will not incur any of the expenses under Equity
Funds III, Inc.'s 12b-1 Plans and Class A Shares, Class B Shares and
Class C Shares alone will bear the 12b-1 Plan expenses payable under
their respective 12b-1 Plan. Due to the specific distribution expenses
and other costs that will be allocable to each class, the NAV of each
class of the Fund will vary.
Management of
the Fund
Directors
The business and affairs of Equity Funds III, Inc. are managed
under the direction of its Board of Directors. Part B contains
additional information regarding Equity Funds III, Inc.'s 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 Investments family since 1938. On June 30, 1998, the
Manager and its affiliates within Delaware Investments, including
Delaware International Advisers Ltd., were managing in the aggregate
more than $44 billion in assets in the various institutional or
separately managed (approximately $26,604,750,000) and investment
company (approximately $17,876,100,000) accounts.
The Manager is a series of Delaware Management Business Trust. The
Manager changed its form of organization from a corporation to a
business trust on March 1, 1998. 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 indirect, wholly owned subsidiaries, and subject to the
ultimate control, of Lincoln National. Lincoln National, with
headquarters in Fort Wayne, Indiana, is a diversified organization with
operations in many aspects of the financial services industry, including
insurance and investment management.
The Manager manages the Fund's portfolio and makes investment
decisions, which are implemented by the Fund's Trading Department. The
Manager also administers Equity Funds III, Inc.'s affairs and pays the
salaries of all the directors, officers and employees of Equity Funds
III, Inc. who are affiliated with the Manager. For these services, the
Manager is paid an annual fee of 3/4 of 1% of the average daily net
assets of the Fund, less all directors' fees paid to unaffiliated
directors of Equity Funds III, Inc. This fee was paid by the Fund during
the last fiscal year. This fee is higher than that paid by many other
funds and may be higher or lower than that paid by funds with comparable
investment objectives. Investment management fees paid by the Fund for
the fiscal year ended June 30, 1998 were 0.75% of its average daily net
assets. The directors annually review fees paid to the Manager.
Gerald S. Frey has primary responsibility for making day-to-day
investment decisions for the Fund. Mr. Frey has been Vice
President/Senior Portfolio Manager of the Fund since March 1997 and was
Co-Manager from June 1996 to March 1997. Mr. Frey holds a BA in
Economics from Bloomsburg University and attended Wilkes College and New
York University, and he has 21 years' experience in the money management
business. Prior to joining Delaware Investments in 1996, he was a Senior
Director with Morgan Grenfell Capital Management in New York.
In making investment decisions for the Fund, Mr. Frey regularly
consults with Wayne A. Stork, Marshall T. Bassett, John A. Heffern,
Jeffrey W. Hynoski and Lori P. Wachs. Mr. Stork, Chairman of the Manager
and Equity Funds III, Inc.'s Boards of Directors, is a graduate of Brown
University and attended New York University's Graduate School of
Business Administration. Mr. Stork joined Delaware Investments in 1962
and has served in various executive capacities at different times within
the Delaware organization. Mr. Bassett, Vice President, joined Delaware
Investments in 1997. In his most recent position, he served as Vice
President in Morgan Stanley Asset Management's Emerging Growth Group,
where he analyzed small growth companies. Prior to that, he was a trust
officer at Sovran Bank and Trust Company. He received his bachelor's
degree and MBA from Duke University. Mr. Heffern, Vice President, holds
a bachelor's degree and an MBA from the University of North Carolina at
Chapel Hill. He joined Delaware Investments in 1997. Previously, he was
a Senior Vice President, Equity Research at NatWest Securities
Corporation's Specialty Finance Services unit. Prior to that, he was a
Principal and Senior Regional Bank Analyst at Alex. Brown & Sons. Mr.
Hynoski is a Vice President. He joined Delaware Investments in 1998.
Previously he served as a Vice President at Bessemer Trust Company in
the mid and large capitalization growth group, where he specialized in
the areas of science, technology, and telecommunications. Prior to that,
Mr. Hynoski held positions at Lord Abbett & Co. and Cowen Asset
Management. Mr. Hynoski holds a BS in Finance from the University of
Delaware and an MBA with a concentration in Investments/Portfolio
Management and Financial Economics from Pace University. Ms. Wachs is a
Vice President. She joined Delaware Investments in 1992 from Goldman
Sachs, where she was an equity analyst for two years. She is a graduate
of the University of Pennsylvania's Wharton School, where she majored in
Finance and Oriental Studies.
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 to the extent that net capital gains are realized. Given
the Fund's investment objective, its annual portfolio turnover rate may
exceed 100%.
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 Manager in servicing any of its accounts. Subject to best
price and execution, the Fund may consider a broker/dealer's sales of
shares of funds in the Delaware Investments family in placing portfolio
orders and may place orders with broker/dealers that have agreed to
defray certain expenses of such funds, such as custodian fees.
Performance Information
From time to time, the Fund may quote total return performance of
the Classes in advertising and other types of literature. 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 or life-of-fund
periods, as applicable. 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 deductions of the maximum front-end sales charge or any
applicable CDSC.
Because stock prices fluctuate, investment results of the Classes
will fluctuate over time. Past performance is not considered a guarantee
of future results.
Distribution (12b-1) and Service
The Distributor, Delaware Distributors, L.P., serves as the
national distributor for the Fund's shares under a Distribution
Agreement with Equity Funds III, Inc. dated April 3, 1995, as amended on
November 29, 1995.
Equity Funds III, Inc. 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
the Distributor's 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 shares of the Classes, the
Distributor may, from time to time, pay to participate in dealer-
sponsored seminars and conferences, and reimburse dealers for expenses
incurred in connection with preapproved seminars, conferences and
advertising. The Distributor may pay or allow additional promotional
incentives to dealers as part of preapproved sales contests and/or to
dealers who provide extra training and information concerning a Class
and who increase sales of such Class. In addition, the Fund may make
payments from the 12b-1 Plan fees of its respective Classes directly to
others, such as banks, who aid in the distribution of Class shares or
provide services in respect of a Class, pursuant to service agreements
with Equity Funds III, Inc.
The 12b-1 Plan expenses relating to each of the Class B Shares and
Class C Shares of the Fund 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 (i) 0.30% of the Class A Shares' average daily net assets in any
year, and (ii) 1% (0.25% of which are service fees to be paid to the
Distributor, dealers or others, for providing personal service and/or
maintaining shareholder accounts) of each of the Class B Shares' and
Class C Shares' average daily net assets in any year. The actual 12b-1
Plan expenses assessed against Class A Shares may be less than 0.30%,
but may not be less than 0.10%, because of the formula for calculating
the fee adopted by Equity Funds III, Inc.'s Board of Directors. See Part
B. The Fund's Class A Shares, Class B Shares and Class C Shares will not
incur any distribution expenses beyond these limits, which may not be
increased without shareholder approval.
While payments pursuant to the Plans may not exceed 0.30% annually
with respect to Class A Shares and 1% annually with respect to each of
the Class B Shares and Class C Shares, the Plans do not limit fees to
amounts actually expended by the Distributor. It is therefore possible
that the Distributor may realize a profit in any particular year.
However, the Distributor currently expects that its distribution
expenses will likely equal or exceed payments to it under the Plans. The
Distributor may, however, incur such additional expenses and make
additional payments to dealers from its own resources to promote the
distribution of shares of the Classes. The monthly fees paid to the
Distributor under the Plans are subject to the review and approval of
Equity Funds III, Inc.'s unaffiliated directors who may reduce the fees
or terminate the Plans at any time.
The Plans do not apply to Trend Fund Institutional Class. Those
shares are not included in calculating the Plans' fees, and the Plans
are not used to assist in the distribution and marketing of Trend Fund
Institutional Class.
The Transfer Agent, Delaware Service Company, Inc., serves as the
shareholder servicing, dividend disbursing and transfer agent for the
Fund under an agreement dated as of June 29, 1988. The Transfer Agent
also provides accounting services to the Fund pursuant to the terms of a
separate Fund Accounting Agreement.
The directors annually review fees paid to the Distributor and the
Transfer Agent. The Distributor and the Transfer Agent are also
indirect, wholly owned subsidiaries of DMH.
* * *
As with other mutual funds, financial and business organizations
and individuals around the world, the Fund could be adversely affected
if the computer systems used by its service providers do not properly
process and calculate date-related information from and after January 1,
2000. This is commonly known as the "Year 2000 Problem." The Fund is
taking steps to obtain satisfactory assurances that the Fund's major
service providers are taking steps reasonably designed to address the
Year 2000 Problem with respect to the computer systems that such service
providers use. There can be no assurance that these steps will be
sufficient to avoid any adverse impact on the business of the Fund.
Several European countries are participating in the European
Economic and Monetary Union, which will establish a common European
currency for participating countries. This currency will commonly be
known as the "Euro." It is anticipated that each such participating
country will replace its existing currency with the Euro on January 1,
1999. Additional European countries may elect to participate after that
date. If the Fund is invested in securities of participating countries
it could be adversely affected if the computer systems used by its major
service providers are not properly prepared to handle the implementation
of this single currency or the adoption of the Euro by additional
countries in the future. Equity Funds III, Inc. is taking steps to
obtain satisfactory assurances that the major service providers of the
Fund are taking steps reasonably designed to address these matters with
respect to the computer systems that such service providers use. There
can be no assurances that these steps will be sufficient to avoid any
adverse impact on the business of the Fund.
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
ratios of expenses to average daily net assets for Class A Shares, Class
B Shares and Class C Shares for the fiscal year ended June 30, 1998,
were 1.34%, 2.09% and 2.09%, respectively. The expense ratio of each
Class reflects the impact of its 12b-1 Plan.
Shares
Equity Funds III, Inc. is an open-end management investment
company. The Fund's portfolio of assets is diversified as defined by the
1940 Act. Commonly known as a mutual fund, Equity Funds III, Inc.
originally was organized as a Delaware corporation in 1966 and
reorganized as a Maryland corporation on March 4, 1983.
Fund shares have a par value of $.50, equal voting rights, except
as noted below, and are equal in all other respects. Equity Funds III,
Inc. shares have noncumulative voting rights which means that the
holders of more than 50% of Equity Funds III, Inc.'s shares voting for
the election of directors can elect 100% of the directors if they choose
to do so. Under Maryland law, Equity Funds III, Inc. 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.
In addition to Class A Shares, Class B Shares and Class C Shares,
the Fund also offers Trend Fund Institutional Class. 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 Trend Fund Institutional
Class are not subject to, and may not vote on matters affecting, the
Distribution Plans under Rule 12b-1 relating to Class A Shares, Class B
Shares and Class C Shares. 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 Plan
relating to Class A Shares.
Effective as of August 29, 1997, the name of Delaware Group Trend
Fund, Inc. was changed to Delaware Group Equity Funds III, Inc.
Other Investment
Policies and
Risk Considerations
Restricted and Illiquid Securities
The Fund may purchase privately placed securities the resale of
which is restricted under applicable securities laws. Such securities
may offer a higher return than comparably registered securities but
involve some additional risk as they can be resold only in privately
negotiated transactions, in accordance with an exemption from the
registration requirements under applicable securities laws or after
registration. The Fund will not purchase illiquid assets, including such
restricted securities, if more than 10% of the value of its assets would
then consist of illiquid securities.
Certain of the privately placed securities acquired by the Fund
will be eligible for resale by the Fund pursuant to Rule 144A under the
Securities Act of 1933 ("Rule 144A Securities"). Rule 144A permits many
privately placed or legally restricted securities to be freely traded
without restriction among certain institutional buyers such as
the Fund.
While maintaining oversight, the Board of Directors of the Fund 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 securities. The Board
has instructed the Manager to consider the following factors in
determining the liquidity of a Rule 144A Security: (i) the frequency of
trades and trading volume for the security; (ii) whether at least three
dealers are willing to purchase or sell the security and the number of
potential purchasers; (iii) whether at least two dealers are making a
market in the security; and (iv) the nature of the security and the
nature of the marketplace trades (e.g., the time needed to dispose of
the security, the method of soliciting offers, and the mechanics of
transfer).
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.
Repurchase Agreements
The Fund may invest in repurchase agreements, but will not normally
do so except to invest excess cash balances. In a repurchase agreement,
the Fund purchases a security and simultaneously agrees to sell it back
to the seller at a set (generally higher) price. Delays or losses could
result if the other party to the repurchase agreement defaults or
becomes insolvent.
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. 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.
Borrowings
Although the Fund is permitted under certain circumstances to borrow
money, it does not normally do so. The Fund will not purchase new
securities while any borrowings are outstanding.
* * *
Investments by Fund of Funds
The Fund accepts investments from the series of Delaware Group
Foundation Funds, a fund of funds (the "Foundation Funds"). From time to
time, the Fund may experience large investments or redemptions due to
allocations or rebalancings by the Foundation Funds. While it is
impossible to predict the overall impact of these transactions over
time, there could be adverse effects on portfolio management to the
extent that the Fund may be required to sell securities or invest cash
at times when it would not otherwise do so. These transactions could
also have tax consequences if sales of securities result in gains and
could also increase transactions costs or portfolio turnover. The
Manager will monitor such transactions and will attempt to minimize any
adverse effects on both the Fund and the Foundation Funds resulting from
such transactions.
Part B describes certain of these investment policies and risk
considerations. Part B also sets forth other investment policies, risk
considerations and more specific investment restrictions.
Delaware Investments includes funds with a wide range of investment
objectives. Stock funds, income funds, national and state-specific tax-
exempt funds, money market funds, global and international funds and
closed-end funds give investors the ability to create a portfolio that
fits their personal financial goals. For more information, contact your
financial adviser or call Delaware Investments at 800-523-1918.
INVESTMENT MANAGER
Delaware Management Company
One Commerce Square
Philadelphia, PA 19103
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING,
ACCOUNTING SERVICES
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
One Commerce Square
Philadelphia, PA 19103
INDEPENDENT AUDITORS
Ernst & Young LLP
Two Commerce Square
Philadelphia, PA 19103
CUSTODIAN
The Chase Manhattan Bank
4 Chase Metrotech Center
Brooklyn, NY 11245
[GRAPHIC OMITTED: LOGO OF DELAWARE INVESTMENTS
----------------------------
Philadelphia * London]
www.delawarefunds.com
[RECYCLE LOGO OMITTED]
Printed in the U.S.A. on recycled paper
P-003[--]PP9/98
TREND FUND PROSPECTUS
INSTITUTIONAL CLASS SHARES AUGUST 28, 1998
1818 Market Street, Philadelphia, PA 19103
For more information about Trend Fund Institutional Class
call Delaware Investments at 800-828-5052
This Prospectus describes shares of Trend Fund series (the "Fund")
of Delaware Group Equity Funds III, Inc. ("Equity Funds III, Inc."), a
professionally-managed mutual fund of the series type. The Fund's
investment objective is to achieve capital appreciation by investing
primarily in securities of emerging and other growth-oriented companies.
The Fund offers Trend Fund Institutional Class (the "Class").
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. The Fund's Statement of Additional
Information ("Part B" of Equity Funds III, Inc.'s registration
statement), dated August 28, 1998, 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 (the "SEC"). 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 SEC also maintains a Web site (http://www.sec.gov) that
contains Part B, material we incorporated by reference and other
information regarding registrants that electronically file with the SEC.
The Fund also offers Trend Fund A Class, Trend Fund B Class and
Trend Fund C Class. Shares of these classes are subject to sales charges
and other expenses, which may effect 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.
TABLE OF CONTENTS
Cover Page
Synopsis
Summary of Expenses
Financial Highlights
Investment Objective and Policies
Suitability and Certain Risk Factors
Investment Strategy
Classes of Shares
How to Buy Shares
Redemption and Exchange
Dividends and Distributions
Taxes
Calculation of Net Asset Value
Per Share
Management of the Fund
Other Investment Policies
and Risk Considerations
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 THE PRINCIPAL AMOUNT INVESTED. SHARES OF THE FUND ARE NOT BANK OR
CREDIT UNION DEPOSITS.
SYNOPSIS
Investment Objective
The investment objective of the Fund is to achieve capital
appreciation by investing primarily in securities of emerging and other
growth-oriented companies. For further details, see Investment Objective
and Policies and Other Investment Policies and Risk Considerations.
Risk Factors and Special Considerations
The prices of common stocks, especially those of smaller companies,
tend to fluctuate, particularly in the shorter term. Investors should be
willing to accept the risks associated with investments in emerging and
growth-oriented companies, some securities of which may be speculative
and subject the Fund to an additional investment risk. See Suitability
and Certain Risk Factors under Investment Objective and Policies.
Investment Manager, Distributor and Transfer Agent
Delaware Management Company (the "Manager") furnishes investment
management services to the Fund, subject to the supervision and
direction of Equity Funds III, Inc.'s Board of Directors. The Manager
also provides investment management services to certain other funds
available from the Delaware Investments family. Delaware Distributors,
L.P. (the "Distributor") is the national distributor for the Fund and
for all of the other mutual funds available from the Delaware
Investments family. Delaware Service Company, Inc. (the "Transfer
Agent") is the shareholder servicing, dividend disbursing, accounting
services and transfer agent for the Fund and for all of the other mutual
funds available from Delaware Investments.
See Summary of Expenses and Management of the Fund for further
information regarding the Manager and the fees payable under the Fund's
Investment Management Agreement.
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 Classes of Shares.
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.
Open-End Investment Company
Equity Funds III, Inc. is an open-end management investment
company. The Fund's portfolio of assets is diversified as defined by
the Investment Company Act of 1940 (the "1940 Act"). Equity Funds III,
Inc. originally was organized as a Delaware corporation in 1966 and
reorganized as a Maryland corporation on March 4, 1983. See Shares
under Management of the Fund.
SUMMARY OF EXPENSES
Shareholder Transaction Expenses
- ----------------------------------------------------------------------
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
Exchange Fees None(1)
Annual Operating Expenses
(as a percentage of average daily net assets)
- ----------------------------------------------------------------------
Management Fees 0.75%
12b-1 Fees None
Other Operating Expenses 0.34%
------
Total Operating Expenses 1.09%
======
1 Exchanges are subject to the requirements of each fund and a
front-end sales charge may apply.
For expense information about Class A Shares, Class B Shares and
Class C Shares, see the separate prospectus relating to 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. The Fund charges no redemption fees.
1 year 3 years 5 years 10 years
-------- -------- -------- --------
$11 $35 $60 $133
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.
The purpose of these tables is to assist investors in understanding
the various costs and expenses they will bear directly or indirectly in
owning shares of the Fund.
FINANCIAL HIGHLIGHTS
The following financial highlights are derived from the financial
statements of Trend Fund of Delaware Group Equity Funds III, 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, 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 Equity Funds III, Inc. upon request at no
charge.
<TABLE>
<CAPTION>
TREND FUND
Period
11/23/92(1)
Year Ended through
6/30/98 6/30/97 6/30/96(1) 6/30/95(1) 6/30/94(1) 6/30/93
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $16.950 $18.330 $14.300 $12.250 $13.990 $12.760
Income From Investment
Operations
Net Investment
Income (Loss)(3) (0.082) (0.034) (0.087) (0.044) (0.002) (0.035)
Net Gain (Loss) on
Securities
(both realized
and unrealized) 3.942 0.164 5.017 2.884 0.202 1.615
-------- -------- -------- -------- -------- --------
Total From
Investment
Operations 3.860 0.130 4.930 2.840 0.200 1.580
-------- -------- -------- -------- -------- --------
Less Dividends and
Distributions
Dividends From
Net Investment
Income none none none none none none
Distributions From
Net Realized Gains (1.940) (1.510) (0.900) (0.790) (1.940) (0.350)
-------- -------- -------- -------- -------- --------
Total
Dividends and
Distributions (1.940) (1.510) (0.900) (0.790) (1.940) (0.350)
-------- -------- -------- -------- -------- --------
Net Asset Value,
End of Period $18.870 $16.950 $18.330 $14.300 $12.250 $13.990
======== ======== ======== ======== ======== ========
Total Return 24.35% 1.94% 35.88% 24.74% 0.83% 21.69%
Ratios and
Supplemental Data
Net Assets, End of
Period (000's
omitted) $61,275 $120,319 $150,695 $55,437 $13,499 $2,237
Ratio of Expenses
to Average Daily
Net Assets 1.09% 1.08% 1.06% 1.12% 1.15% 1.21%
Ratio of Net
Investment Income
(Loss) to Average
Daily Net Assets (0.45%) (0.21%) (0.54%) (0.34%) (0.50%) (0.49%)
Portfolio Turnover
Rate 114% 115% 90% 64% 67% 75%
Average Commission
Rate Paid(5) $0.060 $0.059 $0.056 N/A N/A N/A
TREND FUND
Year Ended
6/30/93(2) 6/30/92(2) 6/30/91(2) 6/30/90(2) 6/30/89(2)
Net Asset Value,
Beginning of Period $11.380 $8.920 $9.970 $10.870 $8.130
Income From Investment
Operations
Net Investment Income
(Loss)(3) (0.004) (0.005) (0.020) 0.146 0.018
Net Gain (Loss) on
Securities
(both realized
and unrealized) 3.754 2.625 (0.460) 1.224 3.042
-------- -------- -------- -------- --------
Total From
Investment
Operations 3.750 2.620 (0.480) 1.370 3.060
-------- -------- -------- -------- --------
Less Dividends and
Distributions
Dividends From
Net Investment
Income none none (0.050) (0.050) none
Distributions From
Net Realized Gains (1.150) (0.160) (0.520) (2.220) (0.320)
-------- -------- -------- -------- --------
Total
Dividends and
Distributions (1.150) (0.160) (0.570) (2.270) (0.320)
-------- -------- -------- -------- --------
Net Asset Value,
End of Period $13.980 $11.380 $8.920 $9.970 $10.870
======== ======== ======== ======== ========
Total Return 35.24%(4) 29.31%(4) (4.82%)(4) 14.32%(4) 39.27%(4)
Ratios and
Supplemental Data
Net Assets, End of
Period (000's
omitted) $219,826 $124,548 $78,631 $88,274 $67,111
Ratio of Expenses
to Average Daily
Net Assets 1.33% 1.18% 1.29% 1.27% 1.28%
Ratio of Net
Investment Income
(Loss) to Average
Daily Net Assets (0.61%) (0.43%) (0.24%) 0.82% 0.19%
Portfolio Turnover
Rate 75% 76% 67% 80% 48%
Average Commission
Rate Paid(5) N/A N/A N/A N/A N/A
- ------------
1Data are derived from Trend Fund Institutional Class (until
September 6, 1994, referred to as Trend Fund (Institutional) class),
which commenced operations on November 23, 1992. Ratios and total
return for the period November 23, 1992 through June 30, 1993 have
been annualized.
2Data are derived from data of Trend Fund A Class (until September 6,
1994, referred to as Trend Fund class) which was subject to 12b-1
distribution expenses effective June 1, 1992.
31995, 1996, 1997 and 1998 per share information was based on the
average shares outstanding method.
4Does not reflect the maximum front-end sales charge or limited
contingent deferred sales charge that is or was in effect for Trend
Fund A Class.
5Computed by dividing the total amount of commissions paid by the
total number of shares purchased and sold during the period for
which there was a commission charged.
</TABLE>
INVESTMENT OBJECTIVE AND POLICIES
SUITABILITY AND CERTAIN RISK FACTORS
The Fund may be suitable for investors interested in long-term
capital appreciation. The prices of common stocks, especially those
of smaller companies, tend to fluctuate, particularly in the shorter
term. The Fund's net asset value also 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 short-
term investors. Investors should be willing to accept the risks
associated with investments in securities of growth-oriented and
emerging issuers, some of which may be speculative and subject the
Fund to an additional investment risk.
* * *
Ownership of Fund shares can reduce the bookkeeping and
administrative inconvenience which is typically connected with direct
purchases of the types of securities in which the Fund invests.
Investors should not consider a purchase of shares of the Fund as
equivalent to a complete investment program. Delaware Investments
offers funds, generally available through registered dealers, which
may be used together to create a more complete investment program.
INVESTMENT STRATEGY
The objective of the Fund is long-term capital appreciation. The
Fund's strategy is to invest primarily in the common stocks and
securities convertible into common stocks of emerging and other growth-
oriented companies which, in the opinion of the Manager, are responsive
to changes within the marketplace and have the fundamental
characteristics to support growth.
The Fund will seek to identify changing and dominant trends within
the economy, the political arena and our society. The Fund will purchase
securities which it believes will benefit from these trends and which
have the fundamentals to exploit them. The fundamentals include
managerial skills, product development and sales and earnings.
In investing for capital appreciation, the Fund may hold securities
for any period of time. The Fund may also invest in foreign securities.
This Fund is designed primarily for capital appreciation. Providing
current income is not an objective of the Fund. Any income produced is
expected to be minimal. Though income is not an objective of the Fund,
should the market warrant a temporary defensive approach, the Fund may
also invest in cash equivalents, and fixed-income obligations issued or
guaranteed by the U.S. government, its agencies or instrumentalities, as
well as corporate bonds.
Although the Fund will constantly strive to attain the objective of
long-term capital growth, there can be no assurance that it will be
attained. The objective of the Fund may not be changed without
shareholder approval.
* * *
If there were a national credit crisis, an issuer became insolvent
or interest rates were to rise, principal values could be adversely
affected.
For additional information on the Fund's investment policies and
certain risks associated with investments in certain types of
securities, see Other Investment Policies and Risk Considerations.
Part B sets forth other more specific investment restrictions. A
brief discussion of those factors that materially affected the Fund's
performance during its most recently completed fiscal year appears in
the Fund's Annual Report.
CLASSES OF 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 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,
or its affiliates and their corporate sponsors, as well as subsidiaries
and related employee benefit plans and rollover individual retirement
accounts from such institutional advisory accounts; (d) a bank, trust
company and similar financial institution investing for its own account
or for the account of its trust customers for whom such financial
institution is exercising investment discretion in purchasing shares of
the Class, except where the investment is part of a program that
requires payment to the financial institution of a Rule 12b-1 Plan fee;
and (e) registered investment advisers investing on behalf of clients
that consist solely of institutions and high net-worth individuals
having at least $1,000,000 entrusted to the adviser for investment
purposes, but only if the adviser is not affiliated or associated with a
broker or dealer and derives compensation for its services exclusively
from its clients for such advisory services.
Trend Fund A Class, Trend Fund B Class and Trend Fund C Class
In addition to offering Trend Fund Institutional Class, the Fund
also offers Trend Fund A Class, Trend Fund B Class and Trend Fund C
Class, which are described in a separate prospectus. Shares of Trend
Fund A Class, Trend Fund B Class and Trend Fund C Class may be purchased
through authorized investment dealers or directly by contacting the Fund
or the Distributor. Class A Shares, Class B Shares and Class C Shares
may have different sales charges and other expenses which may affect
performance. To obtain a prospectus relating to such classes, contact
the Distributor by writing to the address or by calling the phone number
listed on page 1 of this Prospectus.
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 plan account, an appropriate retirement plan application,
must be completed, signed and sent with a check payable to Trend Fund
Institutional Class, to Delaware Investments at 1818 Market Street,
Philadelphia, PA 19103.
2. Subsequent Purchases--Additional purchases may be made at any time by
mailing a check payable to Trend Fund Institutional Class. Your check
should be identified with your name(s) and account number.
Investing Directly by Wire
You may purchase shares by requesting your bank to transmit funds
by wire to CoreStates Bank, N.A., ABA #031000011, account number
1412893401 (include your name(s) and your account number).
1. Initial Purchases--Before you invest, telephone the 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 send your Investment Application, or in the case of a
retirement plan account, an appropriate retirement plan application, for
Trend Fund Institutional Class, to Delaware Investments 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 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 Delaware
Investments 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 Fund. However, shares of Trend Fund B Class and Trend Fund C Class
and Class B Shares and Class C Shares of other funds available from
Delaware Investments 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. See Redemption
and Exchange for more complete information concerning your exchange
privileges.
Investing through Your Investment Dealer
You can make a purchase of Fund shares through most investment
dealers who, as part of the service they provide, must transmit orders
promptly 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 is the date the order is received
by the Fund, its agent or designee. 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
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 Delaware
Investments. 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
involuntarily redeem accounts that remain under $250 as a result of
redemptions.
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 on the net asset
value next determined after the Fund receives your request in good
order. For example, redemption and exchange requests received in good
order after the time the net asset value of shares is determined will
be processed on the next business day. See Purchase Price and Effective
Date under How to Buy 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. With regard to exchanges, 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 800-828-5052.
Redemption proceeds will be distributed promptly, as described below,
but not later than seven days after receipt of a redemption request.
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.
The Fund will process written and telephone redemption requests to
the extent that the purchase orders for the shares being redeemed have
already settled. The Fund will honor redemption requests as to shares
for which a check was tendered as payment, but the Fund will not mail or
wire the proceeds until it is reasonably satisfied that the check has
cleared, which may take up to 15 days from the purchase date. You can
avoid this potential delay if you purchase shares by wiring Federal
Funds. 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 mutual fund in
Delaware Investments, 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 Class B
Shares or Class C Shares of the funds in the Delaware Investments
family. The Fund may suspend, terminate or amend the terms of the
exchange privilege upon 60 days' written notice to shareholders.
Various redemption and exchange methods are outlined below. No fee
is charged by the Fund or the Distributor for redeeming or exchanging
your shares, although, in the case of an exchange, a sales charge may
apply. 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 Delaware
Investments, 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. A signature guarantee can be obtained from a commercial bank,
a trust company or a member of a securities transfer association
medallion program. A signature guarantee cannot be provided by a notary
public. A signature guarantee is designed to protect the shareholders,
the Fund and its agent from fraud. The Fund reserves the right to
reject a signature guarantee supplied by an institution based on its
creditworthiness. The Fund may require further documentation from
corporations, executors, retirement plans, administrators, trustees or
guardians.
The redemption request is effective at the net asset value next
determined after it is received in good order. Payment is normally
mailed the next business day after receipt of your redemption request.
If your shares are in certificate form, the certificate must accompany
your request and also be in good order. Certificates are issued for
shares only if a shareholder submits a specific request.
You also may submit your written request for redemption or
exchange by facsimile transmission at the following number:
215-255-8864.
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 your shares in
certificate form, you may redeem or exchange only by written request
and you must return your certificate(s).
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 its 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. 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 record address. Checks will be
payable to the shareholder(s) of record. Payment is normally mailed the
next business day after receipt of the redemption 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, you must submit a written authorization and
you may need to have your signature guaranteed. For your protection,
your authorization must be on file. If you request a wire, your funds
will normally be sent the next business day. If you ask for a check, it
will normally be mailed the next business day after receipt of your
redemption request to your predesignated bank account. Redemption
proceeds will be wired or mailed to your bank provided that purchase
orders for shares being redeemed have settled and checks tendered as
payment for shares being redeemed have cleared. 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 Investments family 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.
DIVIDENDS AND DISTRIBUTIONS
The Fund will make payments from net investment income and net
realized securities profits, if any, 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 if
necessary to comply with certain requirements of the Internal Revenue
Code of 1986, as amended (the "Code"). Both dividends and distributions,
if any, are automatically reinvested in your account at net asset value.
Each class of the Fund will share proportionately in the investment
income and expenses of the Fund, except that the Class will not incur
any distribution fee under the 12b-1 Plans which apply to Trend Fund A
Class, Trend Fund B Class and Trend Fund C Class.
TAXES
The tax discussion set forth below is included for general
information only. Investors should contact their own tax advisers
concerning the federal, state, local or foreign tax consequences of an
investment in the Fund.
On August 5, 1997, President Clinton signed into law the Taxpayer
Relief Act of 1997 (the "1997 Act"). This new law makes sweeping
changes in the Code. Because many of these changes are complex, and
only indirectly affects the Fund and its distributions to you, they are
discussed in Part B. Changes in the treatment of capital gains, however,
are discussed in this section.
The Fund has qualified, and intends to continue to qualify, as a
regulated investment company under Subchapter M of 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
and it satisfies certain other requirements relating to the sources of
income and diversification of its assets.
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
those investors who are subject to income taxes as ordinary income, even
though received in additional shares. For corporate investors, dividends
from net investment income will generally qualify in part for the
corporate dividends-received deduction. The portion of dividends, if any,
paid by the Fund that so qualifies will be designated each year in a
notice from Equity Funds III, Inc. to the Fund's shareholders.
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 by-product 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.
The Treatment of Capital Gain Distributions under the Taxpayer Relief
Act of 1997
The 1997 Act creates a category of long-term capital gain for
individuals that will be taxed at new lower tax rates. For investors who
are in the 28% or higher federal income tax brackets, these gains will
be taxed at a maximum rate of 20%. For investors who are in the 15%
federal income tax bracket, these gains will be taxed at a maximum rate
of 10%. Capital gain distributions will qualify for these new maximum
tax rates, depending on when the Fund's securities were sold and how
long they were held by the Fund before they were sold. The holding
periods for which the new rates apply were revised by the Internal
Revenue Service Restructuring and Reform Act of 1998. Investors who want
more information on holding periods and other qualifying rules relating
to these new rates should review the expanded discussion in Part B, or
should contact their own tax advisers.
Equity Funds III, Inc. will advise you in its annual information
reporting at calendar year end of the amount of its capital gain
distributions which will qualify for these maximum federal tax rates.
Although dividends generally will be treated as distributed when
paid, 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 the Fund and any other fund available from
the Delaware Investments family. Any loss incurred on a sale or exchange
of Fund shares that 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.
In addition to the federal taxes described above, shareholders may
or may not be subject to various state and local taxes. For example,
distributions of interest income and capital gains realized from certain
types of U.S. government securities may be exempt from state personal
income taxes. Because investors' state and local taxes may be different
than the federal taxes described above, investors should consult their
own tax advisers.
Each year, Equity Funds III, Inc. will mail to 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, if any, 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.
Equity Funds III, Inc. 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 Investment Application your proper Taxpayer Identification Number
and by certifying that you are not subject to backup withholding.
See Taxes in Part B for additional information on tax matters
relating to the Fund and its shareholders.
CALCULATION OF NET ASSET VALUE PER SHARE
The purchase and redemption price of the Class is the net asset
value ("NAV") per share of Class shares 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
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. Portfolio securities for which market quotations are
available are priced at market value. 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 Equity
Funds III, Inc.'s Board of Directors.
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 Equity Funds III, Inc.'s 12b-1 Plans,
and Trend Fund A Class, Trend Fund B Class and Trend Fund C Class alone
will bear the 12b-1 Plan fees payable under their respective Plan. Due
to the specific distribution expenses and other costs that will be
allocable to each class, the net asset value of and dividends paid to
each class of the Fund will vary.
MANAGEMENT OF THE FUND
Directors
The business and affairs of Equity Funds III, Inc. are managed
under the
direction of its Board of Directors. Part B contains additional
information regarding Equity Funds III, Inc.'s 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 Investments family since 1938. On June 30, 1998, the
Manager and its affiliates within Delaware Investments, including
Delaware International Advisers Ltd., were managing in the aggregate
more than $44 billion in assets in the various institutional or
separately managed (approximately $26,604,750,000) and investment
company (approximately $17,876,100,000) accounts.
The Manager is a series of Delaware Management Business Trust. The
Manager changed its form of organization from a corporation to a
business trust on March 1, 1998. 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 indirect, wholly owned subsidiaries, and subject to the
ultimate control, of Lincoln National. Lincoln National, with
headquarters in Fort Wayne, Indiana, is a diversified organization with
operations in many aspects of the financial services industry, including
insurance and investment management.
The Manager manages the Fund's portfolio and makes investment
decisions, which are implemented by the Fund's Trading Department. The
Manager also administers Equity Funds III, Inc.'s affairs and pays the
salaries of all the directors, officers and employees of Equity Funds
III, Inc. who are affiliated with the Manager. For these services, the
Manager is paid an annual fee of 3/4 of 1% of the average daily net
assets of the Fund, less all directors' fees paid to unaffiliated
directors of Equity Funds III Inc. This fee was paid by the Fund during
the last fiscal year. This fee is higher than that paid by many other
funds. The fee may be higher or lower than that paid by funds with
comparable investment objectives. Investment management fees paid by the
Fund were 0.75% of average daily net assets for the fiscal year ended
June 30, 1998. The directors annually review fees paid to the Manager.
Gerald S. Frey has primary responsibility for making day-to-day
investment decisions for the Fund. Mr. Frey has been Vice
President/Senior Portfolio Manager of the Fund since March 1997 and was
Co-Manager from June 1996 to March 1997. Mr. Frey holds a BA in
Economics from Bloomsburg University and attended Wilkes College and New
York University, and he has 21 years' experience in the money management
business. Prior to joining Delaware Investments in 1996, he was a Senior
Director with Morgan Grenfell Capital Management in New York.
In making investment decisions for the Fund, Mr. Frey regularly
consults with Wayne A. Stork, Marshall T. Bassett, John A. Heffern,
Jeffrey W. Hynoski and Lori P. Wachs. Mr. Stork, Chairman of the Manager
and Equity Funds III, Inc.'s Boards of Directors, is a graduate of Brown
University and attended New York University's Graduate School of
Business Administration. Mr. Stork joined Delaware Investments in 1962
and has served in various executive capacities at different times within
the Delaware organization. Mr. Bassett, Vice President, joined Delaware
Investments in 1997. In his most recent position, he served as Vice
President in Morgan Stanley Asset Management's Emerging Growth Group,
where he analyzed small growth companies. Prior to that, he was a trust
officer at Sovran Bank and Trust Company. He received his bachelor's
degree and MBA from Duke University. Mr. Heffern, Vice President, holds
a bachelor's degree and an MBA from the University of North Carolina at
Chapel Hill. He joined Delaware Investments in 1997. Previously, he was
a Senior Vice President, Equity Research at NatWest Securities
Corporation's Specialty Finance Services unit. Prior to that, he was a
Principal and Senior Regional Bank Analyst at Alex. Brown & Sons. Mr.
Hynoski is a Vice President. He joined Delaware Investments in 1998.
Previously he served as a Vice President at Bessemer Trust Company in
the mid and large capitalization growth group, where he specialized in
the areas of science, technology, and telecommunications. Prior to that,
Mr. Hynoski held positions at Lord Abbett & Co. and Cowen Asset
Management. Mr. Hynoski holds a BS in Finance from the University of
Delaware and an MBA with a concentration in Investments/Portfolio
Management and Financial Economics from Pace University. Ms. Wachs is a
Vice President. She joined Delaware Investments in 1992 from Goldman
Sachs, where she was an equity analyst for two years. She is a graduate
of the University of Pennsylvania's Wharton School, where she majored in
Finance and Oriental Studies.
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 may exceed 100%.
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 Manager in servicing any of its accounts. Subject to best
price and execution, the Fund may consider a broker/dealer's sales of
shares of funds in the Delaware Investments family in placing portfolio
orders and may place orders with broker/dealers that have agreed to
defray certain expenses of such funds, such as custodian fees.
Performance Information
From time to time, the Fund may quote total return performance of
the Class in advertising and other types of literature.
Total return will be based on a hypothetical $1,000 investment,
reflecting the reinvestment of all distributions at net asset value.
Each presentation will include the average annual total return for one-,
five- and ten-year, or life-of-fund periods, as applicable. The Fund may
also advertise aggregate and average total return information concerning
the Class over additional periods of time.
Because stock prices fluctuate, investment results of the Class
will fluctuate over time. Past performance is not considered a guarantee
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 dividends. You should examine statements and
confirmations immediately and promptly report any discrepancy by calling
your Client Services Representative.
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. Equity Funds III, Inc.'s
fiscal year ends on June 30.
Distribution and Service
The Distributor, Delaware Distributors, L.P., serves as the
national distributor for the Fund under a Distribution Agreement with
Equity Funds III, Inc. dated April 3, 1995, as amended on November 29,
1995. The Distributor bears all of the costs of promotion and
distribution.
The Transfer Agent, Delaware Service Company, Inc., serves as the
shareholder servicing, dividend disbursing and transfer agent for the
Fund under an agreement dated as of June 29, 1988. The Transfer Agent
also provides accounting services to the Fund pursuant to the terms of a
separate Fund Accounting Agreement. Certain recordkeeping services 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 those services. In addition, participant account
maintenance fees may be assessed for certain recordkeeping services
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 directors annually review fees paid to the Distributor and the
Transfer Agent. 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
for the fiscal year ended June 30, 1998 was 1.09%.
* * *
As with other mutual funds, financial and business organizations
and individuals around the world, the Fund could be adversely affected
if the computer systems used by its service providers do not properly
process and calculate date-related information from and after January 1,
2000. This is commonly known as the "Year 2000 Problem." The Fund is
taking steps to obtain satisfactory assurances that the Fund's major
service providers are taking steps reasonably designed to address the
Year 2000 Problem with respect to the computer systems that such service
providers use. There can be no assurance that these steps will be
sufficient to avoid any adverse impact on the business of the Fund.
Several European countries are participating in the European
Economic and Monetary Union, which will establish a common European
currency for participating countries. This currency will commonly be
known as the "Euro." It is anticipated that each such participating
country will replace its existing currency with the Euro on January 1,
1999. Additional European countries may elect to participate after that
date. If the Fund is invested in securities of participating countries,
it could be adversely affected if the computer systems used by its major
service providers are not properly prepared to handle the implementation
of this single currency or the adoption of the Euro by additional
countries in the future. Equity Funds III, Inc. is taking steps to
obtain satisfactory assurances that the major service providers of the
Fund are taking steps reasonably designed to address these matters with
respect to the computer systems that such service providers use. There
can be no assurances that these steps will be sufficient to avoid any
adverse impact on the business of the Fund.
Shares
Equity Funds III, Inc. is an open-end management investment
company. The Fund's portfolio of assets is diversified as defined by
the 1940 Act. Commonly known as a mutual fund, Equity Funds III, Inc.
originally was organized as a Delaware corporation in 1966 and
reorganized as a Maryland corporation on March 4, 1983. Fund shares
have a par value of $.50, equal voting rights, except as noted below,
and are equal in all other respects.
Equity Funds III, Inc. shares have noncumulative voting rights
which means that the holders of more than 50% of Equity Funds III,
Inc.'s shares voting for the election of directors can elect 100% of the
directors if they choose to do so. Under Maryland law, Equity Funds III,
Inc. 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.
In addition to the Class, the Fund also offers Trend Fund A Class,
Trend Fund B Class and Trend Fund C Class. 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 Class, except that
shares of the Class are not subject to, and may not vote on matters
affecting, the Fund's Distribution Plans under Rule 12b-1 relating to
Trend Fund A Class, Trend Fund B Class and Trend Fund C Class.
Effective as of August 29, 1997, the name of Delaware Group Trend
Fund, Inc. was changed to Delaware Group Equity Funds III, Inc.
OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS
Restricted and Illiquid Securities
The Fund may purchase privately placed securities the resale of
which is restricted under applicable securities laws. Such securities
may offer a higher return than comparably registered securities but
involve some additional risk as they can be resold only in privately
negotiated transactions, in accordance with an exemption from the
registration requirements under applicable securities laws or after
registration. The Fund will not purchase illiquid assets, including such
restricted securities, if more than 10% of the value of its assets would
then consist of illiquid securities.
Certain of the privately placed securities acquired by the Fund
will be eligible for resale by the Fund pursuant to Rule 144A under the
Securities Act of 1933 ("Rule 144A Securities"). Rule 144A permits many
privately placed or legally restricted securities to be freely traded
without restriction among certain institutional buyers such as the Fund.
While maintaining oversight, the Board of Directors of the Fund 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; and (iv) the nature of the security and the nature of the
marketplace trades (e.g., the time needed to dispose of the security,
the method of soliciting offers, and the mechanics of transfer).
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.
Repurchase Agreements
The Fund may invest in repurchase agreements, but will not normally
do so except to invest excess cash balances. In a repurchase agreement,
the Fund purchases a security and simultaneously agrees to sell it back
to the seller at a set (generally higher) price. Delays or losses could
result if the other party to the repurchase agreement defaults or
becomes insolvent.
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. 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.
Borrowings
Although the Fund is permitted under certain circumstances to
borrow money, it does not normally do so. The Fund will not purchase
new securities while any borrowings are outstanding.
* * *
Investments by Fund of Funds
The Fund accepts investments from the series of Delaware Group
Foundation Funds, a fund of funds (the "Foundation Funds"). From time to
time, the Fund may experience large investments or redemptions due to
allocations or rebalancings by the Foundation Funds. While it is
impossible to predict the overall impact of these transactions over
time, there could be adverse effects on portfolio management to the
extent that the Fund may be required to sell securities or invest cash
at times when it would not otherwise do so. These transactions could
also have tax consequences if sales of securities result in gains and
could also increase transactions costs or portfolio turnover. The
Manager will monitor such transactions and will attempt to minimize any
adverse effects on both the Fund and the Foundation Funds resulting from
such transactions.
Part B describes certain of these investment policies and risk
considerations. Part B also sets forth other investment policies, risk
considerations and more specific investment restrictions.
For more information, contact
Delaware Investments at 800-828-5052.
Investment Manager
Delaware Management Company
One Commerce Square
Philadelphia, PA 19103
National Distributor
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
Shareholder Servicing,
Dividend Disbursing,
Accounting Services
and Transfer Agent
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
Legal Counsel
Stradley, Ronon, Stevens & Young, LLP
One Commerce Square
Philadelphia, PA 19103
Independent Auditors
Ernst & Young LLP
Two Commerce Square
Philadelphia, PA 19103
Custodian
The Chase Manhattan Bank
4 Chase Metrotech Center
Brooklyn, NY 11245
www.delawarefunds.com
[RECYCLED LOGO OMITED] Printed in the U.S.A. on recycled paper.
P-043 [--] PP 9/98
- --------------
TREND FUND
INSTITUTIONAL
- --------------
Prospectus
August 28, 1998
[GRAPHIC OMITTED: DELAWARE INVESTMENTS LOGO]
PART B--STATEMENT OF ADDITIONAL INFORMATION
AUGUST 28, 1998
DELAWARE GROUP EQUITY FUNDS III, INC.
1818 Market Street
Philadelphia, PA 19103
For more information about Trend Fund Institutional Class: 800-828-5052
For Prospectus and Performance of Trend Fund A Class, Trend Fund B Class
and Trend Fund C Class: Nationwide 800-523-1918
Information on Existing Accounts of Trend Fund A Class, Trend Fund B
Class and Trend Fund C Class: (SHAREHOLDERS ONLY)
Nationwide 800-523-1918
Dealer Services: (BROKER/DEALERS ONLY)
Nationwide 800-362-7500
TABLE OF CONTENTS
Cover Page
Investment Objective and Policies
Performance Information
Trading Practices and Brokerage
Purchasing Shares
Investment Plans
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
Financial Statements
Delaware Group Equity Funds III, Inc. ("Equity Funds III, Inc.")
is a professionally-managed mutual fund of the series type which
currently offers shares of Trend Fund series (the "Fund"). This
Statement of Additional Information ("Part B" of Equity Funds III,
Inc.'s registration statement) describes the Fund's four classes
(individually, a "Class" and collectively, the "Classes") of shares -
Trend Fund A Class (the "Class A Shares"), Trend Fund B Class (the
"Class B Shares"), Trend Fund C Class (the "Class C Shares") (together,
the "Fund Classes") and Trend Fund Institutional Class (the
"Institutional Class").
Class B Shares, Class C Shares and Institutional Class shares of
the Fund 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
("12b-1 Plan") expenses of up to 0.30%. 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 Classes of Shares in the Fund Classes' Prospectus.
Class C Shares are subject to a CDSC which may be imposed on redemptions
made within 12 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.
This Part B supplements the information contained in the current
Prospectus for the Fund Classes dated August 28, 1998 and the current
Prospectus for the Institutional Class dated August 28, 1998, 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.
All references to "shares" in this Part B refer to each Class of
shares of Equity Funds III, Inc., except where noted.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund, which is a fundamental policy
and cannot be changed without shareholder approval, is capital
appreciation. The strategy is to invest primarily in the common stocks
and securities convertible into common stocks of emerging and other
growth-oriented companies that, in the judgment of Delaware Management
Company (the "Manager"), are responsive to changes within the
marketplace and have the fundamental characteristics to support growth.
Income will not be a significant investment factor except so far as
future dividend growth may affect market appraisal of a security.
Purchases and sales of portfolio securities will be based upon
management's judgment of economic and market trends in addition to
fundamental investment analysis. The Fund will seek to identify
changing and dominant trends affecting securities values which it
believes will offer the opportunities for growth of capital, such as
trends in the overall economic environment (including social,
political, monetary and technological trends); trends within a company
and its industry reflected by, for example, improving managerial skills,
new product development and sales and earnings trends; and trends in
market prices of various types of categories of investments. Since the
production of income is not an objective of the Fund, any income
earned and paid to shareholders is expected to be minimal. An investor
should not consider a purchase of Fund shares as equivalent to a
complete investment program.
Although the Fund will constantly strive to attain the objective of
capital appreciation, there can be no assurance that it will be
attained. It also should be borne in mind that investing in securities
believed to have a potential for capital appreciation may involve
exposure to a greater risk than securities which do not have growth
characteristics, and that the shares of the Fund will fluctuate in
value. Investing for this objective, the Fund usually will invest in
common stocks or securities convertible into common stocks of emerging
and other growth-oriented companies, some of which may be of a
speculative nature and subject the Fund to an additional risk. However,
from time to time, the Fund may, in its judgment, depending upon
prevailing circumstances, and for defensive purposes without limit as to
the proportion of assets invested, hold varying proportions of cash,
U.S. government securities, nonconvertible securities and straight debt
securities.
In investing for capital appreciation, the Fund may hold securities
for any period of time. See Portfolio Turnover under Trading Practices
and Brokerage.
Investment Restrictions
The Fund has the following investment restrictions which are
fundamental and may not be amended without approval of a majority of the
outstanding voting securities of the Fund, which is the lesser of (i)
67% or more of the voting securities present in person or by proxy at a
meeting, if the holders of more than 50% of the outstanding voting
securities are present or represented by proxy; or (ii) more than 50% of
the outstanding voting securities. The percentage limitations contained
in the restrictions and policies set forth herein apply at the time of
purchase of securities.
The Fund shall not:
1. 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. Acquire control of any company.
3. Purchase or retain securities of any 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 own beneficially more
than 1/2 of 1% of the shares of the company, and in the aggregate more
than 5% thereof.
4. Invest in securities of other investment companies except at
customary brokerage commissions rates or in connection with mergers,
consolidations or offers of exchange.
5. Purchase any security issued by any other investment company if
after such purchase it would: (a) own more than 3% of the voting stock
of such company, (b) own securities of such company having a value in
excess of 5% of the Fund's assets or (c) own securities of investment
companies having an aggregate value in excess of 10% of the Fund's
assets.
6. Make any investment in real estate unless necessary for office
space or the protection of investments already made. (This restriction
does not preclude the Fund's purchase of securities issued by real
estate investment trusts.) Any investment in real estate together with
any investment in illiquid assets cannot exceed 10% of the value of the
Fund's assets.
7. Sell short any security or property.
8. Deal in commodities.
9. 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 (the "SEC") 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 (the "1940 Act"), except for notes to
banks.
10. Make loans. However, the purchase of a portion of an issue of
publicly distributed bonds, debentures or other securities, whether or
not the purchase was made upon the original issuance of the securities,
and the entry into "repurchase agreements" are not to be considered the
making of a loan by the Fund and 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.
11. Invest more than 5% of the value of its total assets in
securities of companies less than three years old. Such three-year
period shall include the operation of any predecessor company or
companies.
12. Act as an underwriter of securities of other issuers.
13. Permit long or short positions on shares of the Fund to 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.
14. Invest more than 25% of its assets in any one particular
industry.
Although it is not a matter of fundamental policy, the Fund has
also made a commitment that it will not invest in warrants valued at the
lower of cost or market exceeding 5% of the Fund's net assets. Included
within that amount, but not to exceed 2% of the Fund's net assets, may
be warrants not listed on the New York Stock Exchange or American Stock
Exchange. In addition, 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.
Foreign Securities
Although it is not a matter of fundamental policy, the Fund may
invest not more than 5% of its assets in foreign securities. Foreign
markets may be more volatile than U.S. markets. Such investments
involve sovereign risk in addition to the normal risks associated with
American securities. These risks include political risks, foreign taxes
and exchange controls and currency fluctuations. For example, foreign
portfolio investments may fluctuate in value due to changes in currency
rates (i.e., the value of foreign investments would increase with a fall
in the value of the dollar, and decrease with a rise in the value of the
dollar) and control regulations apart from market fluctuations. The
Fund may also experience delays in foreign securities settlement.
Repurchase Agreements
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 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. While the
Fund is permitted to do so, it normally does not invest in repurchase
agreements, except to invest excess cash balances.
The funds available from the Delaware Investments family have
obtained an exemption from the joint-transaction prohibitions of Section
17(d) of the 1940 Act to allow the funds in the Delaware Investments
family 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.
Rule 144A Securities
The Fund may purchase privately placed securities which may be
resold only in privately negotiated transactions, in accordance with an
exemption from registration under applicable securities laws or after
registration. The registration process may involve delays which could
result in the Fund obtaining a less favorable price on resale. In
addition, to the extent that there is no established trading market for
restricted securities, it will be more difficult for the Fund to obtain
precise valuations for such securities in its portfolio. As a result,
judgment may play a greater role in valuing such securities than is
normally the case.
Certain of the privately placed securities acquired by the Fund
will be eligible for resale pursuant to Rule 144A ("Rule 144A
Securities") under the Securities Act of 1933 (the "1933 Act"). Equity
Funds III, Inc.'s Board of Directors has instructed the Manager to
consider the following factors in determining the liquidity of Rule 144A
Securities: (i) the frequency of trades and trading volume for the
security; (ii) whether at least three dealers are willing to purchase or
sell the security and the number of potential purchasers; (iii) whether
at least two dealers are making a market in the security; and (iv) the
nature of the security and the nature of the marketplace trades (e.g.,
the time needed to dispose of the security, the method of soliciting
offers, and the mechanics of transfer). Investing in Rule 144A
Securities could have the effect of increasing the level of the Fund's
illiquidity to the extent that qualified institutional buyers become,
for a period of time, uninterested in purchasing these securities.
Borrowings
Although the Fund is permitted under certain circumstances to
borrow money and invest in investment company securities, it does not
normally do so. The Fund normally will not purchase securities 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 SEC
permits portfolio lending by registered investment companies if certain
conditions are met. These conditions are as follows: 1) each
transaction must have 100% collateral in the form of cash, short-term
U.S. government securities, or irrevocable letters of credit payable by
banks acceptable to 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 portfolio
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.
PERFORMANCE INFORMATION
From time to time, the Fund may state each Class' total return in
advertisements and other types of literature. Any statement 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,
periods, as applicable. The Fund may also advertise aggregate and
average total return information of each Class over additional periods
of time.
In presenting performance information for Class A Shares, the
Limited CDSC, or other CDSC, applicable only to 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, or other CDSC, and the limited instances in which it applies. All
references to a CDSC in this Performance Information section will apply
to Class B Shares or Class C Shares.
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 Class A
Shares only, the maximum front-end sales
charge, if any, 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.
Total return performance for each Class will be computed by adding
all reinvested income and realized securities profits distributions plus
the change in net asset value during a specific period and dividing by
the offering price at the beginning of the period. It will not reflect
any income taxes payable by shareholders on the reinvested distributions
included in the calculation. Because securities prices fluctuate, past
performance should not be considered as a representative of the results
which may be realized from an investment in the Fund in the future.
Aggregate or cumulative total return is calculated in a similar
manner, except that the results are not annualized. Each calculation
assumes the maximum front-end sales charge, if any, is deducted from the
initial $1,000 investment at the time it is made with respect to Class A
Shares and that all distributions are reinvested at net asset value,
and, with respect to Class B Shares and Class C Shares, reflects the
deduction of the CDSC that would be applicable upon complete redemption
of such shares. In addition, 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 through June
30, 1998, computed as described above. The average annual total return
for Class A Shares at offer reflects the maximum front-end sales charge
of 4.75% paid on the purchase of shares. The average annual total
return for the Class A Shares at net asset value (NAV) does not reflect
the payment of any front-end sales charge. Stock 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 would have been affected had such an
adjustment been made.
Average Annual Total Return
Class A Class A
Shares(1)(2) Shares(1) Institutional
(At Offer) (At NAV) Class(3)
1 year ended
6/30/98 18.12% 23.97% 24.35%
3 years ended
6/30/98 17.64% 19.56% 19.87%
5 years ended
6/30/98 15.29% 16.42% 16.72%
10 years ended
6/30/98 18.36% 18.94% 19.11%
15 years ended
6/30/98 12.05% 11.69% 12.15%
Period 10/3/68(4)
through 6/30/98 9.59% 9.77% 9.82%
(1) Class A Shares began paying 12b-1 payments on June 1, 1992 and
performance prior to that date does not reflect such payments.
(2) Prior to November 29, 1995, the maximum front-end sales charge was
5.75%. Effective November 29, 1995, the maximum front-end sales
charge was reduced to 4.75% and the above performance numbers are
calculated using 4.75% as the applicable sales charge, and are more
favorable than they would have been had they been calculated using
the former front-end charge.
(3) Date of initial public offering of Institutional Class shares was
November 23, 1992.
(4) Date of initial public offering of Class A Shares.
The performance of Class B Shares, as shown below, is the average
annual total return quotation through June 30, 1998. The average annual
total return for Class B Shares including deferred sales charge reflects
the deduction of the applicable CDSC that would be paid if the shares
were redeemed at June 30, 1998. The average annual total return for
Class B Shares excluding deferred sales charge assumes the shares were
not redeemed at June 30, 1998, and therefore does not reflect the
deduction of a CDSC.
Average Annual Total Return
Class B Shares Class B Shares
(Including (Excluding
Deferred Deferred
Sales Charge) Sales Charge)
1 year ended
6/30/98 19.09% 23.09%
3 years ended
6/30/98 17.98% 18.69%
Period 9/6/94(1)
through 6/30/98 18.66% 19.14%
(1) Date of initial public offering of Class B Shares.
The performance of Class C Shares, as shown below, is the average
annual total return quotation through June 30, 1998. The average annual
total return for Class C Shares including deferred sales charge reflects
the deduction of the applicable CDSC that would be paid if the shares
were redeemed at June 30, 1998. The average annual total return for
Class C Shares excluding deferred sales charge assumes the shares were
not redeemed at June 30, 1998 and therefore does not reflect the
deduction of a CDSC.
Average Annual Total Return
Class C Shares Class C Shares
(Including (Excluding
Deferred Deferred
Sales Charge) Sales Charge)
1 year ended
6/30/98 22.09% 23.09%
Period 11/29/95(1)
through 6/30/98 16.57% 16.57%
(1) Date of initial public offering of Class C Shares.
Total return performance for the Classes will be computed by adding
all reinvested income and realized securities profits distributions plus
the change in net asset value during a specific period and dividing by
the offering price at the beginning of the period. It will also
reflect, as applicable, the maximum sales charge, or CDSC, paid with
respect to the illustrated investment amount, but not any income taxes
payable by shareholders on the reinvested distributions included in the
calculation. Because securities prices fluctuate, past performance
should not be considered as a representation of the results which may be
realized from an investment in the Fund in the future.
From time to time, the Fund may also quote each Class' actual total
return performance, dividend results and other performance information
in advertising and other types of literature. This information may be
compared to that of other mutual funds with similar investment
objectives and to stock, bond and other relevant indices or to rankings
prepared by independent services or other financial or industry
publications that monitor the performance of mutual funds. For example,
the performance of the Fund (or Fund Class) may be compared to data
prepared by Lipper Analytical Services, Inc., Morningstar, Inc. or to
the S&P 500 Index or the Dow Jones Industrial Average.
Lipper Analytical Services, Inc. maintains statistical performance
databases, as reported by a diverse universe of independently-managed
mutual funds. Morningstar, Inc. is a mutual fund rating service that
rates mutual funds on the basis of risk-adjusted performance. Rankings
that compare the Fund's performance to another fund in appropriate
categories over specific time periods also may be quoted in advertising
and other types of literature. The S&P 500 Stock Index and the Dow
Jones Industrial Average are industry-accepted unmanaged indices of
generally-conservative securities used for measuring general market
performance. The Russell 2000 Index TR is a total return weighted index
which is comprised of 2,000 of the smallest stocks (on the basis of
capitalization) in the Russell 3000 Index and is calculated on a monthly
basis. The NASDAQ Composite Index is a market capitalization price only
index that tracks the performance of domestic common stocks traded on
the regular NASDAQ market as well as National Market System traded
foreign common stocks and American Depository Receipts. The total
return performance reported for these indices will reflect the
reinvestment of all distributions on a quarterly basis and market price
fluctuations. The indices do not take into account any sales charge or
other fees. A direct investment in an unmanaged index is not possible.
In addition, the performance of multiple indices compiled and
maintained by statistical research firms, such as Salomon Brothers and
Lehman Brothers may be combined to create a blended performance result
for comparative performances. Generally, the indices selected will be
representative of the types of securities in which the Fund may invest
and the assumptions that were used in calculating the blended
performance will be described.
Ibbotson Associates of Chicago, Illinois ("Ibbotson") provides
historical returns of the capital markets in the United States,
including common stocks, small capitalization stocks, long-term
corporate bonds, intermediate-term government bonds, long-term
government bonds, Treasury bills, the U.S. rate of inflation (based on
the Consumer Price Index), and combinations of various capital markets.
The performance of these capital markets is based on the returns of
different indices. The Fund may use the performance of these capital
markets in order to demonstrate general risk-versus-reward investment
scenarios. Performance comparisons may also include the value of a
hypothetical investment in any of these capital markets. The risks
associated with the security types in any capital market may or may not
correspond directly to those of the Fund. The Fund may also compare
performance to that of other compilations or indices that may be
developed and made available in the future.
The Fund may include discussions or illustrations of the potential
investment goals of a prospective investor (including materials that
describe general principles of investing, such as asset allocation,
diversification, risk tolerance, and goal setting, questionnaires
designed to help create a personal financial profile, worksheets used to
project savings needs based on assumed rates of inflation and
hypothetical rates of return and action plans offering investment
alternatives), investment management techniques, policies or investment
suitability of the Fund (such as value investing, market timing, dollar
cost averaging, asset allocation, constant ratio transfer, automatic
account rebalancing, the advantages and disadvantages of investing in
tax-deferred and taxable investments), economic and political
conditions, the relationship between sectors of the economy and the
economy as a whole, the effects of inflation and historical performance
of various asset classes, including but not limited to, stocks, bonds
and Treasury bills. From time to time advertisements, sales literature,
communications to shareholders or other materials may summarize the
substance of information contained in shareholder reports (including the
investment composition of the Fund), as well as the views as to current
market, economic, trade and interest rate trends, legislative,
regulatory and monetary developments, investment strategies and related
matters believed to be of relevance to the Fund. In addition, selected
indices may be used to illustrate historic performance of selected asset
classes. The Fund may also include in advertisements, sales literature,
communications to shareholders or other materials, charts, graphs or
drawings which illustrate the potential risks and rewards of investment
in various investment vehicles, including but not limited to, stocks,
bonds, treasury bills and shares of the Fund. In addition,
advertisements, sales literature, communications to shareholders or
other materials may include a discussion of certain attributes or
benefits to be derived by an investment in the Fund and/or other mutual
funds, shareholder profiles and hypothetical investor scenarios, timely
information on financial management, tax and retirement planning (such
as information on Roth IRAs and Education IRAs) and investment
alternative to certificates of deposit and other financial instruments.
Such sales literature, communications to shareholders or other materials
may include symbols, headlines or other material which highlight or
summarize the information discussed in more detail therein.
Materials may refer to the CUSIP numbers of the Fund and may
illustrate how to find the listings of the Fund in newspapers and
periodicals. Materials may also include discussions of other Funds,
products, and services.
The Fund may quote various measures of volatility and benchmark
correlation in advertising. In addition, the Fund may compare these
measures to those of other funds. Measures of volatility seek to
compare the historical share price fluctuations or total returns to
those of a benchmark. Measures of benchmark correlation indicate how
valid a comparative benchmark may be. Measures of volatility and
correlation may be calculated using averages of historical data. The
Fund may advertise its current interest rate sensitivity, duration,
weighted average maturity or similar maturity characteristics.
Advertisements and sales materials relating to the Fund may include
information regarding the background and experience of its portfolio
managers.
The following tables present examples, for purposes of illustration
only, of cumulative total return performance for Class A Shares, Class B
Shares, Class C Shares and Institutional Class shares through June 30,
1998. For these purposes, the calculations assume the reinvestment of
any capital gains distributions and income dividends paid during the
indicated periods. The performance does not reflect any income taxes
payable by shareholders on the reinvested distributions included in the
calculations. The performance of Class A Shares reflects the maximum
front-end sales charge paid on the purchase of shares but may also be
shown without reflecting the impact of any front-end sales charge. The
performance of Class B Shares and Class C Shares is calculated both with
the applicable CDSC included and excluded. Comparative information on
the S&P 500 Stock Index, the Dow Jones Industrial Average and the NASDAQ
Composite Index is also included. Past performance is no guarantee of
future results.
<TABLE>
<CAPTION>
Cumulative Total Return
Standard
Class A Institu- & Poor's Dow Jones NASDAQ
Shares(1) tional 500 Stock Industrial Composite
(at Offer) Class(2) Index(3) Average(3) Index(3)
<S> <C> <C> <C> <C> <C>
3 months
ended
6/30/98 (4.92%) (0.11%) 3.32% 2.15% 3.22%
6 months
ended
6/30/98 4.51%(5) 9.84% 17.72% 14.16% 20.66%
9 months
ended
6/30/98 (1.75%) 3.36% 21.10% 14.14% 12.40%
1 year
ended
6/30/98 18.12% 24.35% 30.17% 18.71% 31.39%
3 years
ended
6/30/98 62.79% 72.25% 120.86% 109.03% 102.98%
5 years
ended
6/30/98 103.68% 116.65% 182.25% 186.15% 169.16%
10 years
ended
6/30/98 439.60% 474.57% 447.87% 460.39% 380.09%
15 years
ended
6/30/98 424.97% 458.57% 982.41% 1109.36% 494.52%
Period
10/3/68(3)
through
6/30/98 1424.52% 1522.99% 3247.39% 3127.71% N/A
</TABLE>
(1) Class A Shares began paying 12b-1 payments on June 1, 1992 and
performance prior to that date does not reflect such payments.
Prior to November 29, 1995, the maximum front-end sales charge
was 5.75%. Effective November 29, 1995, the maximum front-end
sales charge was reduced to 4.75%, and the above performance
numbers are calculated using 4.75% as the applicable sales charge,
and are more favorable than they would have been had they been
calculated using the former front-end sales charge.
(2) Date of initial public offering of Institutional Class shares
was November 23, 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 would have been
affected had such an adjustment been made.
(3) Source: Lipper Analytical
(4) Date of initial public offering of Class A Shares.
(5) For the six months ended June 30, 1998, cumulative total return
for Trend Fund A Class at net asset value was 9.70%.
<TABLE>
<CAPTION>
Cumulative Total Return
Class B Class B
Shares Shares
(Including (Excluding Standard
Deferred Deferred & Poor's Dow Jones NASDAQ
Sales Sales 500 Stock Industrial Composite
Charge) Charge) Index (2) Average (2) Index(2)
<S> <C> <C> <C> <C> <C>
3 months
ended
6/30/98 (4.37%) (0.39%) 3.32% 2.15% 3.22%
6 months
ended
6/30/98 5.31% 9.31% 17.72% 14.16% 20.66%
9 months
ended
6/30/98 (1.34%) 2.60% 21.10% 14.14% 12.40%
1 year
ended
6/30/98 19.09% 23.09% 30.17% 18.71% 31.39%
3 years
ended
6/30/98 64.21% 67.21% 120.86% 109.03% 102.98%
Period
9/6/94(1)
through
6/30/98 92.10% 95.10% 158.92% 148.99% 147.48%
(1) Date of initial public offering of Class B Shares.
(2) Source: Lipper Analytical
</TABLE>
<TABLE>
<CAPTION>
Cumulative Total Return
Class C Class C
Shares Shares
(Including (Excluding Standard
Deferred Deferred & Poor's Dow Jones NASDAQ
Sales Sales 500 Stock Industrial Composite
Charge) Charge) Index (2) Average (2) Index(2)
<S> <C> <C> <C> <C> <C>
3 months
ended
6/30/98 (1.33%) (0.33%) 3.32% 2.15% 3.22%
6 months
ended
6/30/98 8.33% 9.33% 17.72% 14.16% 20.66%
9 months
ended
6/30/98 1.58% 2.57% 21.10% 14.14% 12.40%
1 year
ended
6/30/98 22.09% 23.09% 30.17% 18.71% 31.39%
Period
11/29/95(1)
through
6/30/98 48.69% 48.69% 96.72% 85.73% 78.88%
(1) Date of initial public offering of Class C Shares.
(2) Source: Lipper Analytical
</TABLE>
Because every investor's goals and risk threshold are different,
the Distributor, as distributor for the Fund and other mutual funds
available from the Delaware Investments family, will provide general
information about investment alternatives and scenarios that will allow
investors to assess their personal goals. This information will include
general material about investing as well as materials reinforcing
various industry-accepted principles of prudent and responsible 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
investment disciplines employed in seeking the objectives of the Fund
and the other funds in the Delaware Investments family. The Distributor
may also from time to time cite general or specific information about
the institutional clients of the Manager, including the number of such
clients serviced by the Manager.
Dollar-Cost Averaging
For many people, deciding when to invest can be a difficult
decision. Security prices tend to move up and down over various market
cycles and logic says to invest when prices are low. However, even
experts can't always pick the highs and the lows. By using a strategy
known as dollar-cost averaging, you schedule your investments ahead of
time. If you invest a set amount on a regular basis, that money will
always buy more shares when the price is low and fewer when the price is
high. You can choose to invest at any regular interval--for example,
monthly or quarterly--as long as you stick to your regular schedule.
Dollar-cost averaging looks simple and it is, but there are important
things to remember.
Dollar-cost averaging works best over longer time periods, and it
doesn't guarantee a profit or protect against losses in declining
markets. If you need to sell your investment when prices are low, you
may not realize a profit no matter what investment strategy you utilize.
That's why dollar-cost averaging can make sense for long-term goals.
Since the potential success of a dollar-cost averaging program depends
on continuous investing, even through periods of fluctuating prices, you
should consider your dollar-cost averaging program a long-term
commitment and invest an amount you can afford and probably won't need
to withdraw. Investors also should consider their financial ability to
continue to purchase shares during periods of high fund share prices.
Delaware Investments offers three services -- Automatic Investing
Program, Direct Deposit Program and the Wealth Builder Option -- that
can help to keep your regular investment program on track. See Direct
Deposit Purchase Plan, Automatic Investing Plan and Wealth Builder
Option under Purchasing Shares -Investing by Electronic Fund Transfer
for a complete description of these services, including restrictions or
limitations.
The example below illustrates how dollar-cost averaging can work.
In a fluctuating market, the average cost per share of a stock or bond
fund over a period of time will be lower than the average price per
share of the Fund for the same time period.
Number
Investment Price Per of Shares
Amount Share Purchased
Month 1 $100 $10.00 10
Month 2 $100 $12.50 8
Month 3 $100 $ 5.00 20
Month 4 $100 $10.00 10
- -------------------------------------------------------
$400 $37.50 48
Total Amount Invested: $400
Total Number of Shares Purchased: 48
Average Price Per Share: $9.38 ($37.50/4)
Average Cost Per Share: $8.33 ($400/48 shares)
This example is for illustration purposes only. It is not intended
to represent the actual performance of the Fund or any stock or bond
fund in the Delaware Investments family. Dollar-cost averaging can be
appropriate for investments in shares of funds that tend to fluctuate in
value. Please obtain the prospectus of any fund in the Delaware
Investments family in which you plan to invest through a dollar-cost
averaging program. The prospectus contains additional information,
including charges and expenses. Please read it carefully before you
invest or send money.
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. The Fund may include illustrations
showing the power of compounding in advertisements and other types of
literature.
TRADING PRACTICES AND BROKERAGE
The Fund selects brokers, dealers and banks 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 brokers, dealers or banks 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. 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. A number of 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.
During the fiscal years ended June 30, 1996, 1997 and 1998, the
aggregate dollar amounts of brokerage commissions paid by the Fund were
$584,737, $928,343 and $1,104,062, respectively.
The Manager may allocate out of all commission business generated
by all of the funds and accounts under its management, brokerage
business to brokers or dealers who provide brokerage and research
services. These services include advice, either directly or through
publications or writings, as to the value of securities, the
advisability of investing in, purchasing or selling securities, and the
availability of securities or purchasers or sellers of securities;
furnishing of analyses and reports concerning issuers, securities or
industries; providing information on economic factors and trends;
assisting in determining portfolio strategy; providing computer software
and hardware used in security analyses; and providing portfolio
performance evaluation and technical market analyses. Such services are
used by the Manager in connection with its investment decision-making
process with respect to one or more funds and accounts managed by it,
and may not be used, or used exclusively, with respect to the fund or
account generating the brokerage.
During the fiscal year ended June 30, 1998, portfolio transactions
of the Fund in the amount of $421,034,667, resulting in brokerage
commissions of $1,028,629, were directed to brokers for brokerage and
research services provided.
As provided in the Securities Exchange Act of 1934 (the "1934 Act")
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 Investments family. Subject to best price and execution,
commissions allocated to brokers providing such pricing services may or
may not be generated by the funds receiving the pricing service.
The Manager may place a combined order for two or more accounts or
funds engaged in the purchase or sale of the same security if, in its
judgment, joint execution is in the best interest of each participant
and will result in best price and execution. Transactions involving
commingled orders are allocated in a manner deemed equitable to each
account or fund. When a combined order is executed in a series of
transactions at different prices, each account participating in the
order may be allocated an average price obtained from the executing
broker. It is believed that the ability of the accounts to participate
in volume transactions will generally be beneficial to the accounts and
funds. Although it is recognized that, in some cases, the joint
execution of orders could adversely affect the price or volume of the
security that a particular account or fund may obtain, it is the opinion
of the Manager and Equity Funds III, Inc.'s Board of Directors that the
advantages of combined orders outweigh the possible disadvantages of
separate transactions.
Consistent with the Conduct Rules of the National Association of
Securities Dealers, Inc. (the "NASD"), and subject to seeking best price
and execution, the Fund may place orders with broker/dealers that have
agreed to defray certain expenses of the funds in the Delaware
Investments family, such as custodian fees, and may, at the request of
the Distributor, give consideration to sales of shares of the funds in
the Delaware Investments family as a factor in the selection of brokers
and dealers to execute Fund portfolio transactions.
Portfolio Turnover
In investing for capital appreciation, the Fund may hold securities
for any period of time. It is anticipated that, given the Fund's
investment objective, its annual portfolio turnover rate will be higher
than that of many other investment companies. 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. The
degree of portfolio activity will affect brokerage costs of the Fund and
may affect taxes payable by the Fund's shareholders. Total brokerage
costs generally increase with higher portfolio turnover rates. 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.
The portfolio turnover rate of the Fund is calculated by dividing
the lesser of purchases or sales of portfolio securities for the
particular fiscal year by the monthly average of the value of the
portfolio securities owned by the Fund during the particular fiscal
year, exclusive of securities whose maturities at the time of
acquisition are one year or less.
During the past two fiscal years, the Fund's portfolio turnover
rates were 115% for 1997 and 114% for 1998.
PURCHASING SHARES
The Distributor serves as the national distributor for the Fund's
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 Equity Funds III, Inc. or the Distributor.
The minimum initial investment generally is $1,000 for Class A
Shares, Class B Shares and Class C Shares. Subsequent purchases of such
classes generally must be at least $100. The initial and subsequent
investment minimums for Class A Shares will be waived for purchases by
officers, directors and employees of any fund in the Delaware
Investments family, the Manager, or any of the Manager's affiliates if
the purchases are made pursuant to a payroll deduction program. Shares
purchased pursuant to the Uniform Gifts to Minors Act or Uniform
Transfers to Minors Act and shares purchased in connection with an
Automatic Investing Plan are subject to a minimum initial purchase of
$250 and a minimum subsequent purchase of $25. Accounts opened under
the 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.
Each purchase of Class B Shares is subject to a maximum purchase
limitation of $250,000. For Class C Shares, each purchase must be in an
amount that is less than $1,000,000. See Investment Plans for purchase
limitations applicable to retirement plans. Equity Funds III, Inc. will
reject any purchase order for more than $250,000 of Class B Shares and
$1,000,000 or more of Class C Shares. An investor may exceed these
limitations by making cumulative purchases over a period of time. An
investor should keep in mind, however, that reduced front-end sales
charges apply to investments of $100,000 or more in 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 are responsible for transmitting orders promptly.
Equity Funds III, Inc. 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 amendments to its Conduct Rules, relating to
investment company sales charges. Equity Funds III, Inc. and the
Distributor intend to operate in compliance with these rules.
Class A Shares are purchased at the offering price which reflects a
maximum front-end sales charge of 4.75%; however, lower front-end sales
charges apply for larger purchases. Class A Shares are also subject to
annual 12b-1 Plan expenses for the life of the investment.
Class B Shares are purchased at net asset value and are subject to
a CDSC of: (i) 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 are redeemed during the sixth year
following purchase; and (v) 0% thereafter. 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 Classes of 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 12 months following purchase.
Class C Shares are also subject to annual 12b-1 Plan expenses for the
life of the investment which are equal to those to which Class B Shares
are subject.
Institutional Class shares are purchased at the net asset value per
share without the imposition of a front-end or contingent deferred sales
charge or 12b-1 Plan expenses. See Plans Under Rule 12b-1 for the Fund
Classes, and Determining Offering Price and Net Asset Value in this Part
B.
Class A Shares, Class B Shares, Class C Shares and Institutional
Class shares represent a proportionate interest in the Fund's assets and
will receive a proportionate interest in the Fund's income, before
application, as to Class A Shares, Class B Shares and Class C Shares, of
any expenses under the Fund's 12b-1 Plans.
Certificates representing shares purchased are not ordinarily
issued unless, in the case of Class A Shares, a shareholder submits a
specific request. Certificates are not issued in the case of Class B
Shares or Class C Shares or in the case of any retirement plan account
including self-directed IRAs. However, purchases not involving the
issuance of certificates are confirmed to the investor and credited to
the shareholder's account on the books maintained by Delaware Service
Company, Inc. (the "Transfer Agent"). The investor will have the same
rights of ownership with respect to such shares as if certificates had
been issued. An investor may receive a certificate representing full
share denominations purchased by sending a letter signed by each owner
of the account to the Transfer Agent requesting the certificate. No
charge is assessed by Equity Funds III, Inc. for any certificate issued.
A shareholder may be subject to fees for replacement of a lost or stolen
certificate, under certain conditions, including the cost of obtaining a
bond covering the lost or stolen certificate. Please contact the Fund
for further information. Investors who hold certificates representing
their shares may only redeem those shares by written request. The
investor's certificate(s) must accompany such request.
Alternative Purchase Arrangements
The alternative purchase arrangements of Class A Shares, Class B
Shares and Class C Shares permit investors to choose the method of
purchasing shares that is most suitable for their needs given the amount
of their purchase, the length of time they expect to hold their shares
and other relevant circumstances. Investors should determine whether,
given their particular circumstances, it is more advantageous to
purchase Class A Shares and incur a front-end sales charge and annual
12b-1 Plan expenses of up to a maximum of 0.30% of the average daily net
assets of Class A Shares or to purchase either Class B Shares 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 A Shares
Purchases of $100,000 or more of Class A Shares at the offering
price carry reduced front-end sales charges and may include a series of
purchases over a 13-month period under a Letter of Intention signed by
the purchaser. See Front-End Sales Charge Alternative - Class A Shares
in the Prospectus for the Fund Classes for a table illustrating reduced
front-end sales charges. See also 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.
Certain dealers who enter into an agreement to provide extra
training and information on Delaware Investments products and services
and who increase sales of funds in the Delaware Investments family may
receive an additional commission of up to 0.15% of the offering price in
connection with sales of Class A Shares. Such dealers must meet certain
requirements in terms of organization and distribution capabilities and
their ability to increase sales. The Distributor should be contacted
for further information on these requirements as well as the basis and
circumstances upon which the additional commission will be paid.
Participating dealers may be deemed to have additional responsibilities
under the securities laws.
Dealer's Commission
As described more fully in the Prospectus for the Fund Classes, 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. See Front-End Sales Charge
Alternative - Class A Shares in the Prospectus for the Fund Classes for
the applicable schedule and further details.
Contingent Deferred Sales Charge - Class B Shares and Class C Shares
Class B Shares and Class C Shares are purchased without a front-end
sales charge. Class B Shares redeemed within six years of purchase may
be subject to a CDSC at the rates set forth above, and Class C Shares
redeemed within 12 months of purchase may be subject to a CDSC of 1%.
CDSCs are charged as a percentage of the dollar amount subject to the
CDSC. The charge will be assessed on an amount equal to the lesser of
the net asset value at the time of purchase of the shares being redeemed
or the net asset value of those shares at the time of redemption. No
CDSC will be imposed on increases in net asset value above the initial
purchase price, nor will a CDSC be assessed on redemptions of shares
acquired through reinvestment of dividends or capital gains
distributions. See Waiver of Contingent Deferred Sales Charge - Class B
Shares and Class C Shares under Redemption and Exchange in the
Prospectus for the Fund Classes for a list of the instances in which the
CDSC is waived.
During the seventh year after purchase and, thereafter, until
converted automatically into Class A Shares, Class B Shares will still
be subject to the annual 12b-1 Plan expenses of up to 1% of average
daily net assets of those shares. At the end of approximately eight
years after purchase, the investor's Class B Shares will be
automatically converted into Class A Shares of the Fund. See Automatic
Conversion of Class B Shares under Classes of Shares in the Fund
Classes' Prospectus. Such conversion will constitute a tax-free
exchange for federal income tax purposes. See Taxes in the Prospectus
for the Fund Classes.
Plans Under Rule 12b-1 for the Fund Classes
Pursuant to Rule 12b-1 under the 1940 Act, Equity Funds III, Inc.
has adopted a separate plan for each of the Class A Shares, Class B
Shares and Class C Shares 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 of shares to which
the Plan applies. The Plans do not apply to 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 shares of the Institutional Class. 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 Class A Shares, Class B Shares and Class C
Shares monthly fees to the Distributor for its services and expenses in
distributing and promoting sales of shares of such classes. These
expenses include, among other things, preparing and distributing
advertisements, sales literature and prospectuses and reports used for
sales purposes, compensating sales and marketing personnel, and paying
distribution and maintenance fees to securities brokers and dealers who
enter into agreements with the Distributor. The Plan expenses relating
to 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.
In addition, the Fund may make payments out of the assets of Class
A Shares, Class B Shares 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 0.30% of
average daily net assets for the year of Class A Shares, and up to 1%
(0.25% of which are service fees to be paid to the Distributor, dealers
and others for providing personal service and/or maintaining shareholder
accounts) of each of the Class B Shares' and Class C Shares' average
daily net assets for the year. Equity Funds III, Inc.'s Board of
Directors may reduce these amounts at any time.
Effective June 1, 1992, the Board of Directors has determined that
the annual fee, payable on a monthly basis, for Class A Shares, under
its Plan, will be equal to the sum of: (i) the amount obtained by
multiplying 0.30% by the average daily net assets represented by Class A
Shares that were acquired by shareholders on or after June 1, 1992, and
(ii) the amount obtained by multiplying 0.10% by the average daily net
assets represented by Class A Shares that were acquired before June 1,
1992. While this is the method for calculating the 12b-1 fees to be
paid by Class A Shares, the fee is a Class expense so that all
shareholders of that Class, regardless of when they purchased their
shares, will bear 12b-1 expenses at the same per share rate. As Class A
Shares are sold on or after June 1, 1992, the initial rate of at least
0.10% will increase over time. Thus, as the proportion of Class A
Shares purchased on or after June 1, 1992 to Class A Shares outstanding
prior to June 1, 1992 increases, the expenses attributable to payments
under the Plan will also increase (but will not exceed 0.30% of average
daily net assets). While this describes the current formula for
calculating the fees which will be payable under the Plan, such Plan
permits the Fund to pay a full 0.30% on all of the Fund's Class A
Shares' assets at any time.
All of the distribution expenses incurred by the Distributor and
others, such as broker/dealers, in excess of the amount paid on behalf
of Class A Shares, Class B Shares and Class C Shares would be borne by
such persons without any reimbursement from such Fund Classes. Subject
to seeking best price and execution, 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 Equity Funds III, Inc., including
a majority of the directors who are not "interested persons" (as defined
in the 1940 Act) of Equity Funds III, Inc. and who have no direct or
indirect financial interest in the Plans by vote cast in person at a
meeting duly called for the purpose of voting on the Plans and such
Distribution Agreement. 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 at any time without penalty by a majority of those
directors who are not "interested persons" or by a majority vote of the
relevant Fund Class' outstanding voting securities. Any amendment
materially increasing the percentage payable under the Plans must
likewise be approved by a majority vote of the relevant Fund Class'
outstanding voting securities, as well as by a majority vote of those
directors who are not "interested persons." With respect to the Class A
Shares' Plan, any material increase in the maximum percentage payable
thereunder must also be approved by a majority of the outstanding voting
securities of the Fund's B Class. Also, any other material amendment to
the Plans must be approved by a majority vote of the directors including
a majority of the noninterested directors of Equity Funds III, Inc.
having no interest in the Plans. In addition, in order for the Plans to
remain effective, the selection and nomination of directors who are not
"interested persons" of Equity Funds III, Inc. must be effected by the
directors who themselves are not "interested persons" and who have no
direct or indirect financial interest in the Plans. Persons authorized
to make payments under the Plans must provide written reports at least
quarterly to the Board of Directors for their review.
For the fiscal year ended June 30, 1998, payments from Trend Fund A
Class, Trend Fund B Class and Trend Fund C Class amounted to $1,278,319,
$659,728 and $145,043, respectively. Such payments were used for the
following purposes:
Trend Fund Trend Fund Trend Fund
A Class B Class C Class
Advertising $5,830 ----- -----
Annual/Semi-Annual Reports $43,915 ----- -----
Broker Trails $904,157 $164,524 $55,568
Broker Sales Charges ----- $283,395 $62,729
Dealer Service Expenses $13,588 ----- $677
Interest on Broker Sales
Charges ----- $178,416 $1,759
Commissions to Wholesalers $108,611 $28,851 $17,188
Promotional-Broker Meetings $22,351 $2,427 $1,496
Promotional-Other $59,975 ----- -----
Prospectus Printing $69,472 ----- -----
Telephone $2,979 $101 $238
Wholesaler Expenses $47,441 $2,014 $5,388
Other ----- ----- -----
Other Payments to Dealers - Class A Shares, Class B Shares and Class C
Shares
From time to time, at the discretion of the Distributor, all
registered broker/dealers whose aggregate sales of Fund Classes exceed
certain limits as set by the Distributor, may receive from the
Distributor an additional payment of up to 0.25% of the dollar amount of
such sales. The Distributor may also provide additional promotional
incentives or payments to dealers that sell shares of the funds in the
Delaware Investments family. In some instances, these incentives or
payments may be offered only to certain dealers who maintain, have sold
or may sell certain amounts of shares. The Distributor may also pay a
portion of the expense of preapproved dealer advertisements promoting
the sale of funds in the Delaware Investments family.
Special Purchase Features - Class A Shares
Buying Class A Shares at Net Asset Value
Class A Shares may be purchased without a front-end sales charge
under the Dividend Reinvestment Plan and, under certain circumstances,
the Exchange Privilege and the 12-Month Reinvestment Privilege.
Current and former officers, directors and employees of Equity
Funds III, Inc., any other fund in the Delaware Investments family, 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 other funds in the Delaware
Investments family, including any fund that may be created, at the net
asset value per share. Family members (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 Class A Shares at net asset value. Class A Shares may
also be purchased at net asset value by current and former officers,
directors and employees (and members of their families) of the Dougherty
Financial Group LLC.
Purchases of Class A Shares may also be made by clients of
registered representatives of an authorized investment dealer at net
asset value within 12 months after the registered representative changes
employment, if the purchase is funded by proceeds from an investment
where a front-end sales charge, contingent deferred sales charge or
other sales charge has been assessed. Purchases of Class A Shares may
also be made at net asset value by bank employees who provide services
in connection with agreements between the bank and unaffiliated brokers
or dealers concerning sales of shares of funds in the Delaware
Investments family. In addition, purchases of Class A Shares may be
made by financial institutions investing for the account of their trust
customers which are not eligible to purchase shares of the Fund's
Institutional Class. 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.
Purchases of Class A Shares at net asset value may also be made by
the following: financial institutions investing for the account of
their trust customers if they are not eligible to purchase shares of the
Institutional Class of the Fund; any group retirement plan (excluding
defined benefit pension plans), or such plans of the same employer, for
which plan participant records are maintained on the Retirement Financial
Services, Inc.(formerly known as Delaware Investment & Retirement
Services, Inc.) proprietary record keeping system that (i) has in excess
of $500,000 of plan assets invested in Class A Shares of funds in the
Delaware Investments family and any stable value product available
through Delaware Investments, or (ii) is sponsored by an employer that
has at any point after May 1, 1997 had more than 100 employees while
such plan has held Class A Shares of a Delaware Investments fund and such
employer has properly represented to, and has received written
confirmation back from, Retirement Financial Services, Inc. in writing
that it has the requisite number of employees.
Purchases of Class A Shares at net asset value may also be made by
bank sponsored retirement plans that are no longer eligible to purchase
Institutional Class Shares as a result of a change in the distribution
arrangements.
Investors in Delaware Investments Unit Investment Trusts may
reinvest monthly dividend checks and/or repayment of invested capital
into Class A Shares of any of the funds available from the Delaware
Investments family at net asset value.
Investments in Class A Shares made by plan level and/or participant
retirement accounts that are for the purpose of repaying a loan taken
from such accounts will be made at net asset value. Loan repayments
made to a Delaware Investments fund 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 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 Equity Funds III, Inc., which provides for the holding in
escrow by the Transfer Agent of 5% of the total amount of Class A Shares
intended to be purchased until such purchase is completed within the 13-
month period. A Letter of Intention may be dated to include shares
purchased up to 90 days prior to the date the Letter is signed. The 13-
month period begins on the date of the earliest purchase. If the
intended investment is not completed, except as noted below, the
purchaser will be asked to pay an amount equal to the difference between
the front-end sales charge on Class A Shares purchased at the reduced
rate and the front-end sales charge otherwise applicable to the total
shares purchased. If such payment is not made within 20 days following
the expiration of the 13-month period, the Transfer Agent will surrender
an appropriate number of the escrowed shares for redemption in order to
realize the difference. Such purchasers may include the value (at
offering price at the level designated in their Letter of Intention) of
all their shares of the Fund and of any class of any of the other mutual
funds in the Delaware Investments family (except shares of any fund in
the Delaware Investments family 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 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 funds in the Delaware
Investments family which offer such shares may be aggregated with Class
A Shares of the Fund and the corresponding class of shares of the other
funds in the Delaware Investments family.
Employers offering a Delaware Investments retirement plan may also
complete a Letter of Intention to obtain a reduced front-end sales
charge on investments of Class A Shares made by the plan. The aggregate
investment level of the Letter of Intention will be determined and
accepted by the Transfer Agent at the point of plan establishment. The
level and any reduction in front-end sales charge will be based on
actual plan participation and the projected investments in funds in the
Delaware Investments family 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 funds
available from the Delaware Investments family which offer corresponding
classes of shares may also be aggregated for this purpose.
Combined Purchases Privilege
In determining the availability of the reduced front-end sales
charge previously set forth with respect to Class A Shares, purchasers
may combine the total amount of any combination of Class B Shares and/or
Class C Shares of the Fund, as well as shares of any other class of any
of the other funds available from the Delaware Investments family
(except shares of any funds in the Delaware Investments family 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 fund in the Delaware
Investments family which carried a front-end sales charge, CDSC or
Limited CDSC). In addition, assets held by investment advisory clients
of the Manager or its affiliates in a stable value account may be
combined with other Delaware Investments fund holdings.
The privilege also extends to all purchases made at one time by an
individual; or an individual, his or her spouse and their children under
21; or a trustee or other fiduciary of trust estates or fiduciary
accounts for the benefit of such family members (including certain
employee benefit programs).
Right of Accumulation
In determining the availability of the reduced front-end sales
charge with respect to 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 funds in the Delaware Investments family which offer such classes
(except shares of any fund in the Delaware Investments family 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 fund in the Delaware
Investments family 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 currently 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 from one of the other
mutual funds in the Delaware Investments family 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 Investments family, subject to applicable
eligibility and minimum purchase requirements, in states where shares of
such other funds may be sold, at net asset value without the payment of
a front-end sales charge. This privilege does not extend to Class A
Shares where the redemption of the shares triggered the payment of a
Limited CDSC. Persons investing redemption proceeds from direct
investments in mutual funds in the Delaware Investments family offered
without a front-end sales charge will be required to pay the applicable
sales charge when purchasing Class A Shares. The reinvestment privilege
does not extend to a redemption of either Class B Shares or Class C
Shares.
Any such reinvestment cannot exceed the redemption proceeds (plus
any amount necessary to purchase a full share). The reinvestment will
be made at the net asset value next determined after receipt of
remittance. A redemption and reinvestment could have income tax
consequences. It is recommended that a tax adviser be consulted with
respect to such transactions. Any reinvestment directed to a fund in
which the investor does not then have an account will be treated like
all other initial purchases of a fund's shares. Consequently, an
investor should obtain and read carefully the prospectus for the fund in
which the investment is intended to be made before investing or sending
money. The prospectus contains more complete information about the
fund, including charges and expenses.
Investors should consult their financial advisers or the Transfer
Agent, which also serves as the Fund's shareholder servicing agent,
about the applicability of the Limited CDSC (see Contingent Deferred
Sales Charge for Certain Redemptions of Class A Shares Purchased at Net
Asset Value under Redemption and Exchange in the Fund Classes'
Prospectus) in connection with the features described above.
Group Investment Plans
Group Investment Plans which 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
Prospectus for the Fund Classes, based on total plan assets. If a
company has more than one plan investing in the Delaware Investments
family of funds, then the total amount invested in all plans would be
used in determining the applicable front-end sales charge reduction upon
each purchase, both initial and subsequent, upon notification to the
Fund at the time of each such purchase. Employees participating in such
Group Investment Plans may also combine the investments made in their
plan account when determining the applicable front-end sales charge on
purchases to non-retirement investment accounts of Delaware Investments
if they so notify the Fund in connection with each purchase. See
Retirement Plans for the Fund Classes under Investment Plans for
information about retirement plans.
Trend 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) a bank, trust company and similar financial institution
investing for its own account or for the account of its trust customers
for whom such financial institution is exercising investment discretion
in purchasing shares of the Class, except where the investment is part
of a program that requires payment to the financial institution of a
Rule 12b-1 fee; and (e) registered investment advisers investing on
behalf of clients that consist solely of institutions and high net-worth
individuals having at least $1,000,000 entrusted to the adviser for
investment purposes, but only if the adviser is not affiliated or
associated with a broker or dealer and derives compensation for its
services exclusively from its clients for such advisory services.
Shares of the Institutional Class are available for purchase at net
asset value, without the imposition of a front-end sales charge or CDSC
and are not subject to Rule 12b-1 expenses.
INVESTMENT PLANS
Reinvestment Plan/Open Account
Unless otherwise designated by shareholders in writing, dividends
from net investment income and distributions from realized securities
profits, if any, will be automatically reinvested in additional shares
of the respective Fund Class in which an investor has an account (based
on the net asset value in effect on the reinvestment date) and will be
credited to the shareholder's account on that date. All dividends and
distributions of the Institutional Class are reinvested in the accounts
of the holders of such shares (based on the net asset value in effect on
the reinvestment date). A confirmation of each dividend payment from
net investment income and of distributions 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 specific Class in which the shares are being purchased.
Such purchases, which must meet the minimum subsequent purchase
requirements set forth in the Prospectuses and this Part B, are made for
Class A Shares at the public offering price, and for Class B Shares,
Class C Shares and Institutional Class shares 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 Funds in the Delaware Investments
Family
Subject to applicable eligibility and minimum initial purchase
requirements and the limitations set forth below, holders of Class A
Shares, Class B Shares and Class C Shares may automatically reinvest
dividends and/or distributions in any of the mutual funds in the
Delaware Investments family, 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. The shareholder must notify the Transfer Agent
in writing and must have established an account in the fund into which
the dividends and/or distributions are to be invested. Any reinvestment
directed to a fund in which the investor does not then have an account
will be treated like all other initial purchases of a fund's shares.
Consequently, an investor should obtain and read carefully the
prospectus for the fund in which the investment is intended to be made
before investing or sending money. The prospectus contains more
complete information about the fund, including charges and expenses.
See also Additional Methods of Adding to Your Investment - Dividend
Reinvestment Plan under How to Buy Shares in the Prospectus for the Fund
Classes.
Subject to the following limitations, dividends and/or
distributions from other funds in the Delaware Investments family 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. Dividends from Class B Shares may only be
directed to other Class B Shares and dividends from Class C Shares may
only be directed to other Class C Shares.
This option is not available to participants in the following
plans: SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and
Money Purchase Pension Plans, 401(k) Defined Contribution Plans, or
403(b)(7) or 457 Deferred Compensation Plans.
Investing by Electronic Fund Transfer
Direct Deposit Purchase Plan--Investors may arrange for the Fund to
accept for investment, 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-- The Automatic Investing Plan enables
shareholders to make regular monthly investments without writing checks.
Shareholders may authorize the Fund, in advance, to make arrangements
for their bank to withdraw a designated amount monthly directly from
their checking account for deposit into a Class. This type of
investment will be handled in either of the following two ways. (1) If
the shareholder's bank is a member of the National Automated Clearing
House Association ("NACHA"), the amount of the investment will be
electronically deducted from his or her account by Electronic Fund
Transfer ("EFT"). The shareholder's checking account will reflect a
debit each month at a specified date although no check is required to
initiate the transaction. (2) If the shareholder's bank is not a member
of NACHA, deductions will be made by preauthorized checks, known as
Depository Transfer Checks. Should the shareholder's bank become a
member of NACHA in the future, his or her investments would be handled
electronically through EFT.
This option is not available to participants in the following
plans: SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and
Money Purchase Pension Plans, 401(k) Defined Contribution Plans, or
403(b)(7) or 457 Deferred Compensation Plans.
* * *
Initial investments under the Direct Deposit Purchase Plan and the
Automatic Investing Plan must be for $250 or more and subsequent
investments under such Plans must be for $25 or more. An investor
wishing to take advantage of either service must complete an
authorization form. Either service can be discontinued by the
shareholder at any time without penalty by giving written notice.
Payments to 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 Equity Funds III, Inc. for proper instructions.
Wealth Builder Option
Shareholders can use the Wealth Builder Option to invest in the
Fund Classes through regular liquidations of shares in their accounts in
other mutual funds available from the Delaware Investments family.
Shareholders of the Fund Classes may also elect to invest in one or more
of the other mutual funds available from the Delaware Investments family
through the Wealth Builder Option. See Wealth Builder Option and
Redemption and Exchange in the Prospectus for the Fund Classes.
Under this automatic exchange program, shareholders can authorize
regular monthly investments (minimum of $100 per fund) to be liquidated
from their account and invested automatically into other mutual funds
available from the Delaware Investments family, subject to the
conditions and limitations set forth in the Fund Classes' Prospectus.
The investment will be made on the 20th day of each month (or, if the
fund selected is not open that day, the next business day) at the public
offering price or net asset value, as applicable, of the fund selected
on the date of investment. No investment will be made for any month if
the value of the shareholder's account is less than the amount specified
for investment.
Periodic investment through the Wealth Builder Option does not
insure profits or protect against losses in a declining market. The
price of the fund into which investments are made could fluctuate.
Since this program involves continuous investment regardless of such
fluctuating value, investors selecting this option should consider their
financial ability to continue to participate in the program through
periods of low fund share prices. This program involves automatic
exchanges between two or more fund accounts and is treated as a purchase
of shares of the fund into which investments are made through the
program. See Exchange Privilege for a brief summary of the tax
consequences of exchanges. Shareholders can terminate their
participation in Wealth Builder at any time by giving written notice to
the fund from which exchanges are made.
This option is not available to participants in the following
plans: SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and
Money Purchase Pension Plans, 401(k) Defined Contribution Plans, or
403(b)(7) or 457 Deferred Compensation Plans. This option also is not
available to shareholders of the Institutional Class.
Asset Planner
To invest in the funds in the Delaware Investments family using the
Asset Planner asset allocation service, you should complete a Asset
Planner Account Registration Form, which is available only from a
financial adviser or investment dealer. Effective September 1, 1997,
the Asset Planner Service is only available to financial advisers or
investment dealers who have previously used this service. The Asset
Planner service offers a choice of four predesigned asset allocation
strategies (each with a different risk/reward profile) in predetermined
percentages in funds in the Delaware Investments family. With the help
of a financial adviser, you may also design a customized asset
allocation strategy.
The sales charge on an investment through the Asset Planner service
is determined by the individual sales charges of the underlying funds
and their percentage allocation in the selected Strategy. Exchanges
from existing Delaware Investments accounts into the Asset Planner
service may be made at net asset value under the circumstances described
under Investing by Exchange in the Prospectus. Also see Buying Class A
Shares at Net Asset Value under Classes of Shares in the Prospectus for
the Fund Classes. 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 Shares, Class B Shares and Class C Shares are
available through the Asset Planner service. Generally, only shares
within the same class may be used within the same Strategy. However,
Class A Shares of the Fund and of other funds in the Delaware
Investments family may be used in the same Strategy with consultant
class shares that are offered by certain other Delaware Investments
funds.
An annual maintenance fee, currently $35 per Strategy, is due at
the time of initial investment and by September 30 of each subsequent
year. The fee, payable to Delaware Service Company, Inc. to defray
extra costs associated with administering the Asset Planner service,
will be deducted automatically from one of the funds within your Asset
Planner account if not paid by September 30. However, effective
November 1, 1996, the annual maintenance fee is waived until further
notice. Investors who utilize the Asset Planner for an IRA will
continue to pay an annual IRA fee of $15 per Social Security number.
Investors will receive a customized quarterly Strategy Report
summarizing all Asset Planner investment performance and account
activity during the prior period. Confirmation statements will be sent
following all transactions other than those involving a reinvestment of
distributions.
Certain shareholder services are not available to investors using
the Asset Planner service, due to its special design. These include
Delaphone, Checkwriting, Wealth Builder Option and Letter of Intention.
Systematic Withdrawal Plans are available after the account has been
open for two years.
Retirement Plans for the Fund Classes
An investment in the Fund may be suitable for tax-deferred
retirement plans. Delaware Investments offers a full spectrum of
retirement plans, including the 401(k) Defined Contribution Plan,
Individual Retirement Account ("IRA") and the new Roth IRA and Education
IRA.
Among the retirement plans that Delaware Investments offers, Class
B Shares are available only by Individual Retirement Accounts, SIMPLE
IRAs, Roth IRAs, Education IRAs, Simplified Employee Pension Plans,
Salary Reduction Simplified Employee Pension Plans, and 403(b)(7) and
457 Deferred Compensation Plans. The CDSC may be waived on certain
redemptions of Class B Shares and Class C Shares. See Waiver of
Contingent Deferred Sales Charge - Class B Shares and Class C Shares
under Redemption and Exchange in the Prospectus for the Fund Classes for
a list of the instances in which the CDSC is waived.
Purchases of Class B Shares are subject to a maximum purchase
limitation of $250,000 for retirement plans. Purchases of Class C
Shares must be in an amount that is less than $1,000,000 for such plans.
The maximum purchase limitations apply only to the initial purchase of
shares by the retirement plan.
Minimum investment limitations generally applicable to other
investors do not apply to retirement plans other than Individual
Retirement Accounts, for which there is a minimum initial purchase of
$250 and a minimum subsequent purchase of $25, regardless of which Class
is selected. Retirement plans may be subject to plan establishment
fees, annual maintenance fees and/or other administrative or trustee
fees. Fees are based upon the number of participants in the plan as
well as the services selected. Additional information about fees is
included in retirement plan materials. Fees are quoted upon request.
Annual maintenance fees may be shared by Delaware Management Trust
Company, the Transfer Agent, other affiliates of the Manager and others
that provide services to such Plans.
Certain shareholder investment services available to non-retirement
plan shareholders may not be available to retirement plan shareholders.
Certain retirement plans may qualify to purchase shares of the
Institutional Class shares. See Trend 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, corporations and other eligible forms of organizations.
These plans can be maintained as Section 401(k), profit sharing or money
purchase pension plans. Contributions may be invested only in Class A
Shares and Class C Shares.
Individual Retirement Account ("IRA")
A document is available for an individual who wants to establish an
IRA and make contributions which may be tax-deductible, even if the
individual is already participating in an employer-sponsored retirement
plan. Even if contributions are not deductible for tax purposes, as
indicated below, earnings will be tax-deferred. In addition, an
individual may make contributions on behalf of a spouse who has no
compensation for the year ; however, participation may be restricted
based on certain income limits.
IRA Disclosures
The Taxpayer Relief Act of 1997 provides new opportunities for
investors. Individuals have five types of tax-favored IRA accounts that
can be utilized depending on the individual's circumstances. A new Roth
IRA and Education IRA are available in addition to the existing
deductible IRA and non-deductible IRA.
Deductible and Non-deductible IRAs
An individual can contribute up to $2,000 in his or her IRA each
year. Contributions may or may not be deductible depending upon the
taxpayer's adjusted gross income ("AGI") and whether the taxpayer is an
active participant in an employer sponsored retirement plan. Even if a
taxpayer is an active participant in an employer sponsored retirement
plan, the full $2,000 is still available if the taxpayer's AGI is below
$30,000 ($50,000 for taxpayers filing joint returns) for years beginning
after December 31, 1997. A partial deduction is allowed for married
couples with income between $50,000 and $60,000, and for single
individuals with incomes between $30,000 and $40,000. These income
phase-out limits reach $80,000-$100,000 in 2007 for joint filers and
$50,000-$60,000 in 2005 for single filers. No deductions are available
for contributions to IRAs by taxpayers whose AGI after IRA deductions
exceeds the maximum income limit established for each year and who are
active participants in an employer sponsored retirement plan.
Taxpayers who are not allowed deductions on IRA contributions still
can make non-deductible IRA contributions of as much as $2,000 for each
working spouse and defer taxes on interest or other earnings from the
IRAs.
Under the new law, a married individual is not considered an active
participant in an employer sponsored retirement plan merely because the
individual's spouse is an active participant if the couple's combined
AGI is below $150,000. The maximum deductible IRA contribution for a
married individual who is not an active participant, but whose spouse
is, is phased out for combined AGI between $150,000 and $160,000.
Conduit (Rollover) IRAs
Certain individuals who have received or are about to receive
eligible rollover distributions from an employer-sponsored retirement
plan or another IRA may rollover the distribution tax-free to a Conduit
IRA. The rollover of the eligible distribution must be completed by the
60th day after receipt of the distribution; however, if the rollover is
in the form of a direct trustee-to-trustee transfer without going
through the distributee's hand, the 60-day limit does not apply.
A distribution qualifies as an "eligible rollover distribution" if
it is made from a qualified retirement plan, a 403(b) plan or another
IRA and does not constitute one of the following:
(i) Substantially equal periodic payments over the employee's
life or life expectancy or the joint lives or life expectancies of the
employee and his/her designated beneficiary;
(ii) Substantially equal installment payments for a period
certain of 10 or more years;
(iii) A distribution, all of which represents a required
minimum distribution after attaining
age 70 1/2;
(iv) A distribution due to a Qualified Domestic Relations Order
to an alternate payee who is not the spouse (or former spouse) of the
employee; and
(v) A distribution of after-tax contributions which is not
includable in income.
Roth IRAs
For taxable years beginning after December 31, 1997, non-deductible
contributions of up to $2,000 per year can be made to a new Roth IRA.
As a result of the Internal Revenue Service Restructuring and Reform Act
of 1998 (the "1998 Act"), the $2,000 annual limit will not be reduced by
any contributions to a deductible or nondeductible IRA for the same
year. The maximum contribution that can be made to a Roth IRA is phased
out for single filers with AGI between $95,000 and $110,000, and for
couples filing jointly with AGI between $150,000 and $160,000.
Qualified distributions from a Roth IRA would be exempt from federal
taxes. Qualified distributions are distributions (1) made after the
five-taxable year period beginning with the first taxable year for which
a contribution was made to a Roth IRA and (2) that are (a) made on or
after the date on which the individual attains age 59 1/2, (b) made to a
beneficiary on or after the death of the individual, (c) attributed to
the individual being disabled, or (d) for a qualified special purpose
(e.g., first time homebuyer expenses).
Distributions that are not qualified distributions would always be
tax-free if the taxpayer is withdrawing contributions, not accumulated
earnings.
Taxpayers with AGI of $100,000 or less are eligible to convert an
existing IRA (deductible, nondeductible and conduit) to a Roth IRA.
Earnings and contributions from a deductible IRA are subject to a tax
upon conversion; however, no 10% excise tax for early withdrawal would
apply. If the conversion is done prior to January 1, 1999, then the
income from the conversion can be included in income ratably over a
four-year period beginning with the year of conversion.
Education IRAs
For taxable years beginning after December 31, 1997, an Education
IRA has been created exclusively for the purpose of paying qualified
higher education expenses. Taxpayers can make non-deductible
contributions up to $500 per year per beneficiary. The $500 annual
limit is in addition to the $2,000 annual contribution limit applicable
to IRAs and Roth IRAs. Eligible contributions must be in cash and made
prior to the date the beneficiary reaches age 18. Similar to the Roth
IRA, earnings would accumulate tax-free. There is no requirement that
the contributor be related to the beneficiary, and there is no limit on
the number of beneficiaries for whom one contributor can establish
Education IRAs. In addition, multiple Education IRAs can be created for
the same beneficiaries, however, the contribution limit of all
contributions for a single beneficiary cannot exceed $500 annually.
This $500 annual contribution limit for Education IRAs is phased
out ratably for single contributors with modified AGI between $95,000
and $110,000, and for couples filing jointly with modified AGI of
between $150,000 and $160,000. Individuals with modified AGI above the
phase-out range are not allowed to make contributions to an Education
IRA established on behalf of any other individual.
Distributions from an Education IRA are excludable from gross
income to the extent that the distribution does not exceed qualified
higher education expenses incurred by the beneficiary during the year
the distribution is made regardless of whether the beneficiary is
enrolled at an eligible educational institution on a full-time, half-
time, or less than half-time basis.
Any balance remaining in an Education IRA at the time a beneficiary
becomes 30 years old must be distributed, and the earnings portion of
such a distribution will be includible in gross income of the
beneficiary and subject to an additional 10% penalty tax if the
distribution is not for qualified higher educations expenses. Tax-free
(and penalty-free) transfers and rollovers of account balances from one
Education IRA benefiting one beneficiary to another Education IRA
benefiting a different beneficiary (as well as redesignations of the
named beneficiary) is permitted, provided that the new beneficiary is a
member of the family of the old beneficiary and that the transfer or
rollover is made before the time the old beneficiary reaches age 30 and
the new beneficiary reaches age 18.
A company or association may establish a Group IRA or Group Roth
IRA for employees or members who want to purchase shares of the Fund.
Investments generally must be held in the IRA until age 59 1/2 in
order to avoid premature distribution penalties, but distributions
generally must commence no later than April 1 of the calendar year
following the year in which the participant reaches age 70 1/2.
Individuals are entitled to revoke the account, for any reason and
without penalty, by mailing written notice of revocation to Delaware
Management Trust Company within seven days after the receipt of the IRA
Disclosure Statement or within seven days after the establishment of the
IRA, except, if the IRA is established more than seven days after
receipt of the IRA Disclosure Statement, the account may not be revoked.
Distributions from the account (except for the pro-rata portion of any
nondeductible contributions) are fully taxable as ordinary income in the
year received. Excess contributions removed after the tax filing
deadline, plus extensions, for the year in which the excess
contributions were made are subject to a 6% excise tax on the amount of
excess. Premature distributions (distributions made before age 59 1/2,
except for death, disability and certain other limited circumstances)
will be subject to a 10% excise tax on the amount prematurely
distributed, in addition to the income tax resulting from the
distribution. For information concerning the applicability of a CDSC
upon redemption of Class B Shares and Class C Shares, see Contingent
Deferred Sales Charge - Class B Shares and Class C Shares under Classes
of Shares in the Prospectus for the Fund Classes.
Effective January 1, 1997, the 10% premature distribution penalty
will not apply to distributions from an IRA that are used to pay medical
expenses in excess of 7.5% of adjusted gross income or to pay health
insurance premiums by an individual who has received unemployment
compensation for 12 consecutive weeks. In addition, effective January
1, 1998, the new law allows for premature distribution without a 10%
penalty if (i) the amounts are used to pay qualified higher education
expenses (including graduate level courses) of the taxpayer, the
taxpayer's spouse or any child or grandchild of the taxpayer or the
taxpayer's spouse, or (ii) used to pay acquisition costs of a principle
residence for the purchase of a first-time home by the taxpayer,
taxpayer's spouse or any child or grandchild of the taxpayer or the
taxpayer's spouse. A qualified first-time homebuyer is someone who has
had no ownership interest in a residence during the past two years. The
aggregate amount of distribution for first-time home purchases cannot
exceed a lifetime cap of $10,000.
Simplified Employee Pension Plan ("SEP/IRA")
A SEP/IRA may be established by an employer who wishes to sponsor a
tax-sheltered retirement program by making contributions on behalf of
all eligible employees. Each of the Classes is available for investment
by a SEP/IRA.
Salary Reduction Simplified Employee Pension Plan ("SAR/SEP")
Although new SAR/SEP plans may not be established after December
31, 1996, existing plans may continue to be maintained by employers
having 25 or fewer employees. An employer may elect to make additional
contributions to such existing plans.
Prototype 401(k) Defined Contribution Plan
Section 401(k) of the Code permits employers to establish qualified
plans based on salary deferral contributions. Effective January 1,
1997, non-governmental tax-exempt organizations may establish 401(k)
plans. Plan documents are available to enable employers to establish a
plan. An employer may also elect to make profit sharing contributions
and/or matching contributions with investments in only Class A Shares
and Class C Shares or certain other funds in the Delaware Investments
family. Purchases under the Plan may be combined for purposes of
computing the reduced front-end sales charge applicable to Class A
Shares as set forth in the table the Prospectus for the Fund Classes.
Deferred Compensation Plan for Public Schools and Non-Profit
Organizations ("403(b)(7)")
Section 403(b)(7) of the Code permits public school systems and
certain non-profit organizations to use mutual fund shares held in a
custodial account to fund deferred compensation arrangements for their
employees. A custodial account agreement is available for those
employers who wish to purchase shares of any of the Classes in
conjunction with such an arrangement. Purchases under the Plan may be
combined for purposes of computing the reduced front-end sales charge
applicable to Class A Shares as set forth in the table the Prospectus
for the Fund Classes.
Deferred Compensation Plan for State and Local Government Employees
("457")
Section 457 of the Code permits state and local governments, their
agencies and certain other entities to establish a deferred compensation
plan for their employees who wish to participate. This enables
employees to defer a portion of their salaries and any federal (and
possibly state) taxes thereon. Such plans may invest in shares of the
Fund. Although investors may use their own plan, there is available a
Delaware Investments 457 Deferred Compensation Plan. Interested
investors should contact the Distributor or their investment dealers to
obtain further information. Purchases under the Plan may be combined
for purposes of computing the reduced front-end sales charge applicable
to Class A Shares as set forth in the table in the Prospectus for the
Fund Classes.
SIMPLE IRA
A SIMPLE IRA combines many of the features of an IRA and a 401(k)
Plan but is easier to administer than a typical 401(k) Plan. It
requires employers to make contributions on behalf of their employees
and also has a salary deferral feature that permits employees to defer a
portion of their salary into the plan on a pre-tax basis. A SIMPLE IRA
is available only to plan sponsors with 100 or fewer employees.
SIMPLE 401(k)
A SIMPLE 401(k) is like a regular 401(k) except that it is
available only to plan sponsors 100 or fewer employees and, in exchange
for mandatory plan sponsor contributions, discrimination testing is no
longer required. Class B Shares are not available for purchase by such
plans.
DETERMINING OFFERING PRICE AND NET ASSET VALUE
Orders for purchases of Class A Shares are effected at the offering
price next calculated after receipt of the order by the Fund, its agent
or certain other authorized persons. See Distribution and Service under
Investment Management Agreement. Orders for purchases of Class B
Shares, Class C Shares and Institutional Class shares are effected at
the net asset value per share next calculated after receipt of the order
by the Fund, its agent or certain other authorized persons. Selling
dealers are responsible for transmitting orders promptly.
The offering price for Class A Shares consists of the net asset
value per share plus any applicable sales charges. Offering price and
net asset value are computed as of the close of regular trading on the
New York Stock Exchange (ordinarily, 4 p.m. Eastern time) on days when
the Exchange is open. The New York Stock Exchange is scheduled to be
open Monday through Friday throughout the year except for days on which
the following holidays are observed: New Year's Day, Martin Luther King,
Jr.'s Birthday, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas. When the New York Stock
Exchange is closed, the 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 of the Fund and dividing by the number of Fund shares
outstanding. Expenses and fees are accrued daily. In determining the
Fund's total net assets, portfolio securities primarily listed or traded
on a national securities exchange, except for bonds, are valued at the
last sale price on that exchange. 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. Subject to the foregoing,
securities for which market quotations are not readily available and
other 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 Class A Shares, Class B Shares and Class C Shares alone
will bear the 12b-1 Plan expenses payable under their respective Plans.
Due to the specific distribution expenses and other costs that will be
allocable to each Class, the net asset value of each Class of the Fund
will vary.
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 at 1818 Market Street, Philadelphia,
PA 19103. In addition, certain expedited redemption methods described
below are available when stock certificates have not been issued.
Certificates are issued for Class A Shares and Institutional Class
shares only if a shareholder specifically requests them. Certificates
are not issued 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 request must be signed
by all owners of the shares or the investment dealer of record, but a
signature guarantee is not required. 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. A signature guarantee can be obtained from a
commercial bank, a trust company or a member of a securities transfer
association medallion program. A signature guarantee cannot be provided
by a notary public. A signature guarantee is designed to protect the
shareholders, the Fund and its agents from fraud. The Fund reserves the
right to reject a signature guarantee supplied by an institution based
on its creditworthiness. 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 per share next determined after receipt of the
request in good order by the Fund, its agent, or certain other
authorized persons, subject to any applicable CDSC or Limited CDSC. See
Distribution and Service under Investment Management Agreement. 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 days at 5 p.m.
Eastern time. This offer is discretionary and may be completely
withdrawn without further notice by the Distributor.
Orders for the repurchase of Fund shares which are submitted to the
Distributor prior to the close of its business day will be executed at
the net asset value per share computed that day (subject to the
applicable CDSC or Limited CDSC), if the repurchase order was received
by the broker/dealer from the shareholder prior to the time the offering
price and net asset value are determined on such day. The selling
dealer has the responsibility of transmitting orders to the Distributor
promptly. Such repurchase is then settled as an ordinary transaction
with the broker/dealer (who may make a charge to the shareholder for
this service) delivering the shares repurchased.
Certain redemptions of Class A Shares purchased at net asset value
may result in the imposition of a Limited CDSC. See Contingent Deferred
Sales Charge for Certain Redemptions of Class A Shares Purchased at Net
Asset Value 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; (iv) 1% if shares
are redeemed during the sixth year following purchase; and (v) 0%
thereafter. Class C Shares are subject to a CDSC of 1% if shares are
redeemed within 12 months following purchase. See Contingent Deferred
Sales Charge - Class B Shares and Class C Shares under Classes of 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, in the case of the Fund Classes, 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 no later than seven days, after receipt of a
redemption request in good order by the Fund or certain other authorized
persons (see Distribution and Service under Investment Management
Agreement); provided, however, that each commitment to mail or wire
redemption proceeds by a certain time, as described below, is modified
by the qualifications described in the next paragraph.
The Fund will process written or telephone redemption requests to
the extent that the purchase orders for the shares being redeemed have
already settled. The Fund will honor redemption requests as to shares
for which a check was tendered as payment, but the Fund will not mail or
wire the proceeds until it is reasonably satisfied that the check has
cleared. The hold period against a recent purchase may be up to but not
in excess of 15 days, depending upon the origin of the investment check.
Dividends will continue to be earned until the redemption is processed.
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 SEC 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.
Payment for shares redeemed or repurchased may be made in either
cash or kind, or partly in cash and partly in kind. Any portfolio
securities paid or distributed in kind would be valued as described in
Determining Offering Price and Net Asset Value. Subsequent sale by an
investor receiving a distribution in kind could result in the payment of
brokerage commissions. However, Equity Funds III, Inc. has elected to
be governed by Rule 18f-1 under the 1940 Act 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 noted in the relevant Prospectus, has remained
below the minimum amounts required by the Fund's Prospectuses 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 by the Prospectuses 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 How to Buy 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 made 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 Shareholder Service
Center at 800-523-1918 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 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 phone numbers listed 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 from
Class A Shares, Class B Shares and Class C Shares. 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.
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 Plans
Shareholders of Class A Shares, Class B Shares and Class C Shares
who own or purchase $5,000 or more of shares at the offering price, or
net asset value, as applicable, for which certificates have not been
issued may establish a Systematic Withdrawal Plan for monthly
withdrawals of $25 or more, or quarterly withdrawals of $75 or more,
although the 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 a 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 be long-term or short-term
depending on the holding period for the specific shares liquidated.
Premature withdrawals from retirement plans may have adverse tax
consequences.
Withdrawals under this plan made concurrently with the purchases of
additional shares may be disadvantageous to the shareholder. Purchases
of Class A Shares through a periodic investment program in a fund
managed by the Manager must be terminated before a Systematic Withdrawal
Plan with respect to such shares can take effect, except if the
shareholder is a participant in one of our retirement plans or is
investing in funds in the Delaware Investments family which do not carry
a sales charge. Redemptions of Class A Shares pursuant to a Systematic
Withdrawal Plan may be subject to a Limited CDSC if the purchase was
made at net asset value and a dealer's commission has been paid on that
purchase. 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 Contingent Deferred Sales Charge - Class B Shares and Class C
Shares and Waiver of Limited CDSC - Class A Shares under Redemption and
Exchange in the Prospectus for the Fund Classes. Shareholders should
consult their financial advisers to determine whether a Systematic
Withdrawal Plan would be suitable for them.
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.
DIVIDENDS AND REALIZED SECURITIES PROFITS DISTRIBUTIONS
The Fund will make payments from its net investment income and net
realized securities profits, if any, 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 Code.
All dividends and any capital gains distributions will be
automatically reinvested for the shareholder in additional shares of the
same Class at net asset value unless, in the case of shareholders in the
Fund Classes, the shareholder requests in writing that such dividends
and/or distributions be paid in cash. 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.
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.
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 United
States Post Office or the Fund is otherwise unable to locate the
shareholder or verify the shareholder's mailing address. These costs
may include a percentage of the account when a search company charges a
percentage fee in exchange for their location services.
TAXES
It is the Fund's policy to pay out substantially all net investment
income and net realized gains to shareholders to relieve the Fund of
federal income tax liability on that portion of its income paid to
shareholders under Subchapter M of the Code. The Fund has met these
requirements in previous years and intends to meet them this year. Such
distributions are taxable as ordinary income or capital gain to those
shareholders who are liable for federal income tax. The Fund also
intends to meet the calendar year distribution requirements imposed by
the Code to avoid the imposition of a 4% excise tax.
Distributions may also be subject to state and local taxes;
shareholders are advised to consult with their tax advisers in this
regard. Shares of the Fund will be exempt from Pennsylvania personal
property taxes.
Dividends representing net investment income or short-term capital
gains are taxable to shareholders as ordinary income. Distributions of
long-term capital gains, if any, are taxable as long-term capital gain
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 will not be affected by
whether they are paid in cash or in additional shares. A portion of
these distributions may be eligible for the dividends-received deduction
for corporations. The portion of dividends, if any, paid by the Fund
that so qualifies will be designated each year in a notice mailed to
the Fund's shareholders, and cannot exceed the gross amount of dividends
received by the Fund from domestic (U.S.) corporations that would have
qualified for the dividends-received deduction in the hands of the Fund
if the Fund was a regular corporation. The availability of the dividends-
received deduction is subject to certain holding period and debt
financing restrictions imposed under the Code on the corporation
claiming the deduction. Under the 1997 Act, the amount that the Fund
may designate as eligible for the dividends-received deduction will be
reduced or eliminated if the shares on which the dividends earned by the
Fund were debt-financed or held by the Fund for less than a 46-day
period during a 90-day period beginning 45 days before the ex-dividend
date and ending 45 days after the ex-dividend date. Similarly, if your
Fund shares are debt-financed or held by you for less than a 46-day
period during a 90-day period beginning 45 days before the ex-dividend
date and ending 45 days after the ex-dividend date, then the dividends-
received deduction for Fund dividends on your shares may also be reduced
or eliminated. Even if designated as dividends eligible for the
dividends-received deduction, all dividends (including any deducted
portion) must be included in your alternative minimum taxable income
calculation. Advice as to the tax status of each year's dividends and
distributions, when paid, will be mailed annually.
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 appreciation
for tax purposes of $159,536,474 as of June 30, 1998.
Prior to purchasing shares of the Fund, you should carefully
consider the impact of dividends or realized securities profits
distributions which have been declared but not paid. Any such dividends
or realized securities profits distributions paid shortly after a
purchase of shares by an investor will have the effect of reducing the
per share net asset value of such shares by the amount of the dividends
or realized securities profits distributions. All or a portion of such
dividends or realized securities profits distributions, although in
effect a return of capital, are subject to taxes which may be at
ordinary income tax rates. The purchase of shares just prior to the
ex-dividend date has an adverse effect for income tax purposes.
Under the Taxpayer Relief Act of 1997 (the "1997 Act"), as revised
by the 1998 Act, the Fund is required to track its sales of portfolio
securities and to report its capital gain distributions to you according
to the following categories of holding periods:
"Mid-term capital gains" or "28 percent rate gain": securities sold by
the Fund after July 28, 1997 that were held more than one year but not
more than 18 months. These gains will be taxable to individual
investors at a maximum rate of 28%.
"1997 Act long-term capital gains" or "20 percent rate gain":
securities sold by the Fund between May 7, 1997 and July 28, 1997 that
were held for more than 12 months, and securities sold by the Fund after
July 28, 1997 that were held for more than 18 months. As revised by the
1998 Act, this rate applies to securities held for more than 12 months
for tax years beginning after December 31, 1997. These gains will be
taxable to individual investors at a maximum rate of 20% for investors
in the 28% or higher federal income tax brackets, and at a maximum rate
of 10% for investors in the 15% federal income tax bracket.
"Qualified 5-year gains": For individuals in the 15% bracket, qualified
5-year gains are net gains on securities held for more than 5 years
which are sold after December 31, 2000. For individuals who are subject
to tax at higher rate brackets, qualified 5-year gains are net gains on
securities which are purchased after December 31, 2000 and are held for
more than 5 years. Taxpayers subject to tax at a higher rate bracket
may also make an election for shares held on January 1, 2001 to
recognize gain on their shares (any loss is disallowed) in order to
qualify such shares as qualified 5-year property as though purchased
after December 31, 2000. These gains will be taxable to individual
investors at a maximum rate of 18% for investors in the 28% or higher
federal income tax brackets, and at a maximum rate of 8% for investors
in the 15% federal income tax bracket when sold after the 5 year holding
period.
The Fund has qualified, and intends to continue to qualify, as a
regulated investment company under Subchapter M of 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
and it satisfies other requirements relating to the sources of its
income and diversification of its assets. In order to qualify as a
regulated investment company for federal income tax purposes, the Fund
must meet certain specific requirements, including:
(i) The Fund must maintain a diversified portfolio of
securities, wherein no security (other than U.S. government securities
and securities of other regulated investment companies) can exceed 25%
of the Fund's total assets, and, with respect to 50% of the Fund's total
assets, no investment (other than cash and cash items, U.S. government
securities and securities of other regulated investment companies) can
exceed 5% of the Fund's total assets;
(ii) The Fund must derive at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, and
gains from the sale or disposition of stock and securities or foreign
currencies, or other income derived with respect to its business of
investing in such stock, securities, or currencies;
(iii) The Fund must distribute to its shareholders at least 90%
of its investment company taxable income and net tax-exempt income for
each of its fiscal years, and
(iv) The Fund must realize less than 30% of its gross income for
each fiscal year from gains from the sale of securities and certain
other assets that have been held by the Fund for less than three months
("short-short income"). The Taxpayer Relief Act of 1997 (the "1997
Act") repealed the 30% short-short income test for tax years of
regulated investment companies beginning after August 5, 1997; however,
this rule may have continuing effect in some states for purposes of
classifying the Fund as a regulated investment company.
The Code requires the Fund to distribute at least 98% of its
taxable ordinary income earned during the calendar year and 98% of its
capital gain net income earned during the 12 month period ending October
31 (in addition to amounts from the prior year that were neither
distributed nor taxed to the Fund) to shareholders by December 31 of
each year in order to avoid federal excise taxes. The Fund intends as a
matter of policy to declare and pay sufficient dividends in December or
January (which are treated by shareholders as received in December) but
does not guarantee and can give no assurances that its distributions
will be sufficient to eliminate all such taxes.
The straddle rules of Section 1092 may apply. Generally, the
straddle provisions require the deferral of losses to the extent of
unrecognized gains related to the offsetting positions in the straddle.
Excess losses, if any, can be recognized in the year of loss. Deferred
losses will be carried forward and recognized in the year that
unrealized losses exceed unrealized gains or when the offsetting
position is sold.
The 1997 Act has also added new provisions for dealing with
transactions that are generally called "Constructive Sale Transactions."
Under these rules, the Fund must recognize gain (but not loss) on any
constructive sale of an appreciated financial position in stock, a
partnership interest or certain debt instruments. The Fund will
generally be treated as making a constructive sale when it: 1) enters
into a short sale on the same or substantially identical property; 2)
enters into an offsetting notional principal contract; or 3) enters into
a futures or forward contract to deliver the same or substantially
identical property. Other transactions (including certain financial
instruments called collars) will be treated as constructive sales as
provided in Treasury regulations to be published. There are also
certain exceptions that apply for transactions that are closed before
the end of the 30th day after the close of the taxable year.
Investment in Foreign Currencies and Foreign Securities--The Fund
is authorized to invest certain limited amounts in foreign securities.
Such investments, if made, will have the following additional tax
consequences to the Fund:
Under the Code, gains or losses attributable to fluctuations in
foreign currency exchange rates which occur between the time the Fund
accrues income (including dividends), or accrues expenses which are
denominated in a foreign currency, and the time the Fund actually
collects such income or pays such expenses generally are treated as
ordinary income or loss. Similarly, on the disposition of debt
securities denominated in a foreign currency and on the disposition of
certain options, futures, forward contracts, gain or loss attributable
to fluctuations in the value of foreign currency between the date of
acquisition of the security or contract and the date of its disposition
are also treated as ordinary gain or loss. These gains or losses,
referred to under the Code as "Section 988" gains or losses, may
increase or decrease the amount of the Fund's net investment company
taxable income, which, in turn, will affect the amount of income to be
distributed to you by the Fund.
If the Fund's Section 988 losses exceed the Fund's other investment
company taxable income during a taxable year, the Fund generally will
not be able to make ordinary dividend distributions to you for that
year, or distributions made before the losses were realized will be
recharacterized as return of capital distributions for federal income
tax purposes, rather than as an ordinary dividend or capital gain
distribution. If a distribution is treated as a return of capital, your
tax basis in your Fund shares will be reduced by a like amount (to the
extent of such basis), and any excess of the distribution over your tax
basis in your Fund shares will be treated as capital gain to you.
The 1997 Act generally requires that foreign income be translated
into U.S. dollars at the average exchange rate for the tax year in which
the transactions are conducted. Certain exceptions apply to taxes paid
more than two years after the taxable year to which they relate. This
new law may require the Fund to track and record adjustments to foreign
taxes paid on foreign securities in which it invests. Under the Fund's
current reporting procedure, foreign security transactions are recorded
generally at the time of each transaction using the foreign currency
spot rate available for the date of each transaction. Under the new
law, the Fund will be required to record at fiscal year end (and at
calendar year end for excise tax purposes) an adjustment that reflects
the difference between the spot rates recorded for each transaction and
the year-end average exchange rate for all of the Fund's foreign
securities transactions. There is a possibility that the mutual fund
industry will be given relief from this new provision, in which case no
year-end adjustments will be required.
The Fund may be subject to foreign withholding taxes on income from
certain of its foreign securities. If more than 50% of the total assets
of the Fund at the end of its fiscal year are invested in securities of
foreign corporations, the Fund may elect to pass-through to you your pro
rata share of foreign taxes paid by the Fund. If this election is made,
you will be: (i) required to include in your gross income your pro rata
share of foreign source income (including any foreign taxes paid by the
Fund); and (ii) entitled to either deduct your share of such foreign
taxes in computing your taxable income or to claim a credit for such
taxes against your U.S. income tax, subject to certain limitations under
the Code. You will be informed by the Fund at the end of each calendar
year regarding the availability of any such foreign tax credits and the
amount of foreign source income (including any foreign taxes paid by the
Fund). If the Fund elects to pass-through to you the foreign income
taxes that it has paid, you will be informed at the end of the calendar
year of the amount of foreign taxes paid and foreign source income that
must be included on your federal income tax return. If the Fund invests
50% or less of its total assets in securities of foreign corporations,
it will not be entitled to pass-through to you your pro-rata shares of
foreign taxes paid by the Fund. In this case, these taxes will be taken
as a deduction by the Fund, and the income reported to you will be the
net amount after these deductions. The 1997 Act also simplifies the
procedures by which investors in funds that invest in foreign securities
can claim tax credits on their individual income tax returns for the
foreign taxes paid by the Fund. These provisions will allow investors
who pay foreign taxes of $300 or less on a single return or $600 or less
on a joint return during any year (all of which must be reported on IRS
Form 1099-DIV from the Fund to the investor) to claim a tax credit
against their U.S. federal income tax for the amount of foreign taxes
paid by the Fund. This process will allow you, if you qualify, to
bypass the burdensome and detailed reporting requirements on the foreign
tax credit schedule (Form 1116) and report your foreign taxes paid
directly on page 2 of Form 1040. You should note that this simplified
procedure will not be available until calendar year 1998.
Investment in Passive Foreign Investment Company Securities--The
Fund may invest in shares of foreign corporations which may be
classified under the Code as passive foreign investment companies
("PFICs"). In general, a foreign corporation is classified as a PFIC if
at least one-half of its assets constitute investment-type assets or 75%
or more of its gross income is investment-type income. If the Fund
receives an "excess distribution" with respect to PFIC stock, the Fund
itself may be subject to U.S. federal income tax on a portion of the
distribution, whether or not the corresponding income is distributed by
the Fund to you. In general, under the PFIC rules, an excess
distribution is treated as having been realized ratably over the period
during which the Fund held the PFIC shares. The Fund itself will be
subject to tax on the portion, if any, of an excess distribution that is
so allocated to prior Fund taxable years, and an interest factor will be
added to the tax, as if the tax had been payable in such prior taxable
years. In this case, you would not be permitted to claim a credit on
your own tax return for the tax paid by the Fund. Certain distributions
from a PFIC as well as gain from the sale of PFIC shares are treated as
excess distributions. Excess distributions are characterized as
ordinary income even though, absent application of the PFIC rules,
certain distribution might have been classified as capital gain. This
may have the effect of increasing Fund distributions to you that are
treated as ordinary dividends rather than long-term capital gain
dividends.
The Fund may be eligible to elect alternative tax treatment with
respect to PFIC shares. Under an election that currently is available
in some circumstances, the Fund generally would be required to include
in its gross income its share of the earnings of a PFIC on a current
basis, regardless of whether distributions are received from the PFIC
during such period. If this election were made, the special rules,
discussed above, relating to the taxation of excess distributions, would
not apply. In addition, the 1997 Act provides for another election that
would involve marking-to-market the Fund's PFIC shares at the end of
each taxable year (and on certain other dates as prescribed in the
Code), with the result that unrealized gains would be treated as though
they were realized. The Fund would also be allowed an ordinary
deduction for the excess, if any, of the adjusted basis of its
investment in the PFIC stock over its fair market value at the end of
the taxable year. This deduction would be limited to the amount of any
net mark-to-market gains previously included with respect to that
particular PFIC security. If the Fund were to make this second PFIC
election, tax at the Fund level under the PFIC rules would generally be
eliminated.
The application of the PFIC rules may affect, among other things,
the amount of tax payable by the Fund (if any), the amounts
distributable to you by the Fund, the time at which these distributions
must be made, and whether these distributions will be classified as
ordinary income or capital gain distributions to you.
You should be aware that it is not always possible at the time
shares of a foreign corporation are acquired to ascertain that the
foreign corporation is a PFIC, and that there is always a possibility
that a foreign corporation will become a PFIC after the Fund acquires
shares in that corporation. While the Fund will generally seek to avoid
investing in PFIC shares to avoid the tax consequences detailed above,
there are no guarantees that it will do so and it reserves the right to
make such investments as a matter of its fundamental investment policy.
Most foreign exchange gains are classified as ordinary income which
will be taxable to you as such when distributed. Similarly, you should
be aware that any foreign exchange losses realized by the Fund,
including any losses realized on the sale of foreign debt securities,
are generally treated as ordinary losses for federal income tax
purposes. This treatment could increase or reduce the Fund's income
available for distribution to you, and may cause some or all of the
Fund's previously distributed income to be classified as a return of
capital.
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 Equity Funds III, Inc.'s Board of
Directors.
The Manager and its predecessors have been managing the funds in
the Delaware Investments family since 1938. On June 30, 1998, the
Manager and its affiliates within Delaware Investments, including
Delaware International Advisers Ltd., were managing in the aggregate
more than $44 billion in assets in various institutional or separately
managed (approximately $26,604,750,000) and investment company
(approximately $17,876,100,000) accounts.
The Investment Management Agreement for the Fund is dated April 3,
1995 and was approved by shareholders on March 29, 1995. The Agreement
had an initial term of two years and may be renewed 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
Equity Funds III, Inc. who are not parties thereto or interested persons
of any such party, cast in person at a meeting called for the purpose of
voting on such approval. The Agreement is terminable without penalty on
60 days' notice by the directors of Equity Funds III, Inc. or by the
Manager. The Agreement will terminate automatically in the event of its
assignment.
The compensation paid by the Fund for investment management
services is equal to 1/16 of 1% per month (3/4 of 1% per year) of the
Fund's average daily net assets, less all directors' fees paid to the
unaffiliated directors of the Fund. This fee is higher than that paid
by funds with comparable investment objectives.
On June 30, 1998, the total net assets of the Fund were
$616,156,239. Investment management fees paid by the Fund during the
past three fiscal years were $3,826,146 for 1996, $4,865,223 for 1997
and $4,849,848 for 1998. Under the general supervision of the Board of
Directors, 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.
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 shareholders.
Distribution and Service
The Distributor, Delaware Distributors, L.P., 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. Delaware
Distributors, L.P. is an indirect, wholly owned subsidiary 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 also provides accounting services to
the Fund pursuant to the terms of a separate Fund Accounting Agreement.
The Transfer Agent is also an indirect, wholly owned subsidiary of
Delaware Management Holdings, Inc.
The Fund has authorized one or more brokers to accept on its behalf
purchase and redemption orders in addition to the Transfer Agent. Such
brokers are authorized to designate other intermediaries to accept
purchase and redemption orders on the behalf of the Fund. For purposes
of pricing, the Fund will be deemed to have received a purchase or
redemption order when an authorized broker or, if applicable, a broker's
authorized designee, accepts the order. Investors may be charged a fee
when effecting transactions through a broker or agent.
OFFICERS AND DIRECTORS
The business and affairs of Equity Funds III, Inc. are managed
under the direction of its Board of Directors.
Certain officers and directors of Equity Funds III, Inc. hold
identical positions in each of the other funds in the Delaware
Investments family. On July 31, 1998, Equity Funds III, Inc.'s officers
and directors owned less than 1% of the outstanding shares of Class A
Shares, Class B Shares, Class C Shares and the Institutional Class.
As of July 31, 1998, management believes the following accounts
held 5% or more of the outstanding shares of a Class of the Fund. With
the exception of DMC Profit Sharing Plans, the Fund has no knowledge of
beneficial ownership.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Class Name of Address of Account Share Amount Percentage
Class A Shares Merrill Lynch, Pierce, Fenner & Smith 1,749,655 7.15%
Attn: Fund Administration
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246
Class B Shares Merrill Lynch, Pierce, Fenner & Smith 450,007 11.24%
Attn: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
Class C Shares Merrill Lynch, Pierce, Fenner & Smith 187,118 23.70%
Attn: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
Institutional
Class Fidelity Investments -
Institutional Operations 998,582 31.03%
CO FIICO as Agent
For Certain Employee Benefit Plans
100 Magellan Way
Covington, KY 41015
Merrill Lynch Trust Co. 480,961 14.95%
Trust Qualified Retirement Plans
Attn: Sue Nohilly
265 Davidson Avenue - 3rd Floor
Somerset, NJ 08873
Class Name of Address of Account Share Amount Percentage
Insitutional
Class Bank of New York 421,611 13.10%
TRST First Hospital Corp.
Retirement Plan
Attn: Michael Polis
1 Wall Street
New York, NY 10005
Fifth Third Bank 373,453 11.60%
Benefits & PPA
P.O. Box 630074
Cincinnati, OH 45263
Northern Trust 261,520 8.13%
Trust PHH Corp
P.O. Box 92956
Chicago, IL 60675
RS DMC Employee Profit Sharing Plan 172,585 5.36%
Delaware Management Company
Employee Profit Sharing Trust
c/o Rick Seidel
1818 Market Street
Philadelphia, PA 19103
</TABLE>
DMH Corp., Delvoy, Inc., Delaware Management Business Trust,
Delaware Management Company, Inc., Delaware Management Company (a series
of Delaware Management Business Trust), Delaware Investment Advisers (a
series of Delaware Management Business Trust), Delaware Distributors,
L.P., Delaware Distributors, Inc., Delaware Service Company, Inc.,
Delaware Management Trust Company, Delaware International Holdings Ltd.,
Founders Holdings, Inc., Delaware International Advisers Ltd., Delaware
Capital Management, Inc. and Delaware Investment & Retirement Services,
Inc. are direct or indirect, wholly owned subsidiaries of Delaware
Management Holdings, Inc. ("DMH"). On April 3, 1995, a merger between
DMH and a wholly owned subsidiary of Lincoln National Corporation
("Lincoln National") was completed. DMH and the Manager are now
indirect, wholly owned subsidiaries, and subject to the ultimate
control, of Lincoln National. Lincoln National, with headquarters in
Fort Wayne, Indiana, is a diversified organization with operations in
many aspects of the financial services industry, including insurance and
investment management.
Certain officers and directors of the Fund hold identical positions
in each of the other funds in the Delaware Investments family.
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.
*Wayne A. Stork (61)
Chairman and Director and/or Trustee of Equity Funds III, Inc. and 33
other investment companies in the Delaware Investments family and
Delaware Capital Management, Inc.
Chairman, President, Chief Executive Officer and Director of DMH Corp.,
Delaware Distributors, Inc. and Founders Holdings, Inc.
Chairman, President, Chief Executive Officer, Chief Investment Officer
and Director/Trustee of Delaware Management Company, Inc. and Delaware
Management Business Trust
Chairman, President, Chief Executive Officer and Chief Investment
Officer of Delaware Management Company (a series of Delaware Management
Business Trust)
Chairman, Chief Executive Officer and Chief Investment Officer of
Delaware Investment Advisers (a series of Delaware Management Business
Trust)
Chairman, Chief Executive Officer and Director of Delaware International
Advisers Ltd., Delaware International Holdings Ltd. and Delaware
Management Holdings, Inc.
President and Chief Executive Officer of Delvoy, Inc.
Chairman of Delaware Distributors, L.P.
Director of Delaware Service Company, Inc. and Retirement Financial
Services, Inc.
During the past five years, Mr. Stork has served in various executive
capacities at different times within the Delaware organization.
*Jeffrey J. Nick (45)
President, Chief Executive Officer and Director and/or Trustee of
Equity Funds III, Inc. and 33 other investment companies in the Delaware
Investments family
President and Director of Delaware Management Holdings, Inc.
President, Chief Executive Officer and Director of Lincoln National
Investment Companies, Inc.
President of Lincoln Funds Corporation
Director of Delaware International Advisers Ltd.
From 1992 to 1996, Mr. Nick was Managing Director of Lincoln National
UK plc and from 1989 to 1992, he was Senior Vice President responsible
for corporate planning and development for Lincoln National Corporation.
Richard G. Unruh, Jr. (58)
Executive Vice President of Equity Funds III, Inc. and 33 other investment
companies in the Delaware Investments family, Delaware Management
Holdings, Inc., Delaware Management Company (a series of Delaware
Management Business Trust) and Delaware Capital Management, Inc.
President of Delaware Investment Advisers (a series of Delaware
Management Business Trust)
Executive Vice President and Director/Trustee of Delaware Management
Company, Inc. and Delaware Management Business Trust
Director of Delaware International Advisers Ltd.
During the past five years, Mr. Unruh has served in various executive
capacities at different times within the Delaware organization.
- -------------------
* Director affiliated with the Fund's investment manager and
considered an "interested person" as defined in the 1940 Act.
Paul E. Suckow (50)
Executive Vice President/Chief Investment Officer, Fixed Income of
Equity Funds III, Inc. and 33 other investment companies in the Delaware
Investments family, Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of Delaware Management Business
Trust) and Delaware Management Holdings, Inc.
Executive Vice President and Director of Founders Holdings, Inc.
Executive Vice President of Delaware Capital Management, Inc. and
Delaware Management Business Trust
Director of Founders CBO Corporation
Director of HYPPCO Finance Company Ltd.
Before returning to Delaware Investments in 1993, Mr. Suckow was
Executive Vice President and Director of Fixed Income for Oppenheimer
Management Corporation, New York, NY from 1985 to 1992. Prior to that,
Mr. Suckow was a fixed-income portfolio manager for Delaware Investments.
David K. Downes (58)
Executive Vice President, Chief Operating Officer, Chief Financial
Officer of Equity Funds III, Inc. and 33 other investment companies in
the Delaware Investments family, Delaware Management Holdings, Inc,
Founders CBO Corporation, Delaware Capital Management, Inc., Delaware
Management Company (a series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of Delaware Management Business
Trust) and Delaware Distributors, L.P.
Executive Vice President, Chief Financial Officer, Chief Administrative
Officer and Trustee of Delaware Management Business Trust
Executive Vice President, Chief Operating Officer, Chief Financial
Officer and Director of Delaware Management Company, Inc., DMH Corp.,
Delaware Distributors, Inc., Founders Holdings, Inc. and Delvoy, Inc.
President, Chief Executive Officer, Chief Financial Officer and
Director of Delaware Service Company, Inc.
President, Chief Operating Officer, Chief Financial Officer and
Director of Delaware International Holdings Ltd.
Chairman, Chief Executive Officer and Director of Delaware Management
Trust Company and Retirement Financial Services, Inc.
Director of Delaware International Advisers Ltd.
Vice President of Lincoln Funds Corporation
During the past five years, Mr. Downes has served in various executive
capacities at different times within the Delaware organization.
Walter P. Babich (70)
Director and/or Trustee of Equity Funds III, Inc. and 33 previous
investment companies in the Delaware Investment family
460 North Gulph Road, King of Prussia, PA 19406
Board Chairman, Citadel Constructors, Inc.
From 1986 to 1988, Mr. Babich was a partner of Irwin & Leighton and
from 1988 to 1991, he was a partner of I&L Investors.
John H. Durham (60)
Director and/or Trustee of Equity Funds III, Inc. and 18 other
investment companies in the Delaware Investments family
Partner, Complete Care Services
120 Gibraltar Road, Horsham, PA 19044
Mr. Durham served as Chairman of the Board of each fund in the
Delaware Investments family from 1986 to 1991; President of each fund
from 1977 to 1990; and Chief Executive Officer of each fund from 1984 to
1990. Prior to 1992, with respect to Delaware Management Holdings,
Inc., Delaware Management Company, Delaware Distributors, Inc. and
Delaware Service Company, Inc., Mr. Durham served as a director and in
various executive capacities at different times.
Anthony D. Knerr (59)
Director and/or Trustee of Equity Funds III, Inc. and 33 other
investment companies in the Delaware Investments family
500 Fifth Avenue, New York, NY 10110
Founder and Managing Director, Anthony Knerr & Associates
From 1982 to 1988, Mr. Knerr was Executive Vice President/Finance and
Treasurer of Columbia University, New York. From 1987 to 1989, he was
also a lecturer in English at the University. In addition, Mr. Knerr
was Chairman of The Publishing Group, Inc., New York, from 1988 to 1990.
Mr. Knerr founded The Publishing Group, Inc. in 1988.
Ann R. Leven (57)
Director and/or Trustee of Equity Funds III, Inc. and 33 other
investment companies in the Delaware Investments family
785 Park Avenue, New York, NY 10021
Treasurer, National Gallery of Art
From 1984 to 1990, Ms. Leven was Treasurer and Chief Fiscal Officer
of the Smithsonian Institution, Washington, DC, and from 1975 to 1992,
she was Adjunct Professor of Columbia Business School.
W. Thacher Longstreth (77)
Director and/or Trustee of Equity Funds III, Inc. and 33 other
investment companies in the Delaware Investments family
City Hall, Philadelphia, PA 19107
Philadelphia City Councilman
Thomas F. Madison (62)
Director and/or Trustee of Equity Funds III, Inc. and 33 other
investment companies in the Delaware Investments family
200 South Fifth Street, Suite 2100, Minneapolis, Minnesota 55402
President and Chief Executive Officer, MLM Partners, Inc. Mr. Madison has
also been Chairman of the Board of Communications Holdings, Inc. since
1996. From February to September 1994, Mr. Madison served as Vice
Chairman--Office of the CEO of The Minnesota Mutual Life Insurance
Company and from 1988 to 1993, he was President of U.S. WEST
Communications--Markets.
Charles E. Peck (72)
Director and/or Trustee of Equity Funds III, Inc. and 33 other
investment companies in the Delaware Investments family
P.O. Box 1102, Columbia, MD 21044
Secretary/Treasurer, Enterprise Homes, Inc.
From 1981 to 1990, Mr. Peck was Chairman and Chief Executive
Officer of The Ryland Group, Inc., Columbia, MD.
George M. Chamberlain, Jr. (51)
Senior Vice President, Secretary and General Counsel of Equity
Funds III, Inc. and 33 other investment companies in the Delaware
Investments family, Delaware Distributors, L.P., Delaware Management
Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust) and
Delaware Management Holdings, Inc.
Senior Vice President, Secretary, General Counsel and Director/Trustee
of DMH Corp., Delaware Management Company, Inc., Delaware Distributors,
Inc., Delaware Service Company, Inc., Founders Holdings, Inc.,
Retirement Financial Services, Inc., Delaware Capital Management,
Inc., Delvoy, Inc. and Delaware Management Business Trust
Executive Vice President, Secretary, General Counsel and Director
of Delaware Management Trust Company
Senior Vice President and Director of Delaware International Holdings Ltd.
Director of Delaware International Advisers Ltd.
Secretary of Lincoln Funds Corporation
Attorney.
During the past five years, Mr. Chamberlain has served in various
executive capacities at different times within the Delaware
organization.
Joseph H. Hastings (48)
Senior Vice President/Corporate Controller of Equity Funds III, Inc. and
33 other investment companies in the Delaware Investments family and
Founders Holdings, Inc.
Senior Vice President/Corporate Controller and Treasurer of Delaware
Management Holdings, Inc., DMH Corp., Delaware Management Company, Inc.,
Delaware Management Company (a series of Delaware Management Business
Trust), Delaware Distributors, L.P., Delaware Distributors, Inc.,
Delaware Service Company, Inc., Delaware Capital Management, Inc.,
Delaware International Holdings Ltd., Delvoy, Inc. and Delaware
Management Business Trust
Chief Financial Officer/Treasurer of Retirement Financial
Services, Inc.
Executive Vice President/Chief Financial Officer/Treasurer of Delaware
Management Trust Company
Senior Vice President/Assistant Treasurer of Founders CBO Corporation
Treasurer of Lincoln Funds Corporation
During the past five years, Mr. Hastings has served in various executive
capacities at different times within the Delaware organization.
Michael P. Bishof (35)
Senior Vice President/Treasurer of Equity Funds III, Inc. and 33 other
investment companies in the Delaware Investments family and Founders
Holdings, Inc.
Senior Vice President/Investment Accounting of Delaware Management
Company, Inc., Delaware Management Company (a series of Delaware
Management Business Trust) and Delaware Service Company, Inc.
Senior Vice President and Treasurer/Manager of Investment Accounting of
Delaware Distributors, L.P. and Delaware Investment Advisers (a series
of Delaware Management Business Trust)
Senior Vice President and Manager of Investment Accounting of Delaware
International Holdings Ltd.
Senior Vice President and Assistant Treasurer of Founders CBO
Corporation
Before joining Delaware Investments in 1995, Mr. Bishof was a Vice
President for Bankers Trust, New York, NY from 1994 to 1995, a Vice
President for CS First Boston Investment Management, New York, NY from
1993 to 1994 and an Assistant Vice President for Equitable Capital
Management Corporation, New York, NY from 1987 to 1993.
Gerald S. Frey (52)
Vice President/Senior Portfolio Manager of Equity Funds III, Inc., nine
other investment companies in the Delaware Investments family, Delaware
Management Company, Inc., Delaware Management Company (a series of
Delaware Management Business Trust) and Delaware Investment Advisers
(a series of Delaware Management Business Trust)
Before joining Delaware Investments in 1996, Mr. Frey was a Senior
Director with Morgan Grenfell Capital Management, New York, NY from 1986
to 1995.
The following is a compensation table listing for each director
entitled to receive compensation, the aggregate compensation received
from Equity Funds III, Inc. and the total compensation received from all
investment companies in the Delaware Investments family for which he or
she serves as a director or trustee for the fiscal year ended June 30,
1998 and an estimate of annual benefits to be received upon retirement
under the Delaware Group Retirement Plan for Directors/Trustees as of
June 30, 1998. Only the independent directors of the Fund receive
compensation from the Fund.
<TABLE>
<CAPTION>
Pension or Estimated Total Compensation
Aggregate Retirement Annual from the Investment
Compensation Benefits Accrued Benefits Companies in
from Equity as Part of Upon Delaware
Name Funds III, Inc. Fund Expenses Retirement(1) Investments(2)
<S> <C> <C> <C> <C>
W. Thacher Longstreth $2,272 None $38,500 $63,408
Ann R. Leven $2,503 None $38,500 $69,517
Walter P. Babich $2,464 None $38,500 $68,241
Anthony D. Knerr $2,464 None $38,500 $68,241
Charles E. Peck $2,272 None $38,500 $63,408
Thomas F. Madison $2,272 None $38,500 $63,408
John H. Durham(3) $524 None $31,000 $11,275
</TABLE>
(1) Under the terms of the Delaware Group Retirement Plan for
Directors/Trustees, each disinterested director/trustee who, at the time
of his or her retirement from the Board, has attained the age of 70 and
served on the Board for at least five continuous years, is entitled to
receive payments from each investment company in the Delaware
Investments family for which he or she serves as a director or trustee
for a period equal to the lesser of the number of years that such person
served as a director or trustee or the remainder of such person's life.
The amount of such payments will be equal, on an annual basis, to the
amount of the annual retainer that is paid to directors/trustees of each
investment company at the time of such person's retirement. If an
eligible director/trustee retired as of June 30, 1998, he or she would
be entitled to annual payments totaling the amount noted above, in the
aggregate, from all of the investment companies in the Delaware
Investments family for which he or she served as director or trustee,
based on the number of investment companies in the Delaware Investments
family as of that date.
(2) Each independent director/trustee (other than John H. Durham)
currently receives a total annual retainer fee of $38,500 for serving as
a director or trustee for all 34 investment companies in Delaware
Investments, plus $3,145 for each Board Meeting attended. John H.
Durham currently receives a total annual retainer fee of $31,000 for
serving as a director or trustee for 19 investment companies in Delaware
Investments, plus $1,757.50 for each Board Meeting attended. Ann R.
Leven, Walter P. Babich, Anthony D. Knerr and Thomas F. Madison serve on
the Fund's audit committee; Ms. Leven is the chairperson. Members of
the audit committee currently receive additional annual compensation of
$5,000 from all investment companies, in the aggregate, with the
exception of the chairperson, who receives $6,000.
(3) John H. Durham joined the Board of Directors of the Fund and 18
other investment companies in Delaware Investments on April 16, 1998.
EXCHANGE PRIVILEGE
The exchange privileges available for shareholders of the Classes
and for shareholders of classes of other funds available from the
Delaware Investments family 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 available from the Delaware Investments
family. 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 available from the Delaware Investments family 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 available from the Delaware
Investments family. 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
Shareholder Service Center at 800-523-1918 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 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 available from the Delaware Investments family.
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 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 funds in the Delaware Investments family 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 ; (ii) makes more than two
exchanges out of the Fund per calendar quarter ; or (iii) exchanges
shares equal in value to at least $5 million, or more than 1/4 of 1% of
the Fund's net assets. Accounts under common ownership or control,
including accounts administered so as to redeem or purchase shares based
upon certain predetermined market indicators, will be aggregated for
purposes of the exchange limits.
Restrictions on Timed Exchanges
Timing Accounts operating under existing timing agreements may only
execute exchanges between the following eight funds in the Delaware
Investments family: (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) Delchester Fund and (8) Tax-
Free Pennsylvania Fund. No other funds in the Delaware Investments
family are available for timed exchanges. Assets redeemed or exchanged
out of Timing Accounts in funds in the Delaware Investments family 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
funds in the Delaware Investments family:
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.
Small Cap Value Fund seeks capital appreciation by investing
primarily in common stocks whose market values appear low relative to
their underlying value or future potential.
DelCap Fund seeks long-term capital growth by investing in common
stocks and securities convertible into common stocks of companies that
have a demonstrated history of growth and have the potential to support
continued growth.
Decatur Income Fund seeks the highest possible current income by
investing primarily in common stocks that provide the potential for
income and capital appreciation without undue risk to principal.
Decatur Total Return Fund seeks long-term growth by investing primarily
in securities that provide the potential for income and capital
appreciation without undue risk to principal. Blue Chip Fund seeks to
achieve long-term capital appreciation. Current income is a secondary
objective. It seeks to achieve these objectives by investing primarily
in equity securities and any securities that are convertible into equity
securities. Social Awareness Fund seeks to achieve long-term capital
appreciation. It seeks to achieve this objective by investing primarily
in equity securities of medium- to large-sized companies expected to
grow over time that meet the Fund's "Social Criteria" strategy.
Delchester Fund seeks as high a current income as possible by
investing principally in high yield, high risk corporate bonds, and also
in U.S. government securities and commercial paper. Strategic Income
Fund seeks to provide investors with high current income and total
return by using a multi-sector investment approach, investing
principally in three sectors of the fixed-income securities markets:
high yield, higher risk securities, investment grade fixed-income
securities and foreign government and other foreign fixed-income
securities. High-Yield Opportunities Fund seeks to provide investors
with total return and, as a secondary objective, high current income.
U.S. Government Fund seeks high current income by investing
primarily in long-term debt obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
Limited-Term Government Fund seeks high, stable income by investing
primarily in a portfolio of short- and intermediate-term securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities and instruments secured by such securities. 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.
REIT Fund seeks to achieve maximum long-term total return with
capital appreciation as a secondary objective. It seeks to achieve its
objectives by investing in securities of companies primarily engaged in
the real estate industry.
Tax-Free 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 New Jersey Fund seeks a high level of current interest
income exempt from federal income tax and New Jersey state and local
taxes, consistent with preservation of capital. Tax-Free Ohio Fund
seeks a high level of current interest income exempt from federal income
tax and Ohio state and local taxes, consistent with preservation of
capital. 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.
Foundation Funds are "fund of funds" which invest in other funds in
the Delaware Investments family (referred to as "Underlying Funds").
Foundation Funds Income Portfolio seeks a combination of current income
and preservation of capital with capital appreciation by investing
primarily in a mix of fixed income and domestic equity securities,
including fixed income and domestic equity Underlying Funds. Foundation
Funds Balanced Portfolio seeks capital appreciation with current income
as a secondary objective by investing primarily in domestic equity and
fixed income securities, including domestic equity and fixed income
Underlying Funds. Foundation Funds Growth Portfolio seeks long term
capital growth by investing primarily in equity securities, including
equity Underlying Funds, and, to a lesser extent, in fixed income
securities, including fixed-income Underlying Funds.
International Equity Fund seeks to achieve long-term growth without
undue risk to principal by investing primarily in international
securities that provide the potential for capital appreciation and
income. Global Bond Fund seeks to achieve current income consistent
with the preservation of principal by investing primarily in global
fixed-income securities that may also provide the potential for capital
appreciation. Global Equity Fund seeks to achieve long-term total
return by investing in global securities that provide the potential for
capital appreciation and income. Emerging Markets Fund seeks long-term
capital appreciation by investing primarily in equity securities of
issuers located or operating in emerging countries.
U.S. Growth Fund seeks to maximize capital appreciation by
investing in companies of all sizes which have low dividend yields,
strong balance sheets and high expected earnings growth rates relative
to their industry. Overseas Equity Fund seeks to maximize total return
(capital appreciation and income), principally through investments in an
internationally diversified portfolio of equity securities. New Pacific
Fund seeks long-term capital appreciation by investing primarily in
companies which are domiciled in or have their principal business
activities in the Pacific Basin.
Delaware Group Premium Fund, Inc. offers 16 funds available
exclusively as funding vehicles for certain insurance company separate
accounts. Decatur Total Return Series seeks the highest possible total
rate of return by selecting issues that exhibit the potential for
capital appreciation while providing higher than average dividend
income. Delchester Series seeks as high a current income as possible by
investing in rated and unrated corporate bonds, U.S. government
securities and commercial paper. Capital Reserves Series seeks a high
stable level of current income while minimizing fluctuations in
principal by investing in a diversified portfolio of short- and
intermediate-term securities. Cash Reserve Series seeks the highest
level of income consistent with preservation of capital and liquidity
through investments in short-term money market instruments. DelCap
Series seeks long-term capital appreciation by investing its assets in a
diversified portfolio of securities exhibiting the potential for
significant growth. Delaware Series seeks a balance of capital
appreciation, income and preservation of capital. It uses a dividend-
oriented valuation strategy to select securities issued by established
companies that are believed to demonstrate potential for income and
capital growth. International Equity Series seeks long-term growth
without undue risk to principal by investing primarily in equity
securities of foreign issuers that provide the potential for capital
appreciation and income. Small Cap Value Series seeks capital
appreciation by investing primarily in small- cap common stocks whose
market values appear low relative to their underlying value or future
earnings and growth potential. Emphasis will also be placed on
securities of companies that may be temporarily out of favor or whose
value is not yet recognized by the market. Trend Series seeks long-term
capital appreciation by investing primarily in small-cap common stocks
and convertible securities of emerging and other growth-oriented
companies. These securities will have been judged to be responsive to
changes in the market place and to have fundamental characteristics to
support growth. Income is not an objective. Global Bond Series seeks
to achieve current income consistent with the preservation of principal
by investing primarily in global fixed-income securities that may also
provide the potential for capital appreciation. Strategic Income Series
seeks high current income and total return by using a multi-sector
investment approach, investing primarily in three sectors of the fixed-
income securities markets: high-yield, higher risk securities;
investment grade fixed-income securities; and foreign government and
other foreign fixed-income securities. Devon Series seeks current
income and capital appreciation by investing primarily in income-
producing common stocks, with a focus on common stocks that the
investment manager believes have the potential for above-average
dividend increases over time. Emerging Markets Series seeks to achieve
long-term capital appreciation by investing primarily in equity
securities of issuers located or operating in emerging countries.
Convertible Securities Series seeks a high level of total return on its
assets through a combination of capital appreciation and current income
by investing primarily in convertible securities. Social Awareness
Series seeks to achieve long-term capital appreciation by investing
primarily in equity securities of medium to large-sized companies
expected to grow over time that meet the Series' "Social Criteria"
strategy. REIT Series seeks to achieve maximum long-term total return,
with capital appreciation as a secondary objective, by investing in
securities of companies primarily engaged in the real estate industry.
Delaware-Voyageur US Government Securities Fund seeks to provide a
high level of current income consistent with the prudent investment risk
by investing in U.S. Treasury bills, notes, bonds, and other obligations
issued or unconditionally guaranteed by the full faith and credit of the
U.S. Treasury, and repurchase agreements fully secured by such
obligations.
Delaware-Voyageur Tax-Free Arizona Insured Fund seeks to provide a
high level of current income exempt from federal income tax and the
Arizona personal income tax, consistent with the preservation of
capital. Delaware-Voyageur Minnesota Insured Fund seeks to provide a
high level of current income exempt from federal income tax and the
Minnesota personal income tax, consistent with the preservation of
capital.
Delaware-Voyageur Tax-Free Minnesota Intermediate Fund seeks to
provide a high level of current income exempt from federal income tax
and the Minnesota personal income tax, consistent with preservation of
capital. The Fund seeks to reduce market risk by maintaining an average
weighted maturity from five to ten years.
Delaware-Voyageur Tax-Free California Insured Fund seeks to
provide a high level of current income exempt from federal income tax
and the California personal income tax, consistent with the preservation
of capital. Delaware-Voyageur Tax-Free Florida Insured Fund seeks to
provide a high level of current income exempt from federal income tax,
consistent with the preservation of capital. The Fund will seek to
select investments that will enable its shares to be exempt from the
Florida intangible personal property tax. Delaware-Voyageur Tax-Free
Florida Fund seeks to provide a high level of current income exempt from
federal income tax, consistent with the preservation of capital. The
Fund will seek to select investments that will enable its shares to be
exempt from the Florida intangible personal property tax. Delaware-
Voyageur Tax-Free Kansas Fund seeks to provide a high level of current
income exempt from federal income tax, the Kansas personal income tax
and the Kansas intangible personal property tax, consistent with the
preservation of capital. Delaware-Voyageur Tax-Free Missouri Insured
Fund seeks to provide a high level of current income exempt from federal
income tax and the Missouri personal income tax, consistent with the
preservation of capital. Delaware-Voyageur Tax-Free New Mexico Fund
seeks to provide a high level of current income exempt from federal
income tax and the New Mexico personal income tax, consistent with the
preservation of capital. Delaware-Voyageur Tax-Free Oregon Insured Fund
seeks to provide a high level of current income exempt from federal
income tax and the Oregon personal income tax, consistent with the
preservation of capital. Delaware-Voyageur Tax-Free Utah Fund seeks to
provide a high level of current income exempt from federal income tax,
consistent with the preservation of capital. Delaware-Voyageur Tax-Free
Washington Insured Fund seeks to provide a high level of current income
exempt from federal income tax, consistent with the preservation of
capital.
Delaware-Voyageur Tax-Free Florida Intermediate Fund seeks to
provide a high level of current income exempt from federal income tax,
consistent with the preservation of capital. The Fund will seek to
select investments that will enable its shares to be exempt from the
Florida intangible personal property tax. The Fund seeks to reduce
market risk by maintaining an average weighted maturity from five to ten
years.
Delaware-Voyageur Tax-Free Arizona Fund seeks to provide a high
level of current income exempt from federal income tax and the Arizona
personal income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free California Fund seeks to provide a high level
of current income exempt from federal income tax and the California
personal income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free Iowa Fund seeks to provide a high level of
current income exempt from federal income tax and the Iowa personal
income tax, consistent with the preservation of capital. Delaware-
Voyageur Tax-Free Idaho Fund seeks to provide a high level of current
income exempt from federal income tax and the Idaho personal income tax,
consistent with the preservation of capital. Delaware-Voyageur
Minnesota High Yield Municipal Bond Fund seeks to provide a high level
of current income exempt from federal income tax and the Minnesota
personal income tax primarily through investment in medium and lower
grade municipal obligations. National High Yield Municipal Fund seeks
to provide a high level of income exempt from federal income tax,
primarily through investment in medium and lower grade municipal
obligations. Delaware-Voyageur Tax-Free New York Fund seeks to provide
a high level of current income exempt from federal income tax and the
personal income tax of the state of New York and the city of New York,
consistent with the preservation of capital. Delaware-Voyageur Tax-Free
Wisconsin Fund seeks to provide a high level of current income exempt
from federal income tax and the Wisconsin personal income tax,
consistent with the preservation of capital.
Delaware-Voyageur Tax-Free Colorado Fund seeks to provide a high
level of current income exempt from federal income tax and the Colorado
personal income tax, consistent with the preservation of capital.
Aggressive Growth Fund seeks long-term capital appreciation, which
the Fund attempts to achieve by investing primarily in equity securities
believed to have the potential for high earnings growth. Although the
Fund, in seeking its objective, may receive current income from
dividends and interest, income is only an incidental consideration in
the selection of the Fund's investments. Growth Stock Fund has an
objective of long-term capital appreciation. The Fund seeks to achieve
its objective from equity securities diversified among individual
companies and industries. Tax-Efficient Equity Fund seeks to obtain for
taxable investors a high total return on an after-tax basis. The Fund
will attempt to achieve this objective by seeking to provide a high
long-term after-tax total return through managing its portfolio in a
manner that will defer the realization of accrued capital gains and
minimize dividend income.
Delaware-Voyageur Tax-Free Minnesota Fund seeks to provide a high
level of current income exempt from federal income tax and the Minnesota
personal income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free North Dakota Fund seeks to provide a high
level of current income exempt from federal income tax and the North
Dakota personal income tax, consistent with the preservation of capital.
For more complete information about any of the funds in the
Delaware Investments family, including charges and expenses, you can
obtain a prospectus from the Distributor. Read it carefully before you
invest or forward funds.
Each of the summaries above is qualified in its entirety by the
information contained in each fund's prospectus(es).
GENERAL INFORMATION
The Manager is the investment manager of the Fund. The Manager
also provides investment management services to certain of the other
funds available from the Delaware Investments family. The Manager,
through a separate division, also manages private investment accounts.
While investment decisions of the Fund are made independently from those
of the other funds and accounts, investment decisions for such other
funds and accounts may be made at the same time as investment decisions
for the Fund.
Delaware International, or its affiliate Delaware also manages the
investment options for Delaware Medallion(SM) III Variable Annuity.
Medallion is issued by Allmerica Financial Life Insurance and Annuity
Company (First Allmerica Financial Life Insurance Company in New York
and Hawaii). Delaware Medallion offers a variety of investment series
ranging from domestic equity funds, international equity and bond funds
and domestic fixed income funds. Each investment series available
through Medallion utilizes an investment strategy and discipline the
same as or similar to one of the mutual funds in the Delaware
Investments family available outside the annuity. See Delaware Group
Premium Fund, Inc., above.
Access persons and advisory persons of the funds in the Delaware
Investments family, as those terms are defined in SEC Rule 17j-1 under
the 1940 Act, who provide services to the Manager, Delaware
International Advisers Ltd. or their affiliates, are permitted to engage
in personal securities transactions subject to the exceptions set forth
in Rule 17j-1 and the following general restrictions and procedures:
(1) certain blackout periods apply to personal securities transactions
of those persons; (2) transactions must receive advance clearance and
must be completed on the same day as the clearance is received; (3)
certain persons are prohibited from investing in initial public
offerings of securities and other restrictions apply to investments in
private placements of securities; (4) opening positions may only be
closed-out at a profit after a 60-day holding period has elapsed; and
(5) the Compliance Officer must be informed periodically of all
securities transactions and duplicate copies of brokerage confirmations
and account statements must be supplied to the Compliance Officer.
The Distributor acts as national distributor for the Fund and for
the other mutual funds in the Delaware Investments family. The
Distributor ("DDLP") received net commissions from the Fund on behalf of
the Class A Shares, after reallowances to dealers, as follows:
Total
Amount of Amounts Net
Underwriting Reallowed Commission
Fiscal Year Ended Commission to Dealers to DDLP
June 30, 1998 $872,998 $722,205 $150,793
June 30, 1997 1,602,046 1,336,246 265,831
June 30, 1996 2,101,990 1,779,727 322,263
The Distributor received in the aggregate Limited CDSC payments
with respect to Class A Shares as follows:
Fiscal Year Ended Limited CDSC Payments
June 30, 1998 $9,869
June 30, 1997 10,416
June 30, 1996 11,000
The Distributor received in the aggregate CDSC payments with
respect to Class B Shares as follows:
Fiscal Year Ended CDSC Payments
June 30, 1998 $190,555
June 30, 1997 175,785
June 30, 1996 29,086
The Distributor received CDSC payments with respect to Class C
Shares as follows:
Fiscal Year Ended CDSC Payments
June 30, 1998 $9,374
June 30, 1997 14,972
June 30, 1996 480
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 Investments family.
The Transfer Agent is paid a fee by the Fund for providing these
services consisting of an annual per account charge of $5.50 plus
transaction charges for particular services according to a schedule.
Compensation is fixed each year and approved by the Board of Directors,
including a majority of the disinterested directors. The Transfer Agent
also provides accounting services to the Fund. Those services include
performing all functions related to calculating the Fund's net asset
value and providing all financial reporting services, regulatory
compliance testing and other related accounting services. For its
services, the Transfer Agent is paid a fee based on total assets of all
funds in the Delaware Investments family for which it provides such
accounting services. Such fee is equal to 0.25% multiplied by the total
amount of assets in the complex for which the Transfer Agent furnishes
accounting services, where such aggregate complex assets are $10 billion
or less, and 0.20% of assets if such aggregate complex assets exceed $10
billion. The fees are charged to each fund, including the Fund, on an
aggregate pro-rata basis. The asset-based fee payable to the Transfer
Agent is subject to a minimum fee calculated by determining the total
number of investment portfolios and associated classes.
The Manager and its affiliates own the name "Delaware Group."
Under certain circumstances, including the termination of Equity Funds
III, Inc.'s advisory relationship with the Manager or its distribution
relationship with the Distributor, the Manager and its affiliates could
cause Equity Funds III, Inc. to delete the words "Delaware Group" from
Equity Funds III, Inc.'s name.
Chase Manhattan Bank ("Chase"), 4 Chase Metrotech Center, Brooklyn,
NY 11245, is custodian of the Fund's securities and cash. As custodian
for the Fund, Chase maintains a separate account or accounts for the
Fund; receives, holds and releases portfolio securities on account of
the Fund; receives and disburses money on behalf of the Fund; and
collects and receives income and other payments and distributions on
account of the Fund's portfolio securities.
Capitalization
Equity Funds III, Inc. has a present authorized capitalization of
five hundred million shares of capital stock with a $.50 par value per
share. The Board of Directors has allocated fifty million shares to
Class A Shares, twenty-five million shares to Class B Shares, twenty-
five million shares to Class C Shares and twenty-five million shares to
Institutional Class shares. Each Class represents a proportionate
interest in the assets of the Fund, and each has the same voting and
other rights and preferences as the other classes of the Fund, except
that shares of the Institutional Class may not vote on any matter that
affects the Fund Classes' 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 Plans
of Class A Shares, Class B Shares and Class C Shares will be allocated
solely to those classes.
All shares have no preemptive rights, are fully transferable and,
when issued, are fully paid and nonassessable and, except as described
above, have equal voting rights.
Prior to September 6, 1994, Trend Fund A Class was known as Trend
Fund class and Trend Fund Institutional Class was known as Trend Fund
(Institutional) class.
Effective as of August 29, 1997, the name of Delaware Group Trend
Fund, Inc. was changed to Delaware Group Equity Funds III, Inc.
Noncumulative Voting
Equity Funds III, Inc. shares have noncumulative voting rights
which means that the holders of more than 50% of the shares of Equity
Funds III, Inc. voting for the election of directors can elect all the
directors if they choose to do so, and, in such event, the holders of
the remaining shares will not be able to elect any directors.
This Part B does not include all of the information contained in
the Registration Statement which is on file with the SEC.
FINANCIAL STATEMENTS
Ernst & Young LLP serves as the independent auditors for Delaware
Group Equity Funds III, Inc. and, in its capacity as such, audits the
annual financial statements of the Fund. The Fund's Statement of Net
Assets, Statement of Operations, Statements of Changes in Net Assets,
Financial Highlights and Notes to Financial Statements, as well as the
report of Ernst & Young LLP, independent auditors, for the fiscal year
ended June 30, 1998 are included in the Fund's Annual Report to
shareholders. The financial statements and financial highlights, 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.
Delaware Investments includes funds with a wide range of investment
objectives. Stock funds, income funds, national and state-specific tax-
exempt funds, money market funds, global and international funds and
closed-end funds give investors the ability to create a portfolio that
fits their personal financial goals. For more information, shareholders
of the Fund Classes should contact their financial adviser or call
Delaware Investments at 800-523- 1918 and shareholders of the
Institutional Class should contact Delaware Investments at 800-828-5052.
INVESTMENT MANAGER
Delaware Management Company
One Commerce Square
Philadelphia, PA 19103
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING,
ACCOUNTING SERVICES
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
One Commerce Square
Philadelphia, PA 19103
INDEPENDENT AUDITORS
Ernst & Young LLP
Two Commerce Square
Philadelphia, PA 19103
CUSTODIAN
The Chase Manhattan Bank
4 Chase Metrotech Center
Brooklyn, NY 11245
DELAWARE GROUP EQUITY FUNDS III, INC.
TREND FUND
A CLASS
B CLASS
C CLASS
INSTITUTIONAL CLASS
CLASSES OF DELAWARE GROUP
EQUITY FUNDS III, INC.
PART B
STATEMENT OF
ADDITIONAL INFORMATION
AUGUST 28, 1998
[LOGO OMITTED: DELAWARE INVESTMENTS]
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 Assets and Liabilities
Statement of Operations
Statements of Changes in Net Assets
Notes to Financial Statements
Accountant's Report
* The financial statements and Accountant's Report listed above are
incorporated into Part B by reference to the Registrant's Annual Report
for the fiscal year ended June 30, 1998.
(b) Exhibits:
(1) Articles of Incorporation.
(a) Articles of Incorporation, as amended and supplemented
through August 30, 1995, incorporated into this filing
by reference to Post-Effective Amendment No. 53 filed
August 30, 1995.
(b) Executed Articles Supplementary (November 28, 1995)
incorporated into this filing by reference to Post-
Effective Amendment No. 55 filed August 28, 1996.
(c) Executed Articles of Amendment (August 27, 1997)
incorporated into this filing by reference to Post-
Effective Amendment No. 56 filed August 29, 1997.
(2) By-Laws. By-Laws, as amended through August 30, 1995,
incorporated into this filing by reference to Post-Effective
Amendment No. 53 filed August 30, 1995.
(3) Voting Trust Agreement. Inapplicable.
(4) Copies of All Instruments Defining the Rights of Holders.
(a) Articles of Incorporation, Articles of Amendment and
Articles Supplementary.
(i) Incorporated into this filing by reference to Post-
Effective Amendment No. 53 filed August 30, 1995.
(ii) Executed Articles Supplementary (November 28, 1995)
incorporated into this filing by reference to Post-
Effective Amendment No. 55 filed August 28, 1996.
(iii) Executed Articles of Amendment (August 27, 1997)
incorporated into this filing by reference to Post-
Effective Amendment No. 56 filed August 29, 1997.
(b) By-Laws. Incorporated into this filing by reference to
Post-Effective Amendment No. 53 filed August 30, 1995.
(5) Investment Management Agreement. Investment Management
Agreement between Delaware Management Company, Inc. and the
Registrant dated April 3, 1995 incorporated into this filing
by reference to Post-Effective Amendment No. 53 filed August 30,
1995.
(6)(a) Distribution Agreement.
(i) Executed Distribution Agreement (April 3, 1995)
incorporated into this filing by reference to Post-
Effective Amendment No. 55 filed August 28, 1996.
(ii) Executed Amendment No. 1 to Distribution Agreement
(November 29, 1995) incorporated into this filing by
reference to Post-Effective Amendment No. 55 filed August
28, 1996.
(b) Administration and Service Agreement. Form of
Administration and Service Agreement (as amended November
1995) incorporated into this filing by reference to Post-
Effective Amendment No. 54 filed November 20, 1995.
(c) Dealer's Agreement. Dealer's Agreement (as amended November
1995) incorporated into this filing by reference to Post-
Effective Amendment No. 54 filed November 20, 1995.
(d) Mutual Fund Agreement for the Delaware Group of Funds (as
amended November 1995) (Module) incorporated into this filing
by reference to Post-Effective Amendment No. 55 filed August
28, 1996.
(7) Bonus, Profit Sharing, Pension Contracts.
(a) Amended and Restated Profit Sharing Plan (November 17,
1994) incorporated into this filing by reference to Post-
Effective Amendment No. 53 filed August 30, 1995.
(b) Amendment to Profit Sharing Plan (December 21, 1995)
(Module) incorporated into this filing by reference to Post-
Effective Amendment No. 55 filed August 28, 1996.
(8) Custodian Agreement.
(a) Executed Custodian Agreement (June 1, 1996) between the
Registrant and Bankers Trust Company incorporated into this
filing by reference to Post-Effective Amendment No. 56 filed
August 29, 1997.
(b) Form of Securities Lending Agreement (1996) between the
Registrant and Bankers Trust Company incorporated into this
filing by reference to Post-Effective Amendment No. 55 filed
August 28, 1996.
(9) Other Material Contracts.
(a) Shareholders Services Agreement (June 29, 1988)
incorporated into this filing by reference to Post-
Effective Amendment No. 55 filed August 28, 1996.
(b) Executed Delaware Group of Funds Fund Accounting
Agreement (August 19, 1996) between the Registrant and
Delaware Service Company, Inc. incorporated into this
filing by reference to Post-Effective Amendment No. 56
filed August 29, 1997.
(i) Executed Amendment No. 7 (October 14, 1997) to
Schedule A to Delaware Group of Funds Fund
Accounting Agreement attached as Exhibit.
(ii) Executed Amendment No. 8 (December 18, 1997) to
Schedule A to Delaware Group of Funds Fund
Accounting Agreement attached as Exhibit.
(iii) Executed Amendment No. 9 (March 31, 1998) to
Schedule A to Delaware Group of Funds Fund
Accounting Agreement attached as Exhibit.
(iv) Form of Amendment No. 10 (1998) to Schedule A to
Delaware Group of Funds Fund Accounting Agreement
attached as Exhibit.
(v) Form of Amendment No. 11 (1998) to Schedule A to
Delaware Group of Funds Fund Accounting Agreement
attached as Exhibit.
(vi) Form of Amendment No. 12 (1998) to Schedule A to
Delaware Group of Funds Fund Accounting Agreement
attached as Exhibit.
(10) Opinion of Counsel. Attached as Exhibit.
(11) Consent of Auditors. Attached as Exhibit.
(12-13) Inapplicable.
(14) Model Plans. Incorporated into this filing by reference
to Post-Effective Amendment No. 53 filed August 30, 1995.
**(15) Plans under Rule 12b-1.
(a) Plan under Rule 12b-1 for Class A (November 29, 1995)
incorporated into this filing by reference to Post-
Effective Amendment No. 55 filed August 28, 1996.
(b) Plan under Rule 12b-1 for Class B (November 29, 1995)
incorporated into this filing by reference to Post-
Effective Amendment No. 55 filed August 28, 1996.
(c) Plan under Rule 12b-1 for Class C (November 29, 1995)
incorporated into this filing by reference to Post-
Effective Amendment No. 55 filed August 28, 1996.
(16) Schedules of Computation for each Performance Quotation.
(a) Incorporated into this filing by reference to Post-
Effective Amendment No. 53 filed August 30, 1995 and
Post-Effective Amendment No. 56 filed August 29, 1997.
(17) Financial Data Schedules. Attached as Exhibit.
(18) Plan under Rule 18f-3.
(a) Plan under Rule 18f-3 (as amended May 1, 1996)
incorporated into this filing by reference to Post-
Effective Amendment No. 55 filed August 28, 1996.
(b) Form of Amended Appendix A (1997) to Plan under Rule
18f-3 incorporated into this filing by reference to
Post-Effective Amendment No. 56 filed August 29, 1997.
(19) Other: Directors' Power of Attorney. Attached as
Exhibit.
Item 25. Persons Controlled by or under Common Control with Registrant.
None.
** Relates only to Trend Fund A Class, Trend Fund B Class and Trend
Fund C Class.
Item 26. Number of Holders of Securities.
(1) (2)
Number of
Title of Class Record Holders
------------- -----------------
Delaware Group Equity Funds III, Inc.'s:
Trend Fund A Class
Common Stock Par Value 32,366 Accounts as of
$.50 Per Share July 31, 1998
Trend Fund B Class
Common Stock Par Value 7,420 Accounts as of
$.50 Per Share July 31, 1998
Trend Fund C Class
Common Stock Par Value 1,111 Accounts as of
$.50 Per Share July 31, 1998
Trend Fund Institutional Class
Common Stock Par Value 63 Accounts as of
$.50 Per Share July 31, 1998
Item 27. Indemnification. Incorporated into this filing by reference to
Post-Effective Amendment No. 31 filed June 27, 1983 and Article VII of the
By-Laws incorporated into this filing by reference to Post-Effective
Amendment No. 53 filed August 30, 1995.
Item 28. Business and Other Connections of Investment Adviser.
Delaware Management Company (the "Manager"), a series of Delaware
Management Business Trust, serves as investment manager to the Registrant
and also serves as investment manager or sub-adviser to certain of the
other funds in the Delaware Investments family (Delaware Group Equity
Funds I, Inc., Delaware Group Equity Funds II, Inc., Delaware Group Equity
Funds IV, Inc., Delaware Group Equity Funds V, Inc., Delaware Group
Government Fund, Inc., Delaware Group Income Funds, Inc., Delaware Group
Limited-Term Government Funds, Inc., Delaware Group Cash Reserve, Inc.,
Delaware Group Tax-Free Fund, Inc., Delaware Group State Tax-Free Income
Trust, Delaware Group Tax-Free Money Fund, Inc., Delaware Group Premium
Fund, Inc., Delaware Group Global & International Funds, Inc., Delaware
Pooled Trust, Inc., Delaware Group Adviser Funds, Inc., Delaware Group
Dividend and Income Fund, Inc., Delaware Group Global Dividend and Income
Fund, Inc., Delaware Group Foundation Funds, Inc., Voyageur Intermediate
Tax-Free Funds, Inc., Voyageur Tax-Free Funds, Inc., Voyageur Funds, Inc.,
Voyageur Insured Funds, Inc., Voyageur Investment Trust, Voyageur Investment
Trust II, Voyageur Mutual Funds, Inc., Voyageur Mutual Funds II, Inc.,
Voyageur Mutual Funds III, Inc., Voyageur Arizona Municipal Income Fund,
Inc., Voyageur Colorado Insured Municipal Income Fund, Inc., Voyageur
Florida Insured Municipal Income Fund, Voyageur Minnesota Municipal Fund,
Inc., Voyageur Minnesota Municipal Fund II, Inc. and Voyageur Minnesota
Municipal Fund III, Inc.). In addition, certain officers of the Manager
also serve as directors/trustees of the other funds in the Delaware
Investments family, and certain officers are also officers of these other
funds. A company indirectly owned by the Manager's indirect parent company
acts as principal underwriter to the mutual funds in the Delaware
Investments family (see Item 29 below) and another such company acts as
the shareholder services, dividend disbursing, accounting servicing and
transfer agent for all of the mutual funds in the Delaware Investments
family.
The following persons serving as officers of the Manager have held the
following positions during the past two years:
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
Wayne A. Stork Chairman of the Board, President, Chief Executive
Officer, Chief Investment Officer and Director/
Trustee of Delaware Management Company, Inc. and
Delaware Management Business Trust; Chairman of the
Board, President, Chief Executive Officer, Chief
Investment Officer of Delaware Management Company
(a series of Delaware Management Business Trust);
Chairman of the Board, President, Chief Executive
Officer and Director of DMH Corp., Delaware
Distributors, Inc. and Founders Holdings, Inc.;
Chairman, Chief Executive Officer and Chief Investment
Officer of Dealware Investment Advisers (a series of
Delaware Management Business Trust); Chairman, Chief
Executive Officer and Director of Delaware International
Holdings Ltd. and Delaware International Advisers Ltd.;
Chairman of the Board and Director of the Registrant, each
of the other funds in the Delaware Investments family,
Delaware Management Holdings, Inc., and Delaware Capital
Management, Inc.; Chairman of Delaware Distributors,
L.P.; President and Chief Executive Officer of Delvoy,
Inc.; and Director and/or Trustee of Delaware Service
Company, Inc. and Retirement Financial Services, Inc.
Richard G.
Unruh, Jr. Executive Vice President of the Registrant, each of the
other funds in the Delaware Investments family, Delaware
Management Holdings, Inc., Delaware Capital Management,
Inc. and Delaware Management Company (a series of Delaware
Management Business Trust); Executive Vice President and
Director/Trustee of Delaware Management Company, Inc. and
Delaware Management Business Trust; President of Delaware
Investment Advisers (a series of Delaware Management
Business Trust); and Director of Delaware International
Advisers Ltd.
Board of Directors, Chairman of Finance Committee,
Keystone Insurance Company since 1989, 2040 Market Street,
Philadelphia, PA; Board of Directors, Chairman of Finance
Committee, AAA Mid Atlantic, Inc. since 1989, 2040 Market
Street, Philadelphia, PA; Board of Directors, Metron, Inc.
since 1995, 11911 Freedom Drive, Reston, VA
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
Paul E. Suckow Executive Vice President/Chief Investment Officer,
Fixed Income of Delaware Management Company, Inc.,
Delaware Management Company (a series of Delaware
Management Business Trust), Delaware Investment Advisers
(a series of Delaware Management Business Trust), the
Registrant, each of the other funds in the Delaware
Investments family and Delaware Management Holdings,
Inc.; Executive Vice President and Director of
Founders Holdings, Inc.; Executive Vice President of
Delaware Capital Management, Inc. and Delaware Management
Business Trust; and Director of Founders CBO Corporation
Director, HYPPCO Finance Company Ltd.
David K. Downes Executive Vice President, Chief Operating Officer,
Chief Financial Officer and Director of Delaware
Management Company, Inc., DMH Corp, Delaware
Distributors, Inc., Founders Holdings, Inc. and
Delvoy, Inc.; Executive Vice President, Chief Financial
Officer, Chief Administrative Officer and Trustee of
Delaware Management Business Trust; Executive Vice
President, Chief Operating Officer and Chief Financial
Officer of the Registrant and each of the other funds in
the Delaware Investments family, Delaware Management
Holdings, Inc., Founders CBO Corporation, Delaware
Capital Management, Inc., Delaware Management Company
(a series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of Delaware
Management Business Trust) and Delaware Distributors,
L.P.; President, Chief Executive Officer, Chief
Financial Officer and Director of Delaware Service
Company, Inc.; President, Chief Operating Officer,
Chief Financial Officer and Director of Delaware
International Holdings Ltd.; Chairman, Chief Executive
Officer and Director of Retirement Financial
Services, Inc.; Chairman and Director of Delaware
Management Trust Company; Director of Delaware
International Advisers Ltd.; and Vice President of
Lincoln Funds Corporation
Chief Executive Officer and Director of Forewarn, Inc.
since 1993, 8 Clayton Place, Newtown Square, PA
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
George M.
Chamberlain, Jr. Senior Vice President, General Counsel, Secretary
and Director/Trustee of Delaware Management Company,
Inc., DMH Corp., Delaware Distributors, Inc., Delaware
Service Company, Inc., Founders Holdings, Inc.,
Delaware Capital Management, Inc., Retirement
Financial Services, Inc., Delvoy, Inc. and Delaware
Management Business Trust; Senior Vice President,
Secretary and General Counsel of the Registrant, each
of the other funds in the Delaware Investments family,
Delaware Distributors, L.P., Delaware Management Company
(a series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of Delaware
Management Business Trust) and Delaware Management
Holdings, Inc.; Senior Vice President and Director
of Delaware International Holdings Ltd.; Executive
Vice President, Secretary, General Counsel and
Director of Delaware Management Trust Company; Director
of Delaware International Advisers Ltd.; Secretary
of Lincoln Funds Corporation
Richard J.
Flannery Senior Vice President/Corporate and International
Affairs of the Registrant, each of the other funds
in the Delaware Investments family, Delaware
Management Holdings, Inc., DMH Corp., Delaware
Management Company, Inc., Delaware Distributors, Inc.,
Delaware Distributors, L.P., Delaware Management
Trust Company, Delaware Capital Management, Inc.,
Delaware Service Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series of
Delaware Management Business Trust) and Retirement
Financial Services, Inc.; Executive Vice
President/Corporate & International Affairs
and Director of Delaware International Holdings Ltd.;
Senior Vice President/Corporate and International
Affairs and Director of Founders Holdings, Inc. and
Delvoy, Inc.; Senior Vice President of Founders CBO
Corporation; and Director of Delaware International
Advisers Ltd.
Director, HYPPCO Finance Company Ltd.
Limited Partner of Stonewall Links, L.P. since 1991,
Bulltown Rd., Elverton, PA; Director and Member of
Executive Committee of Stonewall Links, Inc. since
1991, Bulltown Rd., Elverton, PA
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
Michael P. Bishof Senior Vice President and Treasurer of the
Registrant, each of the other funds in the Delaware
Investments family and Founders Holdings, Inc.;
Senior Vice President/Investment Accounting of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware Management
Business Trust) and Delaware Service Company, Inc.;
Senior Vice President and Treasurer/Manager,
Investment Accounting of Delaware Distributors, L.P.
and Delaware Investment Advisers (a series of Delaware
Management Business Trust); Senior Vice President
and Assistant Treasurer of Founders CBO Corporation;
and Senior Vice President and Manager of Investment
Accounting of Delaware International Holdings Ltd.
Joseph H. Hastings Senior Vice President/Corporate Controller and
Treasurer of Delaware Management Holdings, Inc.,
DMH Corp., Delaware Management Company, Inc.,
Delaware Distributors, Inc., Delaware Capital
Management, Inc., Delaware Distributors, L.P.,
Delaware Service Company, Inc., Delaware
International Holdings Ltd., Delaware Management
Company (a series of Delaware Management Business
Trust), Delvoy, Inc. and Delaware Management Business
Trust; Senior Vice President/Corporate Controller
of the Registrant, each of the other funds in the
Delaware Investments family and Founders Holdings,
Inc.; Executive Vice President, Chief Financial
Officer and Treasurer of Delaware Management Trust
Company; Chief Financial Officer and Treasurer of
Retirement Financial Services, Inc.; Senior Vice
President/ Assistant Treasurer of Founders CBO
Corporation; and Treasurer of Lincoln Funds
Corporation
Michael T. Taggart Vice President/Facilities Management and Administrative
Services of Delaware Management Company, Inc. and
Delaware Management Company (a series of Delaware
Management Business Trust)
Douglas L. Anderson Senior Vice President/Operations of Delaware
Management Company, Inc., Delaware Management Company
(a series of Delaware Management Business Trust),
Delaware Investment and Retirement Services, Inc. and
Delaware Service Company, Inc.; Senior Vice President/
Operations and Director of Delaware Management Trust
Company
James L. Shields Senior Vice President/Chief Information Officer
of Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware Management
Business Trust), Delaware Service Company, Inc. and
Retirement Financial Services, Inc.
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
Eric E. Miller Vice President, Assistant Secretary and Deputy
General Counsel of the Registrant and each of the
other funds in the Delaware Investments family,
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware Management
Business Trust), Delaware Investment Advisers (a
series of Delaware Management Business Trust),
Delaware Management Holdings, Inc., DMH Corp.,
Delaware Distributors, L.P., Delaware Distributors
Inc., Delaware Service Company, Inc., Delaware
Management Trust Company, Founders Holdings, Inc.,
Delaware Capital Management, Inc. and Retirement
Financial Services, Inc.; Assistant Secretary of
Delaware Management Business Trust; and Vice
President and Assistant Secretary of Delvoy, Inc.
Richelle S.
Maestro Vice President and Assistant Secretary of the
Registrant, each of the other funds in the Delaware
Investments family, Delaware Management Company,
Inc., Delaware Management Company (a series of
Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management
Business Trust), Delaware Management Holdings, Inc.,
Delaware Distributors, L.P., Delaware Distributors,
Inc., Delaware Service Company, Inc., DMH Corp.,
Delaware Management Trust Company, Delaware Capital
Management, Inc., Retirement Financial Services,
Inc., Founders Holdings, Inc. and Delvoy, Inc.;
Vice President and Secretary of Delaware
International Holdings Ltd.; and Secretary of
Founders CBO Corporation
Partner of Tri-R Associates since 1989, 10001
Sandmeyer Lane, Philadelphia, PA
Richard Salus1 Vice President/Assistant Controller of Delaware
Management Company, Inc., Delaware Management Company
(a series of Delaware Management Business Trust) and
Delaware Management Trust Company
Bruce A. Ulmer Vice President/Director of LNC Internal Audit of the
Registrant, each of the other funds in the Delaware
Investments family, Delaware Management Company, Inc.,
Delaware Management Company (a series of Delaware
Management Business Trust), Delaware Management
Holdings, Inc., DMH Corp., Delaware Management Trust
Company and Retirement Financial Services, Inc.; Vice
President/Director of Internal Audit of Delvoy, Inc.
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
Joel A. Ettinger2 Vice President/Taxation of the Registrant, each
of the other funds in the Delaware Investments family,
Delaware Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), Delaware Management Holdings, Inc., Founders
Holdings, Inc. and Founders CBO Corporation
Christopher Adams Vice President/Strategic Planning of Delaware
Management Company, Inc., Delaware Management Company
(a series of Delaware Management Business Trust) and
Delaware Service Company, Inc.
Susan L. Hanson Vice President/Strategic Planning of Delaware
Management Company, Inc., Delaware Management Company
(a series of Delaware Management Business Trust) and
Delaware Service Company, Inc.
Dennis J. Mara3 Vice President/Acquisitions of Delaware Management
Company, Inc. and Delaware Management Company (a
series of Delaware Management Business Trust)
Scott Metzger Vice President/Business Development of Delaware
Management Company, Inc., Delaware Management Company
(a series of Delaware Management Business Trust) and
Delaware Service Company, Inc.
Lisa O. Brinkley Vice President/Compliance of the Registrant, Delaware
Management Company, Inc., each of the other funds
in the Delaware Investments family, Delaware
Management Company (a series of Delaware Management
Business Trust), DMH Corp., Delaware Distributors,
L.P., Delaware Distributors, Inc., Delaware Service
Company, Inc., Delaware Management Trust Company,
Delaware Capital Management, Inc. and Retirement
Financial Services, Inc.; Vice President/Compliance
Officer of Delaware Management Business Trust; and
Vice President of Delvoy, Inc.
Mary Ellen Carrozza Vice President/Client Services of Delaware Management
Company, Inc., Delaware Management Company (a series
of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management
Business Trust) and the Registrant
Gerald T. Nichols Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series of
Delaware Management Business Trust), the Registrant,
20 other investment companies in the Delaware
Investments family; Vice President of Founders
Holdings, Inc.; and Treasurer, Assistant Secretary
and Director of Founders CBO Corporation
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
Paul A. Matlack Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series of
Delaware Management Business Trust), 20 investment
companies in the Delaware Investments family; Vice
President of Founders Holdings, Inc.; and President
and Director of Founders CBO Corporation
Gary A. Reed Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series of
Delaware Management Business Trust), 17 investment
companies in the Delaware Investments family and
Delaware Capital Management, Inc.
Patrick P. Coyne Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware Management
Business Trust), Delaware Investment Advisers (a
series of Delaware Management Business Trust), the
Registrant, 17 other investment companies in the
Delaware Investments family and Delaware Capital
Management, Inc.
Roger A. Early Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Company
(a series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of Delaware
Management Business Trust), the Registrant, 17 other
investment companies in the Delaware Investments
family
Mitchell L.
Conery4 Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Company
(a series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of Delaware
Management Business Trust), the Registrant, 17 other
investment companies in the Delaware Investments
family and Delaware Capital Management, Inc.
George H. Burwell Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Company
(a series of Delaware Management Business Trust) and
10 investment companies in the Delaware Investments
family
John B. Fields Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series of
Delaware Management Business Trust), ten investment
companies in the Delaware Investments family, Delaware
Capital Management, Inc. and Trustee of Delaware
Management Business Trust
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
Gerald S. Frey Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series of
Delaware Management Business Trust), the Registrant
and nine investment companies in the Delaware
Investments family
Christopher Beck5 Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series of
Delaware Management Business Trust), and 10
investment companies in the Delaware Investments
family
Elizabeth H.
Howell6 Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), the Registrant and seven other investment
companies in the Delaware Investments family
Andrew M.
McCullagh, Jr.7 Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust) the Registrant and eight other investment
companies in the Delaware Investments family
Babak Zenouzi Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust) and 13 investment companies in the Delaware
Investments family
J. Paul Dokas8 Vice President/Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Company
(a series of Delaware Management Business Trust),
and two investment companies in the Delaware
Investments family
Cynthia Isom Vice President/Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), the Registrant and 17 other investment
companies in the Delaware Investments family
Paul Grillo Vice President/Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series of
Delaware Management Business Trust), the Registrant
and 19 other investment companies in the Delaware
Investments family
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
Marshall T.
Bassett9 Vice President/Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Company
(a series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of Delaware
Management Business Trust), the Registrant and each
of the other funds in the Delaware Investments family
John A. Heffern10 Vice President/Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Company
(a series of Delaware Management Business Trust) and
each of the funds in the Delaware Investments family
Lori P. Wachs Vice President/Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Company
(a series of Delaware Management Business Trust) and
each of the funds in the Delaware Investments family
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
1 SENIOR MANAGER, Ernst & Young LLP prior to December 1996.
2 TAX PRINCIPAL, Ernst & Young LLP prior to April 1998.
3 CORPORATE CONTROLLER, IIS prior to July 1997.
4 INVESTMENT OFFICER, Travelers Insurance prior to January 1997.
5 SENIOR PORTFOLIO MANAGER, Pitcairn Trust Company prior to May 1997.
6 SENIOR PORTFOLIO MANAGER, Voyageur Fund Managers, Inc. prior to
May 1997.
7 SENIOR VICE PRESIDENT, SENIOR PORTFOLIO MANAGER, Voyageur Asset
Management LLC prior to May 1997.
8 DIRECTOR OF TRUST INVESTMENTS, Bell Atlantic Corporation prior to
February 1997.
9 VICE PRESIDENT, Morgan Stanley Asset Management prior to March 1997.
10 SENIOR VICE PRESIDENT, EQUITY RESEARCH, NatWest Securities
Corporation prior to March 1997.
Item 29. Principal Underwriters.
(a) Delaware Distributors, L.P. serves as principal underwriter
for all the mutual funds in the Delaware Investments family.
(b) Information with respect to each director, officer or
partner of principal underwriter:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------- ---------------------- ---------------------
<S> <C> <C>
Delaware Distributors, Inc. General Partner None
Delaware Investment
Advisers Limited Partner None
Delaware Capital
Management, Inc. Limited Partner None
Wayne A. Stork Chairman Chairman
Bruce D. Barton President and Chief Executive None
Officer
David K. Downes Executive Vice President, Executive Vice President,
Chief Operating Officer Chief Operating Officer and
and Chief Financial Officer Chief Financial Officer
George M. Chamberlain, Jr. Senior Vice President/ Senior Vice President/
Secretary/General Counsel Secretary/General Counsel
Richard J. Flannery Senior Vice President/Corporate Senior Vice President/
and International Affairs Corporate and International
Affairs
Joseph H. Hastings Senior Vice President/Corporate Senior Vice President/
Controller & Treasurer Corporate Controller
Terrence P. Cunningham Senior Vice President/Financial None
Institutions
Thomas E. Sawyer Senior Vice President/ None
National Sales Director
Mac McAuliffe Senior Vice President/Sales None
Manager, Western Division
J. Chris Meyer Senior Vice President/ None
Director Product Management
William M. Kimbrough Senior Vice President/ None
Wholesaler
Daniel J. Brooks Senior Vice President/ None
Wholesaler
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------- ---------------------- ---------------------
Bradley L. Kolstoe Senior Vice President/Western None
Division Sales Manager
Henry W. Orvin Senior Vice President/Eastern None
Division Sales Manager
Michael P. Bishof Senior Vice President and
Treasurer/ Manager, Investment Senior Vice
Accounting President/Treasurer
Eric E. Miller Vice President/ Vice President/Assistant
Assistant Secretary/ Secretary/Deputy General
Deputy General Counsel Counsel
Richelle S. Maestro Vice President/ Vice President/
Assistant Secretary Assistant Secretary
Lisa O. Brinkley Vice President/Compliance Vice President/Compliance
Daniel H. Carlson Vice President/Strategic None
Marketing
Diane M. Anderson Vice President/Plan Record None
Keeping and Administration
Anthony J. Scalia Vice President/Defined None
Contribution Sales,
SW Territory
Courtney S. West Vice President/ None
Defined Contribution
Sales, NE Territory
Denise F. Guerriere Vice President/Client Services None
Gordon E. Searles Vice President/Client Services None
Lori M. Burgess Vice President/Client Services None
Julia R. Vander Els Vice President/Participant None
Services
Jerome J. Alrutz Vice President/Retail Sales None
Scott Metzger Vice President/Business Vice President/Business
Development Development
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------- ---------------------- ---------------------
Larry Carr Vice President/Sales Manager None
Stephen C. Hall Vice President/ None
Institutional Sales
Gregory J. McMillan Vice President/ None
National Accounts
Holly W. Reimel Senior Vice President/Manager, None
National Accounts
Christopher H. Price Vice President/Manager, None
Insurance
Stephen J. DeAngelis Senior Vice President, National None
Director/Manager
Account Services
Andrew W. Whitaker Vice President/ None
Financial Institutions
Jessie Emery Vice President/Marketing None
Communications
Darryl S. Grayson Vice President, Broker/Dealer None
Internal Sales
Dinah J. Huntoon Vice President/Product None
Manager Equity
Soohee Lee Vice President/Fixed Income None
Product Management
Michael J. Woods Vice President/UIT Product None
Management
Ellen M. Krott Vice President/Marketing None
Dale L. Kurtz Vice President/ None
Marketing Support
David P. Anderson Vice President/Wholesaler None
Lee D. Beck Vice President/Wholesaler None
Gabriella Bercze Vice President/Wholesaler None
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------- ---------------------- ---------------------
Larry D. Birdwell Vice President/Wholesaler None
Terrence L. Bussard Vice President/Wholesaler None
William S. Carroll Vice President/Wholesaler None
William L. Castetter Vice President/Wholesaler None
Thomas J. Chadie Vice President/Wholesaler None
Joseph Gallagher Vice President/Wholesaler None
Thomas C. Gallagher Vice President/Wholesaler None
Douglas R. Glennon Vice President/Wholesaler None
Ronald A. Haimowitz Vice President/Wholesaler None
Edward J. Hecker Vice President/Wholesaler None
Christopher L. Johnston Vice President/Wholesaler None
Michael P. Jordan Vice President/Wholesaler None
Jeffrey A. Keinert Vice President/Wholesaler None
Thomas P. Kennett Vice President/Wholesaler None
Theodore T. Malone Vice President/Wholesaler None
Debbie A. Marler Vice President/Wholesaler None
Nathan W. Medin Vice President/Wholesaler None
Roger J. Miller Vice President/Wholesaler None
Andrew Morris Vice President/Wholesaler None
Patrick L. Murphy Vice President/Wholesaler None
Scott Naughton Vice President/Wholesaler None
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------- ---------------------- ---------------------
Stephen C. Nell Vice President/Wholesaler None
Julia A. Nye Vice President/Wholesaler None
Joseph T. Owczarek Vice President/Wholesaler None
Mary Ellen Pernice-Fadden Vice President/Wholesaler None
Mark A. Pletts Vice President/Wholesaler None
Philip G. Rickards Vice President/Wholesaler None
Laura E. Roman Vice President/Wholesaler None
Linda Schulz Vice President/Wholesaler None
Edward B. Sheridan Vice President/Wholesaler None
Robert E. Stansbury Vice President/Wholesaler None
Julia A. Stanton Vice President/Wholesaler None
Larry D. Stone Vice President/Wholesaler None
Edward J. Wagner Vice President/Wholesaler None
Wayne W. Wagner Vice President/Wholesaler None
John A. Wells Vice President/Marketing None
Technology
Scott Whitehouse Vice President/Wholesaler None
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
</TABLE>
(c) Inapplicable.
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.
(c) The Registrant hereby undertakes to furnish each person
to whom a prospectus is delivered with a copy of the
Registrant's latest annual report to shareholders, upon
request and without charge.
(d) Not Applicable.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, this Registrant 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,
Commonwealth of Pennsylvania on this 24th day of August, 1998.
DELAWARE GROUP EQUITY FUNDS III, INC.
By /s/ Wayne A. Stork
------------------
Wayne A. Stork
Chairman
<TABLE>
<CAPTION>
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities
and on the dates indicated:
Signature Title Date
- ------------------ -------------- ----------
<S> <C> <C>
/s/ Wayne A. Stork Chairman of the Board and Director August 24, 1998
- ------------------
Wayne A. Stork
Executive Vice President/Chief Operating
Officer/Chief Financial Officer
/s/ David K. Downes (Principal Financial Officer and Principal August 24, 1998
- ------------------
David K. Downes Accounting Officer)
/s/Walter P. Babich * Director August 24, 1998
- ------------------
Walter P. Babich
/s/John H. Durham * Director August 24, 1998
- ------------------
John H. Durham
/s/Anthony D. Knerr * Director August 24, 1998
- ------------------
Anthony D. Knerr
/s/Ann R. Leven * Director August 24, 1998
- ------------------
Ann R. Leven
/s/W. Thacher
- ------------------
Longstreth * Director August 24, 1998
- ------------------
W. Thacher
Longstreth
/s/Thomas F. Madison * Director August 24, 1998
- ------------------
Thomas F. Madison
/s/Jeffrey J. Nick * Director August 24, 1998
- ------------------
Jeffrey J. Nick
/s/Charles E. Peck * Director August 24, 1998
- ------------------
Charles E. Peck
*By /s/ Wayne A. Stork
-------------------
Wayne A. Stork
as Attorney-in-Fact for
each of the persons indicated
</TABLE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Exhibits
to
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
INDEX TO EXHIBITS
Exhibit No. Exhibit
- ---------- ------------
EX-99.B9BI Amendment No. 7 (October 14, 1997) to Schedule A to
Delaware Group of Funds Fund Accounting Agreement
EX-99.B9BII Amendment No. 8 (December 18, 1997) to Schedule A to
Delaware Group of Funds Fund Accounting Agreement
EX-99.B9BIII Amendment No. 9 (March 31, 1998) to Schedule A to
Delaware Group of Funds Fund Accounting Agreement
EX-99.B9BIV Form of Amendment No. 10 (1998) to Schedule A to
Delaware Group of Funds Fund Accounting Agreement
EX-99.B9BV Form of Amendment No. 11 (1998) to Schedule A to
Delaware Group of Funds Fund Accounting Agreement
EX-99.B9BVI Form of Amendment No. 12 (1998) to Schedule A to
Delaware Group of Funds Fund Accounting Agreement
EX-99.B10 Opinion of Counsel
EX-99.B11 Consent of Auditors
EX-27 Financial Data Schedules
EX-99.B19B Power of Attorney
EX-99.B9BI
Exhibit 24 (b)(9)(b)(i)
AMENDMENT NO.7
to
SCHEDULE A
of
DELAWARE GROUP OF FUNDS*
FUND ACCOUNTING AGREEMENT
Delaware Group Adviser Funds, Inc.
Corporate Income Fund (liquidated September 19, 1997)
Enterprise Fund (liquidated September 19, 1997)
Federal Bond Fund (liquidated September 19, 1997)
New Pacific Fund
U.S. Growth Fund
Overseas Equity Fund
Delaware Group Cash Reserve, Inc.
Delaware Group Equity Funds I, Inc. (formerly Delaware)
Delaware Fund
Devon Fund
Delaware Group Equity Funds II, Inc. (formerly Decatur)
Blue Chip Fund (New)
Decatur Income Fund
Decatur Total Return Fund
Quantum Fund (New)
Delaware Group Equity Funds III, Inc. (formerly Trend)
Trend Fund
Delaware Group Equity Funds IV, Inc. (formerly DelCap)
Capital Appreciation Fund (New)
DelCap Fund
Delaware Group Equity Funds V, Inc. (formerly Value)
Value Fund
Retirement Income Fund (New)
Delaware Group Government Fund, Inc.
Government Income Series (U.S. Government Fund )
- ------------------
*Except as otherwise noted, all Portfolios included on this
Schedule A are Existing Portfolios for purposes of the compensation
described on Schedule B to that Fund Accounting Agreement between
Delaware Service Company, Inc. and the Delaware Group of Funds dated as
of August 19, 1996 ("Agreement"). All portfolios added to this Schedule
A by amendment executed by a Company on behalf of such Portfolio hereof
shall be a New Portfolio for purposes of Schedule B to the Agreement.
Delaware Group Global & International Funds, Inc.
Emerging Markets Fund (New)
Global Assets Fund
Global Bond Fund
International Equity Fund
Global Equity Fund (New)
International Small Cap Fund (New)
Delaware Group Income Funds, Inc. (formerly Delchester)
Delchester Fund
High-Yield Opportunities Fund (New)
Strategic Income Fund (New)
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund
U. S. Government Money Fund
Delaware Pooled Trust, Inc.
The Aggressive Growth Portfolio
The Defensive Equity Portfolio
The Defensive Equity Small/Mid-Cap Portfolio (New)
The Defensive Equity Utility Portfolio (deregistered
January 14, 1997)
The Emerging Markets Portfolio (New)
The Fixed Income Portfolio
The Global Fixed Income Portfolio
The High-Yield Bond Portfolio (New)
The International Equity Portfolio
The International Fixed Income Portfolio (New)
The Labor Select International Equity Portfolio
The Limited-Term Maturity Portfolio (New)
The Real Estate Investment Trust Portfolio
The Global Equity Portfolio (New)
The Real Estate Investment Trust Portfolio II (New)
Delaware Group Premium Fund, Inc.
Capital Reserves Series
Cash Reserve Series
Convertible Securities Series (New)
Decatur Total Return Series
Delaware Series
Delchester Series
Devon Series (New)
Emerging Markets Series (New)
DelCap Series
Global Bond Series (New)
International Equity Series
Quantum Series (New)
Strategic Income Series (New)
Trend Series
Value Series
Delaware Group Tax-Free Fund, Inc.
Tax-Free Insured Fund
Tax-Free USA Fund
Tax-Free USA Intermediate Fund
Delaware Group Tax-Free Money Fund, Inc.
Delaware Group State Tax-Free Income Trust (formerly DMCT Tax-Free
Income Trust-Pennsylvania)
Tax-Free Pennsylvania Fund
Tax-Free New Jersey Fund (New)
Tax-Free Ohio Fund (New)
Voyageur Funds, Inc.
Voyageur U.S. Government Securities Fund (New)
Voyageur Insured Funds, Inc.
Arizona Insured Tax Free Fund (New)
Colorado Insured Fund (New)
Minnesota Insured Fund (New)
National Insured Tax Free Fund (New)
Voyageur Intermediate Tax Free Funds, Inc.
Arizona Limited Term Tax Free Fund (New)
California Limited Term Tax Free Fund (New)
Colorado Limited Term Tax Free Fund (New)
Minnesota Limited Term Tax Free Fund (New)
National Limited Term Tax Free Fund (New)
Voyageur Investment Trust
California Insured Tax Free Fund (New)
Florida Insured Tax Free Fund (New)
Florida Tax Free Fund (New)
Kansas Tax Free Fund (New)
Missouri Insured Tax Free Fund (New)
New Mexico Tax Free Fund (New)
Oregon Insured Tax Free Fund (New)
Utah Tax Free Fund (New)
Washington Insured Tax Free Fund (New)
Voyageur Investment Trust II
Florida Limited Term Tax Free Fund (New)
Voyageur Mutual Funds, Inc.
Arizona Tax Free Fund (New)
California Tax Free Fund (New)
Iowa Tax Free Fund (New)
Idaho Tax Free Fund (New)
Minnesota High Yield Municipal Bond Fund (New)
National High Yield Municipal Bond Fund (New)
National Tax Free Fund (New)
New York Tax Free Fund (New)
Wisconsin Tax Free Fund (New)
Voyageur Mutual Funds II, Inc.
Colorado Tax Free Fund (New)
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund (New)
Growth Stock Fund (New)
International Equity Fund (New)
Tax Efficient Equity Fund (New)
Voyageur Tax Free Funds, Inc.
Minnesota Tax Free Fund (New)
North Dakota Tax Free Fund (New)
Dated as of October 14, 1997
DELAWARE SERVICE COMPANY, INC.
/s/ David K. Downes
By: -----------------------------------------------------
David K. Downes
President, Chief Executive Officer and Chief Financial Officer
DELAWARE GROUP ADVISER FUNDS, INC.
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE GROUP EQUITY FUNDS II, INC.
DELAWARE GROUP EQUITY FUNDS III, INC.
DELAWARE GROUP EQUITY FUNDS IV, INC.
DELAWARE GROUP EQUITY FUNDS V, INC.
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
DELAWARE GROUP INCOME FUNDS, INC.
DELAWARE GROUP LIMITED-TERM GOVERNMENT FUNDS, INC.
DELAWARE POOLED TRUST, INC.
DELAWARE GROUP PREMIUM FUND, INC.
DELAWARE GROUP STATE TAX-FREE INCOME TRUST
DELAWARE GROUP TAX-FREE FUND, INC.
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
VOYAGEUR FUNDS, INC.
VOYAGEUR INSURED FUNDS, INC.
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
VOYAGEUR INVESTMENT TRUST
VOYAGEUR INVESTMENT TRUST II
VOYAGEUR MUTUAL FUNDS, INC.
VOYAGEUR MUTUAL FUNDS II, INC.
VOYAGEUR MUTUAL FUNDS III, INC.
/s/Wayne A. Stork
By: -----------------------------------------------------
Wayne A. Stork
Chairman
EX-99.B9BII
Exhibit 24(b)(9)(b)(ii)
AMENDMENT NO. 8
to
SCHEDULE A
of
DELAWARE GROUP OF FUNDS*
FUND ACCOUNTING AGREEMENT
Delaware Group Adviser Funds, Inc.
Corporate Income Fund (liquidated September 19, 1997)
Enterprise Fund (liquidated September 19, 1997)
Federal Bond Fund (liquidated September 19, 1997)
New Pacific Fund
U.S. Growth Fund
Overseas Equity Fund (formerly World Growth Fund)
Delaware Group Cash Reserve, Inc.
Delaware Group Equity Funds I, Inc. (formerly Delaware)
Delaware Fund
Devon Fund
Delaware Group Equity Funds II, Inc. (formerly Decatur)
Blue Chip Fund (New)
Decatur Income Fund
Decatur Total Return Fund
Quantum Fund (New)
Delaware Group Equity Funds III, Inc. (formerly Trend)
Trend Fund
Delaware Group Equity Funds IV, Inc. (formerly DelCap)
Capital Appreciation Fund (New)
DelCap Fund
Delaware Group Equity Funds V, Inc. (formerly Value)
Small Cap Value Fund (formerly Value Fund)
Retirement Income Fund (New)
- ------------------
*Except as otherwise noted, all Portfolios included on this
Schedule A are Existing Portfolios for purposes of the compensation
described on Schedule B to that Fund Accounting Agreement between
Delaware Service Company, Inc. and the Delaware Group of Funds dated as
of August 19, 1996 ("Agreement"). All portfolios added to this Schedule
A by amendment executed by a Company on behalf of such Portfolio hereof
shall be a New Portfolio for purposes of Schedule B to the Agreement.
Delaware Group Foundation Funds (New)
Balanced Portfolio (New)
Growth Portfolio (New)
Income Portfolio (New)
Delaware Group Government Fund, Inc.
Government Income Series (U.S. Government Fund)
Delaware Group Global & International Funds, Inc.
Emerging Markets Fund (New)
Global Assets Fund
Global Bond Fund
International Equity Fund
Global Equity Fund (New)
International Small Cap Fund (New)
Delaware Group Income Funds, Inc. (formerly Delchester)
Delchester Fund
High-Yield Opportunities Fund (New)
Strategic Income Fund (New)
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund
U. S. Government Money Fund
Delaware Pooled Trust, Inc.
The Aggressive Growth Portfolio
The Large-Cap Value Equity Portfolio
(formerly The Defensive Equity Portfolio)
The Small/Mid-Cap Value Equity Portfolio (New)
(formerly The Defensive Equity Small/Mid-Cap Portfolio)
The Defensive Equity Utility Portfolio (deregistered January
14, 1997)
The Emerging Markets Portfolio (New)
The Intermediate Fixed Income Portfolio
(formerly The Fixed Income Portfolio)
The Global Fixed Income Portfolio
The High-Yield Bond Portfolio (New)
The International Equity Portfolio
The International Fixed Income Portfolio (New)
The Labor Select International Equity Portfolio
The Limited-Term Maturity Portfolio (New)
The Real Estate Investment Trust Portfolio
The Global Equity Portfolio (New)
The Real Estate Investment Trust Portfolio II (New)
The Diversified Core Fixed Income Portfolio (New)
The Aggregate Fixed Income Portfolio (New)
Delaware Group Premium Fund, Inc.
Capital Reserves Series
Cash Reserve Series
Convertible Securities Series (New)
Decatur Total Return Series
Delaware Series
Delchester Series
Devon Series (New)
Emerging Markets Series (New)
DelCap Series
Global Bond Series (New)
International Equity Series
Quantum Series (New)
Strategic Income Series (New)
Trend Series
Value Series
Delaware Group Tax-Free Fund, Inc.
Tax-Free Insured Fund
Tax-Free USA Fund
Tax-Free USA Intermediate Fund
Delaware Group Tax-Free Money Fund, Inc.
Delaware Group State Tax-Free Income Trust (formerly DMCT Tax-Free
Income Trust-Pennsylvania)
Tax-Free Pennsylvania Fund
Tax-Free New Jersey Fund (New)
Tax-Free Ohio Fund (New)
Voyageur Funds, Inc.
Voyageur U.S. Government Securities Fund (New)
Voyageur Insured Funds, Inc.
Arizona Insured Tax Free Fund (New)
Colorado Insured Fund (New)
Minnesota Insured Fund (New)
National Insured Tax Free Fund (New)
Voyageur Intermediate Tax Free Funds, Inc.
Arizona Limited Term Tax Free Fund (New)
California Limited Term Tax Free Fund (New)
Colorado Limited Term Tax Free Fund (New)
Minnesota Limited Term Tax Free Fund (New)
National Limited Term Tax Free Fund (New)
Voyageur Investment Trust
California Insured Tax Free Fund (New)
Florida Insured Tax Free Fund (New)
Florida Tax Free Fund (New)
Kansas Tax Free Fund (New)
Missouri Insured Tax Free Fund (New)
New Mexico Tax Free Fund (New)
Oregon Insured Tax Free Fund (New)
Utah Tax Free Fund (New)
Washington Insured Tax Free Fund (New)
Voyageur Investment Trust II
Florida Limited Term Tax Free Fund (New)
Voyageur Mutual Funds, Inc.
Arizona Tax Free Fund (New)
California Tax Free Fund (New)
Iowa Tax Free Fund (New)
Idaho Tax Free Fund (New)
Minnesota High Yield Municipal Bond Fund (New)
National High Yield Municipal Bond Fund (New)
National Tax Free Fund (New)
New York Tax Free Fund (New)
Wisconsin Tax Free Fund (New)
Voyageur Mutual Funds II, Inc.
Colorado Tax Free Fund (New)
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund (New)
Growth Stock Fund (New)
International Equity Fund (New)
Tax Efficient Equity Fund (New)
Voyageur Tax Free Funds, Inc.
Minnesota Tax Free Fund (New)
North Dakota Tax Free Fund (New)
Dated as of December 18, 1997
DELAWARE SERVICE COMPANY, INC.
/s/David K. Downes
By: -----------------------------------------------------
David K. Downes
President, Chief Executive Officer and Chief Financial Officer
DELAWARE GROUP ADVISER FUNDS, INC.
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE GROUP EQUITY FUNDS II, INC.
DELAWARE GROUP EQUITY FUNDS III, INC.
DELAWARE GROUP EQUITY FUNDS IV, INC.
DELAWARE GROUP EQUITY FUNDS V, INC.
DELAWARE GROUP FOUNDATION FUNDS
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
DELAWARE GROUP INCOME FUNDS, INC.
DELAWARE GROUP LIMITED-TERM GOVERNMENT FUNDS, INC.
DELAWARE POOLED TRUST, INC.
DELAWARE GROUP PREMIUM FUND, INC.
DELAWARE GROUP STATE TAX-FREE INCOME TRUST
DELAWARE GROUP TAX-FREE FUND, INC.
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
VOYAGEUR FUNDS, INC.
VOYAGEUR INSURED FUNDS, INC.
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
VOYAGEUR INVESTMENT TRUST
VOYAGEUR INVESTMENT TRUST II
VOYAGEUR MUTUAL FUNDS, INC.
VOYAGEUR MUTUAL FUNDS II, INC.
VOYAGEUR MUTUAL FUNDS III, INC.
/s/ Wayne A. Stork
By: -----------------------------------------------------
Wayne A. Stork
Chairman
EX-99.B9BIII
Exhibit 24(b)(9)(b)(iii)
AMENDMENT NO. 9
to
SCHEDULE A
of
DELAWARE GROUP OF FUNDS*
FUND ACCOUNTING AGREEMENT
Delaware Group Adviser Funds, Inc.
Corporate Income Fund (liquidated September 19, 1997)
Enterprise Fund (liquidated September 19, 1997)
Federal Bond Fund (liquidated September 19, 1997)
New Pacific Fund
U.S. Growth Fund
Overseas Equity Fund (formerly World Growth Fund)
Delaware Group Cash Reserve, Inc.
Delaware Group Equity Funds I, Inc. (formerly Delaware)
Delaware Fund
Devon Fund
Delaware Group Equity Funds II, Inc. (formerly Decatur)
Blue Chip Fund (New)
Decatur Income Fund
Decatur Total Return Fund
Quantum Fund (New)
Delaware Group Equity Funds III, Inc. (formerly Trend)
Trend Fund
Delaware Group Equity Funds IV, Inc. (formerly DelCap)
Capital Appreciation Fund (New)
DelCap Fund
Delaware Group Equity Funds V, Inc. (formerly Value)
Small Cap Value Fund (formerly Value Fund)
Retirement Income Fund (New)
- ------------------
*Except as otherwise noted, all Portfolios included on this
Schedule A are Existing Portfolios for purposes of the compensation
described on Schedule B to that Fund Accounting Agreement between
Delaware Service Company, Inc. and the Delaware Group of Funds dated as
of August 19, 1996 ("Agreement"). All portfolios added to this Schedule
A by amendment executed by a Company on behalf of such Portfolio hereof
shall be a New Portfolio for purposes of Schedule B to the Agreement.
Delaware Group Foundation Funds (New)
Balanced Portfolio (New)
Growth Portfolio (New)
Income Portfolio (New)
Delaware Group Government Fund, Inc.
Government Income Series (U.S. Government Fund)
Delaware Group Global & International Funds, Inc.
Emerging Markets Fund (New)
Global Assets Fund
Global Bond Fund
International Equity Fund
Global Equity Fund (New)
International Small Cap Fund (New)
Delaware Group Income Funds, Inc. (formerly Delchester)
Delchester Fund
High-Yield Opportunities Fund (New)
Strategic Income Fund (New)
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund
U. S. Government Money Fund
Delaware Pooled Trust, Inc.
The Aggressive Growth Portfolio
The Large-Cap Value Equity Portfolio
(formerly The Defensive Equity Portfolio)
The Small/Mid-Cap Value Equity Portfolio (New)
(formerly The Defensive Equity Small/Mid-Cap Portfolio)
The Defensive Equity Utility Portfolio (deregistered
January 14, 1997)
The Emerging Markets Portfolio (New)
The Intermediate Fixed Income Portfolio
(formerly The Fixed Income Portfolio)
The Global Fixed Income Portfolio
The High-Yield Bond Portfolio (New)
The International Equity Portfolio
The International Fixed Income Portfolio (New)
The Labor Select International Equity Portfolio
The Limited-Term Maturity Portfolio (New)
The Real Estate Investment Trust Portfolio
The Global Equity Portfolio (New)
The Real Estate Investment Trust Portfolio II (New)
The Diversified Core Fixed Income Portfolio (New)
The Aggregate Fixed Income Portfolio (New)
Delaware Group Premium Fund, Inc.
Capital Reserves Series
Cash Reserve Series
Convertible Securities Series (New)
Decatur Total Return Series
Delaware Series
Delchester Series
Devon Series (New)
Emerging Markets Series (New)
DelCap Series
Global Bond Series (New)
International Equity Series
Quantum Series (New)
REIT Series (New)
Strategic Income Series (New)
Trend Series
Value Series
Delaware Group Tax-Free Fund, Inc.
Tax-Free Insured Fund
Tax-Free USA Fund
Tax-Free USA Intermediate Fund
Delaware Group Tax-Free Money Fund, Inc.
Delaware Group State Tax-Free Income Trust (formerly DMCT Tax-Free
Income Trust-Pennsylvania)
Tax-Free Pennsylvania Fund
Tax-Free New Jersey Fund (New)
Tax-Free Ohio Fund (New)
Voyageur Funds, Inc.
Voyageur U.S. Government Securities Fund (New)
Voyageur Insured Funds, Inc.
Arizona Insured Tax Free Fund (New)
Colorado Insured Fund (New)
Minnesota Insured Fund (New)
National Insured Tax Free Fund (New)
Voyageur Intermediate Tax Free Funds, Inc.
Arizona Limited Term Tax Free Fund (New)
California Limited Term Tax Free Fund (New)
Colorado Limited Term Tax Free Fund (New)
Minnesota Limited Term Tax Free Fund (New)
National Limited Term Tax Free Fund (New)
Voyageur Investment Trust
California Insured Tax Free Fund (New)
Florida Insured Tax Free Fund (New)
Florida Tax Free Fund (New)
Kansas Tax Free Fund (New)
Missouri Insured Tax Free Fund (New)
New Mexico Tax Free Fund (New)
Oregon Insured Tax Free Fund (New)
Utah Tax Free Fund (New)
Washington Insured Tax Free Fund (New)
Voyageur Investment Trust II
Florida Limited Term Tax Free Fund (New)
Voyageur Mutual Funds, Inc.
Arizona Tax Free Fund (New)
California Tax Free Fund (New)
Iowa Tax Free Fund (New)
Idaho Tax Free Fund (New)
Minnesota High Yield Municipal Bond Fund (New)
National High Yield Municipal Bond Fund (New)
National Tax Free Fund (New)
New York Tax Free Fund (New)
Wisconsin Tax Free Fund (New)
Voyageur Mutual Funds II, Inc.
Colorado Tax Free Fund (New)
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund (New)
Growth Stock Fund (New)
International Equity Fund (New)
Tax Efficient Equity Fund (New)
Voyageur Tax Free Funds, Inc.
Minnesota Tax Free Fund (New)
North Dakota Tax Free Fund (New)
Dated as of March 31, 1998
DELAWARE SERVICE COMPANY, INC.
/s/David K. Downes
By: -----------------------------------------------------
David K. Downes
President, Chief Executive Officer and Chief Financial Officer
DELAWARE GROUP ADVISER FUNDS, INC.
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE GROUP EQUITY FUNDS II, INC.
DELAWARE GROUP EQUITY FUNDS III, INC.
DELAWARE GROUP EQUITY FUNDS IV, INC.
DELAWARE GROUP EQUITY FUNDS V, INC.
DELAWARE GROUP FOUNDATION FUNDS
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
DELAWARE GROUP INCOME FUNDS, INC.
DELAWARE GROUP LIMITED-TERM GOVERNMENT FUNDS, INC.
DELAWARE POOLED TRUST, INC.
DELAWARE GROUP PREMIUM FUND, INC.
DELAWARE GROUP STATE TAX-FREE INCOME TRUST
DELAWARE GROUP TAX-FREE FUND, INC.
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
VOYAGEUR FUNDS, INC.
VOYAGEUR INSURED FUNDS, INC.
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
VOYAGEUR INVESTMENT TRUST
VOYAGEUR INVESTMENT TRUST II
VOYAGEUR MUTUAL FUNDS, INC.
VOYAGEUR MUTUAL FUNDS II, INC.
VOYAGEUR MUTUAL FUNDS III, INC.
/s/ Wayne A. Stork
By: -----------------------------------------------------
Wayne A. Stork
Chairman
EX-99.B9BIV
Exhibit 24(b)(9)(b)(iv)
AMENDMENT NO. 10
to
SCHEDULE A
of
DELAWARE GROUP OF FUNDS*
FUND ACCOUNTING AGREEMENT
Delaware Group Adviser Funds, Inc.
Corporate Income Fund (liquidated September 19, 1997)
Enterprise Fund (liquidated September 19, 1997)
Federal Bond Fund (liquidated September 19, 1997)
New Pacific Fund
U.S. Growth Fund
Overseas Equity Fund (formerly World Growth Fund)
Delaware Group Cash Reserve, Inc.
Delaware Group Equity Funds I, Inc. (formerly Delaware)
Delaware Fund
Devon Fund
Delaware Group Equity Funds II, Inc. (formerly Decatur)
Blue Chip Fund (New)
Decatur Income Fund
Decatur Total Return Fund
Social Awareness Fund (formerly Quantum Fund) (New)
Delaware Group Equity Funds III, Inc. (formerly Trend)
Trend Fund
Delaware Group Equity Funds IV, Inc. (formerly DelCap)
Capital Appreciation Fund (New)
DelCap Fund
Delaware Group Equity Funds V, Inc. (formerly Value)
Small Cap Value Fund (formerly Value Fund)
Retirement Income Fund (New)
- ------------------
*Except as otherwise noted, all Portfolios included on this
Schedule A are Existing Portfolios for purposes of the compensation
described on Schedule B to that Fund Accounting Agreement between
Delaware Service Company, Inc. and the Delaware Group of Funds dated as
of August 19, 1996 ("Agreement"). All portfolios added to this Schedule
A by amendment executed by a Company on behalf of such Portfolio hereof
shall be a New Portfolio for purposes of Schedule B to the Agreement.
Delaware Group Foundation Funds (New)
Balanced Portfolio (New)
Growth Portfolio (New)
Income Portfolio (New)
The Asset Allocation Portfolio (New)
Delaware Group Government Fund, Inc.
Government Income Series (U.S. Government Fund)
Delaware Group Global & International Funds, Inc.
Emerging Markets Fund (New)
Global Assets Fund
Global Bond Fund
International Equity Fund
Global Equity Fund (New)
International Small Cap Fund (New)
Delaware Group Income Funds, Inc. (formerly Delchester)
Delchester Fund
High-Yield Opportunities Fund (New)
Strategic Income Fund (New)
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund
U. S. Government Money Fund
Delaware Pooled Trust, Inc.
The Aggressive Growth Portfolio
The Large-Cap Value Equity Portfolio
(formerly The Defensive Equity Portfolio)
The Small/Mid-Cap Value Equity Portfolio (New)
(formerly The Defensive Equity Small/Mid-Cap Portfolio)
The Defensive Equity Utility Portfolio (deregistered
January 14, 1997)
The Emerging Markets Portfolio (New)
The Intermediate Fixed Income Portfolio
(formerly The Fixed Income Portfolio)
The Global Fixed Income Portfolio
The High-Yield Bond Portfolio (New)
The International Equity Portfolio
The International Fixed Income Portfolio (New)
The Labor Select International Equity Portfolio
The Limited-Term Maturity Portfolio (New)
The Real Estate Investment Trust Portfolio
The Global Equity Portfolio (New)
The Real Estate Investment Trust Portfolio II (New)
The Diversified Core Fixed Income Portfolio (New)
The Aggregate Fixed Income Portfolio (New)
The Small-Cap Growth Equity Portfolio (New)
The Growth and Income Portfolio (New)
Delaware Group Premium Fund, Inc.
Capital Reserves Series
Cash Reserve Series
Convertible Securities Series (New)
Decatur Total Return Series
Delaware Series
Delchester Series
Devon Series (New)
Emerging Markets Series (New)
DelCap Series
Global Bond Series (New)
International Equity Series
Social Awareness Series (formerly Quantum Series) (New)
REIT Series (New)
Strategic Income Series (New)
Trend Series
Small Cap Value Series (formerly Value Series)
Delaware Group Tax-Free Fund, Inc.
Tax-Free Insured Fund
Tax-Free USA Fund
Tax-Free USA Intermediate Fund
Delaware Group Tax-Free Money Fund, Inc.
Delaware Group State Tax-Free Income Trust (formerly DMCT Tax-Free
Income Trust-Pennsylvania)
Tax-Free Pennsylvania Fund
Tax-Free New Jersey Fund (New)
Tax-Free Ohio Fund (New)
Voyageur Funds, Inc.
Voyageur US Government Securities Fund (New)
Voyageur Insured Funds, Inc.
Arizona Insured Tax Free Fund (New)
Colorado Insured Fund (New)
Minnesota Insured Fund (New)
National Insured Tax Free Fund (New)
Voyageur Intermediate Tax Free Funds, Inc.
Arizona Limited Term Tax Free Fund (New)
California Limited Term Tax Free Fund (New)
Colorado Limited Term Tax Free Fund (New)
Minnesota Limited Term Tax Free Fund (New)
National Limited Term Tax Free Fund (New)
Voyageur Investment Trust
California Insured Tax Free Fund (New)
Florida Insured Tax Free Fund (New)
Florida Tax Free Fund (New)
Kansas Tax Free Fund (New)
Missouri Insured Tax Free Fund (New)
New Mexico Tax Free Fund (New)
Oregon Insured Tax Free Fund (New)
Utah Tax Free Fund (New)
Washington Insured Tax Free Fund (New)
Voyageur Investment Trust II
Florida Limited Term Tax Free Fund (New)
Voyageur Mutual Funds, Inc.
Arizona Tax Free Fund (New)
California Tax Free Fund (New)
Iowa Tax Free Fund (New)
Idaho Tax Free Fund (New)
Minnesota High Yield Municipal Bond Fund (New)
National High Yield Municipal Bond Fund (New)
National Tax Free Fund (New)
New York Tax Free Fund (New)
Wisconsin Tax Free Fund (New)
Voyageur Mutual Funds II, Inc.
Colorado Tax Free Fund (New)
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund (New)
Growth Stock Fund (New)
International Equity Fund (New)
Tax Efficient Equity Fund (New)
Voyageur Tax Free Funds, Inc.
Minnesota Tax Free Fund (New)
North Dakota Tax Free Fund (New)
Dated as of August , 1998
DELAWARE SERVICE COMPANY, INC.
By: -----------------------------------------------------
David K. Downes
President, Chief Executive Officer and Chief Financial Officer
DELAWARE GROUP ADVISER FUNDS, INC.
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE GROUP EQUITY FUNDS II, INC.
DELAWARE GROUP EQUITY FUNDS III, INC.
DELAWARE GROUP EQUITY FUNDS IV, INC.
DELAWARE GROUP EQUITY FUNDS V, INC.
DELAWARE GROUP FOUNDATION FUNDS
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
DELAWARE GROUP INCOME FUNDS, INC.
DELAWARE GROUP LIMITED-TERM GOVERNMENT FUNDS, INC.
DELAWARE POOLED TRUST, INC.
DELAWARE GROUP PREMIUM FUND, INC.
DELAWARE GROUP STATE TAX-FREE INCOME TRUST
DELAWARE GROUP TAX-FREE FUND, INC.
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
VOYAGEUR FUNDS, INC.
VOYAGEUR INSURED FUNDS, INC.
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
VOYAGEUR INVESTMENT TRUST
VOYAGEUR INVESTMENT TRUST II
VOYAGEUR MUTUAL FUNDS, INC.
VOYAGEUR MUTUAL FUNDS II, INC.
VOYAGEUR MUTUAL FUNDS III, INC.
By: -----------------------------------------------------
Wayne A. Stork
Chairman
EX-99.B9BV
Exhibit 24(b)(9)(b)(v)
AMENDMENT NO. 11
to
SCHEDULE A
of
DELAWARE GROUP OF FUNDS*
FUND ACCOUNTING AGREEMENT
Delaware Group Adviser Funds, Inc.
Corporate Income Fund (liquidated September 19, 1997)
Enterprise Fund (liquidated September 19, 1997)
Federal Bond Fund (liquidated September 19, 1997)
New Pacific Fund
U.S. Growth Fund
Overseas Equity Fund (formerly World Growth Fund)
Delaware Group Cash Reserve, Inc.
Delaware Group Equity Funds I, Inc. (formerly Delaware)
Delaware Fund
Devon Fund
Delaware Group Equity Funds II, Inc. (formerly Decatur)
Blue Chip Fund (New)
Decatur Income Fund
Decatur Total Return Fund
Social Awareness Fund (formerly Quantum Fund) (New)
Diversified Value Fund (New)
Delaware Group Equity Funds III, Inc. (formerly Trend)
Trend Fund
Delaware Group Equity Funds IV, Inc. (formerly DelCap)
Capital Appreciation Fund (New)
DelCap Fund
Delaware Group Equity Funds V, Inc. (formerly Value)
Small Cap Value Fund (formerly Value Fund)
Retirement Income Fund (New)
- ------------------
*Except as otherwise noted, all Portfolios included on this
Schedule A are Existing Portfolios for purposes of the compensation
described on Schedule B to that Fund Accounting Agreement between
Delaware Service Company, Inc. and the Delaware Group of Funds dated as
of August 19, 1996 ("Agreement"). All portfolios added to this Schedule
A by amendment executed by a Company on behalf of such Portfolio hereof
shall be a New Portfolio for purposes of Schedule B to the Agreement.
Delaware Group Foundation Funds (New)
Balanced Portfolio (New)
Growth Portfolio (New)
Income Portfolio (New)
The Asset Allocation Portfolio (New)
Delaware Group Government Fund, Inc.
Government Income Series (U.S. Government Fund)
Delaware Group Global & International Funds, Inc.
Emerging Markets Fund (New)
Global Assets Fund
Global Bond Fund
International Equity Fund
Global Equity Fund (New)
International Small Cap Fund (New)
Delaware Group Income Funds, Inc. (formerly Delchester)
Delchester Fund
High-Yield Opportunities Fund (New)
Strategic Income Fund (New)
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund
U. S. Government Money Fund
Delaware Pooled Trust, Inc.
The Aggressive Growth Portfolio
The Large-Cap Value Equity Portfolio
(formerly The Defensive Equity Portfolio)
The Small/Mid-Cap Value Equity Portfolio (New)
(formerly The Defensive Equity Small/Mid-Cap Portfolio)
The Defensive Equity Utility Portfolio (deregistered
January 14, 1997)
The Emerging Markets Portfolio (New)
The Intermediate Fixed Income Portfolio
(formerly The Fixed Income Portfolio)
The Global Fixed Income Portfolio
The High-Yield Bond Portfolio (New)
The International Equity Portfolio
The International Fixed Income Portfolio (New)
The Labor Select International Equity Portfolio
The Limited-Term Maturity Portfolio (New)
The Real Estate Investment Trust Portfolio
The Global Equity Portfolio (New)
The Real Estate Investment Trust Portfolio II (New)
The Diversified Core Fixed Income Portfolio (New)
The Aggregate Fixed Income Portfolio (New)
The Small-Cap Growth Equity Portfolio (New)
The Growth and Income Portfolio (New)
Delaware Group Premium Fund, Inc.
Capital Reserves Series
Cash Reserve Series
Convertible Securities Series (New)
Decatur Total Return Series
Delaware Series
Delchester Series
Devon Series (New)
Emerging Markets Series (New)
DelCap Series
Global Bond Series (New)
International Equity Series
Social Awareness Series (formerly Quantum Series) (New)
REIT Series (New)
Strategic Income Series (New)
Trend Series
Small Cap Value Series (formerly Value Series)
Delaware Group Tax-Free Fund, Inc.
Tax-Free Insured Fund
Tax-Free USA Fund
Tax-Free USA Intermediate Fund
Delaware Group Tax-Free Money Fund, Inc.
Delaware Group State Tax-Free Income Trust (formerly DMCT Tax-Free
Income Trust-Pennsylvania)
Tax-Free Pennsylvania Fund
Tax-Free New Jersey Fund (New)
Tax-Free Ohio Fund (New)
Voyageur Funds, Inc.
Voyageur US Government Securities Fund (New)
Voyageur Insured Funds, Inc.
Arizona Insured Tax Free Fund (New)
Colorado Insured Fund (New)
Minnesota Insured Fund (New)
National Insured Tax Free Fund (New)
Voyageur Intermediate Tax Free Funds, Inc.
Arizona Limited Term Tax Free Fund (New)
California Limited Term Tax Free Fund (New)
Colorado Limited Term Tax Free Fund (New)
Minnesota Limited Term Tax Free Fund (New)
National Limited Term Tax Free Fund (New)
Voyageur Investment Trust
California Insured Tax Free Fund (New)
Florida Insured Tax Free Fund (New)
Florida Tax Free Fund (New)
Kansas Tax Free Fund (New)
Missouri Insured Tax Free Fund (New)
New Mexico Tax Free Fund (New)
Oregon Insured Tax Free Fund (New)
Utah Tax Free Fund (New)
Washington Insured Tax Free Fund (New)
Voyageur Investment Trust II
Florida Limited Term Tax Free Fund (New)
Voyageur Mutual Funds, Inc.
Arizona Tax Free Fund (New)
California Tax Free Fund (New)
Iowa Tax Free Fund (New)
Idaho Tax Free Fund (New)
Minnesota High Yield Municipal Bond Fund (New)
National High Yield Municipal Bond Fund (New)
National Tax Free Fund (New)
New York Tax Free Fund (New)
Wisconsin Tax Free Fund (New)
Voyageur Mutual Funds II, Inc.
Colorado Tax Free Fund (New)
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund (New)
Growth Stock Fund (New)
International Equity Fund (New)
Tax Efficient Equity Fund (New)
Voyageur Tax Free Funds, Inc.
Minnesota Tax Free Fund (New)
North Dakota Tax Free Fund (New)
Dated as of August , 1998
DELAWARE SERVICE COMPANY, INC.
By: -----------------------------------------------------
David K. Downes
President, Chief Executive Officer and Chief Financial Officer
DELAWARE GROUP ADVISER FUNDS, INC.
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE GROUP EQUITY FUNDS II, INC.
DELAWARE GROUP EQUITY FUNDS III, INC.
DELAWARE GROUP EQUITY FUNDS IV, INC.
DELAWARE GROUP EQUITY FUNDS V, INC.
DELAWARE GROUP FOUNDATION FUNDS
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
DELAWARE GROUP INCOME FUNDS, INC.
DELAWARE GROUP LIMITED-TERM GOVERNMENT FUNDS, INC.
DELAWARE POOLED TRUST, INC.
DELAWARE GROUP PREMIUM FUND, INC.
DELAWARE GROUP STATE TAX-FREE INCOME TRUST
DELAWARE GROUP TAX-FREE FUND, INC.
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
VOYAGEUR FUNDS, INC.
VOYAGEUR INSURED FUNDS, INC.
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
VOYAGEUR INVESTMENT TRUST
VOYAGEUR INVESTMENT TRUST II
VOYAGEUR MUTUAL FUNDS, INC.
VOYAGEUR MUTUAL FUNDS II, INC.
VOYAGEUR MUTUAL FUNDS III, INC.
By: -----------------------------------------------------
Wayne A. Stork
Chairman
EX-99.B9BVI
Exhibit 24(b)(9)(b)(vi)
AMENDMENT NO. 12
to
SCHEDULE A
of
DELAWARE GROUP OF FUNDS*
FUND ACCOUNTING AGREEMENT
Delaware Group Adviser Funds, Inc.
Corporate Income Fund (liquidated September 19, 1997)
Enterprise Fund (liquidated September 19, 1997)
Federal Bond Fund (liquidated September 19, 1997)
New Pacific Fund
U.S. Growth Fund
Overseas Equity Fund (formerly World Growth Fund)
Delaware Group Cash Reserve, Inc.
Delaware Group Equity Funds I, Inc. (formerly Delaware)
Delaware Fund
Devon Fund
Delaware Group Equity Funds II, Inc. (formerly Decatur)
Blue Chip Fund (New)
Decatur Income Fund
Decatur Total Return Fund
Social Awareness Fund (formerly Quantum Fund) (New)
Diversified Value Fund (New)
Delaware Group Equity Funds III, Inc. (formerly Trend)
Trend Fund
Delaware Group Equity Funds IV, Inc. (formerly DelCap)
Capital Appreciation Fund (New)
DelCap Fund
Delaware Group Equity Funds V, Inc. (formerly Value)
Small Cap Value Fund (formerly Value Fund)
Retirement Income Fund (New)
- ------------------
*Except as otherwise noted, all Portfolios included on this
Schedule A are Existing Portfolios for purposes of the compensation
described on Schedule B to that Fund Accounting Agreement between
Delaware Service Company, Inc. and the Delaware Group of Funds dated as
of August 19, 1996 ("Agreement"). All portfolios added to this Schedule
A by amendment executed by a Company on behalf of such Portfolio hereof
shall be a New Portfolio for purposes of Schedule B to the Agreement.
Delaware Group Foundation Funds (New)
Balanced Portfolio (New)
Growth Portfolio (New)
Income Portfolio (New)
The Asset Allocation Portfolio (New)
Delaware Group Government Fund, Inc.
Government Income Series (U.S. Government Fund)
Delaware Group Global & International Funds, Inc.
Emerging Markets Fund (New)
Global Assets Fund
Global Bond Fund
International Equity Fund
Global Equity Fund (New)
International Small Cap Fund (New)
Delaware Group Income Funds, Inc. (formerly Delchester)
Delchester Fund
High-Yield Opportunities Fund (New)
Strategic Income Fund (New)
Corporate Bond Fund (New)
Extended Duration Bond Fund (New)
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund
U. S. Government Money Fund
Delaware Pooled Trust, Inc.
The Aggressive Growth Portfolio
The Large-Cap Value Equity Portfolio
(formerly The Defensive Equity Portfolio)
The Small/Mid-Cap Value Equity Portfolio (New)
(formerly The Defensive Equity Small/Mid-Cap Portfolio)
The Defensive Equity Utility Portfolio (deregistered
January 14, 1997)
The Emerging Markets Portfolio (New)
The Intermediate Fixed Income Portfolio
(formerly The Fixed Income Portfolio)
The Global Fixed Income Portfolio
The High-Yield Bond Portfolio (New)
The International Equity Portfolio
The International Fixed Income Portfolio (New)
The Labor Select International Equity Portfolio
The Limited-Term Maturity Portfolio (New)
The Real Estate Investment Trust Portfolio
The Global Equity Portfolio (New)
The Real Estate Investment Trust Portfolio II (New)
The Diversified Core Fixed Income Portfolio (New)
The Aggregate Fixed Income Portfolio (New)
The Small-Cap Growth Equity Portfolio (New)
The Growth and Income Portfolio (New)
Delaware Group Premium Fund, Inc.
Capital Reserves Series
Cash Reserve Series
Convertible Securities Series (New)
Decatur Total Return Series
Delaware Series
Delchester Series
Devon Series (New)
Emerging Markets Series (New)
DelCap Series
Global Bond Series (New)
International Equity Series
Social Awareness Series (formerly Quantum Series) (New)
REIT Series (New)
Strategic Income Series (New)
Trend Series
Small Cap Value Series (formerly Value Series)
Delaware Group Tax-Free Fund, Inc.
Tax-Free Insured Fund
Tax-Free USA Fund
Tax-Free USA Intermediate Fund
Delaware Group Tax-Free Money Fund, Inc.
Delaware Group State Tax-Free Income Trust (formerly DMCT Tax-Free
Income Trust-Pennsylvania)
Tax-Free Pennsylvania Fund
Tax-Free New Jersey Fund (New)
Tax-Free Ohio Fund (New)
Voyageur Funds, Inc.
Voyageur US Government Securities Fund (New)
Voyageur Insured Funds, Inc.
Arizona Insured Tax Free Fund (New)
Colorado Insured Fund (New)
Minnesota Insured Fund (New)
National Insured Tax Free Fund (New)
Voyageur Intermediate Tax Free Funds, Inc.
Arizona Limited Term Tax Free Fund (New)
California Limited Term Tax Free Fund (New)
Colorado Limited Term Tax Free Fund (New)
Minnesota Limited Term Tax Free Fund (New)
National Limited Term Tax Free Fund (New)
Voyageur Investment Trust
California Insured Tax Free Fund (New)
Florida Insured Tax Free Fund (New)
Florida Tax Free Fund (New)
Kansas Tax Free Fund (New)
Missouri Insured Tax Free Fund (New)
New Mexico Tax Free Fund (New)
Oregon Insured Tax Free Fund (New)
Utah Tax Free Fund (New)
Washington Insured Tax Free Fund (New)
Voyageur Investment Trust II
Florida Limited Term Tax Free Fund (New)
Voyageur Mutual Funds, Inc.
Arizona Tax Free Fund (New)
California Tax Free Fund (New)
Iowa Tax Free Fund (New)
Idaho Tax Free Fund (New)
Minnesota High Yield Municipal Bond Fund (New)
National High Yield Municipal Bond Fund (New)
National Tax Free Fund (New)
New York Tax Free Fund (New)
Wisconsin Tax Free Fund (New)
Voyageur Mutual Funds II, Inc.
Colorado Tax Free Fund (New)
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund (New)
Growth Stock Fund (New)
International Equity Fund (New)
Tax Efficient Equity Fund (New)
Voyageur Tax Free Funds, Inc.
Minnesota Tax Free Fund (New)
North Dakota Tax Free Fund (New)
Dated as of September , 1998
DELAWARE SERVICE COMPANY, INC.
By: -----------------------------------------------------
David K. Downes
President, Chief Executive Officer and Chief Financial Officer
DELAWARE GROUP ADVISER FUNDS, INC.
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE GROUP EQUITY FUNDS II, INC.
DELAWARE GROUP EQUITY FUNDS III, INC.
DELAWARE GROUP EQUITY FUNDS IV, INC.
DELAWARE GROUP EQUITY FUNDS V, INC.
DELAWARE GROUP FOUNDATION FUNDS
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
DELAWARE GROUP INCOME FUNDS, INC.
DELAWARE GROUP LIMITED-TERM GOVERNMENT FUNDS, INC.
DELAWARE POOLED TRUST, INC.
DELAWARE GROUP PREMIUM FUND, INC.
DELAWARE GROUP STATE TAX-FREE INCOME TRUST
DELAWARE GROUP TAX-FREE FUND, INC.
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
VOYAGEUR FUNDS, INC.
VOYAGEUR INSURED FUNDS, INC.
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
VOYAGEUR INVESTMENT TRUST
VOYAGEUR INVESTMENT TRUST II
VOYAGEUR MUTUAL FUNDS, INC.
VOYAGEUR MUTUAL FUNDS II, INC.
VOYAGEUR MUTUAL FUNDS III, INC.
By: -----------------------------------------------------
Wayne A. Stork
Chairman
EX-99.B10
Exhibit 24(b)(10)
Law Offices
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, Pennsylvania 19103-7098
(215) 564-8000
Direct Dial: (215) 564-8115
August 27, 1998
Delaware Group Equity Funds III, Inc.
1818 Market Street
Philadelphia, PA 19103
Re: Legal Opinion-Securities Act of 1933
Ladies and Gentlemen:
We have examined the Articles of Incorporation, as amended and
supplemented (the "Articles") of Delaware Group Equity Funds III,
Inc. (the "Fund"), a series corporation organized under the laws of the
State of Maryland on March 4, 1983, the By-Laws of the Fund, and the
various pertinent corporate proceedings we deem material. We have also
examined the Notification of Registration and the Registration
Statements filed under the Investment Company Act of 1940 (the
"Investment Company Act") and the Securities Act of 1933 (the
"Securities Act"), all as amended to date, as well as other items we
deem material to this opinion.
The Fund is authorized by the Articles to issue five hundred million
(500,000,000) shares of common stock with a par value of $0.50 per
share. The Articles designate, or authorize the Board to designate one
or more series or classes of shares of the Fund, and allocate, or
authorize the Board to allocate, shares to each such series or class.
Pursuant to the authority contained in the Articles, the Fund issues
four classes of shares of a single series designated as the Trend Fund.
The Articles also empower the Board to designate any additional series
or classes and allocate shares to such series or classes.
The Fund has filed with the U.S. Securities and Exchange Commission, a
registration statement under the Securities Act, which registration
statement is deemed to register an indefinite number of shares of the
Fund pursuant to the provisions of Rule 24f-2 under the Investment
Company Act. You have further advised us that the Fund has filed, and
each year hereafter will timely file, a Notice pursuant to Rule 24f-2
perfecting the registration of the shares sold by the Fund during each
fiscal year during which such registration of an indefinite number of
shares remains in effect.
You have also informed us that the shares of the Fund have been, and
will continue to be, sold in accordance with the Fund's usual method of
distributing its registered shares, under which prospectuses are made
available for delivery to offerees and purchasers of such shares in
accordance with Section 5(b) of the Securities Act.
Based upon the foregoing information and examination, so long as the
Fund remains a valid and subsisting entity under the laws of the State
of Maryland, and the registration of an indefinite number of shares of
the Fund remains effective, the authorized shares of the Fund when
issued for the consideration set by the Board of Directors pursuant to
the Articles, and subject to compliance with Rule 24f-2, will be legally
outstanding, fully-paid, and non-assessable shares, and the holders of
such shares will have all the rights provided for with respect to such
holding by the Articles and the laws of the State of Maryland.
We hereby consent to the use of this opinion, in lieu of any other, as
an exhibit to the Registration Statement of the Fund, and any amendments
thereto, covering the registration of the shares of the Fund under the
Securities Act and the applications, registration statements or notice
filings, and amendments thereto, filed in accordance with the securities
laws of the several states in which shares of the Fund are offered, and
we further consent to reference in the registration statement of the
Fund to the fact that this opinion concerning the legality of the issue
has been rendered by us.
Very truly yours,
STRADLEY, RONON, STEVENS & YOUNG, LLP
BY: /S/BRUCE G. LETO
Bruce G. Leto
EX-99.B11
Exhibit 24(b)(11)
Consent of Ernst & Young LLP, Independent Auditors
We consent to the references to our firm under the captions "Financial
Highlights" in the Prospectuses and "Financial Statements" in the
Statement of Additional Information and to the incorporation by
reference in this Post-Effective Amendment No. 57 to the Registration
Statement (Form N-1A) (No. 2-28871) of Delaware Group Equity Funds III,
Inc. of our report dated July 31, 1998, included in the 1998 Annual
Report to shareholders.
/s/ Ernst & Young LLP
---------------------
Ernst & Young LLP
Philadelphia, Pennsylvania
August 25, 1998
Report of Independent Auditors
To the Shareholders and Board of Directors
Delaware Group Equity Funds III, Inc. - Trend Fund
We have audited the accompanying statement of net assets of Delaware
Group Equity Funds III, Inc. - Trend Fund (the "Fund") as of June 30,
1998, and the related statement of operations for the year then ended,
the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the periods
indicated therein. 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 and financial highlights. Our
procedures included confirmation of securities owned as of June 30,
1998, 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 Equity Funds III, Inc. - Trend Fund
at June 30, 1998, 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 its financial highlights for each of the periods
indicated therein, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
---------------------
Ernst & Young LLP
July 31, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000027937
<NAME> DELAWARE GROUP EQUITY FUNDS III, INC.
<SERIES>
<NUMBER> 01
<NAME> TREND FUND A CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 452,838,274
<INVESTMENTS-AT-VALUE> 612,438,685
<RECEIVABLES> 23,111,728
<ASSETS-OTHER> 950
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 635,551,363
<PAYABLE-FOR-SECURITIES> 9,459,120
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,936,004
<TOTAL-LIABILITIES> 19,395,124
<SENIOR-EQUITY> 16,649,038
<PAID-IN-CAPITAL-COMMON> 365,352,515
<SHARES-COMMON-STOCK> 25,287,456
<SHARES-COMMON-PRIOR> 25,594,010
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 74,554,275
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 159,600,411
<NET-ASSETS> 469,152,495
<DIVIDEND-INCOME> 1,981,548
<INTEREST-INCOME> 2,065,957
<OTHER-INCOME> 0
<EXPENSES-NET> 9,072,266
<NET-INVESTMENT-INCOME> (5,024,761)
<REALIZED-GAINS-CURRENT> 114,261,594
<APPREC-INCREASE-CURRENT> 38,430,492
<NET-CHANGE-FROM-OPS> 147,667,325
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 52,530,445
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 85,939,344
<NUMBER-OF-SHARES-REDEEMED> 89,203,065
<SHARES-REINVESTED> 2,957,167
<NET-CHANGE-IN-ASSETS> 1,003,947
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 39,133,444
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 267,378
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 9,072,266
<AVERAGE-NET-ASSETS> 468,013,168
<PER-SHARE-NAV-BEGIN> 16.730
<PER-SHARE-NII> (0.126)
<PER-SHARE-GAIN-APPREC> 3.886
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 1.940
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 18.550
<EXPENSE-RATIO> 1.340
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000027937
<NAME> DELAWARE GROUP EQUITY FUNDS III, INC.
<SERIES>
<NUMBER> 02
<NAME> TREND FUND B CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 452,838,274
<INVESTMENTS-AT-VALUE> 612,438,685
<RECEIVABLES> 23,111,728
<ASSETS-OTHER> 950
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 635,551,363
<PAYABLE-FOR-SECURITIES> 9,459,120
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,936,004
<TOTAL-LIABILITIES> 19,395,124
<SENIOR-EQUITY> 16,649,038
<PAID-IN-CAPITAL-COMMON> 365,352,515
<SHARES-COMMON-STOCK> 3,978,495
<SHARES-COMMON-PRIOR> 3,362,432
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 74,554,275
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 159,600,411
<NET-ASSETS> 71,469,806
<DIVIDEND-INCOME> 1,981,548
<INTEREST-INCOME> 2,065,957
<OTHER-INCOME> 0
<EXPENSES-NET> 9,072,266
<NET-INVESTMENT-INCOME> (5,024,761)
<REALIZED-GAINS-CURRENT> 114,261,594
<APPREC-INCREASE-CURRENT> 38,430,492
<NET-CHANGE-FROM-OPS> 147,667,325
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 7,025,698
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,005,828
<NUMBER-OF-SHARES-REDEEMED> 792,064
<SHARES-REINVESTED> 402,299
<NET-CHANGE-IN-ASSETS> 1,003,947
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 39,133,444
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 267,378
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 9,072,266
<AVERAGE-NET-ASSETS> 66,853,114
<PER-SHARE-NAV-BEGIN> 16.370
<PER-SHARE-NII> (0.252)
<PER-SHARE-GAIN-APPREC> 3.782
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 1.940
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 17.960
<EXPENSE-RATIO> 2.090
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000027937
<NAME> DELAWARE GROUP EQUITY FUNDS III, INC.
<SERIES>
<NUMBER> 03
<NAME> TREND FUND C CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 452,838,274
<INVESTMENTS-AT-VALUE> 612,438,685
<RECEIVABLES> 23,111,728
<ASSETS-OTHER> 950
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 635,551,363
<PAYABLE-FOR-SECURITIES> 9,459,120
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,936,004
<TOTAL-LIABILITIES> 19,395,124
<SENIOR-EQUITY> 16,649,038
<PAID-IN-CAPITAL-COMMON> 365,352,515
<SHARES-COMMON-STOCK> 784,688
<SHARES-COMMON-PRIOR> 693,944
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 74,554,275
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 159,600,411
<NET-ASSETS> 14,258,996
<DIVIDEND-INCOME> 1,981,548
<INTEREST-INCOME> 2,065,957
<OTHER-INCOME> 0
<EXPENSES-NET> 9,072,266
<NET-INVESTMENT-INCOME> (5,024,761)
<REALIZED-GAINS-CURRENT> 114,261,594
<APPREC-INCREASE-CURRENT> 38,430,492
<NET-CHANGE-FROM-OPS> 147,667,325
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 1,412,695
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 636,820
<NUMBER-OF-SHARES-REDEEMED> 629,680
<SHARES-REINVESTED> 83,604
<NET-CHANGE-IN-ASSETS> 1,003,947
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 39,133,444
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 267,378
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 9,072,266
<AVERAGE-NET-ASSETS> 13,354,698
<PER-SHARE-NAV-BEGIN> 16.540
<PER-SHARE-NII> (0.255)
<PER-SHARE-GAIN-APPREC> 3.825
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 1.940
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 18.170
<EXPENSE-RATIO> 2.090
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000027937
<NAME> DELAWARE GROUP EQUITY FUNDS III, INC.
<SERIES>
<NUMBER> 04
<NAME> TREND FUND INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 452,838,274
<INVESTMENTS-AT-VALUE> 612,438,685
<RECEIVABLES> 23,111,728
<ASSETS-OTHER> 950
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 635,551,363
<PAYABLE-FOR-SECURITIES> 9,459,120
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,936,004
<TOTAL-LIABILITIES> 19,395,124
<SENIOR-EQUITY> 16,649,038
<PAID-IN-CAPITAL-COMMON> 365,352,515
<SHARES-COMMON-STOCK> 3,247,438
<SHARES-COMMON-PRIOR> 7,097,441
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 74,554,275
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 159,600,411
<NET-ASSETS> 61,274,942
<DIVIDEND-INCOME> 1,981,548
<INTEREST-INCOME> 2,065,957
<OTHER-INCOME> 0
<EXPENSES-NET> 9,072,266
<NET-INVESTMENT-INCOME> (5,024,761)
<REALIZED-GAINS-CURRENT> 114,261,594
<APPREC-INCREASE-CURRENT> 38,430,492
<NET-CHANGE-FROM-OPS> 147,667,325
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 12,847,164
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,600,325
<NUMBER-OF-SHARES-REDEEMED> 9,205,605
<SHARES-REINVESTED> 755,277
<NET-CHANGE-IN-ASSETS> 1,003,947
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 39,133,444
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 267,378
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 9,072,266
<AVERAGE-NET-ASSETS> 100,711,846
<PER-SHARE-NAV-BEGIN> 16.950
<PER-SHARE-NII> (0.082)
<PER-SHARE-GAIN-APPREC> 3.942
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 1.940
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 18.870
<EXPENSE-RATIO> 1.090
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
EX-99.B19
Exhibit 24(b)(19)
POWER OF ATTORNEY
Each of the undersigned, a member of the Boards of
Directors/Trustees of the Delaware Group Funds listed on Exhibit A to
this Power of Attorney, hereby constitutes and appoints on behalf of
each of the Funds listed on Exhibit A, Wayne A. Stork, Jeffrey J. Nick
and Walter P. Babich and any one of them acting singly, his true and
lawful attorneys-in-fact, in his name, place, and stead, to execute and
cause to be filed with the Securities and Exchange Commission and other
federal or state government agency or body, such registration
statements, and any and all amendments thereto as either of such
designees may deem to be appropriate under the Securities Act of 1933,
as amended, the Investment Company Act of 1940, as amended, and all
other applicable federal and state securities laws.
IN WITNESS WHEREOF, the undersigned have executed this instrument
as of this 18th day of December, 1997.
/s/Walter P. Babich /s/Thomas F. Madison
- ------------------------------ ------------------------------
Walter P. Babich Thomas F. Madison
/s/Anthony D. Knerr /s/Jeffrey J. Nick
- ------------------------------ ------------------------------
Anthony D. Knerr Jeffrey J. Nick
/s/Ann R. Leven /s/Charles E. Peck
- ------------------------------ ------------------------------
Ann R. Leven Charles E. Peck
/s/W. Thacher Longstreth /s/Wayne A. Stork
- ------------------------------ ------------------------------
W. Thacher Longstreth Wayne A. Stork
POWER OF ATTORNEY
EXHIBIT A
DELAWARE GROUP FUNDS
DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE GROUP EQUITY FUNDS II, INC.
DELAWARE GROUP EQUITY FUNDS III, INC.
DELAWARE GROUP EQUITY FUNDS IV, INC.
DELAWARE GROUP EQUITY FUNDS V, INC.
DELAWARE GROUP INCOME FUNDS, INC.
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP LIMITED-TERM GOVERNMENT FUNDS, INC.
DELAWARE GROUP TAX-FREE FUND, INC.
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
DELAWARE GROUP ADVISER FUNDS, INC.
DELAWARE POOLED TRUST, INC.
DELAWARE GROUP PREMIUM FUND, INC.
DELAWARE GROUP STATE TAX-FREE INCOME TRUST
DELAWARE GROUP DIVIDEND AND INCOME FUND, INC.
DELAWARE GROUP GLOBAL DIVIDEND AND INCOME FUND, INC.
DELAWARE GROUP FOUNDATION FUNDS
VOYAGEUR FUNDS, INC.
VOYAGEUR INSURED FUNDS, INC.
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
VOYAGEUR INVESTMENT TRUST
VOYAGEUR INVESTMENT TRUST II
VOYAGEUR MUTUAL FUNDS, INC.
VOYAGEUR MUTUAL FUNDS II, INC.
VOYAGEUR MUTUAL FUNDS III, INC.
VOYAGEUR TAX FREE FUNDS, INC.
VOYAGEUR ARIZONA MUNICIPAL INCOME FUND, INC.
VOYAGEUR COLORADO INSURED MUNICIPAL INCOME FUND, INC.
VOYAGEUR FLORIDA INSURED MUNICIPAL INCOME FUND
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND, INC.
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND II, INC.
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND III, INC.
POWER OF ATTORNEY
The undersigned, a member of the Boards of Directors/Trustees of the
Delaware Group Funds listed on Exhibit A to this Power of Attorney,
hereby constitutes and appoints on behalf of each of the Funds listed on
Exhibit A, Wayne A. Stork, Jeffrey J. Nick and Walter P. Babich and any
one of them acting singly, his true and lawful attorneys-in-fact, in his
name, place, and stead, to execute and cause to be filed with the
Securities and Exchange Commission and other federal or state government
agency or body, such registration statements, and any and all amendments
thereto as either of such designees may deem to be appropriate under the
Securities Act of 1933, as amended, the Investment Company Act of 1940,
as amended, and all other applicable federal and state securities laws.
IN WITNESS WHEREOF, the undersigned have executed this instrument as of
this 16th day of April, 1998.
/s/ John H. Durham
- ------------------------------
John H. Durham
POWER OF ATTORNEY
EXHIBIT A
DELAWARE GROUP FUNDS
DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE GROUP EQUITY FUNDS II, INC.
DELAWARE GROUP EQUITY FUNDS III, INC.
DELAWARE GROUP EQUITY FUNDS IV, INC.
DELAWARE GROUP EQUITY FUNDS V, INC.
DELAWARE GROUP INCOME FUNDS, INC.
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP LIMITED-TERM GOVERNMENT FUNDS, INC.
DELAWARE GROUP TAX-FREE FUND, INC.
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
DELAWARE GROUP ADVISER FUNDS, INC.
DELAWARE POOLED TRUST, INC.
DELAWARE GROUP PREMIUM FUND, INC.
DELAWARE GROUP STATE TAX-FREE INCOME TRUST
DELAWARE GROUP DIVIDEND AND INCOME FUND, INC.
DELAWARE GROUP GLOBAL DIVIDEND AND INCOME FUND, INC.
DELAWARE GROUP FOUNDATION FUNDS
