DELAWARE GROUP DELCAP FUND INC, 485BPOS, 1996-11-27

DELAWARE GROUP DELCAP FUND INC
485BPOS, 1996-11-27

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<PAGE>

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-1A

File No. 33-442

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

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

-----
Post-Effective Amendment No. 21 X
------ -----

AND

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

Amendment No. 21
-------

DELAWARE GROUP DELCAP FUND, INC.
(to be renamed Delaware Group Equity Funds IV, 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: November 29, 1996
-----------------

It is proposed that this filing will become effective:

immediately upon filing pursuant to paragraph (b)
- -------

X on November 29, 1996 pursuant to paragraph (b)
- -------

60 days after filing pursuant to paragraph (a)(1)
- -------
on November 29, 1996 pursuant to paragraph (a)(1)
- -------
75 days after filing pursuant to paragraph (a)(2)
- -------
on (date) pursuant to paragraph (a)(2) of Rule 485
- -------

Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Section 24(f)
of the Investment Company Act of 1940. Registrant's 24f-2 Notice for its
most recent fiscal year will be filed on or about November 29, 1996.
<PAGE>

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

This Post-Effective Amendment No. 21 to Registration File No. 33-442 includes
the following:

1. Facing Page

2. Contents Page

3. Cross-Reference Sheet

4. Part A - Prospectuses*

5. Part B - Statement of Additional Information*

6. Part C - Other Information

7. Signatures

* This Post-Effective Amendment relates to the Registrant's DelCap Fund -
DelCap Fund A Class, DelCap Fund B Class, DelCap Fund C Class and DelCap
Fund Institutional Class. This Post-Effective Amendment also relates to the
Registrant's Capital Appreciation Fund - Capital Appreciation Fund A Class,
Capital Appreciation Fund B Class, Capital Appreciation Fund C Class and
Capital Appreciation Fund Institutional Class. Shares of each Fund are
described in separate prospectuses, however, they share a common Statement
of Additional Information and Part C.
<PAGE>

CROSS-REFERENCE SHEET*

PART A

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

DelCap Fund

A Class/ Institutional
B Class/ Class
C Class

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

2 Synopsis........................................................ Synopsis; Synopsis;
Summary of Summary of
Expenses Expenses

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

4 General Description of Registrant .............................. Investment Investment
Objective and Objective and
Policies; 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
Difference; and Distributions;
Dividends and Taxes; Shares
Distributions;
Taxes; Shares

7 Purchase of Securities Being Offered............................ Cover Page; Cover Page;
How to Buy How to Buy
Shares; Shares;
Calculation of Calculation of
Offering Price Net Asset Value
and Net Asset Per Share;
Value Per Share; Management of
Management of the Fund
the Fund
</TABLE>
<PAGE>

CROSS-REFERENCE SHEET*

PART A
(Continued)

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

DelCap Fund

A Class/ Institutional
B Class/ Class
C Class

8 Redemption or Repurchase........................................ How to Buy How to Buy
Shares; Shares;
Redemption Redemption
and Exchange and Exchange

9 Legal Proceedings............................................... None None
</TABLE>

* This filing relates to Registrant's DelCap Fund A Class, DelCap Fund B
Class, DelCap Fund C Class and DelCap Fund Institutional Class of DelCap
Fund and the Capital Appreciation Fund A Class, Capital Appreciation Fund B
Class, Capital Appreciation Fund C Class and Capital Appreciation Fund
Institutional Class of Capital Appreciation Fund. Shares of each Fund are
described in separate prospectuses, however, they share a common Statement
of Additional Information and Part C.
<PAGE>

CROSS-REFERENCE SHEET*

PART A
(Continued)

<TABLE>
<CAPTION>
Location in
Item No. Description Prospectuses
- -------- ----------- -------------
<S> <C> <C> <C>
Capital Appreciation Fund

A Class/ Institutional
B Class/ Class
C Class

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

2 Synopsis........................................................ Synopsis; Synopsis;
Summary of Summary of
Expenses Expenses

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

4 General Description of Registrant .............................. Investment Investment
Objective and Objective and
Policies; Shares; Policies; Shares;
Other Investment Other Investment
Policies and Policies and
Risk 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
Difference; and Distributions;
Dividends and Taxes; Shares
Distributions;
Taxes; Shares
</TABLE>
<PAGE>

CROSS-REFERENCE SHEET*

PART A
(Continued)

<TABLE>
<CAPTION>
Location in
Item No. Description Prospectuses
- -------- ----------- -------------
<S> <C> <C> <C>
Capital Appreciation Fund

A Class/ Institutional
B Class/ Class
C Class

7 Purchase of Securities Being Offered............................ Cover Page; Cover Page;
How to Buy; How to Buy
Shares; Shares;
Calculation of Calculation of
Offering Price Net Asset Value
and Net Asset Per Share;
Value Per Share; Management of
Management of the Fund
the Fund

8 Redemption or Repurchase........................................ How to Buy How to Buy
Shares; Shares;
Redemption Redemption
and Exchange and Exchange

9 Legal Proceedings............................................... None None
</TABLE>

CROSS REFERENCE SHEET

PART B

<TABLE>
<CAPTION>
Location in Statement
Item No. Description of Additional Information
- -------- ----------- --------------------------
<S> <C> <C>
10 Cover Page...................................................... Cover Page

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

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

13 Investment Objectives and Policies.............................. Investment Policies and
Portfolio Techniques

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
Agreements; 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...................................................... Accounting and Tax
Issues; Distributions
and Taxes

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

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

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

CROSS REFERENCE SHEET

PART C

<TABLE>
<CAPTION>
Location in
Part C
------------
<S> <C> <C>
24 Financial Statements and Exhibits.............................. Item 24

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

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

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

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

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

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

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

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

<PAGE>

The Delaware Group includes ----------------------------
funds with a wide range of investment DELCAP FUND
objectives. Stock funds, income
funds, tax-free funds, money market ----------------------------
funds, global and international funds
and closed-end equity funds give A CLASS
investors the ability to create a ----------------------------
portfolio that fits their personal
financial goals. For more B CLASS
information, contact your financial ----------------------------
adviser or call Delaware Group at 800-
523-4640. C CLASS
----------------------------

INVESTMENT MANAGER
Delaware Management Company, Inc. P R O S P E C T U S
One Commerce Square
Philadelphia, PA 19103 ----------------------------

NATIONAL DISTRIBUTOR NOVEMBER 29, 1996
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 DELAWARE
4 Chase Metrotech Center GROUP
Brooklyn, NY 11245 ==================

<PAGE>

DELCAP FUND PROSPECTUS
A CLASS SHARES NOVEMBER 29, 1996
B CLASS SHARES
C CLASS SHARES

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

1818 Market Street, Philadelphia, PA 19103

For Prospectus and Performance:
Nationwide 800-523-4640

Information on Existing Accounts:
(SHAREHOLDERS ONLY)
Nationwide 800-523-1918

Dealer Services:
(BROKER/DEALERS ONLY)
Nationwide 800-362-7500

Representatives of Financial Institutions:
Nationwide 800-659-2259

This Prospectus describes the DelCap Fund A Class of shares ("Class A
Shares"), the DelCap Fund B Class of shares ("Class B Shares") and the DelCap
Fund C Class of shares ("Class C Shares") (individually, a "Class" and
collectively, the "Classes") of the DelCap Fund series (the "Fund") (formerly
known as Concept I Series) of Delaware Group Equity Funds IV, Inc. ("Equity
Funds IV, Inc.") (formerly known as Delaware Group DelCap Fund, Inc.), a
professionally-managed mutual fund of the series type. The Fund seeks to achieve
its objective of long-term capital appreciation by investing its assets in a
diversified portfolio of securities offering significant growth opportunity.

This Prospectus sets forth information that you should read and
consider before you invest. Please retain it for future reference. Part B of
Equity Funds IV, Inc.'s registration statement, dated November 29, 1996, as it
may be amended from time to time, contains additional information about the Fund
and has been filed with the Securities and Exchange Commission. Part B is
incorporated by reference into this Prospectus and is available, without charge,
by writing to Delaware Distributors, L.P. at the above address or by calling the
above numbers. The Fund's financial statements appear in its Annual Report,
which will accompany any response to requests for Part B.

-1-
<PAGE>

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

TABLE OF CONTENTS

Cover Page Dividends and
Synopsis Distributions
Summary of Expenses Taxes
Financial Highlights Calculation of Offering
Investment Objective and Policies Price and Net Asset
Suitability Value Per Share
Investment Strategy Management of the Fund
The Delaware Difference Other Investment
Plans and Services Policies and Risk
Retirement Planning Considerations
Classes of Shares Appendix A--Investment
How to Buy Shares Illustrations
Redemption and Exchange Appendix B--Classes
Offered

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

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

-2-

<PAGE>

SYNOPSIS

Investment Objective
The objective of the Fund is to seek 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. For further details, see Investment Objective and
Policies.

Risk Factors and Special Considerations
1. Investments in equity securities of small to medium-sized companies
in which the Fund invests may present greater risks than investments in larger
capitalization companies, as the market prices of securities issued by smaller
companies tend to fluctuate, particularly in the short-term, and some smaller
company securities may be speculative. See Suitability under Investment
Objective and Policies.

2. The Fund may enter into options for hedging purposes to
counterbalance portfolio volatility. While the Fund does not engage in options
for speculative purposes, there are risks which result from use of these
instruments by the Fund, and the investor should review the descriptions of such
in this Prospectus. See Investment Strategy under Investment Objective and
Policies, and Other Investment Policies and Risk Considerations.

Investment Manager, Distributor and Service Agent
Delaware Management Company, Inc. (the "Manager")
furnishes investment management services to the Fund, subject to the supervision
and direction of Equity Funds IV, Inc.'s Board of Directors. The Manager also
provides investment management services to certain of the other funds in the
Delaware Group. Delaware Distributors, L.P. (the "Distributor") is the national
distributor for the Fund and for all of the other mutual funds in the Delaware
Group. Delaware Service Company, Inc. (the "Transfer Agent") is the shareholder
servicing, dividend disbursing, accounting services and transfer agent for the
Fund and for all of the other mutual funds in the Delaware Group. See Summary of
Expenses and Management of the Fund for further information regarding the
Manager and fees payable under the Fund's Investment Management Agreement.

-3-

<PAGE>

Sales Charges
The price of Class A Shares includes a maximum front-end sales charge
of 4.75% of the offering price, which, based on the net asset value per share of
the Class A Shares as of the end of Equity Funds IV, Inc.'s most recent fiscal
year, is equivalent to 4.98% of the amount invested. The front-end sales charge
is reduced on certain transactions of at least $100,000 but under $1,000,000.
There is no front-end sales charge on purchases of $1,000,000 or more. Class A
Shares are 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 contingent deferred sales charge ("CDSC") of:
(i) 4% if shares are redeemed within two years of purchase; (ii) 3% if shares
are redeemed during the third or fourth year following purchase; (iii) 2% if
shares are redeemed during the fifth year following purchase; and (iv) 1% if
shares are redeemed during the sixth year following purchase. Class B Shares are
subject to annual 12b-1 Plan expenses for approximately eight years after
purchase. See 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 for
the life of the investment.

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

Purchase Amounts
Generally, the minimum initial investment in any Class is $1,000.
Subsequent investments must generally be at least $100.

-4-

<PAGE>

Class A Shares are subject to lower annual 12b-1 Plan expenses than Class B 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 calculated after receipt of the redemption or exchange request
subject, in the case of redemptions, to any applicable CDSC. Neither the Fund
nor the Distributor assesses any charges other than the CDSC for redemptions or
exchanges of Class B or Class C Shares. There are certain limitations on an
investor's ability to exchange shares between the various classes of shares that
are offered. See Redemption and Exchange.

Open-End Investment Company
Equity Funds IV, Inc., which was organized as a Maryland corporation in
1985, is an open-end management investment company and the Fund's portfolio of
assets is diversified as defined by the Investment Company Act of 1940 (the
"1940 Act"). See Shares under Management of the Fund.

-5-

<PAGE>

SUMMARY OF EXPENSES

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

Class A Class B Class C
Shareholder Transaction Expenses Shares Shares Shares
- ------------------------------------------------------------------------

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* 4.00%* 1.00%*

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

Annual Operating Expenses
(as a percentage of Class A Class B Class C
average daily net assets) Shares Shares Shares
- ------------------------------------------------------------------------

Management Fees . . . . . . . . . . . 0.75% 0.75% 0.75%

12b-1 Plan Expenses
(including service fees) . . . . . 0.30%*** 1.00%*** 1.00%***

Other Operating Expenses. . . . . . . 0.30% 0.30% 0.30%
----- ----- -----
Total Operating Expenses . . . . 1.35% 2.05% 2.05%
===== ===== =====

-6-

<PAGE>

4% if shares are redeemed within two years of purchase; (ii) 3% if shares are
rredeemed 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 the shares are redeemed within 12 months
of purchase. See Contingent Deferred Sales Charge for Certain Redemptions of
Class A Shares Purchased at Net Asset Value under Redemption and Exchange;
Deferred Sales Charge Alternative Class B Shares and Level Sales Charge
Alternative - Class C Shares under Classes of Shares.

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

***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.

For expense information about the DelCap Fund Institutional Class of
shares, see the separate prospectus relating to that class.

-7-

<PAGE>

The following example illustrates the expenses that an investor would
pay on a $1,000 investment over various time periods, assuming (1) a 5% annual
rate of return, (2) redemption 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.
<TABLE>
<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(1) $88 $118 $202 $61 $88 $118 $202

Class B
Shares $61 $94 $130 $220(2) $21 $64 $110 $220(2)

Class C
Shares $31 $64 $110 $238 $21 $64 $110 $238

</TABLE>
The purpose of the above tables is to assist the investor in
understanding the various costs and expenses that an investor in each Class will
bear directly or indirectly.

(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 12 months of 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. Information for the ninth
and tenth years reflects expenses of the Class A Shares.
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.

-8-

<PAGE>

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

FINANCIAL HIGHLIGHTS

The following financial highlights are derived from the financial statements of
Delaware Group Equity Funds IV, Inc. - DelCap Fund (formerly known as Delaware
Group DelCap Fund, Inc. - Concept I Series) 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 IV, Inc. upon request at no charge.
- --------------------------------------------------------------------------------

-9-

Class A Shares
------------------------------------------------------------
Year Ended
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period . . . . . . $28.870 $25.570 $26.080 $20.730 $21.470

Income (Loss) From In-
- ----------------------
vestment Operations
- -------------------

Net Investment
Income (Loss)(1) . (0.208) (0.166) (0.218) (0.125) (0.059)

Net Gains (Losses)
on Securities (both
realized and
unrealized). . . . 5.618 5.296 0.528 5.475 (0.651)
----- ----- ----- ----- -------

Total From
Investment
Operations. . . 5.410 5.130 0.310 5.350 (0.710)
----- ----- ----- ----- -------

Less Distributions
- ------------------

Dividends from
Net Investment
Income. . . . . . none none none none (0.030)

Distributions
from Capital
Gains . . . . . . (3.540) (1.830) (0.820) none none

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

Total Distri-
butions . . . . (3.540) (1.830) (0.820) none (0.030)
------- ------- ------- ---- -------

Net Asset Value,
End of Period. . . $30.740 $28.870 $25.570 $26.080 $20.730
======= ======= ======= ======= =======

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

Total Return(2). . 21.09% 22.04% 1.17% 25.81% (3.32%)
- ------------

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

Ratios/Supplemental
- -------------------
Data
- ----

Net Assets, End
of Period (000's
omitted) . . . . . $923,248 $888,571 $890,787 $1,057,358 $993,125

Ratio of Expenses
to Average Daily
Net Assets . . . . 1.35% 1.37% 1.35% 1.30% 1.39%

Ratio of Net
Investment Income
(Loss) to Average
Daily Net Assets . (0.74%) (0.67%) (0.68%) (0.43%) (0.26%)

Portfolio Turnover
Rate . . . . . . . 72% 51% 34% 51% 24%

Average Commission
Rate Paid. . . . . $0.0600 N/A N/A N/A N/A

</TABLE>
-10-

<PAGE>
<TABLE>
<CAPTION>
Class A Shares
----------------------------------------------------------------
Year Ended
9/30/91 9/30/90 9/30/89 9/30/88 9/30/87
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period . . . . . . $15.810 $19.060 $13.920 $14.930 $16.540

Income (Loss) From In-
- ----------------------
vestment Operations
- -------------------

Net Investment
Income (Loss)(1) . 0.064 0.419 0.201 0.042 0.449

Net Gains (Losses)
on Securities (both
realized and
unrealized). . . . 6.496 (3.219) 5.059 (0.357) 5.361
----- ------- ----- ------- -----

Total From
Investment
Operations. . . 6.560 (2.800) 5.260 (0.315) 5.810
------ ------ ----- ------- -----

Less Distributions
- ------------------

Dividends from
Net Investment
Income. . . . . . (0.410) (0.160) (0.120) (0.430) none

Distributions
from Capital
Gains . . . . . . (0.490) (0.290) none (0.265) (7.420)

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

Total Distri-
butions . . . . (0.900) (0.450) (0.120) (0.695) (7.420)
------- ------- ------- ------- -----

Net Asset Value,
End of Period. . . $21.470 $15.810 $19.060 $13.920 $14.930
======= ======= ======= ======= =======

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

Total Return(2). . 43.25% (14.99%) 38.15% (2.26%) 63.07%
- ------------

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

Ratios/Supplemental
- -------------------
Data
- ----

Net Assets, End
of Period (000's
omitted) . . . . . $512,356 $155,392 $138,589 $114,122 $131,916

Ratio of Expenses
to Average Daily
Net Assets . . . . 1.43% 1.41% 1.44% 1.55% 1.39%(3)

Ratio of Net
Investment Income
(Loss) to Average
Daily Net Assets . 0.63% 2.61% 1.28% 0.31% 7.11%(4)

Portfolio Turnover
Rate . . . . . . . 33% 45% 42% 77% 127%

Average Commission
Rate Paid. . . . . N/A N/A N/A N/A N/A

</TABLE>

-11-

<PAGE>

- -------------------
(1) The per share information for the years ended 9/30/96 and 9/30/95 were
based on the average shares outstanding method.

(2) Does not reflect maximum sales charge that is or was in effect nor the 1%
Limited CDSC that would apply in the event of certain redemptions within 12
months of purchase. See Contingent Deferred Sales Charge for Certain
Purchases of Class A Shares Made at Net Asset Value. Total return for 1987
reflects the expense limitations referenced in Notes 3 and 4.

(3) Ratio of expenses to average daily net assets prior to expense limitation
was 1.73% for 1987.

(4) Ratio of net investment income (loss) to average daily net assets prior to
expense limitation was 6.77% for 1987.

-12-

Class B Shares Class C Shares
----------------------------------------- --------------
Period Period
9/6/94(1) 11/29/95(1)
Year Ended through through
9/30/96 9/30/95 9/30/94 9/30/96
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period . . . . . . $28.680 $25.560 $25.180 $28.880

Income (Loss) From In-
- ----------------------
vestment Operations
- -------------------

Net Investment
Income (Loss)(2) . (0.400) (0.340) (0.008) (0.359)

Net Gains
on Securities (both
realized and
unrealized). . . . 5.560 5.290 0.388 5.589
----- ----- ----- -----

Total From
Investment
Operations. . . 5.160 4.950 0.380 5.230
----- ----- ----- -----

Less Distributions
- ------------------

Dividends from
Net Investment
Income. . . . . . none none none none

Distributions
from Capital
Gains . . . . . . (3.540) (1.830) none (3.540)

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

Total Distri-
butions . . . . (3.540) (1.830) none (3.540)
----- ------- ---- -----

Net Asset Value,
End of Period. . . $30.300 $28.680 $25.560 $30.570
======= ======= ======= =======
- -------------------------------------------------------------

Total Return(3). . 20.27% 21.34% 1.51% 20.38%
- ------------
- -------------------------------------------------------------

Ratios/Supplemental
- -------------------
Data
- ----

Net Assets, End
of Period (000's
omitted) . . . . . $13,239 $2,710 $287 $1,947

Ratio of Expenses
to Average Daily
Net Assets . . . . 2.05% 2.07% 2.05% 2.05%

Ratio of Net
Investment Income
(Loss) to Average
Daily Net Assets . (1.44%) (1.37%) (1.38%) (1.44%)

Portfolio Turnover
Rate . . . . . . . 72% 51% 34% 72%

Average Commission
Rate Paid. . . . . $0.0600 N/A N/A $0.0600

November 23, 1996 0:9AM
</TABLE>
-13-

<PAGE>
- ---------------------------
(1) Date of initial public offering; ratios have been annualized; but total
return has not been annualized. Total return for this short of a time
period may not be representative of longer term results.

(2) The per share information for the years ended 9/30/96 and 9/30/95 were
based on the average shares outstanding method.

(3) Total return 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.

-14-

<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

The objective of the Fund is long-term capital growth. The strategy
will be to invest primarily in common stocks that, in the judgment of the
Manager, are of superior quality and those securities convertible into such
common stocks.

SUITABILITY
The Fund may be suitable for the patient investor interested in
long-term capital appreciation. Investors should be willing to accept the risks
associated with investments in equity securities.

While equity securities of small to medium-sized companies in which the
Fund invests may offer the potential for greater capital appreciation than
securities issued by larger companies, investments in securities of smaller
companies, some of which may be speculative, may present greater risks. The
prices of equity securities, especially of smaller companies, tend to fluctuate
in response to the condition of individual companies as well as general market
and economic conditions. Consequently, the Fund's net asset value will fluctuate
and an investment in the Fund may be inappropriate for the short-term investor.

Ownership of Fund shares reduces the bookkeeping and administrative
inconvenience connected with direct purchases of the types of securities in
which the Fund invests.

Providing current income is not an objective of the Fund. Any income
produced is expected to be minimal. Investors should not consider a purchase of
Fund shares as equivalent to a complete investment program. The Delaware Group
includes a family of funds generally available through registered investment
dealers which may be used in concert to create a more complete investment
program.

INVESTMENT STRATEGY
The Fund will attempt to achieve its objective by exceeding the return
of common stocks as measured by the Standard & Poor's ("S&P") 500 Stock Index.

Securities purchased will be of companies whose earnings the Manager
believes will grow more rapidly than the average of those listed in the S&P 500
Stock Index. The Manager's emphasis will be on the securities of companies that,
in its judgment, have the characteristics that will enable them to grow faster
than the economy as measured by the Index.

-15-

<PAGE>

This judgment will be based on the financial strength of the company,
the expertise of its management, the growth potential of the company within its
industry and the growth potential of the industry itself.

The Manager will focus primarily on those securities of companies it
believes have established themselves within their industry while maintaining
growth potential. If the Manager believes that market conditions warrant, the
Fund may employ certain option strategies involving the activities and
instruments described below.

In investing for capital appreciation, the Fund may hold securities for
any period of time.

While management believes its objective may best be attained by
investing in common stocks, the Fund may also invest in other securities
including, but not limited to, convertible securities, warrants, preferred
stocks, bonds and foreign securities. The strategies employed are dependent upon
the judgment of the Manager.

Should the market warrant a temporary, defensive approach, the Fund may
also invest in fixed-income obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities as well as corporate bonds of
investment quality rated Baa or above by Moody's Investors Service, Inc. or BBB
or above by S&P. (Appendix A in Part B describes these ratings.)

The Fund may write covered call options on individual issues as well as
write call options on stock indices. The Fund may also purchase put options on
individual issues and on stock indices. The Manager will employ these techniques
in an attempt to protect appreciation attained, to offset capital losses and to
take advantage of the liquidity available in the option markets. The ability to
hedge effectively using options on stock indices will depend, in part, on the
correlation between the composition of the index and the Fund's portfolio as
well as the price movement of individual securities. The Manager may also write
covered call options to achieve income to offset the cost of purchasing put
options.

While there is no limit on the amount of the Fund's assets which may be
invested in covered call options, the Fund will not invest more than 2% of its
net assets in put options. The Fund will only use Exchange-traded options.

-16-

<PAGE>

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.

For additional information about the Fund's investment policies and
certain risks associated with investments in certain types of securities, see
Other Investment Policies and Risk Considerations.

-17-

<PAGE>

THE DELAWARE DIFFERENCE

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

SHAREHOLDER PHONE DIRECTORY

Investor Information Center
800-523-4640

Fund Information; Literature; Price; Yield and
Performance Figures

Shareholder Service Center
800-523-1918

Information on Existing Regular Investment Accounts
and Retirement Plan Accounts; Wire
Investments; Wire Liquidations; Telephone
Liquidations and Telephone Exchanges

Delaphone
800-362-FUND
(800-362-3863)

Performance Information
You can call the Investor Information Center at any time for current
performance information.

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

Delaphone Service
Delaphone is an account inquiry service for investors with
Touch-Tone(R) phone service. It enables you to get information on your account
faster than the mailed statements and confirmations. Delaphone also provides
current performance information on the Fund, as well as other funds in the
Delaware Group. Delaphone is available seven days a week, 24 hours a day.

-18-

<PAGE>

Dividend Payments
Dividends, capital gains and other distributions 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 Delaware Group fund 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.

MoneyLine 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 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. Your funds will normally be credited to your bank account two
business days after the payment date. There are no fees for this service. You
can initiate the MoneyLine Direct Deposit Service by completing an Authorization
Agreement. If your name and address are not identical to the name and address on
your Fund account, you must have your signature guaranteed. This service is not
available for retirement plans.

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 IV, Inc. will mail to you
information on the tax status of your dividends and
distributions.

-19-

<PAGE>

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

Delaware Group Asset Planner
Delaware Group Asset Planner is an asset allocation service that gives
you, working with a professional financial adviser, the ability to more easily
design and maintain investments in a diversified selection of Delaware Group
mutual funds. The Asset Planner service offers a choice of

-20-

<PAGE>

four predesigned allocation strategies (each with a different risk/reward
profile) made up of separate investments in predetermined percentages of
Delaware Group funds. With the guidance of a financial adviser, you may also
tailor an allocation strategy that meets your personal needs and goals.
See How to Buy Shares.

Financial Information about the Fund
Each fiscal year, you will receive an audited annual report and an
unaudited semi-annual report. These reports provide detailed information about
the Fund's investments and performance. Equity Funds IV, Inc.'s fiscal year ends
on September 30.

-21-

<PAGE>

RETIREMENT PLANNING

An investment in the Fund may be suitable for tax-deferred retirement
plans. Among the retirement plans noted below, Class B Shares are available for
investment only by Individual Retirement Accounts, Simplified Employee Pension
Plans, 457 Deferred Compensation Plans and 403(b)(7) Deferred
Compensation Plans.

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. Certain shareholder investment services available to
non-retirement plan shareholders may not be available to retirement plan
shareholders. Certain retirement plans may qualify to purchase the DelCap Fund
Institutional Class. For additional information on any of the plans and
Delaware's retirement services, call the Shareholder Service Center or see Part
B.

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

Simplified Employee Pension Plan ("SEP/IRA")
A SEP/IRA may be established by an employer who wishes
to sponsor a tax-sheltered retirement program by making contributions on behalf
of all eligible employees. Each of the Classes is available for investment by a
SEP/IRA.

Salary Reduction Simplified Employee Pension Plan ("SAR/SEP")

Offers employers with 25 or fewer eligible employees the ability to
establish a SEP/IRA that permits salary deferral contributions. An employer may
also elect to make additional contributions to this plan. Class B Shares are not
available for purchase by such plans. Under the Small Business Protection Act of
1996, an employer cannot establish a new SAR/SEP after December 31, 1996. Plans
established before January 1, 1997 can continue to operate without change.

-22-

<PAGE>

403(b)(7) Deferred Compensation Plan
Permits employees of public school systems or of certain types of
non-profit organizations to enter into a deferred compensation arrangement for
the purchase of shares of each of the Classes.

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

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

Prototype 401(k) Defined Contribution Plan
Permits employers to establish a tax-qualified plan
based on salary deferral contributions for investment in Class A or Class C
Shares. Class B Shares are not available for purchase by such plans.

Allied Plans
Class A Shares are available for purchase by participants in certain
401(k) Defined Contribution Plans ("Allied Plans") which are made available
under a joint venture agreement between the Distributor and another institution
through which mutual funds are marketed and which allow investments in Class A
Shares of designated Delaware Group funds ("eligible Delaware Group fund
shares"), as well as shares of designated classes of non-Delaware Group funds
("eligible non-Delaware Group fund shares"). Class B Shares and Class C Shares
are not eligible for purchase by Allied Plans.

With respect to purchases made in connection with an Allied Plan, the
value of eligible Delaware Group and eligible non-Delaware Group fund shares
held by 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 Group fund shares. See Front-End Sales Charge
Alternative - Class A Shares under Classes of Shares.

-23-

<PAGE>

Participants in Allied Plans may exchange all or part of their eligible
Delaware Group fund shares for other eligible Delaware Group fund shares or for
eligible non-Delaware Group fund shares at net asset value without payment of a
front-end sales charge. However, exchanges of eligible fund shares, both
Delaware Group and non-Delaware Group, which were not subject to a front-end
sales charge, will be subject to the applicable sales charge if exchanged for
eligible Delaware Group fund shares to which a sales charge applies. No sales
charge will apply if the eligible fund shares were previously acquired through
the exchange of eligible shares on which a sales charge was already paid or
through the reinvestment of dividends. See Investing by Exchange.

A dealer's commission may be payable on purchases of eligible Delaware
Group fund shares under an Allied Plan. In determining a financial adviser's
eligibility for a dealer's commission on net asset value purchases of eligible
Delaware Group fund shares in connection with Allied Plans, all participant
holdings in the Allied Plan will be aggregated. See Front-End Sales Charge
Alternative - Class A Shares under Classes of Shares.

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 Group and non- Delaware Group fund shares. When
eligible Delaware Group fund shares are exchanged into eligible non-Delaware
Group fund shares, the Limited CDSC will be imposed at the time of the exchange,
unless the joint venture agreement specifies that the amount of the 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.

-24-

<PAGE>

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. 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, the Class B Shares will
automatically be converted into Class A Shares and, thereafter, for the
remainder of the life of the investment, the annual 0.30% 12b-1 Plan fee for the
Class A Shares will apply. See Automatic Conversion of Class B Shares, below.

-25-

<PAGE>

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. In comparing Class B Shares to Class C
Shares, investors should also consider the desirability of an automatic
conversion feature, which is available only for Class B Shares.

Prospective investors should refer to Appendix A-- Investment
Illustrations in this Prospectus for an illustration of the potential effect
that each of the purchase options may have on a long-term shareholder's
investment.

-26-

<PAGE>

For the distribution and related services provided to, and the expenses
borne on behalf of, the Fund, the Distributor and others will be paid, in the
case of the Class A Shares, from the proceeds of the front-end sales charge and
12b-1 Plan fees and, in the case of the Class B Shares and the Class C Shares,
from the proceeds of the 12b-1 Plan fees and, if applicable, the CDSC incurred
upon redemption. Financial advisers may receive different compensation for
selling Class A, Class B and Class C Shares. Investors should understand that
the purpose and function of the respective 12b-1 Plans and the CDSCs applicable
to Class B Shares and Class C Shares are the same as those of the 12b-1 Plan and
the front-end sales charge applicable to Class A Shares in that such fees and
charges are used to finance the distribution of the respective Classes. See
Distribution (12b-1) and Service under Management of the Fund.

Dividends paid on Class A, Class B and Class C Shares, to the extent
any dividends are paid, will be calculated in the same manner, at the same time,
on the same day and will be in the same amount, except that the additional
amount of 12b-1 Plan expenses relating to 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 IV, Inc. and the Distributor intend to operate in
compliance with these rules.

Front-EndSales 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.

-27-

<PAGE>

<TABLE>
<CAPTION>
DelCap Fund A Class
- ------------------------------------------------------------------------------------------------------------

Dealer's
Commission***
Amount of Purchase Front-End Sales Charge as % of as % of
Offering Amount Offering
Price Invested** Price
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $100,000 4.75% 4.98% 4.00%

$100,000 but under $250,000 3.75 3.90 3.00

$250,000 but under $500,000 2.50 2.60 2.00

$500,000 but under $1,000,000* 2.00 2.05 1.60
</TABLE>

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

** Based upon the net asset value per share of the Class A Shares as of
the end of Equity Funds IV, Inc.'s most recent fiscal year.

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

From time to time, upon written notice to all of its
dealers, the Distributor may hold special promotions for
specified periods during which the Distributor may
reallow to dealers up to the full amount of the front-
end sales charge shown above. In addition, certain
dealers who enter into an agreement to provide extra
training and information on Delaware Group products and
services and who increase sales of Delaware Group funds
may receive an additional 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.
- --------------------------------------------------------------------------------

-28-

<PAGE>

For initial purchases of Class A Shares of $1,000,000 or more, a
dealer's commission may be paid by the Distributor to financial advisers through
whom such purchases are made in accordance with the following schedule:

Dealer's Commission
-------------------
(as a percentage of
Amount of Purchase amount purchased)
------------------

Up to $2 million 1.00%
Next $1 million up to $3 million 0.75
Next $2 million up to $5 million 0.50
Amount over $5 million 0.25

In determining a financial adviser's eligibility for the dealer's
commission, purchases of Class A Shares of other Delaware Group funds as to
which a Limited CDSC applies may be aggregated with those of the Class A Shares
of the Fund. Financial advisers also may be eligible for a dealer's commission
in connection with certain purchases made under a Letter of Intention or
pursuant to an investor's Right of Accumulation. Financial advisers should
contact the Distributor concerning the applicability and calculation of the
dealer's commission in the case of combined purchases.

An exchange from other Delaware Group funds will not qualify for
payment of the dealer's commission, unless 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.

-29-

<PAGE>

be combined with other Delaware Group fund holdings. Shares of other funds that
do not carry a front-end sales charge or CDSC may not be included unless they
were acquired through an exchange from a Delaware Group fund that does carry a
front-end sales charge or CDSC.

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

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

Combined purchases of $1,000,000 or more, including certain purchases
made at net asset value pursuant to a Right of Accumulation or under a Letter of
Intention, may 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.

Buying Class A Shares at Net Asset Value
Class A Shares of the Fund may be purchased at net asset value under
the Delaware Group 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 Group, 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.

-30-

<PAGE>

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 Delaware Group
funds. 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.

Investments in Class A Shares made by plan level and/or participant
retirement accounts that are for the purpose of repaying a loan taken from such
accounts will be made at net asset value. Loan repayments made to a Delaware
Group account in connection with loans originated from accounts previously
maintained by another investment firm will also be invested at net asset value.

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

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

For additional information on 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, see Retirement
Planning.

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 anticipates
compensating dealers or brokers for selling Class B Shares at the time of
purchase from its own assets in an amount equal to no more than 4% of the dollar
amount purchased. 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

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annual 12b-1 Plan expenses and, if redeemed within six years of purchase, a
CDSC.

Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to the
Distributor and others for providing distribution and related services, and
bearing related expenses, in connection with the sale of Class B Shares. These
payments support the compensation paid to dealers or brokers for selling Class B
Shares. Payments to the Distributor and others under the Class B 12b-1 Plan may
be in an amount equal to no more than 1% annually. The combination of the CDSC
and the proceeds of the 12b-1 Plan fees makes it possible for 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 the Class B Shares
described in this Prospectus, even after the exchange. Such CDSC schedule may be
higher than the CDSC schedule for the 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,

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Inc., the Delaware Cash Reserve Consultant Class) pro-rata with Class B Shares
of that fund not acquired through dividend reinvestment.

All such automatic conversions of Class B Shares will constitute
tax-free exchanges for federal income tax purposes. See Taxes.

Level Sales Charge Alternative - Class C Shares
Class C Shares may be purchased at net asset value without a front-end
sales charge and, as a result, the full amount of the investor's purchase
payment will be invested in Fund shares. The Distributor currently anticipates
compensating dealers or brokers for selling Class C Shares at the time of
purchase from its own assets in an amount equal to no more than 1% of the dollar
amount purchased. As discussed below, however, Class C Shares are subject to
annual 12b-1 Plan expenses and, if redeemed within 12 months of purchase, a
CDSC.

Holders of Class C Shares who exercise the exchange privilege described
below will continue to be subject to the CDSC schedule for the 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%. 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 reinvestments of dividends or capital gains distributions.

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For purposes of this formula, the "net asset value at the time of purchase" will
be the net asset value at purchase of the Class B Shares or the Class C Shares
of the Fund, even if those shares are later exchanged for shares of another
Delaware Group fund. In the event of an exchange of the shares, the "net asset
value of such shares at the time of redemption" will be the net asset value of
the shares that were acquired in the exchange.

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

Contingent Deferred
Sales Charge (as a
Percentage of
Dollar Amount
Year After 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 the 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.

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<PAGE>

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, Class B 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 Delaware Group of funds. In some instances, these incentives or
payments may be offered only to certain dealers who maintain, have sold or may
sell certain amounts of shares.

Subject to pending amendments to the NASD's Rules of Fair Practice, in
connection with the promotion of Delaware Group fund shares, the Distributor
may, from time to time, pay to participate in dealer-sponsored seminars and
conferences, reimburse dealers for expenses incurred in connection with
preapproved seminars, conferences and advertising and may, from time to time,
pay or allow additional promotional incentives to dealers, which shall include
non-cash concessions, such as certain luxury merchandise or a trip to or
attendance at a business or investment seminar at a luxury resort, as part of
preapproved sales contests. Payment of non-cash compensation to dealers is
currently under review by the NASD and the Securities and Exchange Commission.
It is likely that the NASD's Rules of Fair Practice will be amended such that
the ability of the Distributor to pay non-cash compensation as described above
will be restricted in some fashion. The Distributor intends to comply with the
NASD's Rules of Fair Practice as they may be amended.

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<PAGE>

DelCap Fund Institutional Class
In addition to offering the Class A, Class B and Class C Shares, the
Fund also offers the DelCap Fund Institutional Class, which is described in a
separate prospectus and is available for purchase only by certain investors.
DelCap 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 the DelCap Fund Institutional Class, contact the
Distributor by writing to the address or by calling the telephone number listed
on the back of this Prospectus.

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<PAGE>

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 a 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.

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, we
can refer you to one.

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

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<PAGE>

to a deposit slip) is provided at the bottom of transaction confirmations and
dividend statements that you will receive from Equity Funds IV, 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, to the specific Class selected, to Delaware Group 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 Group,
you may write and authorize an exchange of part or all of your investment into
shares of the Fund. If you wish to open an account by exchange, call the
Shareholder Service Center for more information. All exchanges are subject to
the eligibility and minimum purchase requirements set forth in each fund's
prospectus.

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<PAGE>

Class B Shares of other Delaware Group funds. 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 Delaware Group funds. See Appendix B Classes
Offered for a list of Delaware Group funds and the classes they offer. 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 the Class B Shares of the Fund acquired by exchange will be added to
that of the shares that were exchanged for purposes of determining the time of
the automatic conversion into Class A Shares of the Fund.

Permissible exchanges into Class A Shares of the Fund will be made
without a front-end sales charge, 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 Retirement Planning 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
IV, Inc. to transfer a designated amount monthly from your checking account to
your Fund account. Many shareholders use this as an automatic savings plan.
Shareholders should allow a reasonable amount of time for initial purchases and
changes to these plans to become effective.

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

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<PAGE>

2. Direct Deposit
You may have your employer or bank make regular investments directly to
your account for you (for example: payroll deduction, pay by phone, annuity
payments). The Fund also accepts preauthorized recurring government and private
payments by Electronic Fund Transfer, which avoids mail time and check clearing
holds on payments such as social security, federal salaries, Railroad Retirement
benefits, etc.

* * *

Should investments through an automatic investing plan or by direct
deposit be reclaimed or returned for some reason, Equity Funds IV, 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. Wealth Builder Option
You can use our Wealth Builder Option to invest in the Fund through
regular liquidations of shares in your accounts in other funds in the Delaware
Group. You may also elect to invest in other mutual funds in the Delaware Group
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 Group and invested automatically into such
other Delaware Group account 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 at any time by written notice to the fund from
which the exchanges are made. See Redemption and Exchange.

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<PAGE>

4. 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 Group, subject
to the exceptions noted below as well as the eligibility and minimum purchase
requirements set forth in each fund's prospectus.

Reinvestments of distributions into Class A Shares of the Fund or of
other Delaware Group funds are made without a front-end sales charge.
Reinvestments of distributions into Class B Shares of the Fund or of other
Delaware Group funds or into Class C Shares of the Fund or of other Delaware
Group funds are also made without any sales charge and will not be subject to a
CDSC if later redeemed. See Automatic Conversion of Class B Shares under 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
Group, including the Fund. Holders of Class B Shares of the Fund may reinvest
their distributions only into Class B Shares of the funds in the Delaware Group
which offer that class of shares. Similarly, holders of Class C Shares of the
Fund may reinvest their distributions only into Class C Shares of the funds in
the Delaware Group which offer that class of shares. See Appendix B--Classes
Offered for a list of the funds offering those classes of shares. For more
information about reinvestments, call the Shareholder Service Center.

Delaware Group Asset Planner
To invest in Delaware Group funds using the Delaware Group Asset
Planner asset allocation service, you should complete a Delaware Group Asset
Planner Account Registration Form, which is available only from a financial
adviser or investment dealer. As previously described, the Delaware Group Asset
Planner service offers a choice of four predesigned asset allocation strategies
(each with a different risk/reward profile) in predetermined percentages in
Delaware Group funds. Or, with the help of a financial adviser, you may 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

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<PAGE>

the selected Strategy. Exchanges from existing Delaware Group accounts into the
Asset Planner service may be made at net asset value under the circumstances
described under Investing by Exchange, above. The minimum initial investment per
Strategy is $2,000; subsequent investments must be at least $100. Individual
fund minimums do not apply to investments made using the Asset Planner service.
Class A, Class B and Class C Shares are available through the Asset Planner
service. Generally, only shares within the same class may be used within the
same Strategy. However, Class A Shares of the Fund and of other funds in the
Delaware Group may be used in the same Strategy with consultant class shares
that are offered by certain other Delaware Group funds. See Appendix B--Classes
Offered for the Delaware Group funds that offer consultant class shares.

An annual maintenance fee, currently $35 per Strategy, is typically due
at the time of initial investment and by September 30th of each subsequent year.
The fee, payable to Delaware Service Company, Inc. to defray extra costs
associated with administering the Asset Planner service, will be deducted
automatically from one of the funds within your Asset Planner account if not
paid by September 30th. However, effective November 1, 1996, the annual fee will
be 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.
See Part B.

Investors will receive a customized quarterly Strategy Report
summarizing all Delaware Group Asset Planner investment performance and account
activity during the prior period. Confirmation statements will be sent following
all transactions other than those involving a reinvestment of distributions.

Certain shareholder services are not available to investors using the
Asset Planner service, due to its special design. These include Delaphone,
Checkwriting, Wealth Builder Option and Letter of Intention. Systematic
Withdrawal Plans are available after the account has been open for two years.

Purchase Price and Effective Date
The offering price and net asset value of the Class A, Class B and
Class C Shares are determined as of the close of regular trading on the New York
Stock Exchange (ordinarily, 4 p.m., Eastern time) on days when the Exchange is
open.

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<PAGE>

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

The Conditions of Your Purchase
The Fund reserves the right to reject any purchase order. If a purchase
is canceled because your check is returned unpaid, you are responsible for any
loss incurred. The Fund can redeem shares from your account(s) to reimburse
itself for any loss, and you may be restricted from making future purchases in
any of the funds in the Delaware Group. The Fund reserves the right to reject
purchase orders paid by third-party checks or checks that are not drawn on a
domestic branch of a United States financial institution. If a check drawn on a
foreign financial institution is accepted, you may be subject to additional bank
charges for clearance and currency conversion.

The Fund also reserves the right, following shareholder notification,
to charge a service fee on non-retirement accounts that, 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.

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REDEMPTION AND EXCHANGE

You can redeem or exchange your shares in a number of different ways.
The exchange service is useful if your investment requirements change and you
want an easy way to invest in other equity funds, tax-advantaged funds, bond
funds or money market funds. This service is also useful if you are anticipating
a major expenditure and want to move a portion of your investment into a fund
that has the checkwriting feature. Exchanges are subject to the requirements of
each fund and all exchanges of shares constitute taxable events. See Taxes.
Further, in order for an exchange to be processed, shares of the fund being
acquired must be registered in the state where the acquiring shareholder
resides. You may want to consult your financial adviser or investment dealer to
discuss which funds in the Delaware Group will best meet your changing
objectives, and the consequences of any exchange transaction. You may also call
the Delaware Group directly for fund information.

Your shares will be redeemed or exchanged at a price based on the net
asset value next determined after the Fund receives your request in good order,
subject, in the case of a redemption, to any applicable CDSC or Limited CDSC.
Redemption or exchange requests received in good order after the time the
offering price and net asset value of shares are determined, as noted above,
will be processed on the next business day. See Purchase Price and Effective
Date under 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 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.

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Except as noted below, for a redemption request to be in "good order,"
you must provide your account number, account registration, and the total number
of shares or dollar amount of the transaction. For exchange requests, you must
also provide the name of the fund you want to receive the proceeds. Exchange
instructions and redemption requests must be signed by the record owner(s)
exactly as the shares are registered. You may request a redemption or an
exchange by calling the 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 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.

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<PAGE>

charged by the Fund from which the 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 the New Shares acquired as a result of the
exchange. For purposes of computing the CDSC that may be payable upon a
disposition of the New Shares, the period of time that an investor held the
Original Shares is added to the period of time that an investor held the New
Shares. With respect to Class B Shares, the automatic conversion schedule of the
Original Shares may be longer than that of the New Shares. Consequently, an
investment in New Shares by exchange may subject an investor to the higher 12b-1
fees applicable to Class B Shares of 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 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. Each signature guarantee must be supplied by
an eligible guarantor institution. The Fund reserves the right to reject a
signature guarantee supplied by an eligible institution based on its
creditworthiness. The Fund may require further documentation from corporations,
executors, retirement plans, administrators, trustees or guardians.

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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 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 Group, subject to the same conditions and limitations as
other exchanges noted above.

Telephone Redemption and Exchange
To get the added convenience of the telephone redemption and exchange
methods, you must have the Transfer Agent hold your shares (without charge) for
you. If you choose to have your Class A Shares in certificate form, you may
redeem or exchange only by written request and you must return your
certificates.

The Telephone Redemption--Check to Your Address of Record service and
the Telephone Exchange service, both of which are described below, are
automatically provided unless you notify the Fund in 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.

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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.

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 Group under the same registration,
subject to the same conditions and limitations as other exchanges noted above.
As with the written exchange service, telephone exchanges are subject to the
requirements of each fund, as described above. Telephone exchanges may be
subject to limitations as to amounts or frequency.

Systematic Withdrawal Plans
1. Regular Plans
This plan provides shareholders with a consistent monthly (or
quarterly) payment. This is particularly useful to shareholders living on fixed
incomes, since it can provide

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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 Direct Deposit Service. Your
funds will normally be credited to your bank account two business days after the
payment date. There are no separate fees for this redemption method. See
MoneyLine Direct Deposit Service 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 Direct Deposit Service described above is not
available for 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

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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 and Class C Shares, below.

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

Contingent Deferred Sales Charge for Certain Redemptions of
Class A Shares Purchased at Net Asset Value
A Limited CDSC will be imposed on certain redemptions of Class A Shares
(or shares into which such Class A Shares are exchanged) made within 12 months
of purchase, if such purchases were made at net asset value and triggered the
payment by the Distributor of the dealer's commission previously described. See
Classes of Shares.

The Limited CDSC will be paid to the Distributor and will be equal to
the lesser of 1% of: (1) the net asset value at the time of purchase of the
Class A Shares being redeemed; or (2) the net asset value of such Class A Shares
at the time of redemption. For purposes of this formula, the "net asset value at
the time of purchase" will be the net asset value at purchase of the Class A
Shares even if those shares are later exchanged for shares of another Delaware
Group fund and, in the event of an exchange of Class A Shares, the "net asset
value of such shares at the time of redemption" will be the net asset value of
the shares acquired in the exchange.

Redemptions of such Class A Shares held for more than 12 months will
not be subjected to the Limited CDSC and an exchange of such Class A Shares into
another Delaware Group fund will not trigger the imposition of the Limited CDSC
at the time of such exchange. The period a shareholder owns shares into which
Class A Shares are exchanged will count towards satisfying the 12-month holding
period. The Limited CDSC is assessed if such 12-month 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

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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) distributions from a section 403(b)(7)
Plan or an IRA due to death, disability, or attainment of age 59 1/2; (v)
returns of excess contributions to an IRA; (vi) distributions by other employee
benefit plans to pay benefits; (vii) distributions described in (ii), (iv), and
(vi) above pursuant to a systematic withdrawal plan; and (viii) redemptions by
the classes of shareholders who are permitted to purchase shares at net asset
value, regardless of the size of the purchase (see Buying Class A Shares at Net
Asset Value under Classes of Shares).

Waiver of Contingent Deferred Sales Charge - Class B 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 or 403(b)(7)
Deferred Compensation Plan; (iii) required minimum distributions from an IRA,
403(b)(7) Deferred Compensation Plan or 457 Deferred Compensation Plan; and (iv)
distributions from an account if the redemption results from the death of all
registered owners of the account (in the case of accounts established under the

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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, 403(b)(7) Deferred Compensation Plan, Profit
Sharing Plan, Money Purchase Pension Plan or 401(k) Defined Contribution Plan;
(iii) required minimum distributions from an IRA, 403(b)(7) Deferred
Compensation Plan, 457 Deferred Compensation Plan, Profit Sharing Plan, Money
Purchase Pension Plan or 401(k) Defined Contribution Plan; (iv) distributions
from a 403(b)(7) Deferred Compensation Plan, 457 Deferred Compensation Plan,
Profit Sharing Plan, or 401(k) Defined Contribution Plan, under hardship
provisions of the plan; (v) distributions from a 403(b)(7) Deferred Compensation
Plan, 457 Deferred Compensation Plan, Profit Sharing Plan, Money Purchase
Pension Plan or a 401(k) Defined Contribution Plan upon attainment of normal
retirement age under the plan or upon separation from service; (vi)
distributions from an IRA on or after attainment of age 59 1/2; and (vii)
distributions from an account if the redemption results from the death of all
registered owners of the account (in the case of accounts established under the
Uniform Gifts to Minors or Uniform Transfers to Minors Acts or trust accounts,
the waiver applies upon the death of all beneficial owners) or a total and
permanent disability (as defined in Section 72 of the Code) of all registered
owners occurring after the purchase of the shares being redeemed.

In addition, the CDSC will be waived on Class B and Class C Shares
redeemed in accordance with a Systematic Withdrawal Plan if the annual amount
selected to be withdrawn under the Plan does not exceed 12% of the value of the
account on the date that the Systematic Withdrawal Plan was established or
modified.

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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 normally will be
made during the first quarter following the end of Equity Funds IV, Inc.'s
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 the Class A Shares, the Class B Shares and the Class C
Shares will vary due to the expenses under the 12b-1 Plan applicable to each
Class. Generally, the dividends per share on Class B Shares and Class C Shares
can be expected to be lower than the dividends per share on Class A Shares
because the expenses under the 12b-1 Plans relating to Class B and Class C
Shares will be higher than the expenses under the 12b-1 Plan relating to Class A
Shares. See Distribution (12b-1) and Service under Management of the Fund.

Both dividends and distributions, if any, are automatically reinvested
in your account at net asset value unless you elect otherwise. Any check in
payment of dividends or other distributions which cannot be delivered by 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
Direct Deposit Service and have such payments transferred from your Fund account
to your predesignated bank account. This service is not available for retirement
plans. See MoneyLine Direct Deposit Service under The Delaware Difference for
more information about this service.

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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.

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.

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 paid by the Fund that so qualifies will be designated each
year in a notice from Equity Funds IV, Inc. to the Fund's shareholders. For the
fiscal year ended September 30, 1996, 4.24% of the Fund's dividends from net
investment income qualified for the dividends-received deduction to
corporations.

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

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 year declared.

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<PAGE>

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

The automatic conversion of Class B Shares into Class A Shares at the
end of approximately eight years after purchase will be tax-free for federal tax
purposes. See Automatic Conversion of Class B Shares under Classes of Shares.

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

Each year, Equity Funds IV, 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.

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

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<PAGE>

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

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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. Foreign securities expressed in foreign currency values
will be converted into U.S. dollar values at the mean between the currencies'
bid and offered quotations. 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 IV, 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 the DelCap Fund Institutional Class will not incur any of the
expenses under the Fund's 12b-1 Plans and the Class A, Class B and Class C
Shares alone will bear the 12b-1 Plan expenses payable under their respective
Plans. Due to the specific distribution expenses and other costs that will be
allocable to each class, the NAV per share of each class of the Fund will vary.

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MANAGEMENT OF THE FUND

Directors
The business and affairs of Equity Funds IV, Inc. are managed under the
direction of its Board of Directors. Part B contains additional information
regarding the directors and officers.

Investment Manager
The Manager furnishes investment management services to the Fund.

The Manager and its predecessors have been managing the funds in the
Delaware Group since 1938. On September 30, 1996, the Manager and its affiliates
within the Delaware Group, including Delaware International Advisers Ltd., were
supervising in the aggregate more than $30 billion in assets in the various
institutional or separately managed (approximately $18,573,058,000) and
investment company (approximately $11,495,414,000) accounts.

The Manager is an indirect, wholly owned subsidiary of Delaware
Management Holdings, Inc. ("DMH"). On April 3, 1995, a merger between DMH and a
wholly owned subsidiary of Lincoln National Corporation ("Lincoln National") was
completed. DMH and the Manager are now 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. In connection with the merger, a new
Investment Management Agreement between Equity Funds IV, Inc. on behalf of the
Fund and the Manager was executed following shareholder approval.

The Manager manages the Fund's portfolio and makes investment decisions
for the Fund, which are implemented by the Fund's Trading Department. The
Manager also administers Equity Funds IV, Inc.'s affairs and pays the salaries
of all the directors, officers and employees of Equity Funds IV, 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 the Fund's
proportionate share of all directors' fees paid to the unaffiliated directors by
Equity Funds IV, Inc. The Fund's fee is higher than that paid by many other
funds and may be higher or lower than that paid by funds with comparable

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investment objectives. Investment management fees paid by the Fund for the
fiscal year ended September 30, 1996 were 0.75% of its average daily net assets.

Edward N. Antoian and Gerald S. Frey have primary responsibility for
making day-to-day investment decisions for the Fund. Mr. Antoian, a Vice
President/Senior Portfolio Manager of Equity Funds IV, Inc., has had such
responsibility since the Fund's inception. A graduate of The State University of
New York at Albany with an MBA in Finance from the University of Pennsylvania's
Wharton School, Mr. Antoian began his career with Price Waterhouse. Prior to
joining the Delaware Group in June 1984, he worked in the Institutional Equity
Department of E.F. Hutton in Philadelphia. Mr. Antoian is Chartered Financial
Analyst, and a member of the Philadelphia Finance Association and the
Philadelphia Securities Association. Mr. Frey joined Mr. Antoian as Vice
President/Senior Portfolio Manager and Co-Manager of the Equity Funds IV, Inc.
in June 1996. Mr. Frey has 20 years' experience in the money management business
and holds a BA in Economics from Bloomsburg University and an MBA from Wilkes
College. Prior to joining the Delaware Group in 1996, he was a Senior Director
with Morgan Grenfell Capital Management in New York.

In making investment decisions for the Fund, Mr. Antoian and Mr. Frey
regularly consult with Wayne A. Stork, William H. Miller, Judith R. Finger and
Lori Wachs. Mr. Stork, Chairman of the Manager and Equity Funds IV, Inc.'s Board
of Directors, is a graduate of Brown University and attended New York
University's Graduate School of Business Administration. Mr. Miller is a Vice
President/Assistant Portfolio Manager. He holds a BA in Economics from Trinity
College. Prior to joining the Delaware Group in 1995, he worked as a technology
analyst for Janney Montgomery Scott in Philadelphia and he has also served as an
institutional salesman for Rutherford Brown & Catherwood. Ms. Finger is a Vice
President/Assistant Portfolio Manager. She joined the Delaware Group in 1995
from the New York-based Fred Alger Management, where she was an equity analyst
for three years. Prior to that, she held positions with Chemical Bank and Dun &
Bradstreet, in mergers and acquisitions. She earned her BA in Finance from the
University of Pennsylvania and her MBA in Finance & Accounting from the
University of Chicago. Ms. Wachs is an Assistant Vice President. She joined the
Delaware Group 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.

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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%.
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 turnover rate also may be affected by cash requirements for
redemptions and repurchases of Fund shares. For the fiscal years ended September
30, 1995 and 1996, the Fund's portfolio turnover rates were 51% and 72%,
respectively.

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 Fund shares in placing portfolio orders and may place
orders with broker/dealers that have agreed to defray certain Fund expenses such
as custodian fees.

Performance Information
From time to time, the Fund may quote the 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 periods, as relevant. The Fund may also advertise
aggregate and average total return information concerning a Class over
additional periods of time. In addition, the Fund may present total return
information that does not reflect the deduction of the maximum front-end sales
charge or any applicable CDSC. In this case, such total return information would
be more favorable than total return information that includes deductions of the
maximum front-end sales charge or any applicable CDSC.

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Because securities prices fluctuate, investment results of the Classes
will fluctuate over time and past performance should not be considered a
guarantee of future results.

Distribution (12b-1) and Service
The Distributor, Delaware Distributors, L.P., serves as the national
distributor of the Fund's shares under a Distribution Agreement with Equity
Funds IV, Inc. dated as of April 3, 1995, as amended on November 29, 1995.

Equity Funds IV, 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 provide extra training and
information concerning a Class and increase sales of the Class. In addition, the
Fund may make payments from the 12b-1 Plan fees of the respective Class directly
to others, such as banks, who aid in the distribution of Class shares or provide
services in respect of a Class, pursuant to service agreements with Equity Funds
IV, Inc.

The 12b-1 Plan expenses relating to each of the Class B Shares and the
Class C Shares are also used to pay the Distributor for advancing the commission
costs to dealers with respect to the initial sale of such shares.

The aggregate fees paid by the Fund from the assets of the respective
Classes to the Distributor and others under the Plans may not exceed (i) 0.30%
of the Class A Shares'

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average daily net assets in any year, and (ii) 1% (0.25% of which are fees to be
paid by the Fund to the Distributor, dealers and others, for providing personal
service and/or maintaining shareholder accounts) of each of the Class B Shares'
and the Class C Shares' average daily net assets in any year. The Class A, Class
B and Class C Shares will not incur any distribution expenses beyond these
limits, which may not be increased without shareholder approval.

While payments pursuant to the Plans may not exceed 0.30% annually with
respect to the Class A Shares, and 1% annually with respect to each of the Class
B Shares and the Class C Shares, the Plans do not limit fees to amounts actually
expended by the Distributor. It is therefore possible that the Distributor may
realize a profit in any particular year. However, the Distributor currently
expects that its distribution expenses will likely equal or exceed payments to
it under the Plans. The 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 IV,
Inc.'s unaffiliated directors, who may reduce the fees or terminate the Plans at
any time.

Equity Funds IV, Inc.'s Plans do not apply to the DelCap Fund
Institutional Class of shares. Those shares are not included in calculating the
Plans' fees, and the Plans are not used to assist in the distribution and
marketing of Delcap Fund Institutional Class shares.

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 expenses to
average

-63-

<PAGE>

daily net assets for the fiscal year ended September 30, 1996 was 1.35% for the
Class A Shares, 2.05% for the Class B Shares and 2.05% for the Class C Shares.
The expense ratio of each Class reflects the impact of its 12b-1 Plan.

Shares
Equity Funds IV, Inc. is an open-end management investment company. The
Fund's portfolio of assets is diversified as defined by the 1940 Act. In
addition to the Fund, Equity Funds IV, Inc. currently offers one other series of
shares, the Capital Appreciation Fund. Commonly known as a mutual fund, Equity
Funds IV, Inc. was organized as a Maryland corporation in September 1985.

Equity Funds IV, Inc. shares have a par value of $.01, equal voting
rights, except as noted below, and are equal in all other respects. All Fund
shares have noncumulative voting rights which means that the holders of more
than 50% of Equity Funds IV, 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 IV, 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. Shareholders of 10% or more of Equity Funds IV, Inc.'s
outstanding shares may request that a special meeting be called to consider the
removal of a director.

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

Prior to November 29, 1996, Delaware Group Equity Funds IV, Inc.
offered a single series of shares, the Concept I Series, which was known and did
business as DelCap Fund.

-64-

<PAGE>

OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

Small to Medium-Sized Companies
The Fund invests its assets in equity securities of small to
medium-sized companies. These stocks have historically been more volatile in
price than larger capitalization stocks, such as those included in the Standard
& Poor's 500 Index. This is because, among other things, smaller companies have
a lower degree of liquidity and tend to have a greater sensitivity to changing
economic conditions. These companies may have narrow product lines, markets or
financial resources, or may depend on a limited management group. The companies'
securities may trade less frequently and have a smaller trading volume. The
securities may be traded only in the over-the-counter markets or on a regional
securities exchange. In addition to exhibiting greater volatility, smaller
capitalization securities may, to some degree, fluctuate independently of the
stocks of larger capitalization companies. For example, the stocks of smaller
capitalization companies may decline in price as the price of larger company
stocks rise, or vice versa.

Foreign Securities
The Fund may invest up to 25% 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.

The Fund's Custodian for its foreign securities is The Chase Manhattan
Bank, 4 Chase Metrotech Center, Brooklyn, NY 11245.

American Depository Receipts
The Fund may make foreign investments through the purchase and sale of
sponsored or unsponsored American Depository Receipts ("ADRs"). ADRs are
receipts typically issued by a U.S. bank or trust company which evidence
ownership of underlying securities issued by a foreign corporation. "Sponsored"
ADRs are issued jointly by the

-65-

<PAGE>

issuer of the underlying security and a depository, whereas "unsponsored" ADRs
are issued without participation of the issuer of the deposited security.
Holders of unsponsored ADRs generally bear all the costs of such facilities and
the depository of an unsponsored facility frequently is under no obligation to
distribute shareholder communications received from the issuer of the deposited
security or to pass through voting rights to the holders of such receipts in
respect of the deposited securities. Therefore, there may not be a correlation
between information concerning the issuer of the security and the market value
of an unsponsored ADR.

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

While maintaining oversight, the Board of Directors has delegated to
the Manager the day-to-day function of determining whether or not individual
Rule 144A Securities are liquid for purposes of the Fund's 10% limitation on
investments in illiquid assets. The Board has instructed the Manager to consider
the following factors in determining the liquidity of a Rule 144A Security: (i)
the frequency of trades and trading volume for the security; (ii) whether at
least three dealers are willing to purchase or sell the security and the number
of potential purchasers; (iii) whether at least two dealers are making a market
in the security; (iv) the nature of the security and the nature of the
marketplace trades (e.g., the time needed to dispose of the security, the method
of soliciting offers, and the mechanics of transfer).

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

Portfolio Loan Transactions
The Fund may loan up to 25% of its assets to qualified broker/dealers
or institutional investors for their use relating to short sales or other
security transactions.

-66-

<PAGE>

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.

Repurchase Agreements
The Fund may also use repurchase agreements that are at least 100%
collateralized by securities in which the Fund can invest directly. Repurchase
agreements help the Fund to invest cash on a temporary basis. The Fund may
invest cash balances in joint repurchase agreements with other Delaware Group
funds. Under a repurchase agreement, the Fund acquires ownership and possession
of a security, and the seller agrees to buy the security back at a specified
time and higher price. If the seller is unable to repurchase the security, the
Fund could experience delays in liquidating the securities. To minimize this
possibility, the Fund considers the creditworthiness of banks and dealers when
entering into repurchase agreements.

* * *

The Fund is permitted under certain circumstances to borrow money.
Investment securities will not be purchased while the Fund has an outstanding
borrowing.

Call Options
Writing Covered Call Options
A covered call option obligates the Fund to sell one of its securities
for an agreed price up to an agreed date. The advantage is that the Fund
receives premium income, which may offset any decline in market value of the
security. However, if the Manager's forecast is wrong, the Fund may not fully
participate in the market appreciation if the security's price rises.

Writing a Call Option on Stock Indices
Writing a call option on stock indices is similar to the
writing of a call option on an individual stock. Stock indices used will
include, but not be limited to, the S&P 100 and the S&P Over-The-Counter ("OTC")
250.

-67-

<PAGE>

Put Options
Purchasing a Put Option
A put option gives the Fund the right to sell one of its securities for
an agreed price up to an agreed date. The advantage is that the Fund can be
protected should the market value of the security decline. However, the Fund
must pay a premium for this right whether or not the put option is exercised.

Purchasing a Put Option on Stock Indices
Purchasing a protective put option on stock indices is
similar to the purchase of protective puts on an individual stock. Indices used
will include, but not be limited to, the S&P 100 and the S&P OTC 250.

Closing Transactions
Closing transactions essentially let the Fund offset a put option or
covered call option prior to its exercise or expiration. If the Fund cannot
effect a closing transaction, it may have to hold a security it would otherwise
sell or deliver a security it might want to hold.

Part B sets forth other more specific investment restrictions.

-68-

<PAGE>
APPENDIX A - INVESTMENT ILLUSTRATIONS
Illustrations of Hypothetical Returns Impact on Investments
Based on Purchase Options
$10,000 Purchase
<TABLE>
<CAPTION>

Scenario 1 Scenario 2
No Redemption Redeem 1st Year
---------------------------------------- --------------------------------------
Year Class A Class B Class C Class A Class B Class C
- ---- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
0 9,525 10,000 10,000 9,525 10,000 10,000
1 10,478 10,930 10,930 10,478 10,530 10,830+
2 11,525 11,946 11,946
3 12,678 13,058 13,058
4 13,946 14,272 14,272
5 15,340 15,599 15,599
6 16,874 17,050 17,050
7 18,562 18,636 18,636
8 20,418+ 20,369 20,369
9 22,459 22,405* 22,263
10 24,705 24,646* 24,333

</TABLE>

Scenario 3 Scenario 4
Redeem 3rd Year Redeem 5th Year
--------------------------------------- --------------------------------------
Year Class A Class B Class C Class A Class B Class C
- ---- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
0 9,525 10,000 10,000 9,525 10,000 10,000
1 10,478 10,930 10,930 10,478 10,930 10,930
2 11,525 11,946 11,946 11,525 11,946 11,946
3 12,678 12,758 13,058+ 12,678 13,058 13,058
4 13,946 14,272 14,272
5 15,340 15,399 15,599+
6
7
8
9
10

*This assumes that Class B Shares were converted to Class A Shares at the end of the eighth year.
</TABLE>

<PAGE>

$250,000 Purchase

Scenario 1 Scenario 2
No Redemption Redeem 1st Year
------------------------------------------ ----------------------------------------
Year Class A Class B Class C Class A Class B Class C
- ---- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
0 243,750 250,000 250,000 243,750 250,000 250,000
1 268,125 273,250 273,250 268,125 263,250 270,750+
2 294,938 298,662 298,662
3 324,431 326,438 326,438
4 356,874+ 356,797 356,797
5 392,562 389,979 389,979
6 431,818 426,247 426,247
7 475,000 465,888 465,888
8 522,500 509,215 509,215
9 574,750 560,137* 556,572
10 632,225 616,150* 608,333

</TABLE>

Scenario 3 Scenario 4
Redeem 3rd Year Redeem 5th Year
--------------------------------------- -------------------------------------
Year Class A Class B Class C Class A Class B Class C
- ---- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
0 243,750 250,000 250,000 243,750 250,000 250,000
1 268,125 273,250 273,250 268,125 273,250 273,250
2 294,938 298,662 298,662 294,938 298,662 298,662
3 324,431 318,938 326,438+ 324,431 326,438 326,438
4 356,874+ 356,797 356,797
5 392,562 384,979 389,979
6
7
8
9
10
</TABLE>

*This assumes that Class B Shares were converted to Class A Shares at the end
of the eighth year.
Assumes a hypothetical return for Class A of 10% per year, a
hypothetical return for Class B of 9.3% for years 1-8 and 10% for years 9-10,
and a hypothetical return for Class C of 9.3% per year. Hypothetical returns
vary due to the different expense structures for each Class and do not represent
actual performance. Class A purchase subject to appropriate sales charge
breakpoint (4.75% @ $10,000; 3.75% @ $100,000; 2.50% @ $250,000). Class B
purchase assessed appropriate CDSC upon redemption (4%-4%-3%-3%-2%-1% in years
1-2-3-4-5-6). Class C purchase assessed 1% CDSC upon redemption in year 1.
Figures marked "+" identify which Class offers the greater return potential
based on investment amount, the holding period and the expense structure of each
Class.

<PAGE>

APPENDIX B--CLASSES OFFERED

Growth of Capital A Class B Class C Class Consultant Class
- ----------------- ------- ------- ------- ----------------
<S> <C> <C> <C> <C>
Trend Fund x x x -
Enterprise Fund x x x -
DelCap Fund x x x -
Value Fund x x x -
U.S. Growth Fund x x x -

Total Return
Devon Fund x x x -
Decatur Total Return Fund x x x -
Decatur Income Fund x x x -
Delaware Fund x x x -

Global Diversification
Emerging Markets Fund x x x -
New Pacific Fund x x x -
International Equity Fund x x x -
World Growth Fund x x x -
Global Assets Fund x x x -
Global Bond Fund x x x -

Current Income
Delchester Fund x x x -
Strategic Income Fund x x x -
Corporate Income Fund x x x -
Federal Bond Fund x x x -
U.S. Government Fund x x x -
Limited-Term Government Fund x x x -

Tax-Free Current Income
Tax-Free Pennsylvania Fund x x x -
Tax-Free USA Fund x x x -
Tax-Free Insured Fund x x x -
Tax-Free USA Intermediate Fund x x x -

Money Market Funds
Delaware Cash Reserve x x x x
U.S. Government Money Fund x - - x
Tax-Free Money Fund x - - x

</TABLE>

-69-

<PAGE>

DELCAP FUND INSTITUTIONAL PROSPECTUS
NOVEMBER 29, 1996

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

1818 Market Street, Philadelphia, PA 19103

For more information about
the DelCap Fund Institutional Class
call Delaware Group at 800-828-5052.

This Prospectus describes the DelCap Fund Institutional Class (the
"Class") of DelCap Fund series (the "Fund") (formerly known as Concept I
Series), of Delaware Group Equity Funds IV, Inc. ("Equity Funds IV, Inc.")
(formerly known as Delaware Group DelCap Fund, Inc.), a professionally- managed
mutual fund of the series type. The Fund intends to achieve its objective of
long-term capital appreciation by investing its assets in a diversified
portfolio of securities offering significant growth opportunity.

This Prospectus relates only to the Class and sets forth information
that you should read and consider before you invest. Please retain it for future
reference. Part B of Equity Funds IV, Inc.'s registration statement, dated
November 29, 1996, as it may be amended from time to time, contains additional
information about the Fund and has been filed with the Securities and Exchange
Commission. Part B is incorporated by reference into this Prospectus and is
available, without charge, by writing to Delaware Distributors, L.P. at the
above address or by calling the above number. The Fund's financial statements
appear in its Annual Report, which will accompany any response to requests for
Part B.

The Fund also offers DelCap Fund A Class, DelCap Fund B Class and
DelCap Fund C Class. Shares of these classes are subject to sales charges and
other expenses, which may affect 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.

-1-

<PAGE>

TABLE OF CONTENTS

Cover Page Classes of Shares
Synopsis How to Buy Shares
Summary of Expenses Redemption and Exchange
Financial Highlights Dividends and Distributions
Investment Objective Taxes
and Policies Calculation of Net Asset
Suitability Value Per Share
Investment Strategy Management of the Fund
Other Investment Policies
and Risk Considerations

-2-

<PAGE>

SYNOPSIS

-3-

<PAGE>

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 IV, Inc., which was organized as a Maryland corporation in
1985, 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"). See Shares under Management of the Fund.

-4-

<PAGE>

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

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

Exchange Fees . . . . . . . . . . . . . . . . . . None**

Annual Operating Expenses
(as a percentage of
average daily net assets)
- -------------------------------------------------------------
Management Fees . . . . . . . . . . . . . . . . . 0.75%

12b-1 Fees. . . . . . . . . . . . . . . . . . . . None

Other Operating Expenses. . . . . . . . . . . . . 0.30%
-----
Total Operating Expenses . . . . . . . . . . 1.05%
=====

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

** Exchanges are subject to the requirements of each fund and a front-end sales
charge may apply.

For expense information about the DelCap Fund A Class, B Class and C
Class, see the separate prospectus relating to those classes.

-5-

<PAGE>

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

1 year 3 years 5 years 10 years
------ ------- ------- --------
$11 $33 $58 $128

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

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.

-6-

<PAGE>

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

-7-

<PAGE>
<TABLE>
<CAPTION>
Period
11/9/92(1)
Year Ended through Year Ended
9/30/96 9/30/95 9/30/94 9/30/93 9/30/93(2)
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period . . . . . . $29.130 $25.710 $26.140 $22.000 $20.730

Income (Loss) From In-
- ---------------
vestment Operations
- -------------------

Net Investment
Income (Loss)(3) . (0.123) (0.091) (0.080) (0.027) (0.125)

Net Gains (Losses)
on Securities (both
realized and
unrealized). . . . 5.693 5.341 0.470 4.167 5.475
----- ----- ----- ----- -----

Total From
Investment
Operations. . . 5.570 5.250 0.390 4.140 5.350
----- ----- ----- ----- -----

Less Distributions
- ------------------

Dividends from
Net Investment
Income. . . . . . none none none none none

Distributions
from Capital
Gains . . . . . . (3.540) (1.830) (0.820) none none

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

Total Distri-
butions . . . . (3.540) (1.830) (0.820) none none
----- ------- ------- ---- ----

Net Asset Value,
End of Period. . . $31.160 $29.130 $25.710 $26.140 $26.080
======= ======= ======= ======= =======

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

Total Return . . . 21.44% 22.45% 1.48% 21.31% 25.81%(4)
- ------------

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

Ratios/Supplemental
- -------------------
Data
- ----

Net Assets, End
of Period (000's
omitted) . . . . . $178,197 $129,378 $110,126 $85,588 $1,057,358

Ratio of Expenses
to Average
Net Assets . . . . 1.05% 1.07% 1.05% 1.02% 1.30%

Ratio of Net
Investment Income
(Loss) to Average
Net Assets . . . . (0.44%) (0.37%) (0.38%) (0.15%) (0.43%)

Portfolio Turnover
Rate . . . . . . . 72% 51% 34% 51% 51%

Average Commission
Rate Paid. . . . . $0.0600 N/A N/A N/A N/A

</TABLE>

-8-

Year Ended
9/30/92(2) 9/30/91(2) 9/30/90(2) 9/30/89(2) 9/30/88(2)
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period . . . . . . $21.470 $15.810 $19.060 $13.920 $14.930

Income (Loss) From In-
- ---------------
vestment Operations
- -------------------

Net Investment
Income (Loss). . . (0.059) 0.064 0.419 0.201 0.042

Net Gains (Losses)
on Securities (both
realized and
unrealized). . . . (0.651) 6.496 (3.219) 5.059 (0.357)
------ ----- ------- ----- -------

Total From
Investment
Operations. . . (0.710) 6.560 (2.800) 5.260 (0.315)
------- ----- ------- ----- -------

Less Distributions
- ------------------

Dividends from
Net Investment
Income. . . . . . (0.030) (0.410) (0.160) (0.120) (0.430)

Distributions
from Capital
Gains . . . . . . none (0.490) (0.290) none (0.265)

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

Total Distri-
butions . . . . (0.030) (0.900) (0.450) (0.120) (0.695)
------- ------- ------- ------- -------

Net Asset Value,
End of Period. . . $20.730 $21.470 $15.810 $19.060 $13.920
======= ======= ======= ======= =======

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

Total Return . . . (3.32%)(4) 43.25%(4) (14.99%)(4) 38.15%(4) (2.26%)(4)
- ------------

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

Ratios/Supplemental
- -------------------
Data
- ----

Net Assets, End
of Period (000's
omitted) . . . . . $993,125 $512,356 $155,392 $138,589 $114,122

Ratio of Expenses
to Average
Net Assets . . . . 1.39% 1.43% 1.41% 1.44% 1.55%

Ratio of Net
Investment Income
(Loss) to Average
Net Assets . . . . (0.26%) 0.63% 2.61% 1.28% 0.31%

Portfolio Turnover
Rate . . . . . . . 24% 33% 45% 42% 77%

Average Commission
Rate Paid. . . . . N/A N/A N/A N/A N/A

</TABLE>

-9-

<PAGE>

Year Ended
9/30/87(2)
Net Asset Value,
Beginning of
Period . . . . . . $16.540

Income (Loss) From In-
- ---------------
vestment Operations
- -------------------

Net Investment
Income (Loss). . . 0.449

Net Gains (Losses)
on Securities (both
realized and
unrealized). . . . 5.361
-----

Total From
Investment
Operations. . . 5.810
-----

Less Distributions
- ------------------

Dividends from
Net Investment
Income. . . . . . none

Distributions
from Capital
Gains . . . . . . (7.420)

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

Total Distri-
butions . . . . (7.420)
-------

Net Asset Value,
End of Period. . . $14.930
=======

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

Total Return . . . 63.07%(4)(5)
- ------------

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

Ratios/Supplemental
- -------------------
Data
- ----

Net Assets, End
of Period (000's
omitted) . . . . . $131,916

Ratio of Expenses
to Average
Net Assets . . . . 1.39%(6)

Ratio of Net
Investment Income
(Loss) to Average
Net Assets . . . . 7.11%(7)

Portfolio Turnover
Rate . . . . . . . 127%

Average Commission
Rate Paid. . . . . N/A

-10-

<PAGE>

- ------------------------
(1) Date of initial public offering of the DelCap Fund Institutional Class;
ratios and total return for this period have been annualized.

(2) Data are derived from data of the DelCap Fund A Class and reflect the
impact of Rule 12b-1 distribution expenses paid by the DelCap Fund A Class.
DelCap Fund Institutional Class shares are not subject to Rule 12b-1
distribution expenses and per share data for periods beginning on and after
November 9, 1992 will not reflect the deduction of such expenses.

(3) The per share information for the years ended 9/30/96 and 9/30/95 were
based on the average shares outstanding method.

(4) Total return data is derived from performance of the DelCap Fund A Class,
but does not reflect the maximum sales charge that is or was in effect nor
the 1% limited contingent deferred sales charge that would apply in the
event of certain redemptions within 12 months of purchase.

(5) Total return for 1987 reflects the expense limitation referenced in Notes 5
and 6.

(6) Ratio of expenses to average net assets prior to expense limitation was
1.73% for 1987.

(7) Ratio of net investment income (loss) to average net assets prior to
expense limitation was 6.77% for 1987.

-11-

<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

Ownership of Fund shares reduces the bookkeeping and administrative
inconvenience connected with direct purchases of the types of securities in
which the Fund invests.

INVESTMENT STRATEGY
The Fund will attempt to achieve its objective by exceeding the return
of common stocks as measured by the Standard & Poor's ("S&P") 500 Stock Index.

-12-

<PAGE>

In investing for capital appreciation, the Fund may hold securities for
any period of time.

-13-

<PAGE>

For additional information about the Fund's investment policies and
certain risks associated with investments in certain types of securities, see
Other Investment Policies and Risk Considerations.

-14-

<PAGE>

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, a division of the Manager, or its affiliates and their
corporate sponsors, as well as subsidiaries and related employee benefit plans
and rollover individual retirement accounts from such institutional advisory
accounts; (d) banks, trust companies and similar financial institutions
investing for their own account or for the account of their trust customers for
whom such financial institution is exercising investment discretion in
purchasing shares of the Class; and (e) registered investment advisers investing
on behalf of clients that consist solely of institutions and high net-worth
individuals having at least $1,000,000 entrusted to the adviser for investment
purposes, but only if the adviser is not affiliated or associated with a broker
or dealer and derives compensation for its services exclusively from its clients
for such advisory services.

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

-15-

<PAGE>

A Class carries a front-end sales charge and has annual 12b-1 expenses equal to
a maximum of 0.30%. The maximum front-end sales charge as a percentage of the
offering price is 4.75% and is reduced on certain transactions of $100,000 or
more. The DelCap Fund B Class and the DelCap Fund C Class have no front-end
sales charge but are subject to annual 12b-1 expenses equal to a maximum of 1%.
Shares of the DelCap Fund B Class and the DelCap Fund C Class and certain shares
of the DelCap Fund A Class may be subject to a contingent deferred sales charge
upon redemption. To obtain a prospectus relating to such classes, contact the
Distributor by writing to the address or by calling the phone numbers listed on
the cover of this Prospectus.

-16-

<PAGE>

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

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

2. Subsequent Purchases--Additional purchases may be made at any time by mailing
a check payable to DelCap 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 Fund's Client Services
Department at 800-828-5052 to get an account number. If you do not call first,
it may delay processing your investment. In addition, you must promptly send
your Investment Application or, in the case of a retirement account, an
appropriate retirement plan application, to DelCap Fund Institutional Class, to
Delaware Group 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 the Delaware Group
and you qualify to purchase shares of the Class, you may write and authorize an
exchange of part or all of your investment into the Fund. However, shares of the
DelCap Fund B Class and the DelCap Fund C Class and the Class B Shares and the
Class C Shares of the other funds in the Delaware Group offering such a class of
shares may not be exchanged into the Class. If you wish to open an account by
exchange, call your Client Services Representative at 800- 828-5052 for more
information.

-17-

<PAGE>

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. They
may charge for this service.

Purchase Price and Effective Date
The purchase price (net asset value) is determined as of the close of
regular trading on the New York Stock Exchange (ordinarily, 4 p.m., Eastern
time) on days when the Exchange is open.

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

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

-18-

<PAGE>

REDEMPTION AND EXCHANGE

Redemption and exchange requests made on behalf of participants in an
employer-sponsored retirement plan are made in accordance with directions
provided by the employer. Employees should therefore contact their employer for
details.

Your shares will be redeemed or exchanged based on the net asset value
next determined after we receive your request in good order. Redemption and
exchange requests received in good order after the time the net asset value of
shares is determined, as noted above, will be processed on the next business
day. See Purchase Price and Effective Date under 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 also 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.

-19-

<PAGE>

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

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

All authorizations, 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
your shares into another mutual fund in the Delaware Group, subject to the same
conditions and limitations as other exchanges noted above. The request must be
signed by all owners of the account or your investment dealer of record.

For redemptions of more than $50,000, or when the proceeds are not sent
to the shareholder(s) at the address of record, the Fund requires a signature by
all owners of the account and may require a signature guarantee. Each signature
guarantee must be supplied by an eligible guarantor institution. The Fund
reserves the right to reject a signature guarantee supplied by an eligible
institution based on its creditworthiness. The Fund may require further
documentation from corporations, executors, retirement plans, administrators,
trustees or guardians.

-20-

<PAGE>

Payment is normally mailed the next business day after receipt of your
redemption request. Certificates are issued for shares only if you submit a
specific request. If your shares are in certificate form, the certificate must
accompany your request and also be in good order.

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 certificates.

The Telephone Redemption--Check to Your Address of Record service and
the Telephone Exchange service, both of which are described below, are
automatically provided unless you notify the Fund in writing that you do not
wish to have such service available with respect to your account. The Fund
reserves the right to modify, terminate or suspend these procedures upon 60
days' written notice to shareholders. It may be difficult to reach the Fund by
telephone during periods when market or economic conditions lead to an unusually
large volume of telephone requests.

Neither the Fund nor 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.

-21-

<PAGE>

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.
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 fees for this redemption method, but the mail time may delay
getting funds into your bank account. Simply call your Client Services
Representative prior to the time the net asset value is determined, as noted
above.

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

-22-

<PAGE>

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 normally will be
made during the first quarter following the end of Equity Funds IV, Inc.'s
fiscal year. The second payment would be made near the end of the calendar year
to comply with certain requirements of the Internal Revenue Code (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
distribution fees under the 12b-1 Plans which apply to the DelCap Fund A Class,
the DelCap Fund B Class and the DelCap Fund C Class.

-23-

<PAGE>

TAXES

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 paid by the Fund that so qualifies will be designated each year in a
notice from Equity Funds IV, Inc. to the Fund's shareholders. For the fiscal
year ended September 30, 1996, 4.24% of the Fund's dividends from net investment
income qualified for the dividends-received deduction to corporations.

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

-24-

<PAGE>

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

-25-

<PAGE>

CALCULATION OF NET ASSET VALUE PER SHARE

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

The NAV is computed by adding the value of all securities and other
assets in the portfolio, deducting any liabilities (expenses and fees are
accrued daily) and dividing by the number of shares outstanding. Portfolio
securities for which market quotations are available are priced at market value.
Foreign securities expressed in foreign currency values will be converted into
U.S. dollar values at the mean between the currencies' bid and offered
quotations. 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 IV, 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 the Fund's 12b-1
Plans and DelCap Fund A, B and C Classes alone will bear the 12b-1 Plan fees
payable under their respective Plans. Due to the specific distribution expenses
and other costs that will be allocable to each class, the NAV per share of each
class of the Fund will vary.

-26-

<PAGE>

MANAGEMENT OF THE FUND

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

Investment Manager
The Manager furnishes investment management services to the Fund.

The Manager manages the Fund's portfolio and makes investment decisions
for the Fund, which are implemented by the Fund's Trading Department. The
Manager also administers Equity Funds IV, Inc.'s affairs and pays the salaries
of all the directors, officers and employees of Equity Funds IV, 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 the Fund's
proportionate share of all directors' fees paid to unaffiliated directors by
Equity Funds IV, Inc. The Fund's 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

-27-

<PAGE>

paid by the Fund for the fiscal year ended September 30, 1996 were 0.75% of
average daily net assets.

Edward N. Antoian and Gerald S. Frey have primary responsibility for
making day-to-day investment decisions for the Fund. Mr. Antoian, a Vice
President/Senior Portfolio Manager of Equity Funds IV, Inc., had such
responsibility since the Fund's inception. A graduate of The State University of
New York at Albany with an MBA in Finance from the University of Pennsylvania's
Wharton School, Mr. Antoian began his career with Price Waterhouse. Prior to
joining the Delaware Group in June 1984, he worked in the Institutional Equity
Department of E.F. Hutton in Philadelphia. Mr. Antoian is a Chartered Financial
Analyst, and a member of the Philadelphia Finance Association and the
Philadelphia Securities Association. Mr. Frey joined Mr. Antoian as Vice
President/Senior Portfolio Manager and co-manager of Equity Funds IV, Inc. in
June 1996. Mr. Frey has 20 years' experience in the money management business
and holds a BA in Economics from Bloomsburg University and an MBA from Wilkes
College. Prior to joining the Delaware Group in 1996, he was a Senior Director
with Morgan Grenfell Capital Management in New York.

In making investment decisions for the Fund, Mr. Antoian and Mr. Frey
regularly consult with Wayne A. Stork, William H. Miller, Judith R. Finger and
Lori Wachs. Mr. Stork, Chairman of the Manager and the Equity Funds IV, Inc.'s
Board of Directors, is a graduate of Brown University and attended New York
University's Graduate School of Business Administration. Mr. Miller is a Vice
President/Assistant Portfolio Manager. He holds a BA in Economics from Trinity
College. Prior to joining the Delaware Group in 1995, he worked as a technology
analyst for Janney Montgomery Scott in Philadelphia and he has also served as an
institutional salesman for Rutherford Brown & Catherwood. Ms. Finger is a Vice
President/Assistant Portfolio Manager. She joined the Delaware Group in 1995
from the New York-based Fred Alger Management, where she was an equity analyst
for three years. Prior to that, she held positions with Chemical Bank and Dun &
Bradstreet, in mergers and acquisitions. She earned her BA in Finance from the
University of Pennsylvania and her MBA in Finance & Accounting from the
University of Chicago. Ms. Wachs is an Assistant Vice President. She joined the
Delaware Group 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.

-28-
<PAGE>

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%.
A turnover rate of 100% would occur if all the investments in the Fund's
portfolio at the beginning of the year were replaced by the end of the year. The
turnover rate also may be affected by cash requirements for redemptions and
repurchases of Fund shares. For the fiscal years ended September 30, 1995 and
1996, the Fund's portfolio turnover rates were 51% and 72%, respectively.

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
to 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 Fund shares in placing portfolio orders and may place
orders with broker/dealers that have agreed to defray certain Fund expenses such
as custodian fees.

Performance Information
From time to time, the Fund may quote 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 periods, as relevant. The Fund may also advertise aggregate and average
total return information concerning the Class over additional periods of time.

Because securities prices fluctuate, investment results of the Class
will fluctuate over time and past performance should not be considered a
guarantee of future results.

-29-
<PAGE>

reinvestment of dividends. You should examine statements and confirmations
immediately and promptly report any discrepancy by calling your Client Services
Representative.

Distribution and Service
The Distributor, Delaware Distributors, L.P., serves as the national
distributor of the Fund's shares under a Distribution Agreement with Equity
Funds IV, 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 amended and restated agreement dated as of November 29, 1996. The Transfer
Agent also provides accounting services to the Fund pursuant to the terms of a
separate Fund Account Agreement. The directors annually review service fees paid
to the Transfer Agent. Certain recordkeeping and other shareholder services that
otherwise would be performed by the Transfer Agent may be performed by certain
other entities and the Transfer Agent may elect to enter into an agreement to
pay such other entities for those services. In addition, participant account
maintenance fees may be assessed for certain recordkeeping provided as part of
retirement plan and administration service packages. These fees are based on the
number of participants in the plan and the various services selected. Fees will
be quoted upon request and are subject to change.

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

-30-
<PAGE>

Equity Funds IV, 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 IV, Inc. was organized as a Maryland
corporation in September 1985. In addition to the Fund, Equity Funds IV, Inc.
presently offers one other series of shares, the Capital Appreciation Fund
series.

Equity Funds IV, Inc.'s shares have a par value of $.01, equal voting
rights, except as noted below, and are equal in all other respects. Equity Funds
IV, Inc.'s shares have noncumulative voting rights which means that the holders
of more than 50% of Equity Funds IV, 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 IV, 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. Shareholders of 10% or more of Equity
Funds IV, Inc.'s outstanding shares may request that a special meeting be called
to consider the removal of a director.

-31-

<PAGE>

In addition to the Class, the Fund also offers the DelCap Fund A Class,
the DelCap Fund B Class and the DelCap 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 other classes of the Fund except
that shares of the Class are not subject to, and may not vote on matters
affecting, the Distribution Plans under Rule 12b-1 relating to the DelCap Fund A
Class, the DelCap Fund B Class and the DelCap Fund C Class.

Prior to November 29, 1996, Delaware Group Equity Funds IV, Inc.
offered a single series of shares, the Concept I Series, which was known and did
business as DelCap Fund.

-32-

<PAGE>

OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

The Fund's Custodian for its foreign securities is The Chase Manhattan
Bank, 4 Chase Metrotech Center, Brooklyn, NY 11245.

-33-

<PAGE>

corporation. "Sponsored" ADRs are issued jointly by the issuer of the underlying
security and a depository, whereas "unsponsored" ADRs are issued without
participation of the issuer of the deposited security. Holders of unsponsored
ADRs generally bear all the costs of such facilities and the depository of an
unsponsored facility frequently is under no obligation to distribute shareholder
communications received from the issuer of the deposited security or to pass
through voting rights to the holders of such receipts in respect of the
deposited securities. Therefore, there may not be a correlation between
information concerning the issuer of the security and the market value of an
unsponsored ADR.

-34-

<PAGE>

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 Fund is permitted under certain circumstances to borrow money.
Investment securities will not be purchased while the Fund has an outstanding
borrowing.

-35-

<PAGE>

Part B sets forth other more specific investment restrictions.

-36-

<PAGE>

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

DELCAP FUND INSTITUTIONAL

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

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

NATIONAL DISTRIBUTOR
Delaware Distributors, L.P. P R O S P E C T U S
1818 Market Street
Philadelphia, PA 19103 -----------------------------

NOVEMBER 29, 1996

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
DELAWARE
GROUP
--------

CUSTODIAN
The Chase Manhattan Bank
4 Chase Metrotech Center
Brooklyn, NY 11245

<PAGE>

The Delaware Group includes -----------------------------
funds with a wide range of investment
objectives. Stock funds, income funds, CAPITAL APPRECIATION FUND
tax-free funds, money market funds,
global and international funds and -----------------------------
closed-end equity funds give investors
the ability to create a portfolio that A CLASS
fits their personal financial goals. For B CLASS
more information, contact your financial C CLASS
adviser or call Delaware Group at
800-523-4640. -----------------------------

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

NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street PROSPECTUS
Philadelphia, PA 19103

SHAREHOLDER SERVICING, -----------------------------
DIVIDEND DISBURSING,
ACCOUNTING SERVICES NOVEMBER 29, 1996
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
---------

<PAGE>

CAPITAL APPRECIATION FUND A CLASS SHARES
CAPITAL APPRECIATION FUND B CLASS SHARES PROSPECTUS
CAPITAL APPRECIATION FUND C CLASS SHARES NOVEMBER 29, 1996

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

1818 Market Street, Philadelphia, PA 19103

For Prospectus and Performance:
Nationwide 800-523-4640

Information on Existing Accounts:
(SHAREHOLDERS ONLY)
Nationwide 800-523-1918

Dealer Services:
(BROKER/DEALERS ONLY)
Nationwide 800-362-7500

Representatives of Financial Institutions:
Nationwide 800-659-2259

This Prospectus describes the Capital Appreciation Fund A Class of
shares ("Class A Shares"), the Capital Appreciation Fund B Class of shares
("Class B Shares") and the Capital Appreciation Fund C Class of shares ("Class C
Shares") (individually, a "Class" and collectively, the "Classes") of the
Capital Appreciation Fund series (the "Fund") of Delaware Group Equity Funds IV,
Inc. ("Equity Funds IV, Inc."), a professionally-managed mutual fund of the
series type. The investment objective of the Fund is capital appreciation. The
Fund will attempt to achieve its objective by investing primarily in equity
securities of small to medium-sized companies expected to grow over time and, to
a lesser extent, in equity securities of larger, more well established companies
presenting growth potential.

This Prospectus sets forth information that you should read and
consider before you invest. Please retain it for future reference. The Statement
of Additional Information ("Part B") for Equity Funds IV, Inc., dated November
29, 1996, as it may be amended from time to time, contains additional
information about the Fund and has been filed with the Securities and Exchange
Commission. Part B is incorporated by reference into this Prospectus and is
available, without charge, by writing to Delaware Distributors, L.P. at the
above address or by calling the above numbers.

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

-1-

<PAGE>

TABLE OF CONTENTS

Cover Page How to Buy Shares
Synopsis Redemption and Exchange
Summary of Expenses Dividends and Distributions
Investment Objective and Policies Taxes
Suitability and Certain Calculation of Offering Price and
Risk Factors Net Asset Value Per Share
Investment Strategy Management of the Fund
The Delaware Difference Other Investment Policies
Plans and Services and Risk Considerations
Retirement Planning Appendix A--Investment Illustrations
Classes of Shares Appendix B--Classes Offered

-2-

<PAGE>

SYNOPSIS

Investment Objective
The investment objective of the Fund is to seek capital appreciation.
The Fund will attempt to achieve its objective by investing primarily in equity
securities of small to medium-sized companies expected to grow over time and, to
a lesser extent, in equity securities of larger, more well established companies
presenting growth potential.

Risk Factors and Special Considerations
1. Investments in equity securities of small to medium-sized companies
may present greater risks than investments in larger capitalization companies,
as the market prices of securities issued by smaller companies tend to
fluctuate, particularly in the short-term and, some smaller company securities
may be speculative. See Suitability and Certain Risk Factors under Investment
Objective and Policies.

2. The Fund may enter into options and futures transactions for hedging
purposes and, among other reasons, to attempt to counterbalance portfolio
volatility. While the Fund does not engage in options and futures for
speculative purposes, there are risks that result from the use of these
instruments. See Futures Contracts and Options under Other Investment Policies
and Risk Considerations.

3. The Fund may invest up to 20% of its total assets directly in
securities of foreign issuers denominated in foreign currencies. Consequently,
the Fund may be affected by changes in currency exchange rates and controls and
may incur costs in connection with conversions between currencies. To hedge the
currency risks associated with investments in securities of foreign companies
denominated in foreign currencies and to expedite settlement of portfolio
transactions, the Fund may enter into certain foreign currency transactions.
These activities pose special risks which do not typically arise in connection
with investments denominated in U.S. dollars. See Foreign Securities, Futures
Contracts and Foreign Currency Transactions under Other Investment Policies and
Risk Considerations.

Investment Manager, Distributor and Service Agent
Delaware Management Company, Inc. (the "Manager") furnishes investment
management services to the Fund, subject to the supervision and direction of
Equity Funds IV, Inc.'s Board of Directors. The Manager also provides investment
management services to certain other funds in the Delaware Group. Delaware
Distributors, L.P. (the "Distributor") is the national distributor for the Fund
and for all of the other mutual funds in the Delaware Group. Delaware Service
Company, Inc. (the "Transfer Agent") is the shareholder servicing, dividend
disbursing, accounting services and transfer agent for the Fund and for all of
the other mutual funds in the Delaware Group. See Summary of Expenses and
Management of the Fund for further information regarding the Manager and 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, which is equivalent to 4.94% of the amount
invested, based on an initial net asset value of $8.50 per share. The front-end
sales charge is reduced on certain transactions of at least $100,000 but under
$1,000,000. There is no front-end sales charge on purchases of $1,000,000 or
more. Class A Shares are subject to annual 12b-1 Plan expenses for the life of
the investment.

-3-

<PAGE>

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

Purchase Amounts
Generally, the minimum initial investment in any Class is $1,000.
Subsequent investments must generally 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 these 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 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.

-4-

<PAGE>

SUMMARY OF EXPENSES

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

Class A Class B Class C
Shareholder Transaction Expenses Shares Shares Shares
- ------------------------------------------------------------------------

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

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

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

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

Annual Operating Expenses
(as a percentage of Class A Class B Class C
average daily net assets) Shares Shares Shares
- ------------------------------------------------------------------------

Management Fees . . . . . . . . . . .
(after voluntary waivers) 0.00% 0.00% 0.00%

12b-1 Plan Expenses
(including service fees)
(after voluntary waivers) . . . . . 0.00%+ 0.00%+ 0.00%+

Other Operating Expenses++. . . . . . 0.75% 0.75% 0.75%
----- ----- -----
Total Operating Expenses+++. . .
(after voluntary waivers) 0.75% 0.75% 0.75%
===== ===== =====

*Class A purchases of $1 million 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 CDSC of
1% will be imposed on certain redemptions within 12 months of purchase ("Limited
CDSC"). Class B Shares are subject to a CDSC of: (i) 4% if shares are redeemed
within two years of purchase; (ii) 3% if shares are redeemed during the third or
fourth year following purchase; (iii) 2% if shares are redeemed during the fifth
year following purchase; (iv) 1% if shares are redeemed during the sixth year
following purchase; and (v) 0% thereafter. Class C Shares are subject to a

-5-

<PAGE>
CDSC of 1% if the shares are redeemed within 12 months of purchase. See
Contingent Deferred Sales Charge for Certain Redemptions of Class A Shares
Purchased at Net Asset Value under Redemption and Exchange; Deferred Sales
Charge Alternative - Class B Shares and Level Sales Charge Alternative - Class C
Shares under Classes of Shares.

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

+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"). The Distributor has elected
voluntarily to waive its right to receive 12b-1 Plan fees (including service
fees) from the commencement of the public offering of the Classes through May
31, 1997. In the absence of those waivers, 12b-1 expenses would equal 0.30% for
Class A Shares and 1.00% for each of the Class B and Class C Shares. See
Distribution (12b-1) and Service under Management of the Fund.

++Because the Fund has no operating history, "Other Operating Expenses" for all
Classes are estimates based on expenses expected to be incurred during the
Fund's first fiscal year.

+++"Other Operating Expenses" for the Class A Shares, the Class B Shares and the
Class C Shares are based on estimated amounts for the first full fiscal year of
the Classes, after giving effect to the voluntary expense waiver. As noted
above, the Distributor has elected voluntarily to waive 12b-1 Plan fees through
May 31, 1997. Also, the Manager has elected voluntarily to waive that portion,
if any, of the annual management fees payable by the Capital Appreciation Fund
and to pay certain expenses of the Fund to the extent necessary to ensure that
the "Total Operating Expenses" of each Class of the Fund, excluding each such
Class' 12b-1 fees, do not exceed 0.75%, during the commencement of the public
offering of the Classes through May 31, 1997. If the voluntary expense waivers
were not in effect by the Distributor and the Manager, it is estimated that the
"Total Operating Expenses", as a percentage of average daily net assets, would
be 5.01%, 5.71%, and 5.71%, respectively, for the Class A Shares, the Class B
Shares and the Class C Shares first full fiscal year, reflecting management fees
of 0.75%.

For expense information about the Capital Appreciation Fund
Institutional Class of shares, see the separate prospectus relating to that
class.

-6-

<PAGE>
The following example illustrates the expenses that an investor would
pay on a $1,000 investment over various time periods, assuming (1) a 5% annual
rate of return, (2) redemption 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.

<TABLE>
<CAPTION>
Assuming Redemption Assuming No Redemption
1 year 3 years 1 year 3 years
------ ------- ------ -------
<S> <C> <C> <C> <C>
Class A Shares $55(1) $70 $55 $70

Class B Shares(2) $48 $54 $ 8 $24

Class C Shares $18 $24 $ 8 $24
</TABLE>

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

(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 12 months of 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
does not assume conversion of Class B Shares since it reflects figures
only for one and three years. 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.

-7-

<PAGE>
INVESTMENT OBJECTIVE AND POLICIES

SUITABILITY AND CERTAIN RISK FACTORS
The Fund may be suitable for the patient investor interested in capital
appreciation. Investors should be willing to accept the risks associated with
investments in equity securities issued by domestic and foreign issuers.

While equity securities of small to medium-sized companies may offer
the potential for greater capital appreciation than securities issued by larger
companies, investments in securities of smaller companies, some of which may be
speculative, may present greater risks. The prices of equity securities,
especially of smaller companies, tend to fluctuate in response to the condition
of individual companies as well as general market and economic conditions.
Consequently, the Fund's net asset value will fluctuate and an investment in the
Fund may be inappropriate for the short-term investor.

In addition, investments in securities issued by foreign companies
involve special risks, including those associated with currency fluctuations, as
well as political, economic and social circumstances that may be different from
and more volatile than those present in the U.S. market.

As a result, the Fund of course can not assure a specific rate of
return or that the Fund's principal will be protected. Through cautious
selection and supervision of Fund investments, however, the Manager will strive
to achieve the Fund's objective.

The Fund is designed for capital appreciation; providing current income
is not a goal of the Fund. Any income produced, therefore, is expected to be
minimal. Investors should not consider an investment in the Fund as equivalent
to a complete investment program. The Delaware Group includes a family of funds
generally available through registered investment dealers which may be used in
concert to create a more complete investment program.

INVESTMENT STRATEGY
The Fund's investment objective is capital appreciation. It seeks to
achieve that objective by investing, under normal market conditions, primarily
in equity securities of small to mid-sized companies that the Manager believes
exhibit growth potential that significantly exceeds the average anticipated
growth rate of companies included in the Standard & Poor's 500 Index ("S&P
500"). Small to medium-sized companies generally are those having a current
equity market capitalization of less than $3 billion. The Fund also invests in
equity securities of larger capitalization companies that the Manager believes
present greater than average growth potential compared to other S&P 500
companies.

Common stock generally is the principal kind of equity security in
which the Fund invests. The Fund, however, may invest any portion of its assets
in any type of equity security available in the marketplace, including without
limitation, preferred stock, warrants and equity and debt securities convertible
into common stock. See Other Investment Policies and Risks Considerations and
Part B.

The Fund may enter into options and futures transactions for hedging
purposes and, among other reasons, to attempt to counterbalance portfolio
volatility. See Futures Contracts and Options under Other Investment Policies
and Risk Considerations.

-8-

<PAGE>

Up to 20% of the Fund's total assets may be invested directly in equity
securities of foreign companies or indirectly in foreign securities through
investments in American, Global or European Depositary Receipts. In connection
with its investments in foreign securities, the Fund may hold foreign currency
directly and, to hedge the currency risk associated with securities denominated
in foreign currencies, may enter into currency futures transactions and forward
foreign currency transactions. See Foreign Securities, Depositary Receipts,
Foreign Currency Transactions and Futures Contracts under Other Investment
Policies and Risk Considerations.

Should the market warrant a temporary defensive approach, the Fund may
invest all or a substantial part of its assets in fixed-income securities issued
or guaranteed by the U.S. government, its agencies or instrumentalities, as well
as short-term debt, other money-market instruments or corporate bonds rated
investment grade (i.e., rated Baa or above by Moody's Investors Service, Inc.
("Moody's") or BBB or above by Standard & Poor's Ratings Group ("S&P")) or, if
unrated, instruments determined to be of comparable quality by the Manager. The
Fund may also invest in these instruments pending investment in equity
securities appropriate for the Fund of proceeds from new sales of Fund shares
from proceeds of the sale of the Fund's portfolio securities or to maintain
sufficient cash to meet redemptions. See Appendix A of Part B for a description
of those ratings.

The Fund will constantly strive to achieve its objective of capital
appreciation and, in investing to do so, may hold securities for any period of
time. There can be no assurance, however, that the Fund will achieve its
objective. That objective may be changed without shareholder approval.

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.

-9-

<PAGE>

THE DELAWARE DIFFERENCE

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

SHAREHOLDER PHONE DIRECTORY

Investor Information Center
800-523-4640

Fund Information, Literature Price, Yield and
Performance Figures

Shareholder Service Center
800-523-1918

Information on Existing Regular Investment Accounts and Retirement Plan
Accounts, Wire Investments, Wire Liquidations, Telephone
Liquidations and Telephone Exchanges

Delaphone
800-362-FUND
(800-362-3863)

Performance Information
You can call the Investor Information Center at any time for current
yield information. Current yield and total return information may also be
included in advertisements and information given to shareholders. Yields are
computed on an annual basis over a 30-day period.

-10-

<PAGE>

Dividend Payments
Dividends, capital gains and other distributions are automatically
reinvested in your account. You may also elect to have the dividends earned in
one fund automatically invested in another Delaware Group fund 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.

Tax Information
Each year, Equity Funds IV, Inc. will mail to you information on the
tax status of your dividends and distributions.

-11-

<PAGE>

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

-12-

<PAGE>

RETIREMENT PLANNING

Retirement plans may be subject to plan establishment fees, annual
maintenance fees and/or other administrative or trustee fees. Fees are based
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. Certain shareholder investment services available to
non-retirement plan shareholders may not be available to retirement plan
shareholders. Certain retirement plans may qualify to purchase the Capital
Appreciation Fund Institutional Class. For additional information on any of the
plans and Delaware's retirement services, call the Shareholder Service Center or
see Part B.

Simplified Employee Pension Plan ("SEP/IRA")
A SEP/IRA may be established by an employer who wishes to sponsor a
tax-sheltered retirement program by making contributions on behalf of all
eligible employees. Each of the Classes is available for investment by a
SEP/IRA.

Salary Reduction Simplified Employee Pension Plan ("SAR/SEP")
Offers employers with 25 or fewer eligible employees the ability to
establish a SEP/IRA that permits salary deferral contributions. An employer may
also elect to make additional contributions to this plan. Class B Shares are not
available for purchase by such plans. Under the Small Business Protection Act of
1996, an employer cannot establish a new SAR/SEP after December 31, 1996. Plans
established before January 1, 1997 can continue to operate without change.

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

-13-

<PAGE>

Prototype 401(k) Defined Contribution Plan
Permits employers to establish a tax-qualified plan based on salary
deferral contributions for investment in Class A or Class C Shares. Class B
Shares are not available for purchase by such plans.

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 Group and non-Delaware Group fund shares. When
eligible Delaware Group fund shares are exchanged into eligible non-Delaware
Group fund shares, the Limited CDSC will be imposed at the time of the exchange,
unless the joint venture agreement specifies that the amount of the 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.

-14-

<PAGE>

CLASSES OF SHARES

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. Absent any applicable fee waiver, 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. 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. Absent any applicable fee
waiver, 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. If no waiver of 12b-1 fees is in
effect, 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, the Class B
Shares will automatically be converted into Class A Shares and, thereafter, for
the life of the investment, the annual 0.30% 12b-1 Plan fees for the 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. Absent any applicable fee
waiver, 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. If no waiver of 12b-1 fees is in effect, 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.

-15-

<PAGE>

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. If no waiver of 12b-1 fees is in effect,
the higher 12b-1 Plan expenses on Class B Shares and Class C Shares will be
offset to the extent a return is realized on the additional money initially
invested upon the purchase of such shares. However, there can be no assurance as
to the return, if any, that will be realized on such additional money. In
comparing Class B Shares to Class C Shares, investors should also consider the
desirability of an automatic conversion feature, which is available only for
Class B Shares.

Prospective investors should refer to Appendix A--Investment
Illustrations in this Prospectus for an illustration of the potential effect
that each of the purchase options may have on a long-term shareholder's
investment.

-16-

<PAGE>

For the distribution and related services provided to, and the expenses
borne on behalf of, the Fund, absent any applicable fee waiver, the Distributor
and others will be paid, in the case of the Class A Shares, from the proceeds of
the front-end sales charge and 12b-1 Plan fees and, in the case of the Class B
Shares and the Class C Shares, from the proceeds of the 12b-1 Plan fees and, if
applicable, the CDSC incurred upon redemption. Financial advisers may receive
different compensation for selling Class A, Class B and Class C Shares.
Investors should understand that the purpose and function of the respective
12b-1 Plans and the CDSCs applicable to Class B Shares and Class C Shares are
the same as those of the 12b-1 Plan and the front-end sales charge applicable to
Class A Shares in that such fees and charges are used to finance the
distribution of the respective Classes. See Distribution (12b-1) and Service
under Management of the Fund.

Dividends paid on Class A, Class B and Class C Shares, to the extent
any dividends are paid, will be calculated in the same manner, at the same time,
on the same day and will be in the same amount, except that, when assessed, 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 IV, 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.

-17-

<PAGE>

Capital Appreciation Fund A Class
- -----------------------------------------------------------------------------
Dealer's
Front-End Sales Charge Commission***
as % of as % of
Offering Amount Offering
Amount of Purchase Price Invested** Price
- -----------------------------------------------------------------------------

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

$100,000 but
under $250,000 3.75 3.89 3.00

$250,000 but
under $500,000 2.50 2.59 2.00

$500,000 but
under $1,000,000* 2.00 2.00 1.60

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

** Based upon the initial net asset value of $8.50 per share of the Class A
Shares.

*** Financial institutions or their affiliated brokers may receive an agency
transaction fee in the percentages set forth above.
- --------------------------------------------------------------------------------
The Fund must be notified when a sale takes place which would qualify
for the reduced front-end sales charge on the basis of previous or
current purchases. The reduced front-end sales charge will be granted
upon confirmation of the shareholder's holdings by the Fund. Such
reduced front-end sales charges are not retroactive.

From time to time, upon written notice to all of its dealers, the
Distributor may hold special promotions for specified periods during
which the Distributor may reallow to dealers up to the full amount of
the front-end sales charge shown above. In addition, certain dealers
who enter into an agreement to provide extra training and information
on Delaware Group products and services and who increase sales of
Delaware Group funds may receive an additional 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.
- --------------------------------------------------------------------------------

-18-

<PAGE>

Dealer's Commission
-------------------
(as a percentage of
Amount of Purchase amount purchased)
------------------

Up to $2 million 1.00%
Next $1 million up to $3 million 0.75
Next $2 million up to $5 million 0.50
Amount over $5 million 0.25

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

-19-

<PAGE>

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 Delaware Group
funds. 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.

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

-20-

<PAGE>

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

For additional information on 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, see Retirement
Planning.

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.

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<PAGE>

Class B Shares of a fund acquired through a reinvestment of dividends
will convert to the corresponding Class A Shares of that fund (or, in the case
of Delaware Group Cash Reserve, Inc., the Delaware Cash Reserve Consultant
Class) pro-rata with Class B Shares of that fund not acquired through dividend
reinvestment.

All such automatic conversions of Class B Shares will constitute
tax-free exchanges for federal income tax purposes. See Taxes.

Level Sales Charge Alternative - Class C Shares
Class C Shares may be purchased at net asset value without a front-end
sales charge and, as a result, the Fund will invest the full amount of the
investor's purchase payment. The Distributor currently anticipates compensating
dealers or brokers for selling Class C Shares at the time of purchase from its
own assets in an amount equal to no more than 1% of the dollar amount purchased.
As discussed below, however, absent any applicable fee waiver, 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, 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 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.

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%. 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

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<PAGE>

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 the Class B Shares or the
Class C Shares of the Fund, even if those shares are later exchanged for shares
of another Delaware Group fund. In the event of an exchange of the shares, the
"net asset value of such shares at the time of redemption" will be the net asset
value of the shares that were acquired in the exchange.

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

Contingent Deferred
Sales Charge (as a
Percentage of
Dollar Amount
Year After 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, absent any applicable fee waiver. See Automatic Conversion of Class B
Shares, above. Investors are reminded that the Class A Shares into which the
Class B Shares will convert are subject to ongoing annual 12b-1 Plan expenses of
up to a maximum of 0.30% of average daily net assets of such shares.

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.

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Capital Appreciation Fund Institutional Class
In addition to offering the Class A, Class B and Class C Shares, the
Fund also offers the Capital Appreciation Fund Institutional Class, which is
described in a separate prospectus and is available for purchase only by certain
investors. Capital Appreciation 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 the Capital Appreciation Fund
Institutional Class, contact the Distributor by writing to the address or by
calling the telephone number listed on the back of this Prospectus.

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<PAGE>

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 a 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.

Investing by Mail
1. Initial Purchases--An Investment Application or, in the case of a retirement
account, an appropriate retirement plan application, must be completed, signed
and sent with a check payable to Capital Appreciation Fund A Class, Capital
Appreciation Fund B Class or Capital Appreciation Fund C Class, to Delaware
Group 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 Fund and 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 IV, 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.

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<PAGE>

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, to the specific Fund and Class selected, to Delaware Group at
1818 Market Street, Philadelphia, PA 19103.

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

Holders of Class A Shares may exchange all or part of their shares for
certain of the shares of other funds in the Delaware Group, including other
Class A Shares, but may not exchange their Class A Shares for Class B Shares or
Class C Shares of the Fund or of any other fund in the Delaware Group. 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 Delaware Group funds.
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 Delaware Group
funds. See Appendix B--Classes Offered for a list of funds that offer Class A,
Class B, Class C and Consultant Class Shares. 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.

See Allied Plans under Retirement Planning for information on exchanges
by participants in an Allied Plan.

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<PAGE>

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
IV, Inc. to transfer a designated amount monthly from your checking account to
your account. Many shareholders use this as an automatic savings plan.
Shareholders should allow a reasonable amount of time for initial purchases and
changes to these plans to become effective.

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.

* * *

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 Group and invested automatically into any
other Delaware Group account 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 at any time by written notice to the fund from
which the exchanges are made. See Redemption and Exchange.

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<PAGE>

4. Dividend Reinvestment Plan
You can elect to have your distributions (capital gains and/or dividend
income) reinvested in your Fund account or invested in certain other funds in
the Delaware Group, subject to the exceptions noted below as well as the
eligibility and minimum purchase requirements set forth in each fund's
prospectus.

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
Group accounts into the Asset Planner service may be made at net asset value
under the circumstances described under Investing by Exchange, above. The
minimum initial investment per Strategy is $2,000; subsequent investments must
be at least $100. Individual fund minimums do not apply to investments made
using the Asset Planner service. Class A, Class B and Class C Shares are
available through the Asset Planner service. Generally, only shares within the
same class may be used within the same Strategy. However, Class A Shares of the
Fund and of other funds in the Delaware Group may be used in the same Strategy
with consultant class shares that are offered by certain other Delaware Group
funds. See Appendix B--Classes Offered for the Delaware Group funds that offer
consultant class shares.

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<PAGE>

An annual maintenance fee, currently $35 per Strategy, is typically due
at the time of initial investment and by September 30th of each subsequent year.
The fee, payable to Delaware Service Company, Inc. to defray extra costs
associated with administering the Asset Planner service, will be deducted
automatically from one of the funds within your Asset Planner account if not
paid by September 30th. However, the annual fee will be waived until further
notice. Investors who use the Asset Planner for an IRA will pay an annual IRA
fee of $15 per Social Security Number. See Part B.

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

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<PAGE>

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<PAGE>

REDEMPTION AND EXCHANGE

You can redeem or exchange your shares in a number of different ways.
The exchange service is useful if your investment requirements change and you
want an easy way to invest in other bond funds, equity funds, tax-advantaged
funds or money market funds. This service is also useful if you are anticipating
a major expenditure and want to move a portion of your investment into a fund
that has the checkwriting feature. Exchanges are subject to the requirements of
each fund and all exchanges of shares constitute taxable events. See Taxes.
Further, in order for an exchange to be processed, shares of the fund being
acquired must be registered in the state where the acquiring shareholder
resides. You may want to consult your financial adviser or investment dealer to
discuss which funds in the Delaware Group will best meet your changing
objectives, and the consequences of any exchange transaction. You may also call
the Delaware Group directly for fund information.

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<PAGE>

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.

Holders of Class B Shares or Class C Shares that exchange their shares
("Original Shares") for shares of other funds in the Delaware Group (in each
case, "New Shares") in a permitted exchange, will not be subject to a CDSC that
might otherwise be due upon redemption of the Original Shares. However, such
shareholders will continue to be subject to the CDSC and, in the case of Class B
Shares, the automatic conversion schedule of the Original Shares as described in
this Prospectus and any CDSC assessed upon redemption will be charged by the
Fund from which the Original Shares were exchanged. In an exchange of Class B
Shares from the Fund, the Fund's CDSC schedule may be higher than the CDSC
schedule relating to the New Shares acquired as a result of the exchange. For
purposes of computing the CDSC that may be payable upon a disposition of the New
Shares, the period of time that an investor held the Original Shares is added to
the period of time that an investor held the New Shares. With respect to Class B
Shares, the automatic conversion schedule of the Original Shares may be longer
than that of the New Shares. Consequently, an investment in New Shares by
exchange may subject an investor, absent any applicable fee waiver, 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.

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<PAGE>

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 request. This service is only available to individual,
joint and individual fiduciary-type accounts.

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<PAGE>

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 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.

Contingent Deferred Sales Charge for Certain Redemptions of Class A Shares
Purchased at Net Asset Value
A Limited CDSC will be imposed on certain redemptions of Class A Shares
(or shares into which such Class A Shares are exchanged) made within 12 months
of purchase, if such purchases were made at net asset value and triggered the
payment by the Distributor of the dealer's commission previously described. See
Classes of Shares.

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.

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<PAGE>

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) distributions from a section 403(b)(7)
Plan or an IRA due to death, disability, or attainment of age 59 1/2; (v)
returns of excess contributions to an IRA; (vi) distributions by other employee
benefit plans to pay benefits; (vii) distributions described in (ii), (iv), and
(vi) above pursuant to a systematic withdrawal plan; and (viii) redemptions by
the classes of shareholders who are permitted to purchase shares at net asset
value, regardless of the size of the purchase (see Buying Class A Shares at Net
Asset Value under Classes of Shares).

Waiver of Contingent Deferred Sales Charge - Class B 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 or 403(b)(7)
Deferred Compensation Plan; (iii) required minimum distributions from an IRA,
403(b)(7) Deferred Compensation Plan or 457 Deferred Compensation Plan; and (iv)
distributions from an 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.

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<PAGE>

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.

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<PAGE>

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 normally will be
made during the first quarter following the end of Equity Funds IV, Inc.'s
fiscal year. The second payment would be made near the end of the calendar year
to comply with certain requirements of the Internal Revenue Code (the "Code").

Each Class of the Fund will share proportionately in the investment
income and expenses of the Fund, except that, absent any applicable fee waiver,
the per share dividends from net investment income on the Class A Shares, the
Class B Shares and the Class C Shares will vary due to the expenses under the
12b-1 Plan applicable to each Class. Generally, except in the absence of a
waiver, the dividends per share on Class B Shares and Class C Shares can be
expected to be lower than the dividends per share on Class A Shares because the
expenses under the 12b-1 Plans relating to Class B and Class C Shares will be
higher than the expenses under the 12b-1 Plan relating to Class A Shares. See
Distribution (12b-1) and Service under Management of the Fund. Both dividends
and distributions, if any, are automatically reinvested in your account at net
asset value.

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<PAGE>

TAXES

The Fund intends 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.

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

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<PAGE>

Each year, Equity Funds IV, 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 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.

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

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<PAGE>

CALCULATION OF OFFERING PRICE AND NET ASSET VALUE PER SHARE

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. Equity securities for which market quotations are available are
priced at market value. Foreign securities expressed in foreign currency values
will be converted into U.S. dollar values at the mean between the currencies'
bid and offered quotations. Debt securities are priced at fair value by an
independent pricing service using methods approved by Equity Funds IV, Inc.'s
Board of Directors. Short-term investments having a maturity of less than 60
days are valued at amortized cost, which approximates market value. All other
securities are valued at their fair value as determined in good faith and in a
method approved by Equity Funds IV, Inc.'s Board of Directors.

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 the Capital Appreciation Fund Institutional Class will not incur any
of the expenses under the Fund's 12b-1 Plans and the Class A, Class B and Class
C Shares alone will bear the 12b-1 Plan expenses, if any, payable under their
respective Plans.

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<PAGE>

MANAGEMENT OF THE FUND

Investment Manager
The Manager furnishes investment management services to the Fund.

The Manager and its predecessors have been managing the funds in the
Delaware Group since 1938. On September 30, 1996, the Manager and its affiliates
in the Delaware Group, including Delaware International Advisers Ltd., were
supervising in the aggregate more than $30 billion in assets in the various
institutional or separately managed (approximately $18,573,058,000) and
investment company (approximately $11,495,414,000) accounts.

The Manager manages the Fund's portfolio and makes investment decisions
for the Fund, which are implemented by the Fund's Trading Department. The
Manager also administers Equity Funds IV, Inc.'s affairs and pays the salaries
of all the directors, officers and employees of Equity Funds IV, Inc. who are
affiliated with the Manager. For these services, the Manager is paid an annual
fee equal to 0.75% on the first $500 million of average daily net assets, 0.725%
on the next $500 million and 0.70% on the average daily net assets in excess of
$1 billion.

Edward N. Antoian and Gerald S. Frey have had primary responsibility
for making day-to-day investment decisions for the small/mid-cap equity portion
of the Fund since its inception. Mr. Antoian is a Vice President/Senior
Portfolio Manager of the Fund. A graduate of The State University of New York at
Albany with an MBA in Finance from the University of Pennsylvania's Wharton
School, Mr. Antoian began his career with Price Waterhouse. Prior to joining the
Delaware Group in June 1984, he worked in the Institutional Equity Department of
E.F. Hutton in Philadelphia. Mr. Antoian is a Chartered Financial Analyst and a
member of the Philadelphia Finance Association and the Philadelphia Securities
Association. Mr. Frey is also a Vice President/Senior Portfolio Manager of the
Fund. Mr. Frey has 20 years' experience in the money management business and
holds a BA in Economics from Bloomsburg University and an MBA from Wilkes
College. Prior to joining the Delaware Group in 1996, he was a Senior Director
with Morgan Grenfell Capital Management in New York.

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<PAGE>

President/Assistant Portfolio Manager. He holds a BA in Economics from Trinity
College. Prior to joining the Delaware Group in 1995, he worked as a technology
analyst for Janney Montgomery Scott in Philadelphia and he has also served as an
institutional salesman for Rutherford Brown & Catherwood. Ms. Finger is a Vice
President/Assistant Portfolio Manager. She joined the Delaware Group in 1995
from the New York-based Fred Alger Management, where she was an equity analyst
for three years. Prior to that, she held positions with Chemical Bank and Dun &
Bradstreet, in mergers and acquisitions. She earned her BA in Finance from the
University of Pennsylvania and her MBA in Finance & Accounting from the
University of Chicago. Ms. Wachs is an Assistant Vice President. She joined the
Delaware Group 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.

Terry F. Bovarnick has had primary responsibility for making day-to-day
investment decisions for the large-cap equity portion of the Fund since its
inception. Ms. Bovarnick is a Vice President/Portfolio Manager and holds a BA
and an MBA from the University of Miami. She brought 13 years of investment
experience to Delaware Group when she joined the company in March 1993.
Previously, she served as senior equity analyst for E.I. DuPont de Nemours in
Wilmington, Delaware and as senior trust officer/portfolio manager with
Southeast Bank in Miami, Florida.

Portfolio Trading Practices
The Fund normally will not invest for short-term trading purposes.
However, the Fund may sell securities without regard to the length of time they
have been held. The degree of portfolio activity will affect brokerage costs of
the Fund and may affect taxes payable by the Fund's shareholders. Given the
Fund's investment objective, its annual portfolio turnover rate is not expected
to exceed 100%. 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 Manager 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 to their advisory clients. These services may be used by the Manager
in servicing any of its accounts. Subject to best price and execution, the
Manager may consider a broker/dealer's sales of the Fund's shares in placing
portfolio orders and may place orders with broker/dealers that have agreed to
defray certain Fund expenses such as custodian fees.

Performance Information
From time to time, the Fund may quote 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 relevant. The Fund may
also advertise aggregate and average total return information concerning a Class
over additional periods of time. In addition, the Fund may present total return
information that does not reflect the deduction of the maximum front-end sales
charge or any applicable CDSC. In this case, such total

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<PAGE>

return information would be more favorable than total return information that
includes the deductions of the maximum front-end sales charge or any applicable
CDSC.

Net asset value fluctuates and is not guaranteed. Past performance is
not a guarantee of future results.

These expenses include, among other things, preparing and distributing
advertisements, sales literature, and prospectuses and reports used for sales
purposes, compensating sales and marketing personnel, holding special promotions
for specified periods of time, and paying distribution and maintenance fees to
brokers, dealers and others. In connection with the promotion of shares of the
Classes, the Distributor may, from time to time, pay to participate in
dealer-sponsored seminars and conferences, and reimburse dealers for expenses
incurred in connection with preapproved seminars, conferences, and advertising.
The Distributor may pay or allow additional promotional incentives to dealers as
part of preapproved sales contests and/or to dealers who provide extra training
and information concerning a Class and increase sales of the Class. In addition,
the Fund may make payments from the 12b-1 Plan fees of the respective Class
directly to others, such as banks, who aid in the distribution of Class shares
or provide services in respect of a Class, pursuant to service agreements with
Equity Funds IV, Inc. The Distributor has elected voluntarily to waive its right
to receive 12b-1 fees (including service fees) from the commencement of the
public offering of the Classes through May 1, 1997.

The 12b-1 Plans applicable to Class B Shares and Class C Shares are
designed to permit an investor to purchase these shares through dealers or
brokers without paying a front-end sales charge while enabling the Distributor
to compensate dealers and brokers for the sale of such shares.

Absent any applicable fee waiver, 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 and others for providing personal service and/or
maintaining shareholder accounts) of each of the Class B Shares' and Class C
Shares' average daily net assets in any year. The Class A, Class B and Class C
Shares will not incur any distribution expenses beyond these limits, which may
not be increased without shareholder approval.

While payments, if any, pursuant to the Plans may not exceed 0.30%
annually with respect to the Class A Shares, and 1% annually with respect to
each of the Class B Shares and the Class C Shares, the Plans do not limit fees
to amounts actually expended by the Distributor. It is therefore possible that
the Distributor may realize a profit in any particular year. However, the
Distributor currently expects that its

-43-

<PAGE>

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
are subject to the review and approval of Equity Funds IV, Inc.'s unaffiliated
directors, who may reduce the fees or terminate the Plans at any time.

Equity Funds IV, Inc.'s Plans do not apply to the Capital Appreciation
Fund Institutional Class of shares. Those shares are not included in calculating
the Plans' fees, and the Plans are not used to assist in the distribution and
marketing of the Capital Appreciation Fund Institutional Class shares.

The Transfer Agent, Delaware Service Company, Inc., serves as the
shareholder servicing, dividend disbursing and transfer agent for Equity Funds
IV, Inc. under an amended and restated agreement dated as of November 29, 1996.
Delaware Service Company, Inc. also provides accounting services to the Fund
pursuant to the terms of a separate Fund Accounting Agreement. The directors
annually review service fees paid to the Transfer Agent.

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

Shares
Equity Funds IV, Inc. is an open-end management investment company,
commonly known as a mutual fund, and the Fund's portfolio of assets is
diversified as defined by the 1940 Act. Equity Funds IV, Inc. was organized as a
Maryland corporation in September 1985. In addition to the Fund, Equity Funds
IV, Inc. currently offers one other series of shares, the DelCap Fund series.

Equity Funds IV, Inc. shares have a par value of $.01, equal voting
rights, except as noted below, and are equal in all other respects. All Fund
shares have noncumulative voting rights which means that the holders of more
than 50% of Equity Funds IV, 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 IV, 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. Shareholders of 10% or more of Equity Funds IV, Inc.'s
shares may request that a special meeting be called to consider the removal of a
director.

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

-44-

<PAGE>

It is expected that Lincoln National Corporation Employees' Retirement
Trust (the "Trust") will make an initial investment in the Fund, which could
result in the Trust owning up to 100% of the outstanding shares of the Fund.
Subject to certain limited exceptions, there would be no limitation on the
Trust's ability to redeem its shares of the Fund and it may elect to do so at
any time.

-45-

<PAGE>

OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

Foreign Securities
The Fund may invest up to 20% of its total 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 securities of U.S. issuers. 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., other things being equal, 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. The Fund currently
intends to limit its investments in foreign securities to those issued by
entities in developed countries.

The Fund's Custodian for its U.S. and foreign securities is The Chase
Manhattan Bank, located at 4 Chase Metrotech Center, Brooklyn, NY 11245.

Depositary Receipts
The Fund may make foreign investments through the purchase and sale of
sponsored or unsponsored American, European and Global Depositary Receipts
("Depositary Receipts"). Depositary Receipts are receipts typically issued by a
U.S. or foreign bank or trust company which evidence ownership of underlying
securities issued by a foreign corporation. "Sponsored" Depositary Receipts are
issued jointly by the issuer of the underlying security and a depository,
whereas "unsponsored" Depositary Receipts are issued without participation of
the issuer of the deposited security. Holders of unsponsored Depositary Receipts
generally bear all the costs of such facilities and the depository of an
unsponsored facility frequently is under no obligation to distribute shareholder
communications received from the issuer of the deposited security or to pass
through voting rights to the holders of such receipts in respect of the
deposited securities. Therefore, there may not be a correlation between
information concerning the issuer of the security and the market value of an
unsponsored Depositary Receipt.

-46-

<PAGE>

Restricted and Illiquid Securities
The Fund may invest in restricted securities, including privately
placed securities, some of which may be eligible for resale without registration
pursuant to Rule 144A ("Rule 144A Securities") under the Securities Act of 1933.
Rule 144A permits many privately placed and legally restricted securities to be
freely traded among certain institutional buyers such as the Fund. The Fund may
invest no more than 15% of the value of its net assets in illiquid securities.

While maintaining oversight, the Board of Directors has delegated to
the Manager the day-to-day function of determining whether or not individual
Rule 144A Securities are liquid for purposes of the Fund's 15% 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 15% 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.

Investment Company Securities
Any investments that the Fund makes in either closed-end or open-end
investment companies are limited by the 1940 Act, and involve an indirect
payment of a portion of the expenses, including advisory fees, of such other
investment companies. Under the 1940 Act's current limitations, the Fund may not
(1) own more than 3% of the voting stock of another investment company; (2)
invest more than 5% of the Fund's total assets in the shares of any one
investment company; nor (3) invest more than 10% of the Fund's total assets in
shares of other investment companies. If the Fund elects to limit its investment
in other investment companies to closed-end investment companies, the 3%
limitation described above is increased to 10%. These percentage limitations
also apply to the Fund's investments in unregistered investment companies.

Repurchase Agreements
The Fund may also use repurchase agreements that are at least 100%
collateralized by securities in which the Funds can invest directly. Repurchase
agreements help the Fund to invest short-term cash reserves or may be used by
the Fund if a temporary defensive posture is deemed appropriate. The Fund may
invest cash balances in joint repurchase agreements with other Delaware Group
funds. Under a repurchase agreement, the Fund acquires ownership and possession
of a security, and the seller agrees to buy the security back at a specified
time and higher price. If the seller is unable to repurchase the security, the
Fund could experience delays in liquidating the securities and the Fund could
incur a loss. That loss, if any, would be the difference between the repurchase
price and the market value of the security. To minimize those possibilities, the
Fund may enter into repurchase agreements with banks and broker/dealers deemed
by the Manager to be creditworthy under guidelines approved by the Board of
Directors and to those which the Manager, under such guidelines, determines to
present minimal credit risks and which are of high quality.

-47-

<PAGE>

When-Issued and Delayed Delivery Securities
The Fund may purchase securities on a when-issued or delayed delivery
basis. In such transactions, securities are purchased with payment and delivery
taking place in the future in order to secure what is considered to be an
advantageous price at the time of the transaction. Delivery of and payment for
these securities may take as long as a month or more after the date of the
purchase commitment. The Fund will maintain with its custodian bank a separate
account with a segregated portfolio of liquid securities in an amount at least
equal to these commitments. The payment obligation that will be received are
each fixed at the time the Fund enters into the commitment. Thus, it is possible
that the market value at the time of settlement could be higher or lower than
the purchase price.

REITs
The Fund may purchase shares of real estate investment trusts
("REITs"). REITs are pooled investment vehicles which invest primarily in
income-producing real estate or real estate related loans or interests. REITs
are generally classified as equity REITs, mortgage REITs or a combination of
equity and mortgage REITs. Equity REITs invest the majority of their assets
directly in real property and derive income primarily from the collection of
rents. Equity REITs can also realize capital gains by selling properties that
have appreciated in value. Mortgage REITs invest the majority of their assets in
real estate mortgages and derive income from the collection of interest
payments. Like investment companies such as Equity Funds IV, Inc., REITs are not
taxed on income distributed to shareholders provided they comply with several
requirements in the Internal Revenue Code. REITs are subject to substantial cash
flow dependency, defaults by borrowers, self-liquidation, and the risk of
failing to qualify for tax-free pass-through of income under the Internal
Revenue Code, and/or to maintain exemptions from the 1940 Act.

Borrowing
The Fund is permitted under certain circumstances to borrow money.
Investment securities will not normally be purchased while the Fund has an
outstanding borrowing.

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

Foreign Currency Transactions
Although the Fund values its assets daily in terms of U.S. dollars, it
does not intend to convert its holdings of foreign currencies into U.S. dollars
on a daily basis. The Fund will, however, from time to time, purchase or sell
foreign currencies and/or engage in forward foreign currency transactions in
order to expedite settlement of portfolio transactions and to minimize currency
value fluctuations. The Fund may conduct its foreign currency exchange
transactions on a spot (i.e., cash) basis at the spot rate prevailing in the
foreign currency exchange market or through entering into contracts to purchase
or sell foreign currencies at a future date (i.e., a "forward foreign currency"
contract or "forward" contract). A forward contract involves an obligation to
purchase or sell a specific currency at a future date, which may be any

-48-

<PAGE>

fixed number of days from the date of the contract, agreed upon by the parties,
at a price set at the time of the contract. The Fund will convert currency on a
spot basis from time to time, and investors should be aware of the costs of
currency conversion.

The Fund may enter into forward contracts to "lock in" the price of a
security it has agreed to purchase or sell, in terms of U.S. dollars or other
currencies in which the transaction will be consummated. By entering into a
forward contract for the purchase or sale, for a fixed amount of U.S. dollars or
foreign currency, of the amount of foreign currency involved in the underlying
security transaction, the Fund will be able to protect itself against a possible
loss resulting from an adverse change in currency exchange rates during the
period between the date the security is purchased or sold and the date on which
payment is made or received.

When the Manager believes that the currency of a particular country may
suffer a significant decline against the U.S. dollar or against another
currency, the Fund may enter into a forward foreign currency contract to sell,
for a fixed amount of U.S. dollars or other appropriate currency, the amount of
foreign currency approximating the value of some or all of the Fund's securities
denominated in such foreign currency.

The Fund will not enter into forward contracts or maintain a net
exposure to such contracts where the consummation of the contracts would
obligate the Fund to deliver an amount of foreign currency in excess of the
value of the Fund's securities or other assets denominated in that currency.

As the maturity of a forward contract, the Fund may either sell the
portfolio security and make delivery of the foreign currency, or it may retain
the security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract with the same currency trader
obligating it to purchase, on the same maturity date, the same amount of the
foreign currency. The Fund may realize a gain or loss from currency
transactions.

The Fund also may purchase and write put and call options on foreign
currencies (traded on U.S. and foreign exchanges or over-the-counter) for
hedging purposes to protect against declines in the U.S. dollar cost of foreign
securities held by the Fund and against increases in the U.S. dollar cost of
such securities to be acquired. Call options on foreign currency written by the
Fund will be covered, which means that the Fund will own the underlying foreign
currency. With respect to put options on foreign currency written by the Fund,
the Fund will establish a segregated account with its custodian bank consisting
of cash, U.S. Government securities or other high-grade liquid debt securities
in an amount equal to the amount the Fund will be required to pay upon exercise
of the put.

As in the case of other kinds of options, the writing of an option on
foreign currency will constitute only a partial hedge, up to the amount of the
premium received, and the Fund could be required to purchase or sell foreign
currencies at disadvantageous exchange rates, thereby incurring losses. The
purchase of an option on foreign currency may constitute an effective hedge
against fluctuations in exchange rates, although, in the event of rate movements
adverse to the Fund's position, the Fund may forfeit the entire amount of the
premium plus related transaction costs.

-49-

<PAGE>

Futures Contracts
The Fund may enter into futures contracts on stocks, stock indices and
foreign currencies, and purchase or sell options on such futures contracts.
These activities will not be entered into for speculative purposes, but rather
for hedging purposes and to facilitate the ability to quickly deploy into the
stock market the Fund's positions in cash, short-term debt securities and other
money market instruments, at times when the Fund's assets are not fully invested
in equity securities. Such positions will generally be eliminated when it
becomes possible to invest in securities that are appropriate for the Fund.

A futures contract is a bilateral agreement providing for the purchase
and sale of a specified type and amount of a financial instrument, or for the
making and acceptance of a cash settlement, at a stated time in the future for a
fixed price. By its terms, a futures contract provides for a specified
settlement date on which the securities underlying the contract are delivered,
or in the case of securities index futures contracts, the difference between the
price at which the contract was entered into and the contract's closing value is
settled between the purchaser and seller in cash. Futures contracts differ from
options in that they are bilateral agreements, with both the purchaser and the
seller equally obligated to complete the transaction. In addition, futures
contracts call for settlement only on the expiration date, and cannot be
"exercised" at any other time during their term.

The purchase or sale of a futures contract also differs from the
purchase or sale of a security or the purchase of an option in that no purchase
price is paid or received. Instead, an amount of cash or cash equivalents, which
varies but may be as low as 5% or less of the value of the contract, must be
deposited with the broker as "initial margin" as a good faith deposit. This
amount is generally maintained in a segregated account at the custodian bank.
Subsequent payments to and from the broker, referred to as "variation margin,"
are made on a daily basis as the value of the index or instrument underlying the
futures contract fluctuates, making positions in the futures contracts more or
less valuable, a process known as "marking to the market."

Purchases or sales of stock index futures contracts are used for
hedging purposes to attempt to protect the Fund's current or intended
investments from broad fluctuations in stock prices. For example, the Fund may
sell stock index futures contracts in anticipation of or during a market decline
to attempt to offset the decrease in market value of the Fund's securities
portfolio that might otherwise result. If such decline occurs, the loss in value
of portfolio securities may be offset, in whole or part, by gains on the futures
position. When the Fund is not fully invested in the securities market and
anticipates a significant market advance, it may purchase stock index futures
contracts in order to gain rapid market exposure that may, in part or entirely,
offset increases in the cost of securities that the Fund intends to purchase. As
such purchases are made, the corresponding positions in stock index futures
contracts will be closed out.

The Fund may purchase and sell foreign currency futures contracts for
hedging purposes to attempt to protect its current or intended investments
denominated in foreign currencies from fluctuations in currency exchange rates.
Such fluctuations could reduce the dollar value of portfolio securities
denominated in foreign currencies, or increase the cost of foreign-denominated
securities to be acquired, even if the value of such securities in the
currencies in which they are denominated remains constant. The Fund may sell
futures contracts on a foreign currency, for example, when it holds securities
denominated in such currency and it anticipates a decline in the value of such
currency relative to the dollar. In the event such decline occurs, the resulting
adverse effect on the value of foreign-denominated securities may

-50-

<PAGE>

be offset, in whole or in part, by gains on the futures contracts. However, if
the value of the foreign currency increases relative to the dollar, the Fund's
loss on the foreign currency futures contract may or may not be offset by an
increase in the value of the securities because a decline in the price of the
security stated in terms of the foreign currency may be greater than the
increase in value as a result of the change in exchange rates.

Conversely, the Fund could protect against a rise in the dollar cost of
foreign-denominated securities to be acquired by purchasing futures contracts on
the relevant currency, which could offset, in whole or in part, the increased
cost of such securities resulting from a rise in the dollar value of the
underlying currencies. When the Fund purchases futures contracts under such
circumstances, however, and the price of securities to be acquired instead
declines as a result of appreciation of the dollar, the Fund will sustain losses
on its futures position which could reduce or eliminate the benefits of the
reduced cost of portfolio securities to be acquired.

The Fund may also purchase and write options on the types of futures
contracts in which the Fund may invest, and enter into related closing
transactions. Options on futures are similar to options on securities, as
described below, except that options on futures give the purchaser the right, in
return for the premium paid, to assume a position in a futures contract, rather
than to actually purchase or sell the futures contract, at a specified exercise
price at any time during the period of the option. In the event that an option
written by the Fund is exercised, the Fund will be subject to all the risks
associated with the trading of futures contracts, such as payment of variation
margin deposits. In addition, the writer of an option on a futures contract,
unlike the holder, is subject to initial and variation margin requirements on
the option position.

At any time prior to the expiration of a futures contract, a trader may
elect to close out its position by taking an opposite position on the contract
market on which the position was entered into, subject to the availability of a
secondary market, which will operate to terminate the initial position.
Likewise, a position in an option on a futures contract may be terminated by the
purchaser or seller prior to expiration by effecting a closing purchase or sale
transaction, subject to availability of a secondary market, which is the
purchase or sale of an option of the same series (i.e., the same exercise price
and expiration date) as the option previously purchased or sold. The Fund may
realize a profit or a loss when closing out a futures contract or an option on a
futures contract.

To the extent that interest or exchange rates or securities prices move
in an unexpected direction, the Fund may not achieve the anticipated benefits of
investing in futures contracts and options thereon, or may realize a loss. To
the extent that the Fund purchases an option on a futures contract and fails to
exercise the option prior to the exercise date, it will suffer a loss of the
premium paid. Further, the possible lack of a secondary market could prevent the
Fund from closing out its positions relating to futures. See Part B for a
further discussion of this investment technique.

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<PAGE>

Options
The Fund may write covered call options on individual issues as well as
write call options on stock indices. The Fund may also purchase put options on
individual issues and on stock indices. The Manager will employ these techniques
in an attempt to protect appreciation attained, to offset capital losses and to
take advantage of the liquidity available in the option markets. The ability to
hedge effectively using options on stock indices will depend, in part, on the
correlation between the composition of the index and the Fund's portfolio as
well as the price movement of individual securities. The Manager may also write
covered call options to achieve income to offset the cost of purchasing put
options.

Call Options
Writing a Covered Call Option on Securities - A covered call option
obligates the Fund to sell one of its securities for an agreed price up to an
agreed date. When the Fund writes a call, it receives a premium and agrees to
sell the callable securities to a purchaser of a corresponding call during the
call period (usually, not more than nine months) at a fixed price regardless of
market price changes during the call period. The advantage is that the Fund
receives premium income for the limited purpose of offsetting the costs of
purchasing put options or offsetting any capital loss or decline in the market
value of the security. However, if the Manager's forecast is wrong, the Fund may
not fully participate in the market appreciation if the security's price rises.

Writing a Call Option on Stock Indices - Writing a call option on stock
indices is similar to the writing of a call option on an individual stock. Stock
indices used will include, but not be limited to, the S&P 500, the S&P 100 and
the S&P Over-The-Counter ("OTC") 250.

Put Options
Purchasing a Put Option - A put option gives the Fund the right to sell
one of its securities for an agreed price up to an agreed date. The advantage is
that the Fund can be protected should the market value of the security decline.
However, the Fund must pay a premium for this right which would be lost if the
option is not exercised.

Purchasing a Put Option on Stock Indices - Purchasing a protective put
option on stock indices is similar to the purchase of protective puts on an
individual stock. Indices used will include, but not be limited to, the S&P 500,
the S&P 100 and the S&P OTC 250.

Closing Transactions - Closing transactions essentially let the Fund
offset a put option or covered call option prior to its exercise or expiration.
If the Fund cannot effect a closing transaction, it may have to hold a security
it would otherwise sell or deliver a security it might want to hold.

Part B provides other information concerning the Fund's investment
policies and sets forth more specific investment restrictions.

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<PAGE>

APPENDIX A - INVESTMENT ILLUSTRATIONS
Illustrations of Hypothetical Returns on Investments Based on Purchase Options
$10,000 Purchase
<TABLE>
<CAPTION>

Scenario 1 Scenario 2
No Redemption Redeem 1st Year
--------------------------------------- --------------------------------------
Year Class A Class B Class C Class A Class B Class C
- ---- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
0 9,525 10,000 10,000 9,525 10,000 10,000
1 10,478 10,930 10,930 10,478 10,530 10,830+
2 11,525 11,946 11,946
3 12,678 13,058 13,058
4 13,946 14,272 14,272
5 15,340 15,599 15,599
6 16,874 17,050 17,050
7 18,562 18,636 18,636
8 20,418+ 20,369 20,369
9 22,459 22,405* 22,263
10 24,705 24,646* 24,333
</TABLE>

Scenario 3 Scenario 4
Redeem 3rd Year Redeem 5th Year
-------------------------------------- --------------------------------------
Year Class A Class B Class C Class A Class B Class C
- ---- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
0 9,525 10,000 10,000 9,525 10,000 10,000
1 10,478 10,930 10,930 10,478 10,930 10,930
2 11,525 11,946 11,946 11,525 11,946 11,946
3 12,678 12,758 13,058+ 12,678 13,058 13,058
4 13,946 14,272 14,272
5 15,340 15,399 15,599+
6
7
8
9
10
</TABLE>

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

$250,000 Purchase

Scenario 1 Scenario 2
No Redemption Redeem 1st Year
------------------------------------------ ---------------------------------------
Year Class A Class B Class C Class A Class B Class C
- ---- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
0 243,750 250,000 250,000 243,750 250,000 250,000
1 268,125 273,250 273,250 268,125 263,250 270,750+
2 294,938 298,662 298,662
3 324,431 326,438 326,438
4 356,874+ 356,797 356,797
5 392,562 389,979 389,979
6 431,818 426,247 426,247
7 475,000 465,888 465,888
8 522,500 509,215 509,215
9 574,750 560,137* 556,572
10 632,225 616,150* 608,333
</TABLE>
<PAGE>

Scenario 3 Scenario 4
Redeem 3rd Year Redeem 5th Year
-------------------------------------- ------------------------------------
Year Class A Class B Class C Class A Class B Class C
- ---- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
0 243,750 250,000 250,000 243,750 250,000 250,000
1 268,125 273,250 273,250 268,125 273,250 273,250
2 294,938 298,662 298,662 294,938 298,662 298,662
3 324,431 318,938 326,438+ 324,431 326,438 326,438
4 356,874+ 356,797 356,797
5 392,562 384,979 389,979
6
7
8
9
10
</TABLE>

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

Illustrations do not reflect any applicable waiver of 12b-1 fees. If such fee
waivers were reflected, the illustrations represented above would be different.

Assumes a hypothetical return for Class A of 10% per year, a hypothetical return
for Class B of 9.3% for years 1-8 and 10% for years 9-10, and a hypothetical
return for Class C of 9.3% per year. Hypothetical returns vary due to the
different expense structures for each Class and do not represent actual
performance.
Class A purchase subject to appropriate sales charge breakpoint (4.75% @
$10,000; 3.75% @ $100,000; 2.50% @ $250,000).
Class B purchase assessed appropriate CDSC upon redemption (4%-4%-3%-3%-2%-1%
in years 1-2-3-4-5-6).
Class C purchase assessed 1% CDSC upon redemption in year 1.
Figures marked "+" identify which Class offers the greater return potential
based on investment amount, the holding period and the expense structure of each
Class.

<PAGE>

APPENDIX B--CLASSES OFFERED

Growth of Capital A Class B Class C Class Consultant Class
<S> <C> <C> <C> <C>
Trend Fund x x x -
Enterprise Fund x x x -
DelCap Fund x x x -
Value Fund x x x -
U.S. Growth Fund x x x -

Total Return
Devon Fund x x x -
Decatur Total Return Fund x x x -
Decatur Income Fund x x x -
Delaware Fund x x x -

Global Diversification
Emerging Markets Fund x x x -
New Pacific Fund x x x -
International Equity Fund x x x -
World Growth Fund x x x -
Global Assets Fund x x x -
Global Bond Fund x x x -

Current Income
Delchester Fund x x x -
Strategic Income Fund x x x -
Corporate Income Fund x x x -
Federal Bond Fund x x x -
U.S. Government Fund x x x -
Limited-Term Government Fund x x x -

Tax-Free Current Income
Tax-Free Pennsylvania Fund x x x -
Tax-Free USA Fund x x x -
Tax-Free Insured Fund x x x -
Tax-Free USA Intermediate Fund x x x -

Money Market Funds
Delaware Cash Reserve x x x x
U.S. Government Money Fund x - - x
Tax-Free Money Fund x - - x

</TABLE>

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<PAGE>

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

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

INSTITUTIONAL

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

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

NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
P R O S P E C T U S
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING, ----------------------------
ACCOUNTING SERVICES
AND TRANSFER AGENT NOVEMBER 29, 1996
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
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<PAGE>

CAPITAL APPRECIATION FUND PROSPECTUS
INSTITUTIONAL CLASS SHARES NOVEMBER 29, 1996

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

1818 Market Street, Philadelphia, PA 19103

For more information about
the Capital Appreciation Fund Institutional Class
call the Delaware Group at 800-828-5052.

This Prospectus describes the Capital Appreciation Fund Institutional
Class of shares (the "Class") of the Capital Appreciation Fund series (the
"Fund") of Delaware Group Equity Funds IV, Inc. ("Equity Funds IV, Inc."), a
professionally-managed mutual fund of the series type. The investment objective
of the Fund is capital appreciation. The Fund will attempt to achieve its
objective by investing primarily in equity securities of small to medium-sized
companies expected to grow over time and, to a lesser extent, in equity
securities of larger, more well established companies presenting growth
potential.

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 Statement of Additional Information ("Part B") for Equity Funds
IV, Inc., dated November 29, 1996, as it may be amended from time to time,
contains additional information about the Fund and has been filed with the
Securities and Exchange Commission. Part B is incorporated by reference into
this Prospectus and is available, without charge, by writing to Delaware
Distributors, L.P. at the above address or by calling the above number.

The Fund also offers the Capital Appreciation Fund A Class of shares,
the Capital Appreciation Fund B Class of shares and the Capital Appreciation
Fund C Class of shares. Shares of these classes are subject to sales charges and
other expenses, which may affect their performance. A prospectus for these
classes can be obtained by writing to Delaware Distributors, L.P. at the above
address or by calling 800-523-4640.

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TABLE OF CONTENTS

Cover Page Redemption and Exchange
Synopsis Dividends and Distributions
Summary of Expenses Taxes
Investment Objective and Policies Calculation of Net Asset
Suitability and Certain Value Per Share
Risk Factors Management of the Fund
Investment Strategy Other Investment Policies
Classes of Shares and Risk Considerations
How to Buy Shares

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<PAGE>

SYNOPSIS

Risk Factors and Special Considerations
1. Investments in equity securities of small to medium-sized companies
may present greater risks than investments in larger capitalization companies,
as the market prices of securities issued by smaller companies tend to
fluctuate, particularly in the short-term, and some smaller company securities
may be speculative. See Suitability and Certain Risk Factors under Investment
Objective and Policies.

Investment Manager, Distributor and Service Agent
Delaware Management Company, Inc. (the "Manager") furnishes investment
management services to the Fund, subject to the supervision and direction of
Equity Funds IV, Inc.'s Board of Directors. The Manager also provides investment
management services to certain other funds in the Delaware Group. Delaware
Distributors, L.P. (the "Distributor") is the national distributor for the Fund
and for all of the other mutual funds in the Delaware Group. Delaware Service
Company, Inc. (the "Transfer Agent") is the shareholder servicing, dividend
disbursing, accounting services and transfer agent for the Fund and for all of
the other mutual funds in the Delaware Group. See Summary of Expenses and
Management of the Fund for further information regarding the Manager and fees
payable under the Fund's Investment Management Agreement.

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<PAGE>

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.

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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

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

Exchange Fees . . . . . . . . . . . . . . . . . . None**

Annual Operating Expenses
(as a percentage of average daily net assets)

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Management Fees (after voluntary waivers) . . . . 0.00%

12b-1 Fees. . . . . . . . . . . . . . . . . . . . None

Other Operating Expenses. . . . . . . . . . . . . 0.75%
-----
Total Operating Expenses+
(after voluntary waivers) . . . 0.75%
=====

Because the Fund has no operating history, "Other Operating Expenses"
are estimated based on expenses expected to be incurred during the Fund's first
fiscal year.

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

**Exchanges are subject to the requirements of each fund and a front-end sales
charge may apply.

+"Other Operating Expenses" for the Class are based on estimated amounts for the
first full fiscal year of the Class, after giving effect to the voluntary
expense waiver. The Manager has elected voluntarily to waive that portion, if
any, of the annual management fees payable by the Capital Appreciation Fund and
to pay certain expenses of the Fund to the extent necessary to ensure that the
"Total Operating Expenses" of the Class do not exceed 0.75% during the
commencement of the public offering of the Class through May 31, 1997. If the
voluntary expense waivers were not in effect, it is estimated that the "Total
Operating Expenses," as a percentage of average daily net assets, would be 4.71%
for the Capital Appreciation Fund Institutional Class' first full fiscal year,
reflecting management fees of 0.75%.

For expense information about Capital Appreciation Fund A Class,
Capital Appreciation Fund B Class and Capital Appreciation Fund C Class, see the
separate prospectus relating to those classes.

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1 year 3 years
------ -------
$ 8 $24

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

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.

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INVESTMENT OBJECTIVE AND POLICIES

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<PAGE>

Should the market warrant a temporary defensive approach, the Fund may
invest all or a substantial part of its assets in fixed-income securities issued
or guaranteed by the U.S. government, its agencies or instrumentalities, as well
as short-term debt, other money-market instruments or corporate bonds rated
investment grade (i.e., rated Baa or above by Moody's Investors Service, Inc.
("Moody's') or BBB or above by Standard & Poor's Ratings Group ("S&P")) or, if
unrated, instruments determined to be of comparable quality by the Manager. The
Fund may also invest in these instruments pending investment in equity
securities appropriate for the Fund of proceeds from new sales of Fund shares
from proceeds of the sale of the Fund's portfolio securities or to maintain
sufficient cash to meet redemptions. See Appendix A of Part B for a description
of those ratings.

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.

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CLASSES OF SHARES

Capital Appreciation Fund A Class, Capital Appreciation Fund B Class and Capital
Appreciation Fund C Class
In addition to offering the Capital Appreciation Fund Institutional
Class, the Fund also offers the Capital Appreciation Fund A Class, the Capital
Appreciation Fund B Class and the Capital Appreciation Fund C Class, which are
described in a separate prospectus. Shares of the Capital Appreciation Fund A
Class, the Capital Appreciation Fund B Class and the Capital Appreciation Fund C
Class may be purchased through authorized investment dealers or directly by
contacting the Fund or its Distributor. The Capital Appreciation Fund A Class
carries a front-end sales charge and, absent any applicable fee waiver, has
annual 12b-1 expenses equal to a maximum of 0.30%. The maximum front-end sales
charge as a percentage of the offering price is 4.75% and is reduced on certain
transactions of $100,000 or more. The Capital Appreciation Fund B Class and the
Capital Appreciation Fund C Class have no front-end sales charge but, absent any
applicable fee waiver, are subject to annual 12b-1 expenses equal to a maximum
of 1%. Shares of the Capital Appreciation Fund B Class and the Capital
Appreciation Fund C Class and certain shares of the Capital Appreciation Fund A
Class may be subject to a contingent deferred sales charge upon redemption. To
obtain a prospectus relating to such classes, contact the Distributor by writing
to the address or by calling the phone numbers listed on the cover of this
Prospectus.

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<PAGE>

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

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

1. Initial Purchases--Before you invest, telephone the Fund's Client Services
Department at 800-828-5052 to get an account number. If you do not call first,
it may delay processing your investment. In addition, you must promptly send
your Investment Application, or in the case of a retirement account, an
appropriate retirement plan application, to Capital Appreciation Fund
Institutional Class, to Delaware Group at 1818 Market Street, Philadelphia, PA
19103.

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

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<PAGE>

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

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

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<PAGE>

REDEMPTION AND EXCHANGE

Your shares will be redeemed or exchanged based on the net asset value
next determined after we receive your request in good order. Redemption and
exchange requests received in good order after the time the net asset value of
shares is determined, as noted above, will be processed on the next business
day. See Purchase Price and Effective Date under 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.

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.

-12-

<PAGE>

Written Redemption and Exchange
You can write to the Fund at 1818 Market Street, Philadelphia, PA 19103
to redeem some or all of your shares or to request an exchange of any or all of
your shares into another mutual fund in the Delaware Group, subject to the same
conditions and limitations as other exchanges noted above. The request must be
signed by all owners of the account or your investment dealer of record.

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 certificates.

The Telephone Redemption--Check to Your Address of Record service and
the Telephone Exchange service, both of which are described below, are
automatically provided unless you notify the Fund in writing that you do not
wish to have such service available with respect to your account. The Fund
reserves the right to modify, terminate or suspend these procedures upon 60
days' written notice to shareholders. It may be difficult to reach the Fund by
telephone during periods when market or economic conditions lead to an unusually
large volume of telephone requests.

Neither the Fund nor 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.

-13-

<PAGE>

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.
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 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.

-14-

<PAGE>

DIVIDENDS AND DISTRIBUTIONS

The Fund will make payments from the Fund's net investment income and
net realized securities profits, if any, twice a year. The first payment
normally will be made during the first quarter following the end of DelCap Fund
Inc.'s fiscal year. The second payment would be made near the end of the
calendar year to comply with certain requirements of the Internal Revenue Code.
Both dividends and distributions 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
distribution fees under the Rule 12b-1 Plans which, absent any applicable fee
waiver, apply to the Capital Appreciation Fund A Class, the Capital Appreciation
Fund B Class and the Capital Appreciation Fund C Class.

-15-

<PAGE>

TAXES

The Fund intends to distribute substantially all of its net investment
income and net capital gains, if any. Dividends from net investment income or
net short-term capital gains will be taxable to you as ordinary income, whether
received in cash or in additional shares. For corporate investors, dividends
from net investment income will generally qualify in part for the corporate
dividends-received deduction. The portion of dividends paid by the Fund that so
qualifies will be designated each year in a notice from Equity Funds IV, Inc. to
the Fund's shareholders.

-16-

<PAGE>

Each year, Equity Funds IV, 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 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.

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

-17-

<PAGE>

CALCULATION OF NET ASSET VALUE PER SHARE

The NAV is computed by adding the value of all securities and other
assets in the portfolio, deducting any liabilities (expenses and fees are
accrued daily) and dividing by the number of shares outstanding. Equity
securities for which market quotations are available are priced at market value.
Foreign securities expressed in foreign currency values will be converted into
U.S. dollar values at the mean between the currencies' bid and offered
quotations. Debt securities are priced on the basis of valuations provided by an
independent pricing service using methods approved by Equity Funds IV, Inc.'s
Board of Directors. Short-term investments having a maturity of less than 60
days are valued at amortized cost, which approximates market value. All other
securities are valued at their fair value as determined in good faith and in a
method approved by Equity Funds IV, 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 the Fund's 12b-1
Plans and the Capital Appreciation Fund A, B and C Classes alone will bear the
12b-1 Plan fees payable under their respective Plans.

-18-

<PAGE>

MANAGEMENT OF THE FUND

Investment Manager
The Manager furnishes investment management services to the Fund.

The Manager manages the Fund's portfolio and makes investment decisions
for the Fund, which are implemented by the Fund's Trading Department. The
Manager also administers Equity Funds IV, Inc.'s affairs and pays the salaries
of all the directors, officers and employees of Equity Funds IV, Inc. who are
affiliated with the Manager. For these services, the Manager is paid an annual
fee equal to 0.75% on the first $500 million of average daily net assets, 0.725%
on the next $500 million and 0.70% on the average daily net assets in excess of
$1 billion.

Edward N. Antoian and Gerald S. Frey have had primary responsibility
for making day-to-day investment decisions for the small/mid-cap equity portion
of the Fund since its inception. Mr. Antoian is a Vice President/Senior
Portfolio Manager of Equity Funds IV, Inc. A graduate of The State University of
New York at Albany with an MBA in Finance from the University of Pennsylvania's
Wharton School, Mr. Antoian began his career with Price Waterhouse. Prior to
joining the Delaware Group in June 1984, he worked in the Institutional Equity
Department of E.F. Hutton in Philadelphia. Mr. Antoian is a Chartered Financial
Analyst and a member of the Philadelphia Finance Association and the
Philadelphia Securities Association. Mr. Frey is also a Vice President/Senior
Portfolio Manager of the Fund. Mr. Frey has 20 years' experience in the money
management business and holds a BA in Economics from Bloomsburg University and
an MBA from Wilkes College. Prior to joining the Delaware Group in 1996, he was
a Senior Director with Morgan Grenfell Capital Management in New York.

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<PAGE>

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

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
to their 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 Fund shares in placing portfolio orders and
may place orders with broker/dealers that have agreed to defray certain Fund
expenses such as custodian fees.

Performance Information
From time to time, the Fund may quote 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. Each presentation will include
the average annual total return for one-, five- and ten-year periods or
life-of-fund, as relevant. The Fund may also advertise aggregate and average
total return information concerning the Class over additional periods of time.

Net asset value fluctuates and is not guaranteed. Past performance is
not a guarantee of future results.

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<PAGE>

Distribution and Service
The Distributor, Delaware Distributors, L.P., serves as the national
distributor of the Fund's shares under a Distribution Agreement with Equity
Funds IV, Inc. dated as of November 29, 1996. 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 amended and restated agreement dated as of November 29, 1996. The Transfer
Agent also provides accounting services to the Fund pursuant to the terms of a
separate Fund Accounting Agreement. The directors annually review service fees
paid to the Transfer Agent. Certain recordkeeping and other shareholder services
that otherwise would be performed by the Transfer Agent may be performed by
certain other entities and the Transfer Agent may elect to enter into an
agreement to pay such other entities for their services. In addition,
participant account maintenance fees may be assessed for certain recordkeeping
provided as part of retirement plan and administration service packages. These
fees are based on the number of participants in the plan and the various
services selected. Fees will be quoted upon request and are subject to change.

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

Shares
Equity Funds IV, 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 IV, Inc. was organized as a Maryland
corporation in September 1985. In addition to the Fund, Equity Funds IV, Inc.
presently offers one other series of shares, the Concept I Series.

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<PAGE>

In addition to the Class, the Fund also offers the Capital Appreciation
Fund A Class, the Capital Appreciation Fund B Class and the Capital Appreciation
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 other classes of the Fund, except that shares of the Class are not subject
to, and may not vote on matters affecting, the Distribution Plans under Rule
12b-1 relating to the Capital Appreciation Fund A Class, the Capital
Appreciation Fund B Class and the Capital Appreciation Fund C Class.

-22-

<PAGE>

OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

Small to Medium-Sized Companies
The Fund invests its assets in equity securities of small to
medium-sized companies. These stocks have historically been more volatile in
price than larger capitalization stocks, such as those included in the S&P 500.
This is because, among other things, smaller companies have a lower degree of
liquidity and tend to have a greater sensitivity to changing economic
conditions. These companies may have narrow product lines, markets or financial
resources, or may depend on a limited management group. The companies'
securities may trade less frequently and have a smaller trading volume. The
securities may be traded only in the over-the-counter markets or on a regional
securities exchange. In addition to exhibiting greater volatility, smaller
capitalization securities may, to some degree, fluctuate independently of the
stocks of larger capitalization companies. For example, the stocks of smaller
capitalization companies may decline in price as the price of larger company
stocks rise, or vice versa.

Foreign Securities
The Fund may invest up to 20% of its total 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 securities of U.S. issuers. 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., other things being equal, 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. The Fund currently
intends to limit its investment in foreign securities to those issued by
entities in developed countries.

The Fund's Custodian for its U.S. and foreign securities is The Chase
Manhattan Bank located at 4 Chase Metrotech Center, Brooklyn, NY 11245.

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<PAGE>

While maintaining oversight, the Board of Directors has delegated to
the Manager the day-to-day function of determining whether or not individual
Rule 144A Securities are liquid for purposes of the Fund's 15% 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 15% 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.

Investment Company Securities
Any investments that the Fund makes in either closed-end or open-end
investment companies are limited by the 1940 Act, and involve an indirect
payment of a portion of the expenses, including advisory fees, of such other
investment companies. Under the 1940 Act's current limitations, the Fund may
not: (1) own more than 3% of the voting stock of another investment company; (2)
invest more than 5% of the Fund's total assets in the shares of any one
investment company; nor (3) invest more than 10% of the Fund's total assets in
shares of other investment companies. If the Fund elects to limit its investment
in other investment companies to closed-end investment companies, the 3%
limitation described above is increased to 10%. These percentage limitations
also apply to the Fund's investments in unregistered investment companies.

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<PAGE>

Borrowing
The Fund is permitted under certain circumstances to borrow money.
Investment securities will not normally be purchased while the Fund has an
outstanding borrowing.

-25-

<PAGE>

-26-

<PAGE>

-27-

<PAGE>

-28-

<PAGE>

Part B provides other information concerning the Fund's investment
policies and sets forth more specific investment restrictions.

-29-

<PAGE>

The Delaware Group includes -----------------------------------
funds with a wide range of investment
objectives. Stock funds, income funds, DELAWARE GROUP EQUITY FUNDS IV, INC
tax-free funds, money market funds, (formerly Delaware Group DelCap
global and international funds and Fund, Inc.)
closed-end equity funds give investors -----------------------------------
the ability to create a portfolio that
fits their personal financial goals. For DELCAP FUND
more information, shareholders of the
Fund Classes should contact their -----------------------------------
financial adviser or call Delaware Group
at 800-523-4640, and shareholders of the CAPITAL APPRECIATION FUND
Institutional Classes should contact
Delaware Group at 800-828-5052. -----------------------------------

INVESTMENT MANAGER
Delaware Management Company, Inc.
One Commerce Square PART B
Philadelphia, PA 19103
STATEMENT OF
NATIONAL DISTRIBUTOR ADDITIONAL INFORMATION
Delaware Distributors, L.P.
1818 Market Street -----------------------------------
Philadelphia, PA 19103

SHAREHOLDER SERVICING, NOVEMBER 29, 1996
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
---------
<PAGE>

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

PART B--STATEMENT OF ADDITIONAL INFORMATION
NOVEMBER 29, 1996
- --------------------------------------------------------------------------------

DELAWARE GROUP EQUITY FUNDS IV, INC.

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

1818 Market Street
Philadelphia, PA 19103
- --------------------------------------------------------------------------------

For more information about the Institutional Classes: 800-828-5052

For Prospectus and Performance of the Class A Shares, Class B Shares
and Class C Shares: Nationwide 800-523-4640

Information on Existing Accounts of the Class A Shares, Class B Shares
and Class C Shares: (SHAREHOLDERS ONLY) Nationwide 800-523-1918

Dealer Services: (BROKER/DEALERS ONLY) Nationwide 800-362-7500
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TABLE OF CONTENTS
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Cover Page
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Investment Policies and Portfolio Techniques
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Accounting and Tax Issues
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Performance Information
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Trading Practices and Brokerage
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Purchasing Shares
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Investment Plans
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Determining Offering Price and
Net Asset Value
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Redemption and Repurchase
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Distributions and Taxes
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Investment Management Agreements
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Officers and Directors
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Exchange Privilege
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General Information
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Appendix A--Description of Ratings
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Appendix B--IRA Information
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Appendix C--The Company Life Cycle
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Financial Statements
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Delaware Group Equity Funds IV, Inc. ("Equity Funds IV, Inc.")
(formerly Delaware Group DelCap Fund, Inc.) is a professionally-managed mutual
fund presently offering two series: the DelCap Fund series ("DelCap Fund")
(formerly Concept I Series) and the Capital Appreciation Fund series ("Capital
Appreciation Fund") (individually, a "Fund" and collectively, the "Funds").

Each Fund of Equity Funds IV, Inc. offers three retail classes: DelCap
Fund A Class and Capital Appreciation Fund A Class (the "Class A Shares");
DelCap Fund B Class and Capital Appreciation Fund B Class (the "Class B
Shares"); and DelCap Fund C Class and Capital Appreciation Fund C Class (the
"Class C Shares"). Class A Shares, Class B Shares and Class C Shares are
collectively referred to as the "Fund Classes." Each Fund also offers an
institutional class: DelCap Fund Institutional Class and Capital Appreciation
Fund Institutional Class (collectively, the "Institutional Classes"). Each Class
is individually referred to as a "Class" and collectively referred to as
"Classes."

Class B Shares, Class C Shares and Institutional Class shares of each
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, absent any applicable fee waiver, annual Rule 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, absent any applicable fee waiver, 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 Prospectuses for the Fund Classes. Class C Shares are
subject to a CDSC which may be imposed on redemptions made within 12 months of
purchase and, absent any applicable fee waiver, annual 12b-1 Plan expenses of up
to 1%, which are assessed against the Class C Shares for the life of the
investment. The Capital Appreciation Fund will not pay a 12b-1 fee with respect
to any Class until May 31, 1997.

This Statement of Additional Information ("Part B" of the registration
statement) supplements the information contained in the current Prospectuses of
the Fund Classes for the DelCap Fund and the Capital Appreciation Fund, each
dated November 29, 1996, and the current Prospectuses of the Institutional Class
for the DelCap Fund and the Capital Appreciation Fund, each dated November 29,
1996, as they may be amended from time to time. Part B should be read in
conjunction with the respective Class' Prospectus. Part B is not itself a
prospectus but is, in its entirety, incorporated by reference into each Class'
Prospectus. A Prospectus for each Class may be obtained by writing or calling
your investment dealer or by contacting Equity Funds IV, Inc.'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 all Classes of
shares of Equity Funds IV, Inc., except where noted.

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INVESTMENT POLICIES AND PORTFOLIO TECHNIQUES

Investment Restrictions--Equity Funds IV, Inc. has adopted the
following restrictions for DelCap Fund which, along with its investment
objective, cannot be changed without approval by the holders of a "majority" of
DelCap Fund's outstanding shares, which is a vote by the holders of the lesser
of a) 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 b) 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.

DelCap Fund shall not:

1. Invest more than 5% of the market or other fair value of its assets
in the securities of any one issuer (other than obligations of, or guaranteed
by, the U.S. government, its agencies or instrumentalities).

2. Invest in securities of other investment companies except as part of
a merger, consolidation or other acquisition.

3. Make loans, except to the extent that purchases of debt obligations
(including repurchase agreements), in accordance with DelCap Fund's investment
objective and policies, are considered loans and except that DelCap 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.

4. Purchase or sell real estate, but this shall not prevent DelCap Fund
from investing in securities secured by real estate or interests therein.

5. Purchase more than 10% of the outstanding voting and nonvoting
securities of any issuer, or invest in companies for the purpose of exercising
control or management.

6. Engage in the underwriting of securities of other issuers, except
that in connection with the disposition of a security, DelCap Fund may be deemed
to be an "underwriter" as that term is defined in the Securities Act of 1933.

7. Make any investment which would cause more than 25% of the market or
other fair value of its total assets to be invested in the securities of issuers
all of which conduct their principal business activities in the same industry.
This restriction does not apply to obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities.

8. Write or purchase puts, calls or combinations thereof, except that
DelCap Fund may write covered call options with respect to any or all parts of
its portfolio securities and purchase put options if DelCap Fund owns the
security covered by the put option at the time of purchase, and that premiums
paid on all put options outstanding do not exceed 2% of its total assets. DelCap
Fund may sell put options previously purchased and enter into closing
transactions with respect to covered call and put options. In addition, DelCap
Fund may write call options and purchase put options on stock indices and enter
into closing transactions with respect to such options.

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9. Purchase securities on margin, make short sales of securities or
maintain a net short position.

10. 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.

11. Invest in warrants valued at lower of cost or market exceeding 5%
of DelCap Fund's net assets. Included in that amount, but not to exceed 2% of
DelCap Fund's net assets, may be warrants not listed on the New York Stock
Exchange or American Stock Exchange.

12. Purchase or retain the securities of any issuer which has an
officer, director or security holder who is a director or officer of Equity
Funds IV, Inc. or of its investment manager if or so long as the directors and
officers of Equity Funds IV, Inc. and of its investment manager together own
beneficially more than 5% of any class of securities of such issuer.

13. Invest in interests in oil, gas or other mineral exploration or
development programs.

14. Invest more than 10% of DelCap Fund's total assets in repurchase
agreements maturing in more than seven days and other illiquid assets.

15. Borrow money in excess of one-third of the value of its net assets
and then only as a temporary measure for extraordinary purposes or to facilitate
redemptions. DelCap Fund has no intention of increasing its net income through
borrowing. Any borrowing will be done from a bank and to the extent that such
borrowing exceeds 5% of the value of DelCap Fund's net assets, asset coverage of
at least 300% is required. In the event that such asset coverage shall at any
time fall below 300%, DelCap Fund shall, within three days thereafter (not
including Sunday or holidays) or such longer period as the Securities and
Exchange Commission may prescribe by rules and regulations, reduce the amount of
its borrowings to such an extent that the asset coverage of such borrowings
shall be at least 300%. DelCap Fund will not pledge more than 10% of its net
assets. DelCap Fund will not issue senior securities as defined in the
Investment Company Act of 1940 (the "1940 Act"), except for notes to banks.
Investment securities will not normally be purchased while DelCap Fund has an
outstanding borrowing.

Although not a fundamental investment restriction, DelCap Fund
currently does not invest its assets in real estate limited partnerships.

Equity Funds IV, Inc. has adopted the following restrictions for the
Capital Appreciation Fund which cannot be changed without approval by the
holders of a "majority" of the Capital Appreciation Fund's outstanding shares,
which is a vote by the holders of the lesser of a) 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 b) more than 50% of the outstanding voting securities. The percentage
limitations contained in the restrictions and policies set forth herein apply at
the time the Capital Appreciation Fund purchases the securities.

Capital Appreciation Fund shall not:

1. With respect to 75% of its assets, invest more than 5% of the value
of its total assets in the securities of any one issuer (except obligations
issued or guaranteed by the U.S. Government, its agencies or instrumentalities
or certificates of deposit for any such securities, and cash and cash items).

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2. Make loans, except to the extent that purchases of debt obligations
or other securities (including repurchase agreements), in accordance with
Capital Appreciation Fund's investment objective and policies, are considered
loans and except that Capital Appreciation 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.

3. Purchase or sell real estate, but this shall not prevent Capital
Appreciation Fund from investing in securities by companies that deal in real
estate or securities secured by real estate or interests therein (including
securities issued by real estate investment trusts).

4. Engage in the underwriting of securities of other issuers, except
that Capital Appreciation Fund may acquire restricted or not readily marketable
securities under circumstances where, if such securities are sold, Capital
Appreciation Fund may be deemed to be an "underwriter" as that term is defined
in the Securities Act of 1933.

5. Make any investment which would cause more than 25% of the market
value of its total assets to be invested in the securities of issuers all of
which conduct their principal business activities in the same industry. This
restriction does not apply to obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.

6. Purchase securities on margin or make short sales of securities
except that Capital Appreciation Fund may obtain such short-term credits as may
be necessary for the clearance of purchases and sales of portfolio securities
may engage in futures and related options transactions and may satisfy margin
requirements relating thereto.

7. Purchase more than 10% of the outstanding voting securities of any
one company.

8. Borrow money in excess of one-third of the value of its net assets
and then only as a temporary measure for extraordinary purposes or to facilitate
redemptions. Capital Appreciation Fund has no intention of increasing its net
income through borrowing. Any borrowing will be done from a bank and to the
extent that such borrowing exceeds 5% of the value of Capital Appreciation
Fund's net assets, asset coverage of at least 300% is required. In the event
that such asset coverage shall at any time fall below 300%, Capital Appreciation
Fund shall, within three days thereafter (not including Sundays or holidays) or
such longer period as the Securities and Exchange Commission may prescribe by
rules and regulations, reduce the amount of its borrowings to such an extent
that the asset coverage of such borrowings shall be at least 300%. Capital
Appreciation Fund will not issue senior securities as defined in the Investment
Company Act of 1940, except for notes to banks. Investment securities will not
normally be purchased while Capital Appreciation Fund has an outstanding
borrowing.

9. Buy or sell commodities or commodity contracts, except that Capital
Appreciation Fund may engage into futures and related option transactions.

In addition to the above fundamental restrictions, Equity Funds IV,
Inc. has adopted the following non- fundamental investment restrictions on
behalf of Capital Appreciation Fund, which may be amended or changed without
approval of shareholders.

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Capital Appreciation Fund shall not:

1. Invest in companies for the purpose of exercising control or
management.

2. Invest in interests in oil, gas or other mineral exploration or
development programs.

3. Invest in securities of other investment companies, except that
Capital Appreciation Fund may invest in securities of open-end, closed-end and
unregulated investment companies in compliance with the limitations contained in
the Investment Company Act of 1940 at the time of the investment.

4. Purchase or retain securities of a company which has an officer or
director who is an officer or director of Equity Funds IV, Inc., or an officer,
director or partner of the Manager if, to the knowledge of Capital Appreciation
Fund, one or more such persons owns beneficially more than 1/2 of 1% of the
shares of the company, and in the aggregate more than 5% thereof.

5. 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 the predecessor company or companies. This restriction shall not
apply to Capital Appreciation Fund's investment in the securities of real estate
investment trusts.

6. Invest in warrants valued at lower of cost or market exceeding 5% of
Capital Appreciation Fund's net assets. Included in that amount, but not to
exceed 2% of Capital Appreciation Fund's net assets, may be warrants not listed
on the New York Stock Exchange or American Stock Exchange.

7. Write or purchase puts, calls or combinations thereof, except that
Capital Appreciation Fund may write covered call options with respect to any or
all parts of its portfolio securities if it owns the security covered by the
call option and may purchase put options provided premiums paid on all put
options outstanding do not exceed 2% of its total assets. Capital Appreciation
Fund may sell put options previously purchased and enter into closing
transactions with respect to covered call and put options. In addition, Capital
Appreciation Fund may write call options and purchase put options on stock
indices and enter into closing transactions with respect to such options.

8. Invest more than 15% of Capital Appreciation Fund's total assets in
repurchase agreements maturing in more than seven days and other illiquid
assets.

Although not a fundamental investment restriction, Capital Appreciation
Fund currently does not invest its assets in real estate limited partnerships.

In addition, from time to time, the Funds may also engage in the
following investment techniques:

Repurchase Agreements--While each of the Funds is permitted to do so,
neither normally invests in repurchase agreements, except to invest cash
balances.

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

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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, if
any, to the Fund that has entered into the agreement would be the difference
between the repurchase price and the market value of the security. Each Fund
will limit its investments in repurchase agreements to those which Delaware
Management Company, Inc. (the "Manager") under the guidelines of the Board of
Directors, determines to present minimal credit risks and which are of high
quality. In addition, each 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.

Options--The Funds may write call options and purchase put options on a
covered basis only, and will not engage in option writing strategies for
speculative purposes. The Funds may invest in options that are either
Exchange-listed or traded over-the-counter. Certain over-the-counter options may
be illiquid. Thus, it may not be possible to close options positions and this
may have an adverse impact on a Fund's ability to effectively hedge their
securities. DelCap Fund will not invest more than 10% of its assets in illiquid
securities, and Capital Appreciation Fund will not invest more than 15% of its
assets in illiquid securities.

A. Covered Call Writing--Each Fund may write covered call options from
time to time on such portion of its portfolio, without limit, as the Manager
determines is appropriate in seeking to obtain a Fund's investment objective. A
call option gives the purchaser of such option the right to buy, and the writer,
in this case a Fund, has the obligation to sell the underlying security at the
exercise price during the option period. The advantage to a Fund of writing
covered calls is that it receives a premium which is additional income. However,
if the security rises in value, the Fund may not fully participate in the market
appreciation.

During the option period, a covered call option writer may be assigned
an exercise notice by the broker/dealer through whom such call option was sold
requiring the writer to deliver the underlying security against payment of the
exercise price. This obligation is terminated upon the expiration of the option
period or at such earlier time in which the writer effects a closing purchase
transaction. A closing purchase transaction cannot be effected with respect to
an option once the option writer has received an exercise notice for such
option.

With respect to both options on actual portfolio securities owned by a
Fund and options on stock indices, the Fund may enter into closing purchase
transactions. A closing purchase transaction is one in which a Fund, when
obligated as a writer of an option, terminates its obligation by purchasing an
option of the same series as the option previously written.

Closing purchase transactions will ordinarily be effected to realize a
profit on an outstanding call option, to prevent an underlying security from
being called, to permit the sale of the underlying security or to enable a Fund
to write another call option on the underlying security with either a different
exercise price or expiration date or both. A Fund may realize a net gain or loss
from a closing purchase transaction depending upon whether the net amount of the
original premium received on the call option is more or less than the cost of
effecting the closing purchase transaction. Any loss incurred in a closing
purchase transaction may be partially or entirely offset by the premium received
from a sale of a different call option on the same underlying security. Such a
loss may also be wholly or partially offset by unrealized appreciation in the
market value of the underlying security. Conversely, a gain resulting from a
closing purchase transaction could be offset in whole or in part by a decline in
the market value of the underlying security.

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If a call option expires unexercised, a Fund will realize a short-term
capital gain in the amount of the premium on the option, less the commission
paid. Such a gain, however, may be offset by depreciation in the market value of
the underlying security during the option period. If a call option is exercised,
a Fund will realize a gain or loss from the sale of the underlying security
equal to the difference between the cost of the underlying security, and the
proceeds of the sale of the security plus the amount of the premium on the
option, less the commission paid.

The market value of a call option generally reflects the market price
of an underlying security. Other principal factors affecting market value
include supply and demand, interest rates, the price volatility of the
underlying security and the time remaining until the expiration date.

A Fund will write call options only on a covered basis, which means
that the Fund will own the underlying security subject to a call option at all
times during the option period. Unless a closing purchase transaction is
effected, a Fund would be required to continue to hold a security which it might
otherwise wish to sell, or deliver a security it would want to hold. Options
written by a Fund will normally have expiration dates between one and nine
months from the date written. The exercise price of a call option may be below,
equal to or above the current market value of the underlying security at the
time the option is written.

B. Purchasing Put Options--Each Fund may invest up to 2% of its total
assets in the purchase of put options. The DelCap Fund will, at all times during
which it holds a put option, own the security covered by such option.

Each Fund intends to purchase put options in order to protect against a
decline in the market value of the underlying security below the exercise price
less the premium paid for the option ("protective puts"). The ability to
purchase put options will allow a Fund to protect unrealized gain in an
appreciated security in its portfolio without actually selling the security. If
the security does not drop in value, a Fund will lose the value of the premium
paid. A Fund may sell a put option which it has previously purchased prior to
the sale of the securities underlying such option. Such sales will result in a
net gain or loss depending on whether the amount received on the sale is more or
less than the premium and other transaction costs paid on the put option which
is sold.

A Fund may sell a put option purchased on individual portfolio
securities or stock indices. Additionally, a Fund may enter into closing sale
transactions. A closing sale transaction is one in which a Fund, when it is the
holder of an outstanding option, liquidates its position by selling an option of
the same series as the option previously purchased.

Options on Stock Indices
A stock index assigns relative values to the common stocks included in
the index with the index fluctuating with changes in the market values of the
underlying common stock.

Options on stock indices are similar to options on stocks but have
different delivery requirements. Stock options provide the right to take or make
delivery of the underlying stock at a specified price. A stock index option
gives the holder the right to receive a cash "exercise settlement amount" equal
to (i) the amount by which the fixed exercise price of the option exceeds (in
the case of a put) or is less than (in the case of a call) the closing value of
the underlying index on the date of exercise, multiplied by (ii) a fixed "index
multiplier." Receipt of this cash amount will depend upon the closing level of
the stock index upon which the option is based being greater than (in the case
of a call) or less than (in the case of a put) the exercise price of

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the option. The amount of cash received will be equal to such difference between
the closing price of the index and exercise price of the option expressed in
dollars times a specified multiple. The writer of the option is obligated, in
return for the premium received, to make delivery of this amount. Gain or loss
to the Fund on transactions in stock index options will depend on price
movements in the stock market generally (or in a particular industry or segment
of the market) rather than price movements of individual securities.

As with stock options, a Fund may offset its position in stock index
options prior to expiration by entering into a closing transaction on an
Exchange or it may let the option expire unexercised.

A stock index fluctuates with changes in the market values of the stock
so included. Some stock index options are based on a broad market index such as
the Standard & Poor's 500 or the New York Stock Exchange Composite Index, or a
narrower market index such as the Standard & Poor's 100. Indices are also based
on an industry or market segment such as the AMEX Oil and Gas Index or the
Computer and Business Equipment Index. Options on stock indices are currently
traded on the following Exchanges among others: The Chicago Board Options
Exchange, New York Stock Exchange and American Stock Exchange.

A Fund's ability to hedge effectively all or a portion of its
securities through transactions in options on stock indices depends on the
degree to which price movements in the underlying index correlate with price
movements in the Fund's portfolio securities. Since a Fund's portfolio will not
duplicate the components of an index, the correlation will not be exact.
Consequently, a Fund bears the risk that the prices of the securities being
hedged will not move in the same amount as the hedging instrument. It is also
possible that there may be a negative correlation between the index or other
securities underlying the hedging instrument and the hedged securities which
would result in a loss on both such securities and the hedging instrument.

Positions in stock index options may be closed out only on an Exchange
which provides a secondary market. There can be no assurance that a liquid
secondary market will exist for any particular stock index option. Thus, it may
not be possible to close such an option. The inability to close options
positions could have an adverse impact on a Fund's ability to effectively hedge
its securities. A Fund will enter into an option position only if there appears
to be a liquid secondary market for such options.

A Fund will not engage in transactions in options on stock indices for
speculative purposes but only to protect appreciation attained, to offset
capital losses and to take advantage of the liquidity available in the option
markets.

Foreign Securities
Each Fund may invest in securities of foreign companies. However,
DelCap Fund and Capital Appreciation Fund, will not invest more than,
respectively, 25% and 20% of the value of their respective total assets, at the
time of purchase, in foreign securities (other than securities of Canadian
issuers registered under the Securities Exchange Act of 1934 or, as described
below, in certain Depositary Receipts, on which there are no such limits).

There has been in the past, and there may be again in the future, an
interest equalization tax levied by the United States in connection with the
purchase of foreign securities such as those purchased by the Funds. Payment of
such interest equalization tax, if imposed, would reduce a Fund's rate of return
on its investment. Dividends paid by foreign issuers may be subject to
withholding and other foreign taxes which may decrease the net return on such
investments as compared to dividends paid to a Fund by United States
corporations.

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Investors should recognize that investing in foreign corporations
involves certain considerations, including those set forth below, which are not
typically associated with investing in United States corporations. Foreign
corporations are not generally subject to uniform accounting, auditing and
financial standards and requirements comparable to those applicable to United
States corporations. There may also be less supervision and regulation of
foreign stock exchanges, brokers and listed corporations than exist in the
United States. A Fund may be affected either unfavorably or favorably by
fluctuations in the relative rates of exchange as between the currencies of
different nations and exchange control regulations. Furthermore, there may be
the possibility of expropriation of confiscatory taxation, political, economic
or social instability or diplomatic developments which could affect assets of a
Fund held in foreign countries.

Depositary Receipts
DelCap Fund may make foreign investments through the purchase and sale
of sponsored or unsponsored American Depositary Receipts ("ADRs"), and Capital
Appreciation Fund may, in addition to ADRs, also purchase European and Global
Depositary Receipts ("Depositary Receipts"). ADRs are receipts typically issued
by a U.S. bank or trust company, while Depositary Receipts are issued by a
foreign bank or trust company. ADRs and Depositary Receipts evidence ownership
of underlying securities issued by a foreign corporation. "Sponsored" ADRs and
Depositary Receipts are issued jointly by the issuer of the underlying security
and a depository, whereas "unsponsored" ADRs and Depositary Receipts are issued
without participation of the issuer of the deposited security. Holders of
unsponsored ADRs and Depositary Receipts generally bear all the costs of such
facilities and the depository of an unsponsored facility frequently is under no
obligation to distribute shareholder communications received from the issuer of
the deposited security or to pass through voting rights to the holders of such
receipts in respect of the deposited securities. Therefore, there may not be a
correlation between information concerning the issuer of the security and the
market value of an unsponsored ADR or Depositary Receipt.

Non-Traditional Equity Securities
Capital Appreciation Fund may invest in convertible preferred stocks
that offer enhanced yield features, such as Preferred Equity Redemption
Cumulative Stock ("PERCS"), which provide an investor, such as the Fund, with
the opportunity to earn higher dividend income than is available on a company's
common stock. A PERCS is a preferred stock which generally features a mandatory
conversion date, as well as a capital appreciation limit which is usually
expressed in terms of a stated price. Upon the conversion date, most PERCS
convert into common stock of the issuer (PERCS are generally not convertible
into cash at maturity). Under a typical arrangement, if after a predetermined
number of years the issuer's common stock is trading at a price below that set
by the capital appreciation limit, each PERCS would convert to one share of
common stock. If, however, the issuer's common stock is trading at a price above
that set by the capital appreciation limit, the holder of the PERCS would
receive less than one full share of common stock. The amount of that fractional
share of common stock received by the PERCS holder is determined by dividing the
price set by the capital appreciation limit of the PERCS by the market price of
the issuer's common stock. PERCS can be called at any time prior to maturity,
and hence do not provide call protection. However, if called early, the issuer
may pay a call premium over the market price to the investor. This call premium
declines at a preset rate daily, up to the maturity date of the PERCS.

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Capital Appreciation Fund may also invest in other enhanced convertible
securities. These include but are not limited to ACES (Automatically Convertible
Equity Securities), PEPS (Participating Equity Preferred Stock), PRIDES
(Preferred Redeemable Increased Dividend Equity Securities), SAILS (Stock
Appreciation Income Linked Securities), TECONS (Term Convertible Notes), QICS
(Quarterly Income Cumulative Securities) and DECS (Dividend Enhanced Convertible
Securities). ACES, PEPS, PRIDES, SAILS, TECONS, QICS, and DECS all have the
following features: they are company-issued convertible preferred stock; unlike
PERCS, they do not have capital appreciation limits; they seek to provide the
investor with high current income, with some prospect of future capital
appreciation; they are typically issued with three to four-year maturities; they
typically have some built-in call protection for the first two to three years;
investors have the right to convert them into shares of common stock at a preset
conversion ratio or hold them until maturity; and upon maturity, they will
automatically convert to either cash or a specified number of shares of common
stock.

Portfolio Loan Transactions
Each Fund may loan up to 25% of its assets to qualified broker/dealers
or institutional investors for their use relating to short sales or other
security transactions.

It is the understanding of the Manager that the staff of the Securities
and Exchange Commission permits portfolio lending by registered investment
companies if certain conditions are met. These conditions are as follows: 1)
each transaction must have 100% collateral in the form of cash, short-term U.S.
Government securities, or irrevocable letters of credit payable by banks
acceptable to a Fund from the borrower; 2) this collateral must be valued daily
and should the market value of the loaned securities increase, the borrower must
furnish additional collateral to the Fund; 3) the Fund must be able to terminate
the loan after notice, at any time; 4) the Fund must receive reasonable interest
on any loan, and any dividends, interest or other distributions on the lent
securities, and any increase in the market value of such securities; 5) the Fund
may pay reasonable custodian fees in connection with the loan; and 6) the voting
rights on the lent securities may pass to the borrower; however, if the
directors of Equity Funds IV, Inc. know that a material event will occur
affecting an investment loan, they must either terminate the loan in order to
vote the proxy or enter into an alternative arrangement with the borrower to
enable the directors to vote the proxy.

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

-11-

<PAGE>

ACCOUNTING AND TAX ISSUES

When a Fund writes a call, or purchases a put option, an amount equal
to the premium received or paid by it is included in the section of the Fund's
assets and liabilities as an asset and as an equivalent liability.

In writing a call, the amount of the liability is subsequently "marked
to market" to reflect the current market value of the option written. The
current market value of a written option is the last sale price on the principal
Exchange on which such option is traded or, in the absence of a sale, the mean
between the last bid and asked prices. If an option which a Fund has written
expires on its stipulated expiration date, the Fund reports a realized gain. If
a Fund enters into a closing purchase transaction with respect to an option
which the Fund has written, the Fund realizes a gain (or loss if the cost of the
closing transaction exceeds the premium received when the option was sold)
without regard to any unrealized gain or loss on the underlying security, and
the liability related to such option is extinguished. Any such gain or loss is a
short-term capital gain or loss for federal income tax purposes. If a call
option which a Fund has written is exercised, the Fund realizes a capital gain
or loss (long-term or short-term, depending on the holding period of the
underlying security) from the sale of the underlying security and the proceeds
from such sale are increased by the premium originally received.

The premium paid by a Fund for the purchase of a put option is recorded
in the section of the Fund's assets and liabilities as an investment and
subsequently adjusted daily to the current market value of the option. For
example, if the current market value of the option exceeds the premium paid, the
excess would be unrealized appreciation and, conversely, if the premium exceeds
the current market value, such excess would be unrealized depreciation. The
current market value of a purchased option is the last sale price on the
principal Exchange on which such option is traded or, in the absence of a sale,
the mean between the last bid and asked prices. If an option which a Fund has
purchased expires on the stipulated expiration date, the Fund realizes a
short-term or long-term capital loss for federal income tax purposes in the
amount of the cost of the option. If a Fund sells the put option, it realizes a
short-term or long-term capital gain or loss, depending on whether the proceeds
from the sale are greater or less than the cost of the option. If a Fund
exercises a put option, it realizes a capital gain or loss (long-term or
short-term, depending on the holding period of the underlying security) from the
sale of the underlying security and the proceeds from such sale will be
decreased by the premium originally paid. However, since the purchase of a put
option is treated as a short sale for federal income tax purposes, the holding
period of the underlying security will be affected by such a purchase.

Options on Certain Stock Indices--Accounting for options on certain
stock indices will be in accordance with generally accepted accounting
principles. The amount of any realized gain or loss on closing out such a
position will result in a realized gain or loss for tax purposes. Such options
held by the Fund at the end of each fiscal year will be required to be "marked
to market" for federal income tax purposes. Sixty percent of any net gain or
loss recognized on such deemed sales or on any actual sales will be treated as
long-term capital gain or loss, and the remainder will be treated as short-term
capital gain or loss.

Other Tax Requirements--DelCap Fund has qualified, and intends to
continue to qualify, and Capital Appreciation Fund intends to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended. A Fund must meet several requirements to maintain its status
as a regulated investment company. Among these requirements are that at least
90% of its investment company taxable income be derived from dividends,
interest, payments with respect to securities loans and gains from the sale or
disposition of securities; that at the close of each

-12-

<PAGE>

quarter of its taxable year at least 50% of the value of its assets consist of
cash and cash items, government securities, securities of other regulated
investment companies and, subject to certain diversification requirements, other
securities; and that less than 30% of its gross income be derived from sales of
securities held for less than three months.

The requirement that not more than 30% of a Fund's gross income be
derived from gains from the sale or other disposition of securities held for
less than three months may restrict the Fund in its ability to write covered
call options on securities which it has held less than three months, to write
options which expire in less than three months, to sell securities which have
been held less than three months and to effect closing purchase transactions
with respect to options which have been written less than three months prior to
such transactions. Consequently, in order to avoid realizing a gain within the
three-month period, a Fund may be required to defer the closing out of a
contract beyond the time when it might otherwise be advantageous to do so. A
Fund may also be restricted in the sale of purchased put options and the
purchase of put options for the purpose of hedging underlying securities because
of the application of the short sale holding period rules with respect to such
underlying securities. 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.

-13-

<PAGE>

PERFORMANCE INFORMATION

From time to time, each Fund may state each of its Classes' 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, if applicable) periods.
Each Fund may also advertise aggregate and average total return information for
its Classes over additional periods of time.

The average annual total rate of return for each Class is based on a
hypothetical $1,000 investment that includes capital appreciation and
depreciation during the stated periods. The following formula will be used for
the actual computations:
n
P(1+T) = ERV

Where: P = a hypothetical initial purchase order of
$1,000 from which, in the case of only
Class A Shares, the maximum front-end
sales charge is deducted;

T = average annual total return;

n = number of years;

ERV = redeemable value of the hypothetical
$1,000 purchase at the end of the period
after the deduction of the applicable CDSC,
if any, with respect to Class B Shares and
Class C Shares.

In presenting performance information for Class A Shares, the Limited
CDSC applicable to only certain redemptions of those shares will not be deducted
from any computation of total return. See the Prospectuses for the Fund Classes
for a description of the Limited CDSC and the limited instances in which it
applies. All references to a CDSC in this Performance Information section will
apply to Class B Shares or Class C Shares.

Aggregate or cumulative total return is calculated in a similar manner,
except that the results are not annualized. Each calculation assumes the maximum
front-end sales charge, if any, is deducted from the initial $1,000 investment
at the time it is made with respect to Class A Shares, and that all
distributions are reinvested at net asset value, and, with respect to Class B
Shares and Class C Shares, reflects the deduction of the CDSC that would be
applicable upon complete redemption of such shares. In addition, each Fund may
present total return information that does not reflect the deduction of the
maximum front-end sales charge or any applicable CDSC.

-14-

<PAGE>

The performance of Class A Shares and the Institutional Class of DelCap
Fund, as shown below, is the average annual total return quotations through
September 30, 1996. 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 Class A Shares at net asset value
(NAV) does not reflect the payment of any front-end sales charge. Securities
prices fluctuated during the periods covered and past results should not be
considered as representative of future performance. Pursuant to applicable
regulation, total return shown for the DelCap Fund Institutional Class for the
periods prior to the commencement of operations of such Class is calculated by
taking the performance of DelCap Fund A Class and adjusting it to reflect the
elimination of all sales charges. However, for those periods, no adjustment has
been made to eliminate the impact of 12b-1 payments, and performance would have
been affected had such an adjustment been made.

Average Annual Total Return
DelCap Fund DelCap Fund DelCap Fund
A Class A Class Institutional
(at Offer)(2) (at NAV) Class(3)
<S> <C> <C> <C>
1 year
ended
9/30/96 15.33% 21.09% 21.44%

3 years
ended
9/30/96 12.51% 14.34% 14.70%

5 years
ended
9/30/96 11.61% 12.70% 12.97%

10 years
ended
9/30/96 16.60% 17.17% 17.30%

Period
3/27/86(1)
through
9/30/96 21.95% 22.52% 22.65%

</TABLE>

(1) Date of initial public offering of DelCap Fund A Class.

(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 5.75%.

(3) Date of initial public offering of DelCap Fund Institutional Class was
November 9, 1992.

-15-

<PAGE>

The performance of DelCap Fund B Class, as shown below, is the average
annual total return quotation through September 30, 1996. 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 September 30, 1996. The average annual total return for Class B Shares
excluding deferred sales charge assumes the shares were not redeemed at
September 30, 1996 and therefore does not reflect the deduction of a CDSC.

Average Annual Total Return
DelCap Fund B Class DelCap Fund B Class
(Including Deferred (Excluding Deferred
Sales Charge) Sales Charge)
1 year
ended
9/30/96 16.27% 20.27%

Period
9/6/94(1)
through
9/30/96 19.73% 20.92%

(1) Date of initial public offering of DelCap Fund B Class.

The performance of DelCap Fund C Class, as shown below, is the
aggregate total return quotation through September 30, 1996. The aggregate 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
September 30, 1996. The aggregate total return for Class C Shares excluding
deferred sales charge assumes the shares were not redeemed at September 30, 1996
and therefore does not reflect the deduction of a CDSC.

Aggregate Total Return
DelCap Fund C Class DelCap Fund C Class
(Including Deferred (Excluding Deferred
Sales Charge) Sales Charge)
Period
11/29/95(1)
through
9/30/96 19.38% 20.38%

(1) Date of initial public offering of DelCap Fund C Class; total return for
this short of a time period may not be representative of longer-term
results.

Total return performance for Capital Appreciation Fund is not provided
because such shares were not offered prior to the date of this Part B.

-16-

<PAGE>

From time to time, each Fund may quote actual total return performance
in advertising and other types of literature compared to indices or averages of
alternative financial products available to prospective investors. For example,
the performance comparisons may include the average return of various bank
instruments, some of which may carry certain return guarantees offered by
leading banks and thrifts as monitored by Bank Rate Monitor, and those of
generally-accepted corporate bond and government security price indices of
various durations prepared by Lehman Brothers and Salomon Brothers, Inc. These
indices are not managed for any investment goal.

Total return performance 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 representation of the results which may be realized from an investment in a
Fund in the future.

From time to time, each Fund may also quote its Classes' actual total
return performance, dividend results and other performance information in
advertising and other types of literature and may compare that information to,
or may separately illustrate similar information reported by the Standard &
Poor's 500 Stock Index and the Dow Jones Industrial Average and other unmanaged
indices.

The Standard & Poor's 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 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. In seeking a particular
investment objective, each Fund's portfolio likely will include many securities
considered by the Manager to be more aggressive than those tracked by these
indices.

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

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

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

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

-17-

<PAGE>

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

Russell Indexes is an investment analysis service that provides both
current and historical stock performance information, focusing on the
business fundamentals of those firms issuing the security.

Salomon Brothers and Lehman Brothers are statistical research firms
that maintain databases of international market, bond market, corporate
and government-issued securities of various maturities. This
information, as well as unmanaged indices compiled and maintained by
these firms, will be used in preparing comparative illustrations. In
addition, the performance of multiple indices compiled and maintained
by these firms may be combined to create a blended performance result
for comparative performances. Generally, the indices selected will be
representative of the types of securities in which the Funds may invest
and the assumptions that were used in calculating the blended
performance will be described.

Comparative information on the Consumer Price Index and the CDA Growth
Index may also be included. The Consumer Price Index, as prepared by the U.S.
Bureau of Labor Statistics, is the most commonly used measure of inflation. It
indicates the cost fluctuations of a representative group of consumer goods. It
does not represent a return from an investment. The CDA Growth Index was
developed and is maintained by CDA Technologies, Inc. The Index is comprised of
230 separately-managed, growth-oriented equity mutual funds. It reflects the
reinvestment of any dividend and capital gains distributions paid during a
specified period.

The following tables are an example, for purposes of illustration only,
of cumulative total return performance for the Class A Shares, the Institutional
Class, Class B Shares and Class C Shares of DelCap Fund through September 30,
1996. The performance figures reflect maximum sales charges or contingent
deferred sales charges, if any. Performance of Class A Shares may also be shown
without reflecting the impact of any front-end sales charge. Performance of
Class B Shares and Class C Shares will be calculated both with the applicable
CDSC included and excluded. In addition, the calculations assume the
reinvestment of any realized securities profits distributions and income
dividends paid during the period, but not any income taxes payable by
shareholders on the reinvested distributions. Comparative information on the
Standard & Poor's 500 Stock Index, the Dow Jones Industrial Average and the
NASDAQ Composite Index is also included.

-18-

<PAGE>

The net asset value of a Class fluctuates so shares, when redeemed, may
be worth more or less than the original investment, and a Class' results should
not be considered a guarantee of future performance.
<TABLE>
<CAPTION>

Cumulative Total Return

DelCap DelCap Standard Dow
Fund Fund & Poor's Jones NASDAQ
A Class Institutional 500 Stock Industrial Composite
(at Offer)(2) Class(3) Index Average Index
<S> <C> <C> <C> <C> <C>
3 months
ended
9/30/96 (1.38%) 3.63% 3.09% 4.64% 3.54%

6 months
ended
9/30/96 5.31%(4) 10.73% 7.71% 6.51% 11.40%

9 months
ended
9/30/96 13.14% 19.02% 13.49% 16.95% 16.61%

1 year
ended
9/30/96 15.33% 21.44% 20.32% 25.72% 12.83%

3 years
ended
9/30/96 42.40% 50.90% 61.81% 78.82% 41.98%

5 years
ended
9/30/96 73.20% 83.96% 102.97% 123.67% 87.68%

10 years
ended
9/30/96 364.53% 393.26% 303.43% 358.43% 221.84%

3/27/86(1)
through
9/30/96 705.62% 756.10% 297.41% 353.84% 194.66%
</TABLE>

(1) Date of initial public offering of DelCap Fund A Class.

(3) Date of initial public offering of DelCap Fund Institutional Class was
November 9, 1992. Pursuant to applicable regulation, total return shown for
DelCap Fund Institutional Class for the periods prior to the commencement
of operations of such Class is calculated by taking the performance of
DelCap Fund A Class and adjusting it to reflect the elimination of all
sales charges. However, for those periods, no adjustment has been made to
eliminate the impact of 12b-1 payments, and performance would have been
affected had such an adjustment been made.

(4) For the six months ended September 30, 1996, cumulative total return for
DelCap Fund A Class at net asset value was 10.58%.

-19-

<PAGE>

Cumulative Total Return

DelCap Fund DelCap Fund
B Class B Class Standard
(Including (Excluding & Poor's Dow Jones NASDAQ
Deferred Deferred 500 Stock Industrial Composite
Sales Charge) Sales Charge) Index Average Index
<S> <C> <C> <C> <C> <C>
3 months
ended
9/30/96 (0.66%) 3.34% 3.09% 4.64% 3.54%

6 months
ended
9/30/96 6.22% 10.22% 7.71% 6.51% 11.40%

9 months
ended
9/30/96 14.17% 18.17% 13.49% 16.95% 16.61%

1 year
ended
9/30/96 16.27% 20.27% 20.32% 25.72% 12.83%

Period
9/6/94(1)
through
9/30/96 45.13% 48.13% 52.25% 58.42% 60.25%
</TABLE>

(1) Date of initial public offering of DelCap Fund B Class.

-20-

Cumulative Total Return

DelCap Fund DelCap Fund
C Class C Class Standard
(Including (Excluding & Poor's Dow Jones NASDAQ
Deferred Deferred 500 Stock Industrial Composite
Sales Charge) Sales Charge) Index Average Index
<S> <C> <C> <C> <C> <C>
3 months
ended
9/30/96 2.38% 3.38% 3.09% 4.64% 3.54%

6 months
ended
9/30/96 9.24% 10.24% 7.71% 6.51% 11.40%

9 months
ended
9/30/96 17.21% 18.21% 13.49% 16.95% 16.61%

Period
11/29/95(1)
through
9/30/96 19.38% 20.38% 15.68% 18.17% 14.05%

</TABLE>

(1) Date of initial public offering of DelCap Fund C Class; total return for
this short of a time period may not be representative of longer-term
results.

Total return performance for Capital Appreciation Fund is not provided
because such shares were not offered prior to the date of this Part B.

Because every investor's goals and risk threshold are different, the
Distributor, as distributor for each Fund and other mutual funds in the Delaware
Group, will provide general information about investment alternatives and
scenarios that will allow investors to assess their personal goals. This
information will include general material about investing as well as materials
reinforcing various industry-accepted principles of prudent and responsible
financial planning. One typical way of addressing these issues is to compare an
individual's goals and the length of time the individual has to attain these
goals to his or her risk threshold. In addition, the Distributor will provide
information that discusses the Manager's overriding investment philosophy and
how that philosophy impacts a Fund's, and other Delaware Group funds',
investment disciplines employed in seeking their objectives. The Distributor may
also from time to time cite general or specific information about the
institutional clients of the Manager, including the number of such clients
serviced by the Manager.

-21-

<PAGE>

Dollar-Cost Averaging
For many people, deciding when to invest can be a difficult decision.
Security prices tend to move up and down over various market cycles and logic
says to invest when prices are low. However, even experts can't always pick the
highs and the lows. By using a strategy known as dollar-cost averaging, you
schedule your investments ahead of time. If you invest a set amount on a regular
basis, that money will always buy more shares when the price is low and fewer
when the price is high. You can choose to invest at any regular interval--for
example, monthly or quarterly--as long as you stick to your regular schedule.
Dollar-cost averaging looks simple and it is, but there are important things to
remember.

Dollar-cost averaging works best over longer time periods, and it
doesn't guarantee a profit or protect against losses in declining markets. If
you need to sell your investment when prices are low, you may not realize a
profit no matter what investment strategy you utilize. That's why dollar-cost
averaging can make sense for long-term goals. Since the potential success of a
dollar-cost averaging program depends on continuous investing, even through
periods of fluctuating prices, you should consider your dollar-cost averaging
program a long-term commitment and invest an amount you can afford and probably
won't need to withdraw. You also should consider your financial ability to
continue to purchase shares during periods of low fund share prices. Delaware
Group offers three services -- Automatic Investing Program, Direct Deposit
Program and the Wealth Builder Option -- that can help to keep your regular
investment program on track. See Investing by Electronic Fund Transfer - Direct
Deposit Purchase Plan and Automatic Investing Plan under Investment Plans and
Wealth Builder Option under Investment Plans for a complete description of these
services, including restrictions or limitations.

The example below illustrates how dollar-cost averaging can work. In a
fluctuating market, the average cost per share over a period of time will be
lower than the average price per share for the same time period.

Number
Investment Price Per of Shares
Amount Share Purchased

Month 1 $100 $10.00 10
Month 2 $100 $12.50 8
Month 3 $100 $ 5.00 20
Month 4 $100 $10.00 10
------------------------------------------
$400 $37.50 48

Total Amount Invested: $400
Total Number of Shares Purchased: 48
Average Price Per Share: $9.38 ($37.50/4)
Average Cost Per Share: $8.33 ($400/48 shares)

This example is for illustration purposes only. It is not intended to
represent the actual performance of either Fund.

-22-

<PAGE>

THE POWER OF COMPOUNDING
When you opt to reinvest your current income for additional Fund
shares, your investment is given yet another opportunity to grow. It's called
the Power of Compounding and the following chart illustrates just how powerful
it can be.

COMPOUNDED RETURNS
Results of various assumed fixed rates of return on a $10,000
investment compounded quarterly for 10 years:
<TABLE>
<CAPTION>

8% Rate of Return 10% Rate of Return 12% Rate of Return 14% Rate of Return
----------------- ------------------ ------------------ ------------------

<S> <C> <C> <C> <C>
1 year $10,824 $11,038 $11,255 $11,475
2 years $11,717 $12,184 $12,668 $13,168
3 years $12,682 $13,449 $14,258 $15,111
4 years $13,728 $14,845 $16,047 $17,340
5 years $14,859 $16,386 $18,061 $19,898
6 years $16,084 $18,087 $20,328 $22,833
7 years $17,410 $19,965 $22,879 $26,202
8 years $18,845 $22,038 $25,751 $30,067
9 years $20,399 $24,326 $28,983 $34,503
10 years $22,080 $26,851 $32,620 $39,593
</TABLE>

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

-23-

<PAGE>

TRADING PRACTICES AND BROKERAGE

Equity Funds IV, Inc. selects brokers or dealers to execute
transactions on behalf of each Fund for the purchase or sale of portfolio
securities on the basis of its judgment of their professional capability to
provide the service. The primary consideration is to have brokers or dealers
execute transactions at best price and execution. Best price and execution
refers to many factors, including the price paid or received for a security, the
commission charged, the promptness and reliability of execution, the
confidentiality and placement accorded the order and other factors affecting the
overall benefit obtained by the account on the transaction. A number of trades
are made on a net basis where a Fund either buys securities directly from the
dealer or sells them to the dealer. In these instances, there is no direct
commission charged but there is a spread (the difference between the buy and
sell price) which is the equivalent of a commission. When a commission is paid,
a Fund pays reasonably competitive brokerage commission rates based upon the
professional knowledge of Equity Funds IV, Inc.'s trading department as to rates
paid and charged for similar transactions throughout the securities industry. In
some instances, a Fund pays a minimal share transaction cost when the
transaction presents no difficulty.

During the fiscal years ended September 30, 1994, 1995 and 1996, the
aggregate dollar amounts of brokerage commissions paid by DelCap Fund were
$1,030,567, $899,512 and $1,513,495 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 September 30, 1996, portfolio transactions
of DelCap Fund in the amount of $436,208,392, resulting in brokerage commissions
of $971,035 were directed to brokers for brokerage and research services
provided.

As provided in the Securities Exchange Act of 1934 and each Fund's
Investment Management Agreement, higher commissions are permitted to be paid to
broker/dealers who provide brokerage and research services than to
broker/dealers who do not provide such services if such higher commissions are
deemed reasonable in relation to the value of the brokerage and research
services provided. Although transactions are directed to broker/dealers who
provide such brokerage and research services, Equity Funds IV, Inc. 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

-24-

<PAGE>

disadvantaged, portfolio transactions which generate commissions or
their equivalent are allocated to broker/dealers who provide daily portfolio
pricing services to a Fund and to other funds in the Delaware Group. Subject to
best price and execution, commissions allocated to brokers providing such
pricing services may or may not be generated by the funds receiving the pricing
service.

The Manager may place a combined order for two or more accounts or
funds engaged in the purchase or sale of the same security if, in its judgment,
joint execution is in the best interest of each participant and will result in
best price and execution. Transactions involving commingled orders are allocated
in a manner deemed equitable to each account or fund. When a combined order is
executed in a series of transactions at different prices, each account
participating in the order may be allocated an average price obtained from the
executing broker. It is believed that the ability of the accounts to participate
in volume transactions will generally be beneficial to the accounts and funds.
Although it is recognized that, in some cases, the joint execution of orders
could adversely affect the price or volume of the security that a particular
account or fund may obtain, it is the opinion of the Manager and Equity Funds
IV, Inc.'s Board of Directors that the advantages of combined orders outweigh
the possible disadvantages of separate transactions.

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

Portfolio Turnover
Portfolio trading will be undertaken principally to accomplish each
Fund's objective in relation to anticipated movements in the general level of
interest rates. A Fund is free to dispose of portfolio securities at any time,
subject to complying with the Internal Revenue Code and the Investment Company
Act of 1940, when changes in circumstances or conditions make such a move
desirable in light of the investment objective. A Fund will not attempt to
achieve or be limited to a predetermined rate of portfolio turnover, such a
turnover always being incidental to transactions undertaken with a view to
achieving the Fund's investment objective.

The degree of portfolio activity may affect brokerage costs of a Fund
and taxes payable by the Fund's shareholders. A turnover rate of 100% would
occur, for example, if all the investments in a Fund's portfolio at the
beginning of the year were replaced by the end of the year. In investing for
capital appreciation, each Fund may hold securities for any period of time.
Portfolio turnover will also be increased if a Fund writes a large number of
call options which are subsequently exercised. To the extent a Fund realizes
gains on securities held for less than six months, such gains are taxable to the
shareholder or to a Fund at ordinary income tax rates. The turnover rate also
may be affected by cash requirements from redemptions and repurchases of Fund
shares. Total brokerage costs generally increase with higher portfolio turnover
rates.

-25-

<PAGE>

Under certain market conditions, Delcap Fund may experience a high rate
of portfolio turnover which could exceed 100%. Capital Appreciation Fund is
expected to have a portfolio turnover rate that is less than 100%. The portfolio
turnover rate of each Fund is calculated by dividing the lesser of purchases or
sales of portfolio securities for the particular fiscal year by the monthly
average of the value of the portfolio securities owned by the Fund during the
particular fiscal year, exclusive of securities whose maturities at the time of
acquisition are one year or less. During the past two fiscal years, DelCap
Fund's portfolio turnover rates were 51% and 72% for 1995 and 1996,
respectively.

-26-

<PAGE>

PURCHASING SHARES

The Distributor serves as the national distributor for each Fund's four
classes of shares - Class A Shares, Class B Shares, Class C Shares and the
Institutional Class, and has agreed to use its best efforts to sell shares of
each Fund. See the Prospectuses for information on how to invest. Shares of each
Fund are offered on a continuous basis and may be purchased through authorized
investment dealers or directly by contacting Equity Funds IV, 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 generally must be at
least $100. The initial and subsequent investment minimums for Class A Shares
will be waived for purchases by officers, directors and employees of any
Delaware Group fund, the Manager or any of the Manager's affiliates if the
purchases are made pursuant to a payroll deduction program. Shares purchased
pursuant to the Uniform Gifts to Minors Act or Uniform Transfers to Minors Act
and shares purchased in connection with an Automatic Investing Plan are subject
to a minimum initial purchase of $250 and a minimum subsequent purchase of $25.
Accounts opened under the Delaware Group Asset Planner service are subject to a
minimum initial investment of $2,000 per Asset Planner Strategy selected. There
are no minimum purchase requirements for the Institutional Classes, but certain
eligibility requirements must be satisfied.

Each purchase of Class B Shares is subject to a maximum purchase
limitation of $250,000. For Class C Shares, each purchase must be in an amount
that is less than $1,000,000. See Investment Plans for purchase limitations
applicable to retirement plans. Equity Funds IV, 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 and that, absent any applicable fee waiver, Class A Shares are subject to
lower annual 12b-1 Plan expenses than Class B Shares and Class C Shares and
generally are not subject to a CDSC.

Selling dealers have the responsibility of transmitting orders
promptly. Equity Funds IV, Inc. reserves the right to reject any order for the
purchase of shares of either Fund if in the opinion of management such rejection
is in such Fund's best interest.

The NASD has adopted Rules of Fair Practice relating to investment
company sales charges. Equity Funds IV, 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. See the table below. Class A Shares, absent any
applicable fee waiver, are also subject to annual 12b-1 Plan expenses.

Class B Shares are purchased at net asset value and are subject to a
CDSC of: (i) 4% if shares are redeemed within two years of purchase; (ii) 3% if
shares are redeemed during the third or fourth year following purchase; (iii) 2%
if shares are redeemed during the fifth year following purchase; and (iv) 1% if
shares are redeemed during the sixth year following purchase. Class B Shares are
also subject to annual 12b-1 Plan expenses which, absent any applicable fee
waiver, are higher than those to which Class A Shares are subject and are
assessed against the Class B Shares for approximately eight years after
purchase. See Automatic Conversion of Class B Shares under Classes of Shares in
the Fund Classes' Prospectuses.

-27-

<PAGE>

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, absent any applicable fee waiver, 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.

The distributor has voluntarily elected to waive the payment of 12b-1
Plan expenses by the Capital Appreciation Fund from the commencement of the
public offering through May 31, 1997.

Institutional Class shares are purchased at the net asset value per
share without the imposition of a front-end or contingent deferred sales charge
or 12b-1 Plan expenses. See Determining Offering Price and Net Asset Value and
Plans Under Rule 12b-1 for the Fund Classes in this Part B.

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

Certificates representing shares purchased are not ordinarily issued
unless, in the case of Class A Shares or Institutional Class shares, a
shareholder submits a specific request. Certificates are not issued in the case
of Class B Shares or Class C Shares. However, purchases not involving the
issuance of certificates are confirmed to the investor and credited to the
shareholder's account on the books maintained by Delaware Service Company, Inc.
(the "Transfer Agent"). The investor will have the same rights of ownership with
respect to such shares as if certificates had been issued. An investor that is
permitted to obtain a certificate may receive a certificate representing shares
purchased by sending a letter to the Transfer Agent requesting the certificate.
No charge is assessed by Equity Funds IV, Inc. for any certificate issued.
Investors who hold certificates representing any of their shares may only redeem
those shares by written request. The investor's certificate(s) must accompany
such request.

Alternative Purchase Arrangements
The alternative purchase arrangements of Class A, Class B and Class C
Shares permit investors to choose the method of purchasing shares that is most
suitable for 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,
absent any applicable fee waiver, annual 12b-1 Plan expenses of up to a maximum
of 0.30% of the average daily net assets of Class A Shares or to purchase either
Class B or Class C Shares and have the entire initial purchase amount invested
in the Fund with the investment thereafter subject to a CDSC and, absent any
applicable fee waivers, annual 12b-1 Plan expenses. Class B Shares are subject
to a CDSC if the shares are redeemed within six years of purchase, and Class C
Shares are subject to a CDSC if the shares are redeemed within 12 months of
purchase. Class B and Class C Shares are each subject to annual 12b-1 Plan
expenses of up to a maximum of 1% (0.25% of which are service fees to be paid to
the Distributor, dealers or others for providing personal service and/or
maintaining shareholder accounts) of average daily net assets of the respective
Class. Class B Shares will automatically convert to Class A Shares at the end of
approximately eight years after purchase and, thereafter, be subject to annual
12b-1 Plan expenses of up to a maximum of 0.30% of average daily net assets of
such shares. Unlike Class B Shares, Class C Shares do not convert to another
class.

-28-

<PAGE>

Class A Shares - DelCap Fund and Capital Appreciation Fund
Purchases of $100,000 or more of Class A Shares at the offering price
carry reduced front-end sales charges as shown in the accompanying table, and
may include a series of purchases over a 13-month period under a Letter of
Intention signed by the purchaser. See Special Purchase Features - Class A
Shares, below for more information on ways in which investors can avail
themselves of reduced front-end sales charges and other purchase features.
<TABLE>
<CAPTION>

DelCap Fund
Capital Appreciation Fund
Class A Shares
- -------------------------------------------------------------------------------------------------------------------------------

Dealer's
Front-End Sales Charge as % of Commission***
Amount of Purchase Offering Amount as % of
Price Invested** Offering Price
- -------------------------------------------------------------------------------------------------------------------------------

Capital
DelCap Fund Appreciation Fund
<S> <C> <C> <C> <C>
Less than $100,000 4.75% 4.98% 4.94% 4.00%
$100,000 but under $250,000 3.75 3.90 3.89 3.00
$250,000 but under $500,000 2.50 2.60 2.59 2.00
$500,000 but under $1,000,000* 2.00 2.05 2.00 1.60
</TABLE>

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

** In the case of DelCap Fund, based on the net asset value per share of Class
A Shares as of the end of Equity Funds IV, Inc.'s most recent fiscal year.
In the case of Capital Appreciation Fund, based on an initial net asset
value of $8.50 per share.

A 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 such 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. Dealers who receive 90% or more
of the sales charge may be deemed to be underwriters under the
Securities Act of 1933.
- --------------------------------------------------------------------------------

-29-

<PAGE>

Certain dealers who enter into an agreement to provide extra training
and information on Delaware Group products and services and who increase sales
of Delaware Group funds may receive an additional 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
For initial purchases of Class A Shares of $1,000,000 or more, a
dealer's commission may be paid by the Distributor to financial advisers through
whom such purchases are effected in accordance with the following schedule:

Dealer's Commission
-------------------
(as a percentage of
Amount of Purchase amount purchased)
------------------

Up to $2 million 1.00%
Next $1 million up to $3 million 0.75
Next $2 million up to $5 million 0.50
Amount over $5 million 0.25

In determining a financial adviser's eligibility for the dealer's
commission, purchases of Class A Shares of other Delaware Group funds as to
which a Limited CDSC applies (see Contingent Deferred Sales Charge for Certain
Redemptions of Class A Shares Purchased at Net Asset Value under Redemption and
Exchange in the Fund Classes' Prospectuses) may be aggregated with those of the
Class A Shares of a Fund. Financial advisers also may be eligible for a dealer's
commission in connection with certain purchases made under a Letter of Intention
or pursuant to an investor's Right of Accumulation. Financial advisers should
contact the Distributor concerning the applicability and calculation of the
dealer's commission in the case of combined purchases.

Contingent Deferred Sales Charge - Class B Shares and Class C Shares
Class B 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 below, 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

-30-

<PAGE>

dividends or capital gains distributions. See Waiver of Contingent Deferred
Sales Charge - Class B and Class C Shares under Redemption and Exchange in the
Prospectuses for the Fund Classes for a list of the instances in which the CDSC
is waived.

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

Contingent Deferred
Sales Charge (as a
Percentage of
Dollar Amount
Year After 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, absent any applicable fee
waiver, 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 the same Fund. See Automatic Conversion of Class B
Shares under Classes of Shares in the Fund Classes' Prospectuses. Such
conversion will constitute a tax-free exchange for federal income tax purposes.
See Taxes in the Prospectuses for the Fund Classes.

Plans Under Rule 12b-1 for the Fund Classes
Pursuant to Rule 12b-1 under the 1940 Act, Equity Funds IV, Inc. has
adopted a separate plan for each of the Class A Shares, the Class B Shares and
the Class C Shares of each Fund (the "Plans"). Each Plan permits the Fund to pay
for certain distribution, promotional and related expenses involved in the
marketing of only the Class to which the Plan applies. The Plans do not apply to
the Institutional Classes of shares. Such shares are not included in calculating
the Plans' fees, and the Plans are not used to assist in the distribution and
marketing of shares of the Institutional Classes. Shareholders of the
Institutional Classes may not vote on matters affecting the Plans.

The Plans permit a Fund, pursuant to the Distribution Agreement, to pay
out of the assets of the 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 Class B and Class C Shares are also used to pay the
Distributor for advancing the commission costs to dealers with respect to the
initial sale of such shares.

-31-

<PAGE>

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

The maximum aggregate fee payable by a Fund under the Plans, and a
Fund's Distribution Agreement, is on an annual basis, up to 0.30% of the Class A
Shares' average daily net assets for the year, 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 the Class C Shares' average daily net assets for the year. Equity
Funds IV, Inc.'s Board of Directors may reduce these amounts at any time. The
Distributor has elected voluntarily to waive all payments under the 12b-1 Plan
for the Class A Shares, Class B Shares and Class C Shares of the Capital
Appreciation Fund during the commencement of the public offering of the Fund
through May 31, 1997.

All of the distribution expenses incurred by the Distributor and
others, such as broker/dealers, in excess of the amount paid on behalf of Class
A, Class B and Class C Shares would be borne by such persons without any
reimbursement from such Fund Classes. Subject to seeking best price and
execution, a Fund may, from time to time, buy or sell portfolio securities from
or to firms which receive payments under the Plans.

From time to time, the Distributor may pay additional amounts from its
own resources to dealers for aid in distribution or for aid in providing
administrative services to shareholders.

The Plans and the Distribution Agreements, as amended, have been
approved by the Board of Directors of Equity Funds IV, Inc., including a
majority of the directors who are not "interested persons" (as defined in the
1940 Act) of Equity Funds IV, Inc. and who have no direct or indirect financial
interest in the Plans by vote cast in person or at a meeting duly called for the
purpose of voting on the Plans and such Agreements. Continuation of the Plans
and the Distribution Agreements, as amended, must be approved annually by the
Board of Directors in the same manner as specified above.

Each year, the directors must determine whether continuation of the
Plans is in the best interest of shareholders of, respectively, Class A Shares,
Class B Shares and Class C Shares 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 Agreements, as amended, may be terminated with respect to a
Fund Class at any time without penalty by a majority of those directors who are
not "interested persons" or by a majority vote of the outstanding voting
securities of the relevant Fund Class. Any amendment materially increasing the
maximum percentage payable under the Plans must likewise be approved by a
majority vote of the outstanding voting securities of the relevant Fund Class,
as well as by a majority vote of those directors who are not "interested
persons." With respect to the Class A Share Plan, any material increase in the
maximum percentage payable thereunder must also be approved by a majority of the
outstanding voting securities of the Class B Shares. Also, any other material
amendment to the Plans must be approved by a majority vote of the directors
including a majority of the noninterested directors of Equity Funds IV, 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 IV, 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.

-32-

<PAGE>

For the fiscal year ended September 30, 1996, payments from the Class A
Shares and Class B Shares of DelCap Fund pursuant to their respective Plans
amounted to $2,639,339 and $63,162, respectively. For the period November 29,
1995 (date of initial public sale) through September 30, 1996, payments from the
Class C Shares of DelCap Fund pursuant to its Plan amounted to $4,773. Such
amounts were used for the following purposes:
<TABLE>
<CAPTION>

DelCap DelCap DelCap
Fund A Class Fund B Class Fund C Class
------------ ------------ ------------

<S> <C> <C>
Advertising $3,359 --- ---
Annual/Semi-Annual Reports $92,962 --- ---
Broker Trails $2,153,484 $15,902 ---
Broker Sales Charges --- $23,040 $4,501
Dealer Service Expenses $36,589 --- ---
Interest on Broker Sales Charges --- $21,172 $272
Commissions to Wholesalers $95,280 $2,651 ---
Promotional-Broker Meetings $46,106 $397 ---
Promotional-Other $31,070 --- ---
Prospectus Printing $46,873 --- ---
Telephone $19,383 --- ---
Wholesaler Expenses $114,233 --- ---
Other --- --- ---
</TABLE>

Other Payments to Dealers - Class A, Class B and Class C Shares
From time to time, at the discretion of the Distributor, all registered
broker/dealers whose aggregate sales of Fund Classes exceed certain limits as
set by the Distributor, may receive from the Distributor an additional payment
of up to 0.25% of the dollar amount of such sales. The Distributor may also
provide additional promotional incentives or payments to dealers that sell
shares of the Delaware Group of funds. In some instances, these incentives or
payments may be offered only to certain dealers who maintain, have sold or may
sell certain amounts of shares.

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

-33-

<PAGE>

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
IV, Inc., any other fund in the Delaware Group, the Manager, or any of the
Manager's affiliates that may in the future be created, legal counsel to the
funds and registered representatives and employees of broker/dealers who have
entered into Dealer's Agreements with the Distributor may purchase Class A
Shares and any such class of shares of any of the funds in the Delaware Group,
including any fund that may be created, at the net asset value per share. Family
members of such persons at their direction, and any employee benefit plan
established by any of the foregoing funds, corporations, counsel or
broker/dealers may also purchase shares at net asset value. Purchases of Class A
Shares may also be made by clients of registered representatives of an
authorized investment dealer at net asset value within 12 months of a change of
the registered representative's employment, if the purchase is funded by
proceeds from an investment where a front-end sales charge, 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 Delaware Group funds. 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 Equity Funds IV, Inc. may reasonably require to
establish eligibility for purchase at net asset value.

DelCap Fund A Class shares may be deposited at net asset value, without
payment of a sales charge with respect to sales of units of a unit investment
trust ("Trust"), organized and sponsored by Prudential Securities Incorporated
dealers, whose portfolio consists of Class A Shares and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Unit holders of the Trust may elect to invest cash distributions
from the Trust in Class A Shares at net asset value, including: (a)
distributions of any dividend income or other income received by the Trust; (b)
distributions of any net capital gains received in respect of Class A Shares and
proceeds of the sale of Class A Shares not used to redeem units of the Trust;
and (c) proceeds from the maturity of the Treasury Obligations at the
termination date of the Trust.

Equity Funds IV, Inc. must be notified in advance that the trade
qualifies for purchase at net asset value.

-34-

<PAGE>

Letter of Intention
The reduced front-end sales charges described above with respect to
Class A Shares are also applicable to the aggregate amount of purchases made
within a 13-month period pursuant to a written Letter of Intention provided by
the Distributor and signed by the purchaser, and not legally binding on the
signer or Equity Funds IV, Inc., which provides for the holding in escrow by the
Transfer Agent, of 5% of the total amount of the Class A Shares intended to be
purchased until such purchase is completed within the 13-month period. A Letter
of Intention may be dated to include shares purchased up to 90 days prior to the
date the Letter is signed. The 13- month period begins on the date of the
earliest purchase. If the intended investment is not completed, except as noted
below, the purchaser will be asked to pay an amount equal to the difference
between the front-end sales charge on the Class A Shares purchased at the
reduced rate and the front-end sales charge otherwise applicable to the total
shares purchased. If such payment is not made within 20 days following the
expiration of the 13-month period, the Transfer Agent will surrender an
appropriate number of the escrowed shares for redemption in order to realize the
difference. Such purchasers may include the value (at offering price at the
level designated in their Letter of Intention) of all their shares of the Funds
and of any class of any of the other mutual funds in the Delaware Group (except
shares of any Delaware Group fund which do not carry a front-end sales charge,
CDSC or Limited CDSC, other than shares of Delaware Group Premium Fund, Inc.
beneficially owned in connection with the ownership of variable insurance
products, unless they were acquired through an exchange from a Delaware Group
fund which carried a front-end sales charge, CDSC or Limited CDSC) previously
purchased and still held as of the date of their Letter of Intention toward the
completion of such Letter.

Employers offering a Delaware Group retirement plan may also complete a
Letter of Intention to obtain a reduced front-end sales charge on investments of
Class A Shares made by the plan. The aggregate investment level of the Letter of
Intention will be determined and accepted by the Transfer Agent at the point of
plan establishment. The level and any reduction in front-end sales charge will
be based on actual plan participation and the projected investments in Delaware
Group funds that are offered with a front-end sales charge, CDSC or Limited CDSC
for a 13-month period. The Transfer Agent reserves the right to adjust the
signed Letter of Intention based on this acceptance criteria. The 13-month
period will begin on the date this Letter of Intention is accepted by the
Transfer Agent. If actual investments exceed the anticipated level and equal an
amount that would qualify the plan for further discounts, any front-end sales
charges will be automatically adjusted. In the event this Letter of Intention is
not fulfilled within the 13-month period, the plan level will be adjusted
(without completing another Letter of Intention) and the employer will be billed
for the difference in front-end sales charges due, based on the plan's assets
under management at that time. Employers may also include the value (at offering
price at the level designated in their Letter of Intention) of all their shares
intended for purchase that are offered with a front-end sales charge, CDSC or
Limited CDSC of any class. Class B Shares and Class C Shares of a Fund and other
Delaware Group funds which offer corresponding classes of shares may also be
aggregated for this purpose.

Combined Purchases Privilege
In determining the availability of the reduced front-end sales charge
previously set forth with respect to Class A Shares, purchasers may combine the
total amount of any combination of Class B Shares and/or Class C Shares of the
Funds, as well as shares of any other class of any of the other Delaware Group
funds (except shares of any Delaware Group fund which do not carry a front-end
sales charge, CDSC or Limited CDSC, other than shares of Delaware Group Premium
Fund, Inc. beneficially owned in connection with the ownership of variable
insurance products, unless they were acquired through an exchange from a
Delaware Group fund which carried a front-end sales charge, CDSC or Limited
CDSC).

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<PAGE>

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 a Fund as well
as shares of any other class of any of the other Delaware Group funds which
offer such classes (except shares of any Delaware Group fund which do not carry
a front-end sales charge, CDSC or Limited CDSC, other than shares of Delaware
Group Premium Fund, Inc. beneficially owned in connection with the ownership of
variable insurance products, unless they were acquired through an exchange from
a Delaware Group fund which carried a front-end sales charge, CDSC or Limited
CDSC). If, for example, any such purchaser has previously purchased and still
holds Class A Shares and/or shares of any other of the classes described in the
previous sentence with a value of $40,000 and subsequently purchases $60,000 at
offering price of additional shares of Class A Shares, the charge applicable to
the $60,000 purchase would 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 of a Fund (and of the Institutional Class
holding shares which were acquired through an exchange from one of the other
mutual funds in the Delaware Group offered with a front-end sales charge) who
redeem such shares have one year from the date of redemption to reinvest all or
part of their redemption proceeds in Class A Shares of that Fund or in Class A
Shares of any of the other funds in the Delaware Group, subject to applicable
eligibility and minimum purchase requirements, in states where shares of such
other funds may be sold, at net asset value without the payment of a front-end
sales charge. This privilege does not extend to Class A Shares where the
redemption of the shares triggered the payment of a Limited CDSC. Persons
investing redemption proceeds from direct investments in mutual funds in the
Delaware Group offered without a front-end sales charge will be required to pay
the applicable sales charge when purchasing Class A Shares. The reinvestment
privilege does not extend to a redemption of either Class B or Class C Shares.

Any such reinvestment cannot exceed the redemption proceeds (plus any
amount necessary to purchase a full share). The reinvestment will be made at the
net asset value next determined after receipt of remittance. A redemption and
reinvestment could have income tax consequences. It is recommended that a tax
adviser be consulted with respect to such transactions. Any reinvestment
directed to a fund in which the investor does not then have an account will be
treated like all other initial purchases of a fund's shares. Consequently, an
investor should obtain and read carefully the prospectus for the fund in which
the investment is intended to be made before investing or sending money. The
prospectus contains more complete information about the fund, including charges
and expenses.

Investors should consult their financial advisers or the Transfer
Agent, which also serves as the Funds' shareholder servicing agent, about the
applicability of the Limited CDSC (see Contingent Deferred Sales Charge for
Certain Redemptions of Class A Shares Purchased at Net Asset Value under
Redemption and Exchange in the Fund Classes' Prospectuses) in connection with
the features described above.

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Group Investment Plans
Group Investment Plans which are not eligible to purchase shares of the
Institutional Classes may also benefit from the reduced front-end sales charges
for investments in Class A Shares set forth in the table on page 00, based on
total plan assets. If a company has more than one plan investing in the Delaware
Group of funds, then the total amount invested in all plans would be used in
determining the applicable front-end sales charge reduction upon each purchase,
both initial and subsequent, upon notification to the Fund in which the
investment is being made at the time of each such purchase. Employees
participating in such Group Investment Plans may also combine the investments
made in their plan account when determining the applicable front-end sales
charge on purchases to non-retirement Delaware Group investment accounts if they
so notify the Fund in connection with each purchase. For other retirement plans
and special services, see Retirement Plans for the Fund Classes under Investment
Plans.

The Institutional Classes
The Institutional Class of each Fund is available for purchase only by:
(a) retirement plans introduced by persons not associated with brokers or
dealers that are primarily engaged in the retail securities business and
rollover individual retirement accounts from such plans; (b) tax-exempt employee
benefit plans of the Manager or its affiliates and securities dealer firms with
a selling agreement with the Distributor; (c) institutional advisory accounts of
the Manager or its affiliates and those having client relationships with
Delaware Investment Advisers, a division of the Manager, or its affiliates and
their corporate sponsors, as well as subsidiaries and related employee benefit
plans and rollover individual retirement accounts from such institutional
advisory accounts; (d) banks, trust companies and similar financial institutions
investing for their own account or for the accounts of their trust customers for
whom such financial institution is exercising investment discretion in
purchasing shares of the Class; and (e) registered investment advisers investing
on behalf of clients that consist solely of institutions and high net-worth
individuals having at least $1,000,000 entrusted to the adviser for investment
purposes, but only if the adviser is not affiliated or associated with a broker
or dealer and derives compensation for its services exclusively from its clients
for such advisory services.

Shares of the Institutional Classes are available for purchase at net
asset value, without the imposition of a front-end or contingent deferred sales
charge and are not subject to Rule 12b-1 expenses.

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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 of the DelCap Fund 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 Classes of each Fund and the Fund Classes of the Capital
Appreciation Fund 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
Fund and Class in which shares are being purchased. Such purchases, which must
meet the minimum subsequent purchase requirements set forth in the Prospectuses
and this Part B, are made for Class A Shares at the public offering price and,
for Class B Shares, Class C Shares and the Institutional Classes at the net
asset value, at the end of the day of receipt. A reinvestment plan may be
terminated at any time. This plan does not assure a profit nor protect against
depreciation in a declining market.

Reinvestment of Dividends in Other Delaware Group Funds
Subject to applicable eligibility and minimum initial purchase
requirements and the limitations set forth below, holders of Class A, Class B
and Class C Shares may automatically reinvest dividends and/or distributions in
any of the mutual funds in the Delaware Group, including the Funds, in states
where their shares may be sold. Such investments will be at net asset value at
the close of business on the reinvestment date without any front-end sales
charge or service fee. The shareholder must notify the Transfer Agent in writing
and must have established an account in the fund into which the dividends and/or
distributions are to be invested. Any reinvestment directed to a fund in which
the investor does not then have an account will be treated like all other
initial purchases of a fund's shares. Consequently, an investor should obtain
and read carefully the prospectus for the fund in which the investment is
intended to be made before investing or sending money. The prospectus contains
more complete information about the fund, including charges and expenses. See
also Additional Methods of Adding to Your Investment - Dividend Reinvestment
Plan under How to Buy Shares in the Prospectuses for the Fund Classes.

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

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Investing by Electronic Fund Transfer
Direct Deposit Purchase Plan--Investors may arrange for a Fund to
accept for investment in Class A, Class B or Class C Shares, through an agent
bank, preauthorized government or private recurring payments. This method of
investment assures the timely credit to the shareholder's account of payments
such as social security, veterans' pension or compensation benefits, federal
salaries, Railroad Retirement benefits, private payroll checks, dividends, and
disability or pension fund benefits. It also eliminates lost, stolen and delayed
checks.

Automatic Investing Plan--Shareholders of Class A, Class B and Class C
Shares may make automatic investments by authorizing, in advance, monthly
payments directly from their checking account for deposit into their Fund
account. This type of investment will be handled in either of the following
ways. (1) If the shareholder's bank is a member of the National Automated
Clearing House Association ("NACHA"), the amount of the investment will be
electronically deducted from his or her account by Electronic Fund Transfer
("EFT"). The shareholder's checking account will reflect a debit each month at a
specified date although no check is required to initiate the transaction. (2) If
the shareholder's bank is not a member of NACHA, deductions will be made by
preauthorized checks, known as Depository Transfer Checks. Should the
shareholder's bank become a member of NACHA in the future, his or her
investments would be handled electronically through EFT.

* * *

Initial investments under the Direct Deposit Purchase Plan and the
Automatic Investing Plan must be for $250 or more and subsequent investments
under such Plans must be for $25 or more. An investor wishing to take advantage
of either service must complete an authorization form. Either service can be
discontinued by the shareholder at any time without penalty by giving written
notice.

Payments to a Fund from the federal government or its agencies on
behalf of a shareholder may be credited to the shareholder's account after such
payments should have been terminated by reason of death or otherwise. Any such
payments are subject to reclamation by the federal government or its agencies.
Similarly, under certain circumstances, investments from private sources may be
subject to reclamation by the transmitting bank. In the event of a reclamation,
a Fund may liquidate sufficient shares from a shareholder's account to reimburse
the government or the private source. In the event there are insufficient shares
in the shareholder's account, the shareholder is expected to reimburse the Fund.

Direct Deposit Purchases by Mail
Shareholders may authorize a third party, such as a bank or employer,
to make investments directly to their Fund accounts. A 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 IV, Inc. for
proper instructions.

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<PAGE>

Wealth Builder Option
Shareholders can use the Wealth Builder Option to invest in the Fund
Classes through regular liquidations of shares in their accounts in other mutual
funds in the Delaware Group. Shareholders of the Fund Classes may elect to
invest in one or more of the other mutual funds in the Delaware Group through
the Wealth Builder Option. See Wealth Builder Option and Redemption and Exchange
in the Prospectuses 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 in the Delaware
Group, subject to the conditions and limitations set forth in the Fund Classes'
Prospectuses. 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 at any time by written
notice to their Fund.

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

Each purchase of Class B Shares is subject to a maximum purchase
limitation of $250,000 for retirement plans. Each purchase of Class C Shares
must be in an amount that is less than $1,000,000 for such plans. The maximum
purchase limitations apply only to the initial purchase of shares by the
retirement plan.

Minimum investment limitations generally applicable to other investors
do not apply to retirement plans other than Individual Retirement Accounts, 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

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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 Classes.
See The Institutional Classes, above. For additional information on any of the
plans and Delaware's retirement services, call the Shareholder Service Center
telephone number.

It is advisable for an investor considering any one of the retirement
plans described below to consult with an attorney, accountant or a qualified
retirement plan consultant. For further details, including applications for any
of these plans, contact your investment dealer or the Distributor.

Taxable distributions from the retirement plans described below may be
subject to withholding.

Please contact your investment dealer or the Distributor for the
special application forms required for the plans described below.

Prototype Profit Sharing or Money Purchase Pension Plans
Prototype Plans are available for self-employed individuals,
partnerships and corporations. These plans can be maintained as Section 401(k),
profit sharing or money purchase pension plans. Contributions may be invested
only in Class A and Class C Shares.

Individual Retirement Account ("IRA")
A document is available for an individual who wants to establish an IRA
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 or, for years prior to
1997, elects to be treated as having no compensation for the year. Investments
in each of the Fund Classes are permissible.

An individual can contribute up to $2,000 to his or her IRA each year.
Contributions may or may not be deductible depending upon the taxpayer's
adjusted gross income and whether the taxpayer or his or her spouse is an active
participant in an employer-sponsored retirement plan. Even if a taxpayer (or his
or her spouse) is an active participant in an employer-sponsored retirement
plan, the full $2,000 deduction is still available if the taxpayer's adjusted
gross income is below $25,000 ($40,000 for taxpayers filing joint returns). A
partial deduction is allowed for married couples with incomes between $40,000
and $50,000, and for single individuals with incomes between $25,000 and
$35,000. No deductions are available for contributions to IRAs by taxpayers
whose adjusted gross income before IRA deductions exceeds $50,000 ($35,000 for
singles) and who are active participants in an employer-sponsored retirement
plan. Taxpayers who are not allowed deductions on IRA contributions still can
make nondeductible IRA contributions of as much as $2,000 for each working
spouse ($2,250 for one-income couples for years prior to 1997), and defer taxes
on interest or other earnings from the IRAs. Special rules apply for determining
the deductibility of contributions made by married individuals filing separate
returns.

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<PAGE>

Effective for tax years beginning after 1996, one-income couples can
contribute up to $2,000 to each spouse's IRA provided the combined compensation
of both spouses is at least equal to the total contributions for both spouses.
If the working spouse is an active participant in an employer-sponsored
retirement plan and earns over $40,000, the maximum deduction limit is reduced
in the same way that the limit is reduced for contributions to a non-spousal
IRA.

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

Investments generally must be held in the IRA until age 59 1/2 in order
to avoid premature distribution penalties, but distributions generally must
commence no later than April 1 of the calendar year following the year in which
the participant reaches age 70 1/2. Individuals are entitled to revoke the
account, for any reason and without penalty, by mailing written notice of
revocation to Delaware Management Trust Company within seven days after the
receipt of the IRA Disclosure Statement or within seven days after the
establishment of the IRA, except, if the IRA is established more than seven days
after receipt of the IRA Disclosure Statement, the account may not be revoked.
Distributions from the account (except for the pro-rata portion of any
nondeductible contributions) are fully taxable as ordinary income in the year
received. Excess contributions removed after the tax filing deadline, plus
extensions, for the year in which the excess contributions were made are subject
to a 6% excise tax on the amount of excess. Premature distributions
(distributions made before age 59 1/2, except for death, disability and certain
other limited circumstances) will be subject to a 10% excise tax on the amount
prematurely distributed, in addition to the income tax resulting from the
distribution. See Alternative Purchase Arrangements - Class B Shares and Class C
Shares under Classes of Shares, Contingent Deferred Sales Charge Class B Shares
and Class C Shares under Classes of Shares, and Waiver of Contingent Deferred
Sales Charge Class B and Class C Shares under Redemption and Exchange in the
Fund Classes' Prospectuses concerning the applicability of a CDSC upon
redemption.

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.

See Appendix B for additional IRA information.

Simplified Employee Pension Plan ("SEP/IRA")
A SEP/IRA may be established by an employer who wishes to sponsor a
tax-sheltered retirement program by making contributions on behalf of all
eligible employees. Each of the Fund Classes is available for investment by a
SEP/IRA.

Salary Reduction Simplified Employee Pension Plan ("SAR/SEP")
Employers with 25 or fewer eligible employees can establish this plan
which permits employer contributions and salary deferral contributions in Class
A Shares and Class C Shares only. SAR/SEPs may not be established after December
31, 1996. Employers may, however, continue to make contributions under pre-1997
rules to SAR/SEPs established before January 1, 1997.

Prototype 401(k) Defined Contribution Plan
Section 401(k) of the Code permits employers to establish qualified
plans based on salary deferral contributions. Plan documents are available to
enable employers to establish a plan. An employer may also elect to make profit
sharing contributions and/or matching contributions with investments in only
Class A Shares and Class C Shares or certain other funds in the Delaware Group.
Purchases under the plan may be combined for purposes of computing the reduced
front-end sales charge applicable to Class A Shares as set forth in the table on
page 00.

Deferred Compensation Plan for Public Schools and Non-Profit Organizations
("403(b)(7)")
Section 403(b)(7) of the Code permits public school systems and certain
non-profit organizations to use mutual fund shares held in a custodial account
to fund deferred compensation arrangements for their employees. A custodial
account agreement is available for those employers who wish to purchase any of
the Fund Classes in conjunction with such an arrangement. Applicable front-end
sales charges with respect to Class A Shares for such purchases are set forth in
the table on page 00.

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Deferred Compensation Plan for State and Local Government Employees ("457")
Section 457 of the Code permits state and local governments, their
agencies and certain other entities to establish a deferred compensation plan
for their employees who wish to participate. This enables employees to defer a
portion of their salaries and any federal (and possibly state) taxes thereon.
Such plans may invest in shares of any of the Fund Classes. Although investors
may use their own plan, there is available a Delaware Group 457 Deferred
Compensation Plan. Interested investors should contact the Distributor or their
investment dealers to obtain further information. Applicable front-end sales
charges for such purchases of Class A Shares are set forth in the table on page
00.

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<PAGE>

DETERMINING OFFERING PRICE AND NET ASSET VALUE

Orders for purchases of Class A Shares are effected at the offering
price next calculated by the Fund in which shares are being purchased after
receipt of the order by the Fund or its agent. Orders for purchases of Class B
Shares, Class C Shares and the Institutional Classes are effected at the net
asset value per share next calculated after receipt of the order by the Fund in
which shares are being purchased or its agent. Selling dealers have the
responsibility of transmitting orders promptly.

The offering price for Class A Shares consists of the net asset value
per share plus any applicable sales charges. Offering price and net asset value
are computed as of the close of regular trading on the New York Stock Exchange
(ordinarily, 4 p.m., Eastern time) on days when the Exchange is open. The New
York Stock Exchange is scheduled to be open Monday through Friday throughout the
year except for New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas. When the New York Stock
Exchange is closed, the Funds will generally be closed, pricing calculations
will not be made and purchase and redemption orders will not be processed.

An example showing how to calculate the net asset value per share and,
in the case of Class A Shares, the offering price per share, is included in
DelCap Fund's financial statements which are incorporated by reference into this
Part B.

Each Fund's net asset value per share is computed by adding the value
of all the securities and other assets in the portfolio, deducting any
liabilities, and dividing by the number of shares outstanding. Expenses and fees
are accrued daily. In determining a Fund's total net assets, portfolio
securities primarily listed or traded on a national or foreign securities
exchange, except for bonds, are valued at the last sale price on that exchange.
Options are valued at the last reported sale price or, if no sales are reported,
at the mean between bid and asked prices. For valuation purposes, foreign
securities initially expressed in foreign currency values will be converted into
U.S. dollar values at the mean between the bid and offered quotations of such
currencies against U.S. dollars as last quoted by any recognized dealer.
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 a Fund will bear, pro-rata, all of the common expenses of
that Fund. The net asset values of all outstanding shares of each Class of a
Fund will be computed on a pro-rata basis for each outstanding share based on
the proportionate participation in that Fund represented by the value of shares
of that Class. All income earned and expenses incurred by a Fund will be borne
on a pro-rata basis by each outstanding share of a Class, based on each Class'
percentage in the Fund represented by the value of shares of

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<PAGE>

such Classes, except that the Institutional Classes will not incur any of the
expenses under Equity Funds IV, Inc.'s 12b-1 Plans and the Class A, Class B and
Class C Shares alone will bear any 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 DelCap
Fund will vary. During the period the current waivers of 12b-1 Plan expenses by
the Distributor in connection with the distribution of Class A, Class B and
Class C Shares of the Capital Appreciation Fund remain applicable, no such
variance shall arise.

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REDEMPTION AND REPURCHASE

Any shareholder may require a 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. Each signature guarantee
must be supplied by an eligible guarantor institution. Each Fund reserves the
right to reject a signature guarantee supplied by an eligible institution based
on its creditworthiness. The Funds may request further documentation from
corporations, retirement plans, executors, administrators, trustees or
guardians.

In addition to redemption of shares by a Fund, the Distributor, acting
as agent of the Funds, offers to repurchase Fund shares from broker/dealers
acting on behalf of shareholders. The redemption or repurchase price, which may
be more or less than the shareholder's cost, is the net asset value per share
next determined after receipt of the request in good order by the respective
Fund or its agent, less any applicable CDSC or Limited CDSC. This is computed
and effective at the time the offering price and net asset value are determined.
See Determining Offering Price and Net Asset Value. The Funds and the
Distributor end their business days at 5 p.m., Eastern time. This offer is
discretionary and may be completely withdrawn without further notice by the
Distributor.

Orders for the repurchase of Fund shares which are submitted to the
Distributor prior to the close of its business day will be executed at the net
asset value per share computed that day (subject to the applicable CDSC or
Limited CDSC), if the repurchase order was received by the broker/dealer from
the shareholder prior to the time the offering price and net asset value are
determined on such day. The selling dealer has the responsibility of
transmitting orders to the Distributor promptly. Such repurchase is then settled
as an ordinary transaction with the broker/dealer (who may make a charge to the
shareholder for this service) delivering the shares repurchased.

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 Prospectuses for the Fund Classes. Class B Shares
are subject to a CDSC of: (i) 4% if shares are redeemed within two years of
purchase; (ii) 3% if shares are redeemed during the third or fourth year
following purchase; (iii) 2% if shares are redeemed during the fifth year
following purchase; and (iv) 1% if shares are redeemed during the sixth year
following purchase. Class C Shares are subject to a CDSC of 1% if shares are
redeemed within 12 months following purchase. See Contingent Deferred Sales
Charge - Class B Shares and Class C Shares under Classes of Shares in the
Prospectuses for the Fund Classes. Except for the applicable CDSC or Limited
CDSC and, with respect to the expedited payment by wire described below for
which there is currently a $7.50 bank wiring cost, neither the Funds nor the
Distributor charges a fee for redemptions or repurchases, but such fees could be
charged at any time in the future.

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<PAGE>

Payment for shares redeemed will ordinarily be mailed the next business
day, but in no case later than seven days, after receipt of a redemption request
in good order; provided, however, that each commitment to mail or wire
redemption proceeds by a certain time, as described below is modified by the
qualifications described in the next paragraph.

Each Fund will process written or telephone redemption requests to the
extent that the purchase orders for the shares being redeemed have already
settled. A Fund will honor redemption requests as to shares for which a check
was tendered as payment, but a Fund will not mail or wire the proceeds until it
is reasonably satisfied that the check has cleared. 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 involved will automatically redeem from the shareholder's account the
shares purchased by the check plus any dividends earned thereon. Shareholders
may be responsible for any losses to a Fund or to the Distributor.

In case of a suspension of the determination of the net asset value
because the New York Stock Exchange is closed for other than weekends or
holidays, or trading thereon is restricted or an emergency exists as a result of
which disposal by a Fund of securities owned by it is not reasonably practical,
or it is not reasonably practical for a Fund fairly to value its assets, or in
the event that the Securities and Exchange Commission has provided for such
suspension for the protection of shareholders, a Fund may postpone payment or
suspend the right of redemption or repurchase. In such case, the shareholder may
withdraw the request for redemption or leave it standing as a request for
redemption at the net asset value next determined after the suspension has been
terminated.

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

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

Small Accounts
Before a 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 Funds' 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 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.

-47-

<PAGE>

Effective November 29, 1995, the minimum initial investment in DelCap
Fund A Class was increased from $250 to $1,000. Accounts of DelCap Fund A Class
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.

* * *

Each Fund has made available certain redemption privileges, as
described below. The Funds reserve 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 Classes, 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 record address. 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 relevant Fund before the request is received.
Payment will be made by wire or check to the bank account designated on the
authorization form as follows:

1. Payment by Wire: Request that Federal Funds be wired to the bank
account designated on the authorization form. Redemption proceeds will normally
be wired on the next business day following receipt of the redemption request.
There is a $7.50 wiring fee (subject to change) charged by CoreStates Bank, N.A.
which will be deducted from the withdrawal proceeds each time the shareholder
requests a redemption. If the proceeds are wired to the shareholder's account at
a bank which is not a member of the Federal Reserve System, there could be a
delay in the crediting of the funds to the shareholder's bank account.

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

Redemption Requirements: In order to change the name of the bank and
the account number it will be necessary to send a written request to the
relevant Fund and a signature guarantee may be required. Each signature
guarantee must be supplied by an eligible guarantor institution. The Funds
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.

-48-

<PAGE>

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

Neither the Funds nor the Funds' Transfer Agent is responsible for any
shareholder loss incurred in acting upon written or telephone instructions for
redemption or exchange of Fund shares which are reasonably believed to be
genuine. With respect to such telephone transactions, each Fund will follow
reasonable procedures to confirm that instructions communicated by telephone are
genuine (including verification of a form of personal identification) as, if it
does not, such Fund or the Transfer Agent may be liable for any losses due to
unauthorized or fraudulent transactions. Telephone instructions received by
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, Class B and Class C Shares of the DelCap Fund
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 DelCap Fund does not
recommend any specific amount of withdrawal. This $5,000 minimum does not apply
for that Fund's prototype retirement plans. Shares purchased with the initial
investment and through reinvestment of cash dividends and realized securities
profits distributions will be credited to the shareholder's account and
sufficient full and fractional shares will be redeemed at the net asset value
calculated on the third business day preceding the mailing date.

Checks are dated either the 1st or the 15th of the month, as selected
by the shareholder (unless such date falls on a holiday or a weekend) and are
normally mailed within two business days. Both ordinary income dividends and
realized securities profits distributions will be automatically reinvested in
additional shares of the Class at net asset value. This plan is not recommended
for all investors and should be started only after careful consideration of its
operation and effect upon the investor's savings and investment program. To the
extent that withdrawal payments from the plan exceed any dividends and/or
realized securities profits distributions paid on shares held under the plan,
the withdrawal payments will represent a return of capital, and the share
balance may in time be depleted, particularly in a declining market.

The sale of shares for withdrawal payments constitutes a taxable event
and a shareholder may incur a capital gain or loss for federal income tax
purposes. This gain or loss may 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 of the DelCap Fund through a periodic investment program in a fund
managed by the Manager must be terminated before a Systematic Withdrawal Plan
with respect to such shares can take effect, except if the shareholder is a
participant in one of our retirement plans or is investing in Delaware Group
funds which do not carry a sales charge. Redemptions of Class A Shares pursuant
to a Systematic Withdrawal Plan may be subject to a Limited CDSC if the purchase
was made at net asset value and a dealer's commission has been paid on that
purchase. 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 and Class C Shares and Waiver of Limited
Contingent Deferred Sales Charge - Class A Shares under

-49-

<PAGE>

Redemption and Exchange in the Prospectuses 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. DelCap 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
Classes or, currently, any of the Fund Classes of the Capital Appreciation Fund.

-50-

<PAGE>

DISTRIBUTIONS AND TAXES

DelCap Fund has qualified, and intends to continue to qualify, and
Capital Appreciation Fund intends to qualify as a regulated investment company
under Subchapter M of the Code. As such, the Funds will not be subject to
federal income tax on net investment income and net realized capital gains which
are distributed to shareholders.

Each Fund intends to pay out all of its net investment income and net
realized capital gains. Each Fund also intends to meet the calendar year
distribution requirements imposed by the Code to avoid the imposition of any
excise tax. All dividends and any capital gains distributions will be
automatically credited to the shareholder's account in additional shares of the
same class of the Fund at net asset value unless, in the case of shareholders in
the Fund Classes of the DelCap Fund, 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 a Fund will share proportionately in the
investment income and expenses of such Fund, except that, absent any applicable
fee waiver, 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. A 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.

Persons not subject to tax will not be required to pay taxes on
distributions.

Dividends from investment income and short-term capital gains
distributions are treated by shareholders as ordinary income for federal income
tax purposes. Distributions of long-term capital gains, if any, are taxable to
shareholders as long-term capital gains, regardless of the length of time an
investor has held such shares, and these gains are currently taxed at long-term
capital gain rates. The tax status of dividends and distributions paid to
shareholders will not be affected by whether they are paid in cash or in
additional shares. Each Fund is treated as a single tax entity and capital gains
for each Fund will be calculated separately.

Because of each Fund's investment policy, only a small portion of a
Fund's dividends may qualify for the dividends-received deduction for
corporations provided in the Tax Reform Act of 1986. The portion of dividends
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. For the fiscal
year ended September 30, 1996, 4.24% of DelCap Fund's dividends from net
investment income qualified for the dividends-received deduction to
corporations.

-51-

<PAGE>

Shareholders will be notified annually by Equity Funds IV, Inc. as to
the federal income tax status of dividends and distributions paid by their Fund.

Distributions may also be subject to state and local taxes;
shareholders are advised to consult with their tax advisers in this regard.
Shares of each Fund will be exempt from Pennsylvania county personal property
taxes.

See also Other Tax Requirements under Accounting and Tax Issues in this
Part B.

-52-

<PAGE>

INVESTMENT MANAGEMENT AGREEMENTS

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

The Investment Management Agreement for DelCap Fund is dated April 3,
1995 and was approved by shareholders on March 29, 1995. The Investment
Management Agreement for Capital Appreciation Fund is dated November 29, 1996
and was approved by the initial shareholder on November 29, 1996. Each Agreement
has an initial term of two years and may be renewed each year only so long as
such renewal and continuance are specifically approved at least annually by the
Board of Directors or by vote of a majority of the outstanding voting securities
of the Fund to which the Agreement relates, and only if the terms of the renewal
thereof have been approved by the vote of a majority of the directors of Equity
Funds IV, Inc. who are not parties thereto or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval. Each Agreement is terminable without penalty on 60 days' notice by the
directors of Equity Funds IV, Inc. or by the Manager. Each Agreement will
terminate automatically in the event of its assignment.

The compensation paid by DelCap Fund for investment management services
is equal to 1/16 of 1% per month (the equivalent of 3/4 of 1% per year) of the
Fund's average daily net assets during the month, less DelCap Fund's
proportionate share of all directors' fees paid to the unaffiliated directors by
the Fund. This fee may be higher than that paid by some other funds. On
September 30, 1996, the total net assets of DelCap Fund were $1,116,631,694.
Under the general supervision of the Board of Directors, the Manager makes all
investment decisions which are implemented by DelCap Fund. The Manager pays the
salaries of all directors, officers and employees who are affiliated with both
the Manager and Equity Funds IV, Inc. The investment management fees paid by
DelCap Fund for the fiscal years ended September 30, 1994, 1995 and 1996 were
$7,925,137, $7,128,192 and $7,751,575, respectively.

The annual compensation paid by Capital Appreciation Fund for
investment management services is equal to 0.75% on the first $500 million of
the Fund's average daily net assets, 0.725% of the next $500 million and 0.70%
of the average daily net assets in excess of $1 billion. This fee may be higher
than that paid by some other funds. 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 Equity Funds IV, Inc.

The Manager has elected voluntarily to waive that portion, if any, of
the annual management fees payable by Capital Appreciation Fund and to pay
certain expenses of the Fund to the extent necessary to ensure that the total
operating expenses of each Class do not exceed 0.75% (exclusive of taxes,
interest, brokerage commissions, extraordinary expenses and 12b-1 expenses)
during the commencement of the public offering of the Fund through May 31, 1997.

-53-

<PAGE>

Except for those expenses borne by the Manager under the Investment
Management Agreements and the Distributor under the Distribution Agreement, the
Funds are responsible for all of their own expenses. Among others, these include
a 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.
The ratios of expenses to average daily net assets for the Class A Shares, Class
B Shares, Class C Shares and the Institutional Class for DelCap Fund for the
fiscal year ended September 30, 1996 were 1.35%, 2.05%, 2.05% and 1.05%,
respectively. The ratios for the Class A Shares, Class B Shares and Class C
Shares reflect the impact of their respective 12b-1 Plans.

By California regulation, the Manager is required to waive certain fees
and reimburse a Fund for certain expenses to the extent that the Fund's
operating expenses, exclusive of taxes, interest, brokerage commissions and
extraordinary expenses, exceed 2 1/2% of its first $30 million of average daily
net assets, 2% of the next $70 million of average daily net assets and 1 1/2% of
any additional average daily net assets. For the fiscal year ended September 30,
1996, no such reimbursement was necessary or paid for DelCap Fund.

Distribution and Service
The Distributor, Delaware Distributors, L.P. (which formerly conducted
business as Delaware Distributors, Inc.), located at 1818 Market Street,
Philadelphia, PA 19103, serves as the national distributor of each Fund's shares
under a Distribution Agreement dated April 3, 1995, as amended on November 29,
1995 for DelCap Fund and under a separate Distribution Agreement dated November
29, 1996 for Capital Appreciation Fund. The Distributor is an affiliate of the
Manager and bears all of the costs of promotion and distribution, except for
payments by each Fund on behalf of Class A Shares, Class B Shares and Class C
Shares under their respective 12b-1 Plans. Prior to January 3, 1995, Delaware
Distributors, Inc. ("DDI") served as the national distributor of DelCap Fund's
shares. On that date, Delaware Distributors, L.P., a newly formed limited
partnership, succeeded to the business of DDI. All officers and employees of DDI
became officers and employees of Delaware Distributors, L.P. DDI is the
corporate general partner of Delaware Distributors, L.P. and both DDI and
Delaware Distributors, L.P. are indirect, wholly owned subsidiaries of Delaware
Management Holdings, Inc. The Distributor has elected voluntarily to waive
payments under the 12b-1 Plan for the Class A Shares, the Class B Shares and the
Class C Shares of Capital Appreciation Fund during the commencement of the
public offering of the Fund through May 31, 1997.

The Transfer Agent, Delaware Service Company, Inc., another affiliate
of the Manager located at 1818 Market Street, Philadelphia, PA 19103, serves as
the Funds' shareholder servicing, dividend disbursing and transfer agent
pursuant to an Amended and Restated Shareholders Services Agreement dated
November 29, 1996. The Transfer Agent also provides accounting services to the
Funds pursuant to the terms of a separate Fund Accounting Agreement. The
Transfer Agent is also an indirect, wholly owned subsidiary of Delaware
Management Holdings, Inc.

-54-

<PAGE>

OFFICERS AND DIRECTORS

The business and affairs of Equity Funds IV, Inc. are managed under the
direction of its Board of Directors.

Certain officers and directors of Equity Funds IV, Inc. hold identical
positions in each of the other funds in the Delaware Group. On October 31, 1996,
Equity Funds IV, Inc.'s officers and directors owned less than 1% of the
outstanding shares of, respectively, the Class A Shares, Class B Shares, Class C
Shares and the Institutional Class of DelCap Fund.

As of October 31, 1996, management believes the following accounts held
5% or more of the outstanding shares of the Class A Shares, Class B Shares,
Class C Shares and the Institutional Class:

<TABLE>
<CAPTION>
Class Name and Address of Account Share Amount Percentage
- ----- --------------------------- ------------ ----------

<S> <C> <C> <C>
DelCap B Class MLPF&S For the Sole Benefit of its Customers
Attention: Fund Administration
4800 Deer Lake Drive East - 3rd Floor
Jacksonville, FL 32246 75,036 14.86%

DelCap C Class MLPF&S For the Sole Benefit of its Customers
Attention: Fund Administration
4800 Deer Lake Drive East - 3rd Floor
Jacksonville, FL 32246 10,467 15.84%

RS DMTC 401(k) Plan
Sino-Swearingen Aircraft 401(k) Plan
Attention: Retirements Plans
1818 Market Street - 16th Floor
Philadelphia, PA 19103 3,358 5.08%

DelCap Institutional Class Boston Safe Agent for Mellon Bank
Trst. State of California Deferred Compensation Plan
457 A/C CSPF0134002
Attention: Bob Stein, Mail Code 028-004N
1 Cabot Road
Medford, MA 02155 2,734,473 47.55%

</TABLE>

-55-

<PAGE>

<TABLE>
<CAPTION>
Class Name and Address of Account Share Amount Percentage
- ----- --------------------------- ------------ ----------

DelCap Institutional Class RS 401(k) Plan
Price Waterhouse LLP
Savings Plan
1410 North Westshore Blvd.
P.O. Box 30004
Tampa, Fl 33630 1,632,488 28.39%

Boston Safe Agent for Mellon Bank
Trst. State of California Thrift Plan
401(k) A/C CSPF0034002
Attention: Bob Stein, Mail Code 028-004N
1 Cabot Road
Medford, MA 02155 867,127 15.08%
</TABLE>

DMH Corp., Delaware Management Company, Inc., Delaware Distributors,
L.P., Delaware Distributors, Inc., Delaware Service Company, Inc., Delaware
Management Trust Company, Delaware International Holdings Ltd., Founders
Holdings, Inc., Delaware International Advisers Ltd., 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. In connection
with the merger, a new Investment Management Agreement between Equity Funds IV,
Inc. and the Manager on behalf of DelCap Fund was executed following shareholder
approval. DMH and the Manager are now indirect, wholly owned subsidiaries, and
subject to the ultimate control, of Lincoln National. Lincoln National, with
headquarters in Fort Wayne, Indiana, is a diversified organization with
operations in many aspects of the financial services industry, including
insurance and investment management.

Directors and principal officers of Equity Funds IV, Inc. are noted
below along with their ages and their business experience for the past five
years. Unless otherwise noted, the address of each officer and director is One
Commerce Square, Philadelphia, PA 19103.

-56-

<PAGE>

*Wayne A. Stork (59)
Chairman, President, Chief Executive Officer, Director and/or Trustee
of Equity Funds IV, Inc., 16 other investment companies in the
Delaware Group (which excludes Delaware Pooled Trust, Inc.),
Delaware Management Holdings, Inc., DMH Corp., Delaware
International Holdings Ltd.
and Founders Holdings, Inc.
Chairman and Director of Delaware Pooled Trust, Inc., Delaware
Distributors, Inc., Delaware Capital Management, Inc. and
Delaware Investment & Retirement Services, Inc.
Chairman, President, Chief Executive Officer, Chief Investment Officer
and Director of Delaware Management Company, Inc.
Chairman, Chief Executive Officer and Director of Delaware
International Advisers Ltd.
Director of Delaware Service Company, Inc.
During the past five years, Mr. Stork has served in various executive
capacities at different times within the Delaware
organization.

Winthrop S. Jessup (51)
Executive Vice President of Equity Funds IV, Inc., 16 other investment
companies in the Delaware Group (which excludes Delaware
Pooled Trust, Inc.) and Delaware Management Holdings, Inc.
President and Chief Executive Officer of Delaware Pooled Trust, Inc.
President and Director of Delaware Capital Management, Inc.
Executive Vice President and Director of DMH Corp., Delaware Management
Company, Inc., Delaware International Holdings Ltd. and
Founders Holdings, Inc.
Vice Chairman and Director of Delaware Distributors, Inc.
Vice Chairman of Delaware Distributors, L.P.
Director of Delaware Service Company, Inc., Delaware International
Advisers Ltd., Delaware Management Trust Company and Delaware
Investment & Retirement Services, Inc.
During the past five years, Mr. Jessup has served in various
executive capacities at different times within the Delaware
organization.

Richard G. Unruh, Jr. (57)
Executive Vice President of Equity Funds IV, Inc. and each of the other
17 investment companies in the Delaware Group.
Executive Vice President and Director of Delaware Management Company,
Inc.
Senior Vice President of Delaware Management Holdings, Inc. and
Delaware Capital Management, Inc.
Director of Delaware International Advisers Ltd.
During the past five years, Mr. Unruh has served in various executive
capacities at different times within the Delaware
organization.

*Director affiliated with Equity Funds IV, Inc.'s investment manager and
considered an "interested person" as defined in the 1940 Act.

-57-

<PAGE>

Paul E. Suckow (49)
ExecutiveVice President/Chief Investment Officer, Fixed Income of
Equity Funds IV, Inc., each of the other 17 investment
companies in the Delaware Group and Delaware Management
Company, Inc.
Executive Vice President/Chief Investment Officer/Fixed Income and
Director of Founders Holdings, Inc.
Senior Vice President/Chief Investment Officer, Fixed Income of
Delaware Management Holdings, Inc.
Director of Founders CBO Corporation.
Senior Vice President of Delaware Capital Management, Inc.
Director, HYPPCO Finance Company Ltd.
Before returning to the Delaware Group in 1993, Mr. Suckow was
Executive Vice President and Director of Fixed Income for
Oppenheimer Management Corporation, New York, NY from 1985 to
1992. Prior to that, Mr. Suckow was a fixed-income portfolio
manager for the Delaware Group.

Walter P. Babich (69)
Director and/or Trustee of Equity Funds IV, Inc. and each of the other
17 investment companies in the Delaware Group.
460 North Gulph Road, King of Prussia, PA 19406.
Board Chairman, Citadel Constructors, Inc.
From 1986 to 1988, Mr. Babich was a partner of Irwin & Leighton and
from 1988 to 1991, he was a partner of I&L Investors.

Anthony D. Knerr (57)
Director and/or Trustee of Equity Funds IV, Inc. and each of the other
17 investment companies in the Delaware Group.
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 (56)
Director and/or Trustee of Equity Funds IV, Inc. and each of the other
17 investment companies in the Delaware Group.
785 Park Avenue, New York, NY 10021.
Treasurer, National Gallery of Art.
From 1984 to 1990, Ms. Leven was Treasurer and Chief Fiscal Officer
of the Smithsonian Institution, Washington, DC, and from 1975
to 1992, she was Adjunct Professor of Columbia Business
School.

-58-

<PAGE>

W. Thacher Longstreth (76)
Director and/or Trustee of Equity Funds IV, Inc. and each of the other
17 investment companies in the Delaware Group.
City Hall, Philadelphia, PA 19107.
Philadelphia City Councilman.

Charles E. Peck (70)
Director and/or Trustee of Equity Funds IV, Inc. and each of the other
17 investment companies in the Delaware Group.
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.

David K. Downes (56)
Senior Vice President/Chief Administrative Officer/Chief Financial
Officer of Equity Funds IV, Inc., each of the other 17
investment companies in the Delaware Group and Delaware
Management Company, Inc.
Chairman and Director of Delaware Management Trust Company.
Chief Executive Officer and Director of Delaware Investment &
Retirement Services, Inc.
Executive Vice President/Chief Administrative Officer/Chief Financial
Officer/Treasurer of Delaware Management Holdings, Inc.
Senior Vice President/Chief Financial Officer/Treasurer and Director of
DMH Corp.
Senior Vice President/Chief Administrative Officer and Director of
Delaware Distributors, Inc.
Senior Vice President/Chief Administrative Officer of Delaware
Distributors, L.P.
Senior Vice President/Chief Administrative Officer/Chief Financial
Officer and Director of Delaware Service Company, Inc.
Chief Financial Officer and Director of Delaware International
Holdings Ltd.
Senior Vice President/Chief Financial Officer/Treasurer of Delaware
Capital Management, Inc.
Senior Vice President/Chief Financial Officer and Director of Founders
Holdings, Inc.
Director of Delaware International Advisers Ltd.
Before joining the Delaware Group in 1992, Mr. Downes was Chief
Administrative Officer, Chief Financial Officer and Treasurer
of Equitable Capital Management Corporation, New York, from
December 1985 through August 1992, Executive Vice President
from December 1985 through March 1992 and Vice Chairman from
March 1992 through August 1992.

-59-

<PAGE>

George M. Chamberlain, Jr. (49)
Senior Vice President and Secretary of Equity Funds IV, Inc., each of
the other 17 investment companies in the Delaware Group,
Delaware Management Holdings, Inc. and Delaware Distributors,
L.P.
Executive Vice President, Secretary and Director of Delaware Management
Trust Company.
Senior Vice President, Secretary and Director of DMH Corp., Delaware
Management Company, Inc., Delaware Distributors, Inc.,
Delaware Service Company, Inc., Founders Holdings, Inc.,
Delaware Investment & Retirement Services, Inc. and Delaware
Capital Management, Inc.
Secretary and Director of Delaware International Holdings Ltd.
Director of Delaware International Advisers Ltd.
Attorney.
During the past five years, Mr. Chamberlain has served in various
capacities at different times within the Delaware
organization.

Edward N. Antoian (40)
Vice President/Senior Portfolio Manager of Equity Funds IV, Inc.,
of seven other equity funds in the Delaware Group and of
Delaware Management Company, Inc.
During the past five years, Mr. Antoian has served in such capacities
within the Delaware organization.

Gerald S. Frey (50)
Vice President/Senior Portfolio Manager of Equity Funds IV, Inc.,
of seven other investment companies in the Delaware Group and
of Delaware Management Company, Inc.
Before joining the Delaware Group in 1996, Mr. Frey was a Senior
Director with Morgan Grenfell Capital Management, New York, NY
from 1986 to 1995.

Terry F. Bovarnick (38)
Vice President/Portfolio Manager of Equity Funds IV, Inc. and of seven
other investment companies in the Delaware Group.
Vice President/Portfolio Manager of Delaware Investment Advisers.
Before joining the Delaware Group in 1993, Ms. Bovarnick was a Senior
Equity Analyst for E.I. DuPont de Nemours in Wilmington,
Delaware from 1986 to 1993.

Joseph H. Hastings (46)
Vice President/Corporate Controller of Equity Funds IV, Inc., each
of the other 17 investment companies in the Delaware Group,
Delaware Management Holdings, Inc., DMH Corp., Delaware
Management Company, Inc., Delaware Distributors, L.P.,
Delaware Distributors, Inc., Delaware Service Company, Inc.,
Delaware Capital Management, Inc., Founders Holdings, Inc.
and Delaware International Holdings Ltd.
Chief Financial Officer/Treasurer of Delaware Investment & Retirement
Services, Inc.
Executive Vice President/Chief Financial Officer/Treasurer of Delaware
Management Trust Company.
Assistant Treasurer of Founders CBO Corporation.
1818 Market Street, Philadelphia, PA 19103.
Before joining the Delaware Group in 1992, Mr. Hastings was Chief
Financial Officer for Prudential Residential Services, L.P.,
New York, NY from 1989 to 1992. Prior to that, Mr. Hastings
served as Controller and Treasurer for Fine Homes
International, L.P., Stamford, CT from 1987 to 1989.

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<PAGE>

Michael P. Bishof (34)
Vice President/Treasurer of Equity Funds IV, Inc., each of the
other 17 investment companies in the Delaware Group, Delaware
Management Company, Inc., Delaware Distributors, Inc.,
Delaware Distributors, L.P., Delaware Service Company, Inc.
and Founders Holdings, Inc.
Vice President/Manager of Investment Accounting of Delaware
International Holdings Ltd.
Assistant Treasurer of Founders CBO Corporation.
Before joining the Delaware Group in 1995, Mr. Bishof was a Vice
President for Bankers Trust, New York, NY from 1994 to 1995,
a Vice President for CS First Boston Investment
Management, New York, NY from 1993 to 1994
and an Assistant Vice President for Equitable Capital
Management Corporation, New York, NY from 1987 to 1993.

The following is a compensation table listing for each director
entitled to receive compensation, the aggregate compensation received from
DelCap Fund and the total compensation received from all Delaware Group funds
for the fiscal year ended September 30, 1996 and an estimate of annual benefits
to be received upon retirement under the Delaware Group Retirement Plan for
Directors/Trustees as of September 30, 1996.
<TABLE>
<CAPTION>

Pension or
Retirement Estimated Total
Aggregate Benefits Accrued Annual Compensation
Compensation as Part of Benefits from all 17
from Equity Funds IV, Inc. Upon Delaware
Name Equity Funds IV, Inc. Expenses Retirement* Group Funds

<S> <C> <C> <C>
W. Thacher Longstreth $2,594 None $30,000 $38,425
Ann R. Leven $3,257 None $30,000 $51,205
Walter P. Babich $3,039 None $30,000 $47,069
Anthony D. Knerr $3,197 None $30,000 $50,205
Charles E. Peck $2,957 None $30,000 $46,205
</TABLE>

* Under the terms of the Delaware Group Retirement Plan for
Directors/Trustees, each disinterested director who, at the time of his or
her retirement from the Board, has attained the age of 70 and served on the
Board for at least five continuous years, is entitled to receive payments
from each fund in the Delaware Group for a period equal to the lesser of
the number of years that such person served as a director or the remainder
of such person's life. The amount of such payments will be equal, on an
annual basis, to the amount of the annual retainer that is paid to
directors of each fund at the time of such person's retirement. If an
eligible director retired as of September 30, 1996, he or she would be
entitled to annual payments totaling $30,000, in the aggregate, from all of
the funds in the Delaware Group, based on the number of funds in the
Delaware Group as of that date.

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<PAGE>

EXCHANGE PRIVILEGE

The exchange privileges available for shareholders of the Classes and
for shareholders of classes of other funds in the Delaware Group are set forth
in the relevant prospectuses for such classes. The following supplements that
information. The Funds may modify, terminate or suspend the exchange privilege
upon 60 days' notice to shareholders.

All exchanges involve a purchase of shares of the fund into which the
exchange is made. As with any purchase, an investor should obtain and carefully
read that fund's prospectus before buying shares in an exchange. The prospectus
contains more complete information about the fund, including charges and
expenses. A shareholder requesting an exchange will be sent a current prospectus
and an authorization form for any of the other mutual funds in the Delaware
Group. Exchange instructions must be signed by the record owner(s) exactly as
the shares are registered.

An exchange constitutes, for tax purposes, the sale of one fund or
series and the purchase of another. The sale may involve either a capital gain
or loss to the shareholder for federal income tax purposes.

In addition, investment advisers and dealers may make exchanges between
funds in the Delaware Group on behalf of their clients by telephone or other
expedited means. This service may be discontinued or revised at any time by the
Transfer Agent. Such exchange requests may be rejected if it is determined that
a particular request or the total requests at any time could have an adverse
effect on any of the funds. Requests for expedited exchanges may be submitted
with a properly completed exchange authorization form, as described above.

Telephone Exchange Privilege
Shareholders owning shares for which certificates have not been issued
or their investment dealers of record may exchange shares by telephone for
shares in other mutual funds in the Delaware Group. This service is
automatically provided unless the relevant 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 Classes, 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.

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<PAGE>

The telephone exchange privilege is intended as a convenience to
shareholders and is not intended to be a vehicle to speculate on short-term
swings in the securities market through frequent transactions in and out of the
funds in the Delaware Group. Telephone exchanges may be subject to limitations
as to amounts or frequency. The Transfer Agent and the Funds 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 Funds' Prospectuses, neither the Funds 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 Funds will refuse any new timing
arrangements, as well as any new purchases (as opposed to exchanges) in Delaware
Group funds from Timing Firms. A Fund reserves the right to temporarily or
permanently terminate the exchange privilege or reject any specific purchase
order for any person whose transactions seem to follow a timing pattern who: (i)
makes an exchange request out of the Fund within two weeks of an earlier
exchange request out of the Fund, or (ii) makes more than two exchanges out of
the Fund per calendar quarter, or (iii) exchanges shares equal in value to at
least $5 million, or more than 1/4 of 1% of the Fund's net assets. Accounts
under common ownership or control, including accounts administered so as to
redeem or purchase shares based upon certain predetermined market indicators,
will be aggregated for purposes of the exchange limits.

Restrictions on Timed Exchanges
Timing Accounts operating under existing timing agreements may only
execute exchanges between the following eight Delaware Group funds: (1) Decatur
Income Fund, (2) Decatur Total Return Fund, (3) Delaware Fund, (4) Limited-Term
Government Fund, (5) Tax-Free USA Fund, (6) Delaware Cash Reserve, (7)
Delchester Fund and (8) Tax-Free Pennsylvania Fund. No other Delaware Group
funds are available for timed exchanges. Assets redeemed or exchanged out of
Timing Accounts in Delaware Group funds not listed above may not be reinvested
back into that Timing Account. Each 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).

Each Fund also reserves the right to refuse the purchase side of an
exchange request by any Timing Account, person, or group if, in the Manager's
judgment, the Fund would be unable to invest effectively in accordance with its
investment objectives and policies, or would otherwise potentially be adversely
affected. A shareholder's purchase exchanges may be restricted or refused if a
Fund receives or anticipates simultaneous orders affecting significant portions
of the Fund's assets. In particular, a pattern of exchanges that coincide with a
"market timing" strategy may be disruptive to a Fund and therefore may be
refused.

Except as noted above, only shareholders and their authorized brokers
of record will be permitted to make exchanges or redemptions.

* * *

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<PAGE>

Following is a summary of the investment objectives of the other
Delaware Group funds:

Delaware Fund seeks long-term growth by a balance of capital
appreciation, income and preservation of capital. It uses a dividend-oriented
valuation strategy to select securities issued by established companies that are
believed to demonstrate potential for income and capital growth. Devon Fund
seeks current income and capital appreciation by investing primarily in
income-producing common stocks, with a focus on common stocks the Manager
believes have the potential for above average dividend increases over time.

Trend Fund seeks long-term growth by investing in common stock issued
by emerging growth companies exhibiting strong capital appreciation potential.

Value Fund seeks capital appreciation by investing primarily in common
stocks whose market values appear low relative to their underlying value or
future potential.

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.

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.

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.

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.

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<PAGE>

Tax-Free Money Fund seeks high current income, exempt from federal
income tax, by investing in short-term municipal obligations, while maintaining
a stable net asset value.

Tax-Free Pennsylvania Fund seeks a high level of current interest
income exempt from federal and, to the extent possible, certain Pennsylvania
state and local taxes, consistent with the preservation of capital.

International Equity Fund seeks to achieve long-term growth without
undue risk to principal by investing primarily in international securities that
provide the potential for capital appreciation and income. Global Bond Fund
seeks to achieve current income consistent with the preservation of principal by
investing primarily in global fixed-income securities that may also provide the
potential for capital appreciation. Global Assets Fund seeks to achieve
long-term total return by investing in global securities which will provide
higher current income than a portfolio comprised exclusively of equity
securities, along with the potential for capital growth. Emerging Markets Fund
seeks long-term capital appreciation by investing primarily in equity securities
of issuers located or operating in emerging countries.

Enterprise Fund seeks to provide maximum appreciation of capital by
investing in medium-sized companies which have a dominant position within their
industry, are undervalued, or have potential for growth in earnings. 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. World Growth 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. Federal Bond Fund seeks to maximize current income consistent
with preservation of capital. The fund attempts to achieve this objective by
investing primarily in securities issued by the U.S. government, its agencies
and instrumentalities. Corporate Income Fund seeks to provide high current
income consistent with preservation of capital. The fund attempts to achieve
this objective primarily by investing in a diversified portfolio of investment
grade fixed-income securities issued by U.S.
corporations.

Delaware Group Premium Fund offers ten funds available exclusively as
funding vehicles for certain insurance company separate accounts. Equity/Income
Series seeks the highest possible total rate of return by selecting issues that
exhibit the potential for capital appreciation while providing higher than
average dividend income. High Yield Series seeks as high a current income as
possible by investing in rated and unrated corporate bonds, U.S. government
securities and commercial paper. Capital Reserves Series seeks a high stable
level of current income while minimizing fluctuations in principal by investing
in a diversified portfolio of short- and intermediate-term securities. Money
Market Series seeks the highest level of income consistent with preservation of
capital and liquidity through investments in short-term money market
instruments. Growth Series seeks long-term capital appreciation by investing its
assets in a diversified portfolio of securities exhibiting the potential for
significant growth. Multiple Strategy Series seeks a balance of capital
appreciation, income and preservation of capital. It uses a dividend-oriented
valuation strategy to select securities issued by established companies that are
believed to demonstrate potential for income and capital growth. International
Equity Series seeks long-term growth without undue risk to principal by
investing primarily in equity securities of foreign issuers that provide the
potential for capital appreciation and income. Value Series seeks capital
appreciation by investing in small- to mid-cap common stocks whose market 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.
Emerging Growth Series seeks long-term capital appreciation by investing
primarily in small-cap common stocks and convertible securities of emerging and
other growth-oriented

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<PAGE>

companies. These securities will have been judged to be responsive to changes in
the marketplace 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.

The Manager, or its affiliate Delaware International Advisers Ltd.,
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 10 different investment series ranging from
domestic equity funds, international equity and bond funds and domestic fixed
income funds. Each investment series available through Medallion utilizes an
investment strategy and discipline the same as or similar to one of the Delaware
Group mutual funds available outside the annuity.

For more complete information about any of the Delaware Group funds,
including charges and expenses, you can obtain a prospectus from the
Distributor. Read it carefully before you invest or forward funds.

Each of the summaries above is qualified in its entirety by the
information contained in each fund's prospectus(es).

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<PAGE>

GENERAL INFORMATION

The Manager is the investment manager of the Funds. The Manager also
provides investment management services to certain of the other funds in the
Delaware Group. The Manager, through a separate division, also manages private
investment accounts. While investment decisions of the Funds are made
independently from those of the other funds and accounts, investment decisions
for such other funds and accounts may be made at the same time as investment
decisions for the Funds.

Access persons and advisory persons of the Delaware Group of funds, as
those terms are defined in SEC Rule 17j-1 under the 1940 Act, who provide
services to the Manager, Delaware International Advisers Ltd. or their
affiliates, are permitted to engage in personal securities transactions subject
to the exceptions set forth in Rule 17j-1 and the following general restrictions
and procedures: (1) certain blackout periods apply to personal securities
transactions of those persons; (2) transactions must receive advance clearance
and must be completed on the same day as the clearance is received; (3) certain
persons are prohibited from investing in initial public offerings of securities
and other restrictions apply to investments in private placements of securities;
(4) opening positions may only be closed-out at a profit after a 60-day holding
period has elapsed; and (5) the Compliance Officer must be informed periodically
of all securities transactions and duplicate copies of brokerage confirmations
and account statements must be supplied to the Compliance Officer.

The Distributor acts as national distributor for each Fund and for the
other mutual funds in the Delaware Group. As previously described, prior to
January 3, 1995, DDI served as the national distributor for DelCap Fund. The
Distributor and, in its capacity as such, DDI received net commissions from
DelCap Fund on behalf of Class A Shares after reallowances to dealers, as
follows:
<TABLE>
<CAPTION>

Total
Amount of Amounts Net
Underwriting Reallowed Commission
Fiscal Year Ended Commission to Dealers to Distributor
----------------- ---------- ---------- --------------

<S> <C> <C> <C>
September 30, 1996 $1,380,612 $1,161,576 $219,036
September 30, 1995 1,360,871 1,180,982 179,889
September 30, 1994 2,688,927 2,472,670 216,257

</TABLE>

The Distributor and, in its capacity as such, DDI received in the
aggregate Limited CDSC payments with respect to DelCap Fund A Class as follows:

Fiscal Year Ended Limited CDSC Payments
----------------- ---------------------

September 30, 1996 $374
September 30, 1995 14,860
September 30, 1994 7,500

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<PAGE>

The Distributor and, in its capacity as such, DDI received in the
aggregate CDSC payments with respect to DelCap Fund B Class as follows:

Fiscal Year Ended CDSC Payments
----------------- -------------

September 30, 1996 $13,677
September 30, 1995 1,900
September 30, 1994* - 0 -

*Date of initial public offering was September 6, 1994.

The Distributor received CDSC payments with respect to the DelCap Fund
C Class as follows:

Fiscal Year Ended CDSC Payments
----------------- -------------

September 30, 1996* $207

*Date of initial public offering was November 29, 1995.

Effective as of January 3, 1995, all such payments described above have
been paid to the Distributor.

The Transfer Agent, an affiliate of the Manager, acts as shareholder
servicing, dividend disbursing and transfer agent for each Fund and for the
other mutual funds in the Delaware Group. The Transfer Agent is paid a fee by
each Fund for providing these services consisting of an annual per account
charge of $5.50 plus transaction charges for particular services according to a
schedule. Compensation is fixed each year and approved by the Board of
Directors, including a majority of the unaffiliated directors. The Transfer
Agent also provides accounting services to the Funds. Those services include
performing all functions related to calculating each Fund's net asset value and
providing all financial reporting services, regulatory compliance testing and
other related accounting services. For its services, the Transfer Agent is paid
a fee based on total assets of all funds in the Delaware Group 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 Funds, 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 the Funds' advisory
relationship with the Manager or their distribution relationship with the
Distributor, the Manager and its affiliates could cause Equity Funds IV, Inc. to
delete the words "Delaware Group" from Equity Funds IV, Inc.'s name.

The Chase Manhattan Bank ("Chase"), 4 Chase Metrotech Center, Brooklyn,
NY 11245, is custodian of each Fund's securities and cash. A custodian for a
Fund, Chase maintains a separate account or accounts for the Fund; receives,
holds and releases portfolio securities on account of the Fund; receives and
disburses money on behalf of the Fund; and collects and receives income and
other payments and distributions on account of the Fund's portfolio securities.

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<PAGE>

The legality of the issuance of the shares offered hereby, registered
pursuant to Rule 24f-2 under the 1940 Act, has been passed upon for Equity Funds
IV, Inc. by Stradley, Ronon, Stevens & Young, LLP, Philadelphia, Pennsylvania.

Capitalization
Equity Funds IV, Inc. has a present authorized capitalization of one
billion shares of capital stock with a $.01 par value per share. The Board of
Directors has allocated one hundred fifty million shares to the Class A Shares,
one hundred million shares to the Class B Shares, fifty million shares to the
Class C Shares and fifty million shares to the Institutional Class of DelCap
Fund and one hundred million shares to the Class A Shares, twenty-five million
shares to the Class B Shares, twenty-five million shares to the Class C Shares
and fifty million shares to the Institutional Class of Capital Appreciation
Fund.

Each Class of a Fund represents a proportionate interest in the assets
of that Fund, and each has the same voting and other rights and preferences as
the other classes, except that shares of an Institutional Class may not vote on
any matter affecting the Fund's Plans under Rule 12b-1. Similarly, as a general
matter, shareholders of Class A Shares, Class B Shares and Class C Shares of a
Fund may vote only on matters affecting the 12b-1 Plan that relates to the class
of shares that they hold. However, Class B Shares of a Fund may vote on any
proposal to increase materially the fees to be paid by the Fund under the Rule
12b-1 Plan relating to its Class A Shares. General expenses of a Fund will be
allocated on a pro-rata basis to the classes according to asset size, except
that expenses of the Rule 12b-1 Plans of each Fund's Class A, Class B and Class
C Shares will be allocated solely to those classes. While shares of Equity Funds
IV, Inc. have equal voting rights on matters affecting both Funds, a Fund would
vote separately on any matter which it is directly affected by, such as any
change in its own investment objective and policy or action to dissolve the Fund
and as otherwise prescribed by the 1940 Act. Shares of a Fund have a priority in
that Fund's assets, and in gains on and income from the portfolio of the Fund.
Shares do not have preemptive rights, are fully transferable and, when issued,
are fully paid and nonassessable.

Beginning November 9, 1992, DelCap Fund began offering DelCap Fund
Institutional Class; beginning September 6, 1994, DelCap Fund began offering the
Class B Shares; and beginning November 29, 1995, DelCap Fund began offering
DelCap Fund C Class.

Prior to September 6, 1994, the DelCap Fund A Class was known as the
DelCap Fund class and the DelCap Fund Institutional Class was known as the
DelCap Fund (Institutional) class. Prior to November 29, 1996, Delaware Group
Equity Funds IV, Inc. was known as Delaware Group DelCap Fund, Inc. and DelCap
Fund series was known as Concept I Series.

Noncumulative Voting
Equity Funds IV, Inc. shares have noncumulative voting rights which
means that the holders of more than 50% of the shares of Equity Funds IV, 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 Securities and Exchange
Commission.

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<PAGE>

APPENDIX A--DESCRIPTION OF RATINGS

Bonds
Excerpts from Moody's Investors Service, Inc.'s description of its bond
ratings: Aaa--judged to be the best quality. They carry the smallest degree of
investment risk; Aa--judged to be of high quality by all standards; A--possess
favorable attributes and are considered "upper medium" grade obligations; Baa--
considered as medium grade obligations. Interest payments and principal security
appear adequate for the present but certain protective elements may be lacking
or may be characteristically unreliable over any great length of time.

Excerpts from Standard & Poor's Ratings Group's description of its bond
ratings: AAA--highest grade obligations. They possess the ultimate degree of
protection as to principal and interest; AA--also qualify as high grade
obligations, and in the majority of instances differ from AAA issues only in a
small degree; A-- strong ability to pay interest and repay principal although
more susceptible to changes in circumstances; BBB-- regarded as having an
adequate capacity to pay interest and repay principal.

Excerpts from Fitch Investors Service, Inc.'s description of its bond ratings:
AAA--Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events; AA--Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated AAA. Because bonds rated in
the AAA and AA categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rated F-1+; A--Bonds
considered to be investment grade and of high credit quality. The obligor's
ability to pay interest and repay principal is considered to be strong, but may
be more vulnerable to adverse changes in economic conditions and circumstances
that bonds with higher ratings; BBB--Bonds considered to be investment grade and
of satisfactory credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic conditions
and circumstances, however, are more likely to have adverse impact on these
bonds, and therefore impair timely payment. The likelihood that the ratings of
these bonds will fall below investment grade is higher than for bonds with
higher ratings.

Plus and minus signs are used with a rating symbol to indicate the
relative position of a credit within the rating category. Plus and minus signs,
however, are not used in the "AAA" category.

Commercial Paper
Excerpts from Moody's description of its two highest commercial paper
ratings: P-1--the highest grade possessing greatest relative strength;
P-2--second highest grade possessing less relative strength than the highest
grade.

Excerpts from S&P's description of its two highest commercial paper
ratings: A-1--judged to be the highest investment grade category possessing the
highest relative strength; A-2--investment grade category possessing less
relative strength than the highest rating.

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<PAGE>

APPENDIX B--IRA INFORMATION

An individual can contribute up to $2,000 to his or her IRA each year.
Contributions may or may not be deductible depending upon the taxpayers adjusted
gross income and whether the taxpayer or his or her spouse is an active
participant in an employer-sponsored retirement plan. Even if a taxpayer (or his
or her spouse) is an active participant in an employer-sponsored retirement
plan, the full $2,000 deduction is still available if the taxpayer's adjusted
gross income is below $25,000 ($40,000 for taxpayers filing joint returns). A
partial deduction is allowed for married couples with incomes between $40,000
and $50,000, and for single individuals with incomes between $25,000 and
$35,000. No deductions are available for contributions to IRAs by taxpayers
whose adjusted gross income before IRA deductions exceeds $50,000 ($35,000 for
singles) and who are active participants in an employer-sponsored retirement
plan. Taxpayers who were not allowed deductions on IRA contributions still can
make nondeductible IRA contributions of as much as $2,000 for each working
spouse ($2,250 for one-income couples for years prior to 1997), and defer taxes
on interest or other earnings from the IRAs. Special rules apply for determining
the deductibility of contributions made by married individuals filing separate
returns.

Effective for tax years beginning after 1996, one-income couples can contribute
up to $2,000 to each spouse's IRA provided the combined compensation of both
spouses is at least equal to the total contributions for both spouses. If the
working spouse is an active particiapnt in an employer-sponsored retirement plan
and earns over $40,000, the maximum deduction limit is reduced in the same way
that the limit is reduced for contributions to a non-spousal IRA.

As illustrated in the following tables, maintaining an IRA remains a valuable
opportunity.

For many, an IRA will continue to offer both an up-front tax break with its tax
deduction each year and the real benefit that comes with tax-deferred
compounding. For others, losing the tax deduction will impact their taxable
income status each year. Over the long term, however, being able to defer taxes
on earnings still provides an impressive investment opportunity--a way to have
money grow faster due to tax-deferred compounding.

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<PAGE>

Even if your IRA contribution is no longer deductible, the benefits of saving on
a tax-deferred basis can be substantial. The following tables illustrate the
benefits of tax-deferred versus taxable compounding. Each reflects a constant
10% rate of return, compounded annually, with the reinvestment of all proceeds.
The tables do not take into account any sales charges or fees. Of course,
earnings accumulated in your IRA will be subject to tax upon withdrawal. If you
choose a mutual fund with a fluctuating net asset value, like either Fund, your
bottom line at retirement could be lower--it could also be much higher.

$2,000 Invested Annually Assuming a 10% Annualized Return

15% Tax Bracket Single -- $0 - $24,000
--------------- Joint -- $0 - $40,100

How Much
Cumulative How Much You Have
End of Investment You Have With Full
Year Amount Without IRA IRA Deduction

1 $ 2,000 $ 1,844 $ 2,200
5 10,000 10,929 13,431
10 20,000 27,363 35,062
15 30,000 52,074 69,899
20 40,000 89,231 126,005
25 50,000 145,103 216,364
30 60,000 229,114 361,887
35 70,000 355,438 596,254
40 80,000 545,386 973,704

[Without IRA--investment of $1,700 ($2,000 less 15%) earning 8.5% (10% less
15%)]

28% Tax Bracket Single -- $24,001 - $58,150
--------------- Joint -- $40,101 - $96,900

How Much How Much You Have
Cumulative You Have With Full IRA
End of Investment Without No
Year Amount IRA Deduction Deduction

1 $ 2,000 $ 1,544 $ 1,584 $ 2,200
5 10,000 8,913 9,670 13,431
10 20,000 21,531 25,245 35,062
15 30,000 39,394 50,328 69,899
20 40,000 64,683 90,724 126,005
25 50,000 100,485 155,782 216,364
30 60,000 151,171 260,559 361,887
35 70,000 222,927 429,303 596,254
40 80,000 324,512 701,067 973,704

[Without IRA--investment of $1,440 ($2,000 less 28%) earning 7.2% (10% less
28%)]

[With IRA--No Deduction--investment of $1,440 ($2,000 less 28%) earning 10%]

-72-

<PAGE>

31% Tax Bracket Single -- $58,151 - $121,300
--------------- Joint -- $96,901 - $147,700

How Much How Much You Have
Cumulative You Have With Full IRA
End of Investment Without No
Year Amount IRA Deduction Deduction

1 $ 2,000 $ 1,475 $ 1,518 $ 2,200
5 10,000 8,467 9,268 13,431
10 20,000 20,286 24,193 35,062
15 30,000 36,787 48,231 69,899
20 40,000 59,821 86,943 126,005
25 50,000 91,978 149,291 216,364
30 60,000 136,868 249,702 361,887
35 70,000 199,536 411,415 596,254
40 80,000 287,021 671,855 973,704

[Without IRA--investment of $1,380 ($2,000 less 31%) earning 6.9% (10% less
31%)]

[With IRA--No Deduction--investment of $1,380 ($2,000 less 31%) earning 10%]

36% Tax Bracket* Single -- $121,301 - $263,750
--------------- Joint -- $147,701 - $263,750

How Much How Much You Have
Cumulative You Have With Full IRA
End of Investment Without No
Year Amount IRA Deduction Deduction

1 $ 2,000 $ 1,362 $ 1,408 $ 2,200
5 10,000 7,739 8,596 13,431
10 20,000 18,292 22,440 35,062
15 30,000 32,683 44,736 69,899
20 40,000 52,308 80,643 126,005
25 50,000 79,069 138,473 216,364
30 60,000 115,562 231,608 361,887
35 70,000 165,327 381,602 596,254
40 80,000 233,190 623,170 973,704

[Without IRA--investment of $1,280 ($2,000 less 36%) earning 6.4% (10% less
36%)]

[With IRA--No Deduction--investment of $1,280 ($2,000 less 36%) earning 10%]

-73-

<PAGE>

39.6% Tax Bracket* Single -- over $263,750
----------------- Joint -- over $263,750

How Much How Much You Have
Cumulative You Have With Full IRA
End of Investment Without No
Year Amount IRA Deduction Deduction

1 $ 2,000 $ 1,281 $ 1,329 $ 2,200
5 10,000 7,227 8,112 13,431
10 20,000 16,916 21,178 35,062
15 30,000 29,907 42,219 69,899
20 40,000 47,324 76,107 126,005
25 50,000 70,677 130,684 216,364
30 60,000 101,986 218,580 361,887
35 70,000 143,965 360,137 596,254
40 80,000 200,249 588,117 973,704

[Without IRA--investment of $1,208 ($2,000 less 39.6%) earning 6.04% (10% less
39.6%)]

[With IRA--No Deduction--investment of $1,208 ($2,000 less 39.6%) earning 10%]

* For tax years beginning after 1992, a 36% tax rate applies to all taxable
income in excess of the maximum dollar amounts subject to the 31% tax rate.
In addition, a 10% surtax (not applicable to capital gains) applies to
certain high-income taxpayers. It is computed by applying a 39.6% rate to
taxable income in excess of $263,750. The above tables do not reflect the
personal exemption phaseout nor the limitations of itemized deductions that
may apply.

-74-

<PAGE>

$2,000 SINGLE INVESTMENT AT A RETURN OF 10%
COMPOUNDED ANNUALLY

TAXABLE-- TAXABLE-- TAXABLE--
YEARS 39.6%* 36%* 31%
- --------------------------------------------------------------------------------

10 $ 3,595 $ 3,719 $ 3,898
15 4,820 5,072 5,441
20 6,463 6,916 7,596
30 11,618 12,861 14,803
40 20,884 23,916 28,849

TAXABLE-- TAXABLE-- TAX
YEARS 28% 15% DEFERRED
- --------------------------------------------------------------------------------

10 $ 4,008 $ 4,522 $ 5,187
15 5,675 6,799 8,354
20 8,034 10,224 13,455
30 16,102 23,117 34,899
40 32,272 52,266 90,519

$2,000 INVESTED ANNUALLY AT A RETURN OF 10%
COMPOUNDED ANNUALLY

TAXABLE-- TAXABLE-- TAXABLE--
YEARS 39.6%* 36%* 31%
- --------------------------------------------------------------------------------

10 $ 28,006 $ 28,581 $ 29,400
15 49,514 51,067 53,314
20 78,351 81,731 86,697
30 168,852 180,566 198,360
40 331,537 364,360 415,973

TAXABLE-- TAXABLE-- TAX
YEARS 28% 15% DEFERRED
- --------------------------------------------------------------------------------

10 $ 29,904 $ 32,192 $ 35,062
15 54,714 61,264 69,899
20 89,838 104,978 126,005
30 209,960 269,546 361,887
40 450,711 641,631 973,704

- ---------------------
* For tax years beginning after 1992, a 36% tax rate applies to all taxable
income in excess of the maximum dollar amounts subject to the 31% tax rate.
In addition, a 10% surtax (not applicable to capital gains) applies to
certain high-income taxpayers. It is computed by applying a 39.6% rate to
taxable income in excess of $263,750. The above tables do not reflect the
personal exemption phaseout nor the limitations of itemized deductions that
may apply.

-75-

<PAGE>

THE VALUE OF STARTING YOUR IRA EARLY
The following illustrates how much more you would have contributing
$2,000 each January--the earliest opportunity--compared to contributing on April
15th of the following year--the latest, for each tax year.

After 5 years $3,528 more
10 years $6,113
20 years $17,228
30 years $47,295

Compounded returns for the longest period of time is the key. The above
illustration assumes a 10% rate of return and the reinvestment of all proceeds.

And it pays to shop around. If you get just 2% more per year, it can
make a big difference when you retire. A constant 8% versus 10% return,
compounded annually, illustrates the point. This chart is based on a yearly
investment of $2,000 on January 1. After 30 years the difference can mean as
much as 50% more!

8% 10%
------- --------
10 years $ 31,291 $ 35,062
20 years 98,846 126,005
30 years 244,692 361,887

The statistical exhibits above are for illustration purposes only and
do not reflect the actual performance for the Funds either in the past or in the
future.

-76-

<PAGE>

APPENDIX C--THE COMPANY LIFE CYCLE

Traditional business theory contends that a typical company progresses
through basically four stages of development, keyed closely to a firm's sales.

1. Emerging Growth--a period of experimentation in which the company
builds awareness of a new product or firm.

2. Accelerated Development--a period of rapid growth with potentially
high profitability and acceptance of the product.

3. Maturing Phase--a period of diminished real growth due to dependence
on replacement or sustained product demand.

4. Cyclical Stage--a period in which a company faces a potential
saturation of demand for its product. At this point, a firm either diversifies
or becomes obsolete.

DelCap Fund concentrates on seeking and actively managing the
potentials held by firms entering phase 2 of this development cycle. The
following illustration of a firm's hypothetical development is intended to
graphically depict the full development cycle.

Hypothetical Corporate Life Cycle

[Chart appears here]

Hypothetical Corporate Life Cycle Chart shows in a line illustration, the stages
that a typical company would go through, beginning with the emerging state where
sales growth continues at a steep pace to the mature phase where growth levels
off to the cyclical stage where sales show more definitive highs and lows.

The above chart illustrates the path traditionally followed by
companies that successfully survive the growth sequence.

-77-

<PAGE>

FINANCIAL STATEMENTS

Ernst & Young LLP serves as the independent auditors for Delaware Group
Equity Funds IV, Inc. (previously known as Delaware Group DelCap Fund, Inc.)
and, in its capacity as such, audits the financial statements contained in the
Annual Report. DelCap Fund's (previously known as Concept I Series) Statement of
Net Assets, Statement of Operations, Statement of Changes in Net Assets, and
Notes to Financial Statements, as well as the report of Ernst & Young LLP,
independent auditors, for the fiscal year ended September 30, 1996 are included
in DelCap Fund's Annual Report to shareholders. The financial statements, the
notes relating thereto and the report of Ernst & Young LLP, listed above are
incorporated by reference from the Annual Report into this Part B. Capital
Appreciation Fund was not offered to the public prior to the date of this Part
B.

-78-

<PAGE>

PART C

Other Information

Item 24. Financial Statements and Exhibits

(a) Financial Statements:

Part A - Financial Highlights

*Part B - Statement of Net Assets
Statement of Operations
Statement of Changes in Net Assets
Notes to Financial Statements
Accountant's Report

* The financial statements and Accountant's Report listed above
for DelCap Fund for the fiscal year ended September 30, 1996
are incorporated into Part B by reference. Capital
Appreciation Fund is expected to commence operations on or
about November 29, 1996.

(b) Exhibits:

(1) Articles of Incorporation.

(a) Articles of Incorporation, as amended and supplemented
through November 22, 1995, incorporated into this filing
by reference to Post-Effective Amendment No. 18 filed
November 22, 1995.

(b) Executed Articles Supplementary (November 28, 1995)
attached as Exhibit.

(d) Form of Articles of Amendment (1996) attached as Exhibit.

(2) By-Laws. By-Laws, as amended to date, incorporated into this
filing by reference to Post-Effective Amendment No. 18 filed
November 22, 1995.

(3) Voting Trust Agreement. Inapplicable.
<PAGE>

Delaware Group DelCap Fund, Inc.
PART C - Other Information
(Continued)

(4) Copies of All Instruments Defining the Rights of Holders.

(a) Articles of Incorporation and Articles Supplementary.

(i) Article Third of Articles Supplementary (May 27,
1992), Article Second of Articles Supplementary
(September 6, 1994), Article Fifth of Articles of
Incorporation (September 18, 1985) and Article
Eighth of Articles of Incorporation (September 18,
1985), which was subsequently redesignated as
Article Ninth (July 31, 1989), incorporated into
this filing by reference to Post-Effective
Amendment No. 18 filed November 22, 1995.

(ii) Article Third of Articles Supplementary (November
28, 1995) incorporated into this filing by
reference to Post-Effective Amendment No. 19 filed
September 23, 1996.

(iii) Form of Articles Supplementary (1996) attached as
Exhibit 24(b)(1)(c).

(b) By-Laws. Article II, Article III, as amended, and Article
XIII, which was subsequently redesignated as Article XIV,
incorporated into this filing by reference to
Post-Effective Amendment No. 18 filed November 22, 1995.

(5) Investment Management Agreement.

(a) Investment Management Agreement (April 3, 1995) between
Delaware Management Company, Inc. and the Registrant on
behalf of DelCap Fund incorporated into this filing by
reference to Post-Effective Amendment No. 18 filed
November 22, 1995.

(b) Form of Investment Management Agreement (1996) between
Delaware Management Company, Inc. and the Registrant on
behalf of Capital Appreciation Fund attached as Exhibit.

(6) (a) Distribution Agreement.

(i) Executed Distribution Agreement (April 3, 1995)
between Delaware Distributors, L.P. and the
Registrant on behalf of DelCap Fund attached as
Exhibit.

<PAGE>

Delaware Group DelCap Fund, Inc.
PART C - Other Information
(Continued)

(ii) Executed Amendment No. 1 to Distribution Agreement
(November 29, 1995) between Delaware Distributors,
L.P. and the Registrant on behalf of DelCap Fund
attached as Exhibit.

(iii) Form of Distribution Agreement (1996) between
Delaware Distributors, L.P. and the Registrant on
behalf of Capital Appreciation Fund incorporated
into this filing by reference to Post-Effective
Amendment No. 19 filed September 23, 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. 18 filed November 22, 1995.

(c) Dealer's Agreement. Dealer's Agreement (as amended
November 1995) incorporated into this filing by reference
to Post-Effective Amendment No. 18 filed November 22,
1995.

(d) Mutual Fund Agreement. Mutual Fund Agreement for the
Delaware Group of Funds (as amended November 1995)
incorporated into this filing by reference to
Post-Effective Amendment No. 19 filed September 23, 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. 18 filed November 22, 1995.

(b) Amendment to Profit Sharing Plan (December 21, 1995)
incorporated into this filing by reference to
Post-Effective Amendment No. 19 filed September 23, 1996.

(8) Custodian Agreement.

(a) Executed Custodian Agreement (May 1, 1996) between The
Chase Manhattan Bank and the Registrant on behalf of
DelCap Fund included as Module.

(b) Form of Securities Lending Agreement (1996) between The
Chase Manhattan Bank and the Registrant on behalf of
DelCap Fund attached as Exhibit.

<PAGE>

Delaware Group DelCap Fund, Inc.
PART C - Other Information
(Continued)

(c) Form of Custodian Agreement (1996) between The Chase
Manhattan Bank and the Registrant on behalf of Capital
Appreciation Fund attached as Exhibit.

(d) Form of Securities Lending Agreement (1996) between The
Chase Manhattan Bank and the Registrant on behalf of
Capital Appreciation Fund attached as Exhibit.

(9) Other Material Contracts.

(a) Form of Amended and Restated Shareholders Services
Agreement (1996) between Delaware Service Company, Inc.
and the Registrant on behalf of each Fund incorporated
into this filing by reference to Post-Effective Amendment
No. 19 filed September 23, 1996.

(b) Executed Accounting Services Agreement (August 19, 1996)
between Delaware Service Company, Inc. and the Registrant
on behalf of each Fund attached as Exhibit.

(i) Executed Amendment No. 1 (September 30, 1996) to
Schedule A to Delaware Group of Funds Fund
Accounting Agreement attached as Exhibit.

(ii) Form of Amendment No. 2 (1996) to Schedule A to
Delaware Group of Funds Fund Accounting Agreement
incorporated into this filing by reference to
Post-Effective Amendment No. 19 filed September 23,
1996.

(10) Opinion of Counsel. To be filed with letter relating to Rule
24f-2 on or about November 29, 1996.

(11) Consent of Auditors. Attached as Exhibit.

(12) Inapplicable.

(13) Investment Letter of Initial Shareholder. Incorporated into
this filing by reference to Pre-Effective Amendment No. 2
filed March 26, 1986.

(14) Model Plans. Incorporated into this filing by reference to
Post-Effective Amendment No. 15 filed November 26, 1993 and
Post-Effective Amendment No. 18 filed November 22, 1995.
<PAGE>

Delaware Group DelCap Fund, Inc.
PART C - Other Information
(Continued)

**(15) Plans under Rule 12b-1.

(a) Executed Plan under Rule 12b-1 for DelCap Fund A Class
(November 29, 1995) attached as Exhibit.

(b) Executed Plan under Rule 12b-1 for DelCap Fund B Class
(November 29, 1995) attached as Exhibit.

(d) Form of Plan under Rule 12b-1 for Capital Appreciation
Fund A Class (1996) incorporated into this filing by
reference to Post-Effective Amendment No. 19 filed
September 23, 1996.

(e) Form of Plan under Rule 12b-1 for Capital Appreciation
Fund B Class (1996) incorporated into this filing by
reference to Post-Effective Amendment No. 19 filed
September 23, 1996.

(f) Form of Plan under Rule 12b-1 for Capital Appreciation
Fund C Class (1996) incorporated into this filing by
reference to Post-Effective Amendment No. 19 filed
September 23, 1996.

(16) Schedules of Computation for each Performance Quotation.

(a) Incorporated into this filing by reference to
Post-Effective Amendment No. 18 filed November 22, 1995.

(b) Schedules of Computation for each Performance Quotation
for DelCap Fund for periods not previously electronically
filed attached as Exhibit.

(17) Financial Data Schedules. Attached as Exhibit.

(18) Plan under Rule 18f-3.

(a) Plan under Rule 18f-3 (as amended May 1, 1996) included
as Module.

(b) Form of Amended Appendix A (November 29, 1996) to Plan
under Rule 18f-3 incorporated into this filing by
reference to Post-Effective Amendment No. 19 filed
September 23, 1996.

**Relates to DelCap Fund's and Capital Appreciation Fund's retail classes of
shares only.
<PAGE>

Delaware Group DelCap Fund, Inc.
PART C - Other Information
(Continued)

(19) Other: Directors' Power of Attorney. Incorporated into this
filing by reference to Post-Effective Amendment No. 18
filed November 22, 1995.

Item 25. Persons Controlled by or under Common Control with Registrant. None.

Item 26. Number of Holders of Securities.

(1) (2)

Number of
Title of Class Record Holders
-------------- --------------

Delaware Group DelCap Fund, Inc.'s
DelCap Fund:

DelCap Fund A Class
Common Stock Par Value 61,157 Accounts as of
$.01 Per Share October 31, 1996

DelCap Fund B Class
Common Stock Par Value 1,300 Accounts as of
$.01 Per Share October 31, 1996

DelCap Fund C Class
Common Stock Par Value 181 Accounts as of
$.01 Per Share October 31, 1996

DelCap Fund Institutional Class
Common Stock Par Value 64 Accounts as of
$.01 Per Share October 31, 1996

Delaware Group DelCap Fund, Inc.'s
Capital Appreciation Fund:

Capital Appreciation Fund A Class
Common Stock Par Value 0 Accounts as of
$.01 Per Share October 31, 1996

Capital Appreciation Fund B Class
Common Stock Par Value 0 Accounts as of
$.01 Per Share October 31, 1996
<PAGE>

Delaware Group DelCap Fund, Inc.
PART C - Other Information
(Continued)

Number of
Title of Class Record Holders*
-------------- ---------------

Capital Appreciation Fund C Class
Common Stock Par Value 0 Accounts as of
$.01 Per Share October 31, 1996

Capital Appreciation Fund
Institutional Class
Common Stock Par Value 0 Accounts as of
$.01 Per Share October 31, 1996

* Shares of the Capital Appreciation Fund were not offered prior to
the effective date of this Registration Statement.

Item 27. Indemnification. Incorporated into this filing by reference to
initial Registration Statement filed September 24, 1985 and Article VII
of the By-Laws, as amended, incorporated into this filing by reference
to Post-Effective Amendment No. 18 filed November 22, 1995.

Item 28. Business and Other Connections of Investment Adviser.

Delaware Management Company, Inc. (the "Manager") serves as investment
manager to the Registrant and also serves as investment manager or sub-adviser
to certain of the other funds in the Delaware Group (Delaware Group Delaware
Fund, Inc., Delaware Group Trend Fund, Inc., Delaware Group Value Fund, Inc.,
Delaware Group Decatur Fund, Inc., Delaware Group Income Funds, Inc., Delaware
Group Government Fund, Inc., Delaware Group Limited-Term Government Funds, Inc.,
Delaware Group Cash Reserve, Inc., Delaware Group Tax-Free Fund, Inc., DMC
Tax-Free Income Trust-Pennsylvania, Delaware Group Tax-Free Money Fund, Inc.,
Delaware Group Premium Fund, Inc., Delaware Group Global & International Funds,
Inc., Delaware Pooled Trust, Inc., Delaware Group Adviser Funds, Inc., Delaware
Group Dividend and Income Fund, Inc. and Delaware Group Global Dividend and
Income Fund, Inc.) and provides investment advisory services to institutional
accounts, primarily retirement plans and endowment funds. In addition, certain
directors of the Manager also serve as directors/trustees of the other Delaware
Group funds, and certain officers are also officers of these other funds. A
company owned by the Manager's parent company acts as principal underwriter to
the mutual funds in the Delaware Group (see Item 29 below) and another such
company acts as the shareholder servicing, dividend disbursing, accounting
services and transfer agent for all of the mutual funds in the Delaware Group.
<PAGE>

Delaware Group DelCap Fund, Inc.
PART C - Other Information
(Continued)

The following persons serving as directors or officers of the Manager
have held the following positions during the past two years:

<TABLE>
<CAPTION>
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------- -----------------------------------------------
<S> <C>
Wayne A. Stork Chairman of the Board, President, Chief Executive Officer, Chief Investment
Officer and Director of Delaware Management Company, Inc.; President, Chief
Executive Officer, Chairman of the Board and Director of the Registrant and,
with the exception of Delaware Pooled Trust, Inc., each of the other funds in the
Delaware Group, Delaware Management Holdings, Inc., DMH Corp., Delaware
International Holdings Ltd. and Founders Holdings, Inc.; Chairman of the Board
and Director of Delaware Pooled Trust, Inc., Delaware Distributors, Inc.,
Delaware Capital Management, Inc. and Delaware Investment & Retirement
Services, Inc.; Chairman, Chief Executive Officer and Director of Delaware
International Advisers Ltd.; and Director of Delaware Service Company, Inc.

Winthrop S. Jessup Executive Vice President and Director of Delaware Management Company, Inc.,
DMH Corp., Delaware International Holdings Ltd. and Founders Holdings, Inc.;
Executive Vice President of the Registrant and, with the exception of Delaware
Pooled Trust, Inc., each of the other funds in the Delaware Group and Delaware
Management Holdings, Inc.; President and Chief Executive Officer of Delaware
Pooled Trust, Inc.; Vice Chairman of Delaware Distributors, L.P.; Vice
Chairman and Director of Delaware Distributors, Inc.; Director of Delaware
Service Company, Inc., Delaware Management Trust Company, Delaware
International Advisers Ltd. and Delaware Investment & Retirement Services,
Inc.; and President and Director of Delaware Capital Management, Inc.
</TABLE>

*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>

Delaware Group DelCap Fund, Inc.
PART C - Other Information
(Continued)

<TABLE>
<CAPTION>
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------- -----------------------------------------------
<S> <C>
Richard G. Unruh, Jr. Executive Vice President and Director of Delaware Management Company, Inc.;
Executive Vice President of the Registrant and each of the other funds in the
Delaware Group; Senior Vice President of Delaware Management Holdings, Inc.
and Delaware Capital Management, Inc; and Director of Delaware International
Advisers Ltd.

Board of Directors, Chairman of Finance Committee,
Keystone Insurance Company since 1989, 2040 Market
Street, Philadelphia, PA; Board of Directors,
Chairman of Finance Committee, Mid Atlantic, Inc.
since 1989, 2040 Market Street, Philadelphia, PA

Paul E. Suckow Executive Vice President/Chief Investment Officer, Fixed Income of Delaware
Management Company, Inc., the Registrant and each of the other funds in the
Delaware Group; Executive Vice President/Chief Investment Officer and
Director of Founders Holdings, Inc.; Senior Vice President/Chief Investment
Officer, Fixed Income of Delaware Management Holdings, Inc.; Senior Vice
President of Delaware Capital Management, Inc.; and Director of Founders CBO
Corporation

Director, HYPPCO Finance Company Ltd.

David K. Downes Senior Vice President, Chief Administrative Officer and Chief Financial Officer
of Delaware Management Company, Inc., the Registrant and each of the other
funds in the Delaware Group; Chairman and Director of Delaware Management
Trust Company; Executive Vice President and Chief Operating Officer, Chief
Administrative Officer, Chief Financial Officer and Treasurer of Delaware
Management Holdings, Inc.; Senior Vice President, Chief Financial Officer,
Treasurer and Director of DMH Corp.; Senior Vice President and Chief
Administrative Officer of Delaware Distributors, L.P.; Senior Vice President,
Chief Administrative Officer and Director of Delaware Distributors, Inc.; Senior
Vice President, Chief Administrative Officer, Chief Financial Officer and Director
of Delaware Service Company, Inc.; Chief Financial Officer and Director of
Delaware International Holdings Ltd.; Senior Vice President, Chief Financial
Officer and Treasurer of Delaware Capital Management, Inc.; Senior Vice
President, Chief Financial Officer and Director of Founders Holdings, Inc.; Chief
Executive Officer and Director of Delaware Investment & Retirement Services,
Inc.; and Director of Delaware International Advisers Ltd.

Chief Executive Officer, Chief Financial Officer and Treasurer of Forewarn, Inc.
since 1992, 8 Clayton Place, Newtown Square, PA
</TABLE>

*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>

Delaware Group DelCap Fund, Inc.
PART C - Other Information
(Continued)

<TABLE>
<CAPTION>
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------- -----------------------------------------------
<S> <C>
George M. Chamberlain, Jr. Senior Vice President, Secretary and Director of Delaware Management
Company, Inc., DMH Corp., Delaware Distributors, Inc., Delaware Service
Company, Inc., Founders Holdings, Inc., Delaware Capital Management, Inc.
and Delaware Investment & Retirement Services, Inc.; Senior Vice President and
Secretary of the Registrant, each of the other funds in the Delaware Group,
Delaware Distributors, L.P. and Delaware Management Holdings, Inc.;
Executive Vice President, Secretary and Director of Delaware Management
Trust Company; Secretary and Director of Delaware International Holdings Ltd.;
and Director of Delaware International Advisers Ltd.

Richard J. Flannery Managing Director/Corporate Tax & Affairs of Delaware Management
Company, Inc., Delaware Management Holdings, Inc., DMH Corp., Delaware
Distributors, L.P., Delaware Distributors, Inc., Delaware Service Company, Inc.,
Delaware Management Trust Company, Founders CBO Corporation, Delaware
Capital Management, Inc. and Delaware Investment & Retirement Services, Inc.;
Vice President of the Registrant and each of the other funds in the Delaware
Group; Managing Director/Corporate Tax & Affairs and Director of Founders
Holdings, Inc.; Managing Director and Director of Delaware International
Holdings Ltd.; 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

Michael P. Bishof(1) Vice President and Treasurer of Delaware Management Company, Inc., the Registrant,
each of the other funds in the Delaware Group, Delaware Distributors, L.P.,
Delaware Distributors, Inc., Delaware Service Company, Inc. and Founders Holdings,
Inc.; Assistant Treasurer of Founders CBO Corporation; and Vice President and
Manager of Investment Accounting of Delaware International Holdings Ltd.

Eric E. Miller Vice President and Assistant Secretary of Delaware Management Company, Inc.,
the Registrant, each of the other funds in the Delaware Group, Delaware
Management Holdings, Inc., DMH Corp., Delaware Distributors, L.P., Delaware
Distributors Inc., Delaware Service Company, Inc., Delaware Management Trust
Company, Founders Holdings, Inc., Delaware Capital Management, Inc. and
Delaware Investment & Retirement Services, Inc.
</TABLE>

*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>

Delaware Group DelCap Fund, Inc.
PART C - Other Information
(Continued)

<TABLE>
<CAPTION>
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------- -----------------------------------------------
<S> <C>
Richelle S. Maestro Vice President and Assistant Secretary of Delaware Management Company, Inc.,
the Registrant, each of the other funds in the Delaware Group, Delaware
Management Holdings, Inc., Delaware Distributors, L.P., Delaware Distributors,
Inc., Delaware Service Company, Inc., DMH Corp., Delaware Management
Trust Company, Delaware Capital Management, Inc., Delaware Investment &
Retirement Services, Inc. and Founders Holdings, Inc.; Secretary of Founders
CBO Corporation; and Assistant Secretary of Delaware International Holdings
Ltd.

General Partner of Tri-R Associates since 1989, 10001 Sandmeyer Ln.,
Philadelphia, PA

Joseph H. Hastings Vice President/Corporate Controller of Delaware Management Company, Inc.,
the Registrant, each of the other funds in the Delaware Group, Delaware
Management Holdings, Inc., DMH Corp., Delaware Distributors, L.P., Delaware
Distributors, Inc., Delaware Service Company, Inc., Delaware Capital
Management, Inc., Founders Holdings, Inc. and Delaware International Holdings
Ltd.; Executive Vice President, Chief Financial Officer and Treasurer of
Delaware Management Trust Company; Chief Financial Officer and Treasurer of
Delaware Investment & Retirement Services, Inc.; and Assistant Treasurer of
Founders CBO Corporation

Bruce A. Ulmer Vice President/Director of Internal Audit of Delaware Management Company,
Inc., the Registrant, each of the other funds in the Delaware Group, Delaware
Management Holdings, Inc., DMH Corp. and Delaware Management Trust
Company; and Vice President/Internal Audit of Delaware Investment &
Retirement Services, Inc.

Steven T. Lampe(2) Vice President/Taxation of Delaware Management Company, Inc., the
Registrant, each of the other funds in the Delaware Group, Delaware
Management Holdings, Inc., DMH Corp., Delaware Distributors, L.P., Delaware
Distributors, Inc., Delaware Service Company, Inc., Delaware Management
Trust Company, Founders Holdings, Inc., Founders CBO Corporation, Delaware
Capital Management, Inc. and Delaware Investment & Retirement Services, Inc.
</TABLE>

*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>

Delaware Group DelCap Fund, Inc.
PART C - Other Information
(Continued)

Lisa O. Brinkley Vice President/Compliance of Delaware Management Company, Inc., the Registrant,
each of the other funds in the Delaware Group, DMH Corp., Delaware Distributors,
L.P., Delaware Distributors, Inc., Delaware Service Company, Inc., Delaware
Management Trust Company, Delaware Capital Management, Inc. and Delaware
Investment & Retirement Services, Inc.

Rosemary E. Milner Vice President/Legal of Delaware Management Company, Inc., the Registrant,
each of the other funds in the Delaware Group, Delaware Distributors, L.P. and
Delaware Distributors, Inc.

Douglas L. Anderson Vice President/Operations of Delaware Management Company, Inc., Delaware
Investment and Retirement Services, Inc. and Delaware Service Company, Inc.;
and Vice President/Operations and Director of Delaware Management Trust
Company

Michael T. Taggart Vice President/Facilities Management and Administrative Services of Delaware
Management Company, Inc.

Gerald T. Nichols Vice President/Senior Portfolio Manager of Delaware Management Company, Inc., each
of the tax-exempt funds, the fixed income funds and the closed-end funds in the
Delaware Group; Vice President of Founders Holdings, Inc.; and Treasurer,
Assistant Secretary and Director of Founders CBO Corporation

J. Michael Pokorny Vice President/Senior Portfolio Manager of Delaware Management Company,
Inc., each of the tax-exempt funds and the fixed income funds in the Delaware
Group

Gary A. Reed Vice President/Senior Portfolio Manager of Delaware Management Company, Inc., each
of the tax-exempt funds and the fixed income funds in the Delaware Group and
Delaware Capital Management, Inc.

Paul A. Matlack Vice President/Senior Portfolio Manager of Delaware Management Company, Inc., each
of the tax-exempt funds, the fixed income funds and the closed-end funds in the
Delaware Group; Vice President of Founders Holdings, Inc.; and President and
Director of Founders CBO Corporation
</TABLE>

*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>

Delaware Group DelCap Fund, Inc.
PART C - Other Information
(Continued)

Patrick P. Coyne Vice President/Senior Portfolio Manager of Delaware Management Company, Inc., each
of the tax-exempt funds and the fixed income funds in the Delaware Group and
Delaware Capital Management, Inc.

Roger A. Early Vice President/Senior Portfolio Manager of Delaware Management Company, Inc., each
of the tax-exempt funds and the fixed income funds in the Delaware Group

Edward N. Antoian Vice President/Senior Portfolio Manager of Delaware Management Company, Inc., the
Registrant and each of the equity funds in the Delaware Group and Delaware Capital
Management, Inc.

General Partner of Zeke Investment Partners since 1991, 569 Canterbury Lane,
Berwyn, PA

George H. Burwell Vice President/Senior Portfolio Manager of Delaware Management Company, Inc., the
Registrant and each of the equity funds in the Delaware Group

John B. Fields Vice President/Senior Portfolio Manager of Delaware Management Company, Inc., the
Registrant and each of the equity funds in the Delaware Group and Delaware Capital
Management, Inc.

David C. Dalrymple Vice President/Senior Portfolio Manager of Delaware Management Company, Inc., the
Registrant and each of the equity funds in the Delaware Group

Gerald S. Frey(3) Vice President/Senior Portfolio Manager of Delaware Management Company, Inc., the
Registrant and each of the equity funds in the Delaware Group

Faye P. Staples(4) Vice President/Human Resources of Delaware Management Company, Inc., Delaware
Distributors, L.P. and Delaware Distributors, Inc.; and Vice President/Director of
Human Resources of Delaware Service Company, Inc.
</TABLE>

1 VICE PRESIDENT/GLOBAL INVESTMENT MANAGEMENT OPERATIONS, Bankers Trust and
VICE PRESIDENT, CS First Boston Investment Management prior to June 1995.
2 TAX MANAGER, Price Waterhouse prior to October 1995.
3 SENIOR DIRECTOR, Morgan Grenfell Capital Management prior to June 1996.
4 VICE PRESIDENT/HUMAN RESOURCES, Nova Care prior to September 1995.

*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>

Delaware Group DelCap Fund, Inc.
PART C - Other Information
(Continued)

Item 29. Principal Underwriters.

(a) Delaware Distributors, L.P. serves as principal underwriter for all
the mutual funds in the Delaware Group.

(b) Information with respect to each director, officer or partner of
principal underwriter:

<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ------------------ ---------------------- ---------------------
<S> <C> <C>

Delaware Distributors, Inc. General Partner None

Delaware Management
Company, Inc. Limited Partner Investment Manager

Delaware Capital
Management, Inc. Limited Partner None

Winthrop S. Jessup Vice Chairman Executive Vice President

Bruce Barton President and Chief None
Executive Officer

David K. Downes Senior Vice President and Senior Vice President/Chief
Chief Administrative Officer Administrative Officer/Chief
Financial Officer

George M. Chamberlain, Jr. Senior Vice President/ Senior Vice President/
Secretary Secretary

J. Lee Cook Senior Vice President/ None
Eastern Sales Division

Thomas E. Sawyer Senior Vice President/ None
Western Sales Division

Stephen H. Slack Senior Vice President/ None
Wholesaler
</TABLE>

*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>

Delaware Group DelCap Fund, Inc.
PART C - Other Information
(Continued)

William F. Hostler Senior Vice President/ None
Marketing Services

Dana B. Hall Senior Vice President/ None
Key Accounts

J. Chris Meyer Senior Vice President/ None
Product Development

Richard J. Flannery Managing Director/Corporate Vice President
& Tax Affairs

Eric E. Miller Vice President/ Vice President/
Assistant Secretary Assistant Secretary

Richelle S. Maestro Vice President/ Vice President/
Assistant Secretary Assistant Secretary

Michael P. Bishof Vice President/Treasurer Vice President/Treasurer

Steven T. Lampe Vice President/Taxation Vice President/Taxation

Joseph H. Hastings Vice President/ Vice President/
Corporate Controller Corporate Controller

Lisa O. Brinkley Vice President/ Vice President/
Compliance Compliance

Rosemary E. Milner Vice President/Legal Vice President/Legal
</TABLE>

*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>

Delaware Group DelCap Fund, Inc.
PART C - Other Information
(Continued)

Susan J. Black Vice President/ None
Manager Key Accounts

Daniel H. Carlson Vice President/ None
Marketing Manager

Diane M. Anderson Vice President/ None
Retirement Services

Denise F. Guerriere Vice President/Client Services None

Julia R. Vander Els Vice President/ None
Client Services

Jerome J. Alrutz Vice President/ None
Client Services

Joanne A. Mettenheimer Vice President/ None
National Accounts

Christopher H. Price Vice President/Annuity None
Marketing & Administration

Steven J. DeAngelis Vice President/ None
Product Development

Susan T. Friestedt Vice President/ None
Customer Service

Dinah J. Huntoon Vice President/ None
Product Management
</TABLE>

*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>

Delaware Group DelCap Fund, Inc.
PART C - Other Information
(Continued)

Soohee Zebedee Vice President/Fixed Income None
Product Management

Ellen M. Krott Vice President/ None
Communications

Holly W. Riemel Vice President/ None
Telemarketing

Frank Albanese Vice President/Wholesaler None

Terrence L. Bussard Vice President/Wholesaler None

William S. Carroll Vice President/Wholesaler None

William S. Castetter Vice President/Wholesaler None

Thomas J. Chadie Vice President/Wholesaler None

Thomas C. Gallagher Vice President/Wholesaler None

Douglas R. Glennon Vice President/Wholesaler None

William M. Kimbrough Vice President/Wholesaler None

Mac McAuliffe Vice President/Wholesaler None

Patrick L. Murphy Vice President/Wholesaler None

Henry W. Orvin Vice President/Wholesaler None

Philip G. Rickards Vice President/Wholesaler None

Elizabeth Roman Vice President/Wholesaler None

Michael W. Rose Vice President/Wholesaler None

Edward B. Sheridan Vice President/Wholesaler None

Robert E. Stansbury Vice President/Wholesaler None

Larry D. Stone Vice President/Wholesaler None
</TABLE>

*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>

Delaware Group DelCap Fund, Inc.
PART C - Other Information
(Continued)

Faye P. Staples Vice President/Human Resources None

John Wells Vice President/Marketing None
Technology
</TABLE>

*Business address of each is 1818 Market Street, Philadelphia, PA 19103.

Item 30. Location of Accounts and Records.

All accounts and records are maintained in Philadelphia at 1818 Market
Street, Philadelphia, PA 19103 or One Commerce Square, Philadelphia, PA
19103.

Item 31. Management Services. None.

Item 32. Undertakings.

(a) Not Applicable.

(b) The Registrant hereby undertakes to file a post-effective
amendment, using financial statements which need not be certified,
within four to six months from the initial public offering of
shares of the Capital Appreciation Fund.

(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) The Registrant hereby undertakes to promptly call a meeting of
shareholders for the purpose of voting upon the question of removal
of any director when requested in writing to do so by the record
holders of not less than 10% of the outstanding shares.
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, this Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in this City of Philadelphia and Commonwealth of Pennsylvania on
this 25th day of November, 1996.

DELAWARE GROUP DELCAP FUND, INC.
(to be renamed Delaware Group Equity Funds IV, Inc.)

By /s/ Wayne A. Stork
-------------------------------------
Wayne A. Stork
Chairman of the Board, President,
Chief Executive Officer and Director

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated:

<TABLE>
<CAPTION>
Signature Title Date
- ---------- ----- ----
<S> <C> <C>

Chairman of the Board, President
/s/ Wayne A. Stork Chief Executive Officer and Director November 25, 1996
- --------------------------------
Wayne A. Stork Senior Vice President/Chief Financial
Officer/Chief Administrative Officer
(Principal Financial Officer and
/s/ David K. Downes Principal Accounting Officer) November 25, 1996
- --------------------------------
David K. Downes

/s/ Walter P. Babich * Director November 25, 1996
- --------------------------------
Walter P. Babich

/s/ Anthony D. Knerr * Director November 25, 1996
- --------------------------------
Anthony D. Knerr

/s/ Ann R. Leven * Director November 25, 1996
- --------------------------------
Ann R. Leven

/s/ Charles E. Peck * Director November 25, 1996
- ---------------------------------
Charles E. Peck

/s/ W. Thacher Longstreth * Director November 25, 1996
- ---------------------------------
W. Thacher Longstreth
</TABLE>

*By /s/ Wayne A. Stork
------------------------------
Wayne A. Stork
as Attorney-in-Fact for
each of the persons indicated

<PAGE>

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Exhibits

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

<PAGE>

INDEX TO EXHIBITS

Exhibit No. Exhibit
- ----------- -------
EX-99.B1B Executed Articles Supplementary (November 29, 1995)

EX-99.B1C Form of Articles Supplementary (1996)

EX-99.B1D Form of Articles of Amendment (1996)

EX-99.B6AI Executed Distribution Agreement (April 3, 1995) between Delaware
Distributors, L.P. and the Registrant on behalf of DelCap Fund

EX-99.B6AII Executed Amendment No. 1 to Distribution Agreement (November
28, 1995) between Delaware Distributors, L.P. and the Registrant
on behalf of DelCap Fund

EX-99.B8A Executed Custodian Agreement (May 1, 1996) between The Chase
(Module Name Manhattan Bank and the Registrant on behalf of DelCap Fund
CHASE_CUST_AGR)

EX-99.B8B Form of Securities Lending Agreement (1966) between The Chase
Manhattan Bank and the Registrant on behalf of DelCap Fund

EX-99.B8C Form of Custodian Agreement (1996) between The Chase Manhattan
Bank and the Registrant on behalf of Capital Appreciation Fund

EX-99.B8D Form of Securities Lending Agreement (1996) between The Chase
Manhattan Bank and the Registrant on behalf of Capital
Appreciation Fund

EX-99.B9B Executed Delaware Group of Funds Fund Accounting Agreement

EX-99.B9BI Executed Amendment No. 1 (September 30, 1996) to Schedule A to
Delaware Group of Funds Fund Accounting Agreement

EX-99.B11 Consent of Auditors

EX-99.B15A Plan under Rule 12b-1 for DelCap Fund A Class (November 29,
1995)

EX-99.B15B Plan under Rule 12b-1 for DelCap Fund B Class (November 29,
1995)

EX-99.B15C Plan under Rule 12b-1 for DelCap Fund C Class (November 29,
1995)

EX-99.B16B Schedules of Computation for each Performance Quotation for
DelCap Fund for periods not previously electronically filed

EX-99.B18A Plan under Rule 18f-3 (as amended May 1, 1996)
(Module Name
MOD18F3)

EX-27 Financial Data Schedules

<PAGE>

DELAWARE GROUP DELCAP FUND, INC.

ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION

Delaware Group DelCap Fund, Inc., a Maryland corporation
having its principal office in Baltimore, Maryland (the "Corporation"), hereby
certifies, in accordance with Section 2-208 of the Maryland General Corporation
Law, to the State Department of Assessments and Taxation of Maryland that:

FIRST: The Corporation has authority to issue a total of Five
Hundred Million (500,000,000) shares of common stock with a par value of One
Cent ($0.01) per share of the Corporation (the "Common Stock"), having an
aggregate par value of Five Million Dollars ($5,000,000). Of such Five Hundred
Million (500,000,000) shares of Common Stock, Three Hundred Fifty Million
(350,000,000) shares have been allocated to the Concept I Series of the Common
Stock as follows: (1) One Hundred Fifty Million (150,000,000) shares have been
allocated to each of the DelCap Fund B Class and DelCap Fund class and (2) Fifty
Million (50,000,000) shares have been allocated to the DelCap Fund
(Institutional) class.

SECOND: The Board of Directors of the Corporation, at a
meeting held on July 20, 1995, adopted a resolution classifying a fourth class
of shares of the Concept I Series of the Common Stock as the DelCap Fund C Class
("the C Class") and reclassifying and allocating Fifty Million (50,000,000)
shares of authorized and unissued Common Stock, previously classified and
allocated to the DelCap Fund B Class of the Concept I Series of the Common
Stock, to the C Class.

THIRD: The shares of the C Class shall represent proportionate
interests in the same portfolio of investments as the shares of the DelCap Fund
(Institutional) class, DelCap Fund B Class and DelCap Fund class of the Concept
I Series of the Common Stock. The shares of the C Class shall have the same
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, or terms or conditions of
redemption as the shares of the DelCap Fund (Institutional) class, DelCap Fund B
Class and DelCap Fund class of the Concept I Series of the Common Stock, all as
set forth in the Articles of Incorporation of the Corporation, except for the
differences hereinafter set forth:

-2-

<PAGE>

1. The dividends and distributions of investment income and
capital gains with respect to shares of the C Class shall be
in such amounts as may be declared from time to time by the
Board of Directors, and such dividends and distributions may
vary with respect to such class from the dividends and
distributions of investment income and capital gains with
respect to shares of the other classes of the Concept I Series
of the Common Stock to reflect differing allocations of the
expenses of the Corporation among the shares of such classes
and any resultant difference among the net asset values per
share of the shares of such classes, to such extent and for
such purposes as the Board of Directors may deem appropriate.
The allocation of investment income and capital gains and
expenses and liabilities of the Corporation among the four
classes of the Concept I Series of the Common Stock shall be
determined by the Board of Directors in a manner that is
consistent with the order, as applicable, dated September 6,
1994 (Investment Company Act of 1940 Release No. 20529) issued
by the Securities and Exchange Commission, and any amendments
to such order, any future order or any Multiple Class Plan
adopted by the Corporation in accordance with Rule 18f-3 under
the Investment Company Act of 1940, as amended, that modifies
or supersedes such order.

2. Except as may otherwise be required by law pursuant to any
applicable order, rule or interpretation issued by the
Securities and Exchange Commission, or otherwise, the holders
of shares of the C Class shall have (i) exclusive voting
rights with respect to any matter submitted to a vote of
stockholders that affects only holders of shares of the C
Class, including without limitation the provisions of any
Distribution Plan adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended (a "Distribution
Plan") applicable to shares of the C Class, and (ii) no voting
rights with respect to the provisions of any Distribution Plan
applicable to any other class of Common Stock or with regard
to any other matter submitted to a vote of stockholders which
does not affect holders of shares of the C Class.

3. The shares of the C Class shall not automatically convert
into shares of the DelCap Fund class of the Concept I Series
of the Common Stock as do the shares of the DelCap Fund B
Class of the Concept I Series of the Common Stock.

-3-
<PAGE>

FOURTH: The shares of the DelCap Fund B Class of the Concept I
Series of the Common Stock reclassified as shares of the C Class pursuant to
these Articles Supplementary have been reclassified by the Board of Directors
pursuant to authority contained in the Articles of Incorporation of the
Corporation.

FIFTH: These Articles Supplementary shall become effective on
November 28, 1995.

IN WITNESS WHEREOF, Delaware Group DelCap Fund, Inc. has
caused these Articles Supplementary to be signed in its name and on its behalf
this 14th day of November, 1995.

DELAWARE GROUP DELCAP FUND, INC.

/s/George M. Chamberlain, Jr.
-----------------------------
George M. Chamberlain, Jr.
Senior Vice President

ATTEST:

/s/Richelle S. Maestro
- ----------------------
Richelle S. Maestro
Assistant Secretary

-4-

<PAGE>

THE UNDERSIGNED, Senior Vice President of DELAWARE GROUP
DELCAP FUND, INC., who executed on behalf of the said Corporation the foregoing
Articles Supplementary, of which this instrument is made a part, hereby
acknowledges, in the name of and on behalf of said Corporation, said Articles
Supplementary to be the corporate act of said Corporation and further certifies
that, to the best of his knowledge, information and belief, the matters and
facts set forth therein with respect to the authorization and approval thereof
are true in all material respects, under the penalties of perjury.

/s/George M. Chamberlain, Jr.
-----------------------------
George M. Chamberlain, Jr.
Senior Vice President

-5-

<PAGE>
DELAWARE GROUP EQUITY FUNDS IV, INC.

ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION

Delaware Group Equity Funds IV, Inc. (formerly known as
Delaware Group DelCap Fund, Inc.), a Maryland corporation having its principal
office in Baltimore, Maryland (the "Corporation"), hereby certifies, in
accordance with Section 2-208 and Section 2-208.1 of the Maryland General
Corporation Law, to the State Department of Assessments and Taxation of
Maryland, that:

FIRST: The Corporation has authority to issue a total of Five
Hundred Million (500,000,000) shares of common stock with a par value of One
Cent ($0.01) per share (the "Common Stock") of the Corporation, having an
aggregate par value of Five Million Dollars ($5,000,000). Of such Five Hundred
Million (500,000,000) shares of the Common Stock, Three Hundred Fifty Million
(350,000,000) shares have been allocated to the DelCap Fund series of the Common
Stock as follows: (1) One Hundred Fifty Million (150,000,000) shares of the
DelCap Fund series of the Common Stock have been allocated to the DelCap Fund A
Class, (2) One Hundred Million (100,000,000) shares of the DelCap Fund series of
the Common Stock have been allocated to the DelCap Fund B Class, and (3) Fifty
Million (50,000,000) shares of the DelCap Fund series of the Common Stock have
been allocated to each of the DelCap Fund C Class and DelCap Fund
(Institutional) Class. Of such Five Hundred Million (500,000,000) shares of the
Common Stock, Fifty Million (50,000,000) shares have been allocated to the
Concept II series. Of such Five Hundred Million (500,000,000) shares of the
Common Stock, One Hundred Million (100,000,000) shares are authorized, unissued,
unclassified and unallocated.

SECOND: There being no outstanding shares of the Concept II
series, the Board of Directors of the Corporation, at a meeting held on November
21, 1996, adopted resolutions terminating the Concept II series, and restoring
the Fifty Million (50,000,000) shares of the Common Stock of the Corporation
that had previously been allocated to the Concept II series of the Corporation
to the category of shares of Common Stock of the Corporation that are
authorized, unissued, unclassified and unallocated.

THIRD: The Board of Directors of the Corporation, at a meeting
held on November 21, 1996, adopted resolutions increasing the aggregate number
of shares of Common Stock that the Corporation has authority to issue from Five
Hundred Million

<PAGE>

(500,000,000) shares to One Billion (1,000,000,000) shares, designating one
additional series of the Corporation's Common Stock as the Capital Appreciation
Fund series, and classifying and allocating Two Hundred Million (200,000,000)
shares of authorized, unissued and unclassified Common Stock to the Capital
Appreciation Fund series. The Two Hundred Million (200,000,000) shares of the
Common Stock which have been allocated to the Capital Appreciation Fund series
have been further allocated as follows: (1) One Hundred Million (100,000,000)
shares of the Capital Appreciation Fund series of the Common Stock have been
allocated to the Capital Appreciation Fund A Class, (2) Fifty Million
(50,000,000) shares of the Capital Appreciation Fund series of the Common Stock
have been allocated to the Capital Appreciation Fund (Institutional) Class, and
(3) Twenty-Five Million (25,000,000) shares of the Capital Appreciation Fund
series of the Common Stock have been allocated to each of the Capital
Appreciation Fund B Class and the Capital Appreciation Fund C Class. Four
Hundred Fifty Million (450,000,000) shares of the Corporation's Common Stock
remain authorized but unissued and unallocated shares.

FOURTH: As a result of the aforesaid increase in the
authorized Common Stock and classifications, the Corporation has authority to
issue One Billion (1,000,000,000) shares of Common Stock with a par value of One
Cent ($0.01) per share, having an aggregate par value of Ten Million Dollars
($10,000,000). Of such One Billion (1,000,000,000) shares of Common Stock, Five
Hundred Fifty Million (550,000,000) shares of the Common Stock have been
allocated as follows: Three Hundred Fifty Million (350,000,000) shares have been
allocated to the DelCap Fund series, and Two Hundred Million (200,000,000)
shares have been allocated to the Capital Appreciation Fund series. The Three
Hundred Fifty Million (350,000,000) shares of the Corporation's Common Stock
which have been allocated to the DelCap Fund series have been further classified
and allocated as follows: (1) One Hundred Fifty Million (150,000,000) shares of
the DelCap Fund series of the Common Stock have been allocated to the DelCap
Fund A Class, (2) One Hundred Million (100,000,000) shares of the DelCap Fund
series of the Common Stock have been allocated to the DelCap Fund B Class, and
(3) Fifty Million (50,000,000) shares of the DelCap Fund series of the Common
Stock have been allocated to each of the DelCap Fund (Institutional) Class and
the DelCap Fund C Class. The Two Hundred Million (200,000,000) shares of the
Corporation's Common Stock allocated to the Capital Appreciation Fund series
have been further classified and allocated as follows: (1) One Hundred Million
(100,000,000) shares of the Capital Appreciation Fund series of the Common Stock
have been allocated to the Capital Appreciation Fund A Class, (2) Fifty Million
(50,000,000) shares of the Capital Appreciation Fund series of the Common Stock
have been allocated to the Capital Appreciation Fund (Institutional) Class, and
(3) Twenty-Five Million (25,000,000) shares of the Capital Appreciation Fund

-2-

<PAGE>

series of the Common Stock have been allocated to each of the Capital
Appreciation Fund B Class and the Capital Appreciation Fund C Class. Four
Hundred Fifty Million (450,000,000) shares of the Corporation's Common Stock
remain authorized but unissued and
unallocated shares.

FIFTH: The shares of the Capital Appreciation Fund A Class,
the Capital Appreciation Fund B Class, the Capital Appreciation Fund C Class and
the Capital Appreciation Fund (Institutional) Class of the Capital Appreciation
Fund series shall represent proportionate interests in the same portfolio of
investments. The shares of the Capital Appreciation Fund A Class, the Capital
Appreciation Fund B Class, the Capital Appreciation Fund C Class and the Capital
Appreciation Fund (Institutional) Class of the Capital Appreciation Fund series
shall have the same preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, or terms or
conditions of redemption, all as set forth in the Articles of Incorporation of
the Corporation, except for the differences hereinafter set forth:

1. The dividends and distributions of investment income and
capital gains with respect to shares of the Capital
Appreciation Fund A Class, the Capital Appreciation Fund B
Class, the Capital Appreciation Fund C Class and the Capital
Appreciation Fund (Institutional) Class of the Capital
Appreciation Fund series of the Common Stock shall be in such
amounts as may be declared from time to time by the Board of
Directors, and such dividends and distributions may vary with
respect to each such class from the dividends and
distributions of investment income and capital gains with
respect to the other classes of the Capital Appreciation Fund
series of the Common Stock, to reflect differing allocations
of the expenses of the Corporation among the classes and any
resultant difference among the net asset values per share of
the classes, to such extent and for such purposes as the Board
of Directors may deem appropriate. The allocation of
investment income and capital gains and expenses and
liabilities of the Capital Appreciation Fund series among its
four classes of Common Stock shall be determined by the Board
of Directors in a manner that is consistent with the orders,
as applicable, dated April 10, 1987 and September 6, 1994
(Investment Company Act of 1940 Release Nos. 15675 and 20529)
issued by the Securities and Exchange Commission, and any
amendments to such orders, any existing or future order or any
Multiple Class Plan adopted by the Corporation in accordance
with Rule 18f-3 under the Investment Company Act of 1940, as
amended, that modifies or supersedes such orders.

-3-

<PAGE>

2. Except as may otherwise be required by law, pursuant to any
applicable order, rule or interpretation issued by the
Securities and Exchange Commission, or otherwise, the holders
of shares of the Capital Appreciation Fund A Class, the
Capital Appreciation Fund B Class, the Capital Appreciation
Fund C Class and the Capital Appreciation Fund (Institutional)
Class of the Capital Appreciation Fund series of the Common
Stock shall have (i) exclusive voting rights with respect to
any matter submitted to a vote of stockholders that affects
only holders of shares of the Capital Appreciation Fund A
Class, the Capital Appreciation Fund B Class, the Capital
Appreciation Fund C Class and the Capital Appreciation Fund
(Institutional) Class of the Capital Appreciation Fund series,
respectively, including, without limitation, the provisions of
any Distribution Plan adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended (a "Distribution
Plan"), applicable to shares of the Capital Appreciation Fund
A Class, the Capital Appreciation Fund B Class and the Capital
Appreciation Fund C Class, and (ii) no voting rights with
respect to the provisions of any Distribution Plan applicable
to any other class of the Capital Appreciation Fund series of
the Common Stock or with regard to any other matter submitted
to a vote of stockholders which does not affect holders of
shares of the Capital Appreciation Fund A Class, the Capital
Appreciation Fund B Class and the Capital Appreciation Fund C
Class.

3. (a) Other than shares described in paragraph (3)(b) herein,
each share of the Capital Appreciation Fund B Class shall be
converted automatically, and without any action or choice on
the part of the holder thereof, into shares of the Capital
Appreciation Fund A Class on the Conversion Date. The term
"Conversion Date" when used herein shall mean a date set forth
in the prospectus of the Capital Appreciation Fund B Class, as
such prospectus may be amended from time to time, that is no
later than three months after either (i) the date on which the
eighth anniversary of the date of issuance of the share
occurs, or (ii) any such other anniversary date as may be
determined by the Board of Directors and set forth in the
prospectus of the Capital Appreciation Fund B Class, as such
prospectus may be amended from time to time; provided that any
such other anniversary date determined by the Board of
Directors shall be a date that will occur prior to the
anniversary date set forth in clause (i) and any such other
date theretofore determined by the Board of Directors pursuant
to this clause (ii); but

-4-

<PAGE>

further provided that, subject to the provisions of the next
sentence, for any shares of the Capital Appreciation Fund B
Class acquired through an exchange, or through a series of
exchanges, as permitted by the Corporation as provided in the
prospectus of the Capital Appreciation Fund B Class, as such
prospectus may be amended from time to time, from another
investment company or another series of the Corporation (an
"eligible investment company"), the Conversion Date shall be
the conversion date applicable to the shares of stock of the
eligible investment company originally subscribed for in lieu
of the Conversion Date of any stock acquired through exchange
if such eligible investment company issuing the stock
originally subscribed for had a conversion feature, but not
later than the Conversion Date determined under (i) above. For
the purpose of calculating the holding period required for
conversion, the date of issuance of a share of the Capital
Appreciation Fund B Class shall mean (i) in the case of a
share of the Capital Appreciation Fund B Class obtained by the
holder thereof through an original subscription to the
Corporation, the date of the issuance of such share of the
Capital Appreciation Fund B Class, or (ii) in the case of a
share of the Capital Appreciation Fund B Class obtained by the
holder thereof through an exchange, or through a series of
exchanges, from an eligible investment company, the date of
issuance of the share of the eligible investment company to
which the holder originally subscribed.

(b) Each share of the Capital Appreciation Fund B
Class (i) purchased through the automatic reinvestment of a
dividend or distribution with respect to the Capital
Appreciation Fund B Class or the corresponding class of any
other investment company or of any other series of the
Corporation issuing such class of shares or (ii) issued
pursuant to an exchange privilege granted by the Corporation
in an exchange or series of exchanges for shares originally
purchased through the automatic reinvestment of a dividend or
distribution with respect to shares of capital stock of an
eligible investment company, shall be segregated in a separate
sub-account on the stock records of the Corporation for each
of the holders of record thereof. On any Conversion Date, a
number of the shares held in the separate sub-account of the
holder of record of the share or shares being converted,
calculated in accordance with the next following sentence,
shall be converted automatically, and without any action or
choice on the part of the holder, into shares of the Capital
Appreciation Fund A Class. The number of

-5-

<PAGE>

shares in the holder's separate sub-account so converted shall
(i) bear the same ratio to the total number of shares
maintained in the separate sub-account on the Conversion Date
(immediately prior to conversion) as the number of shares of
the holder converted on the Conversion Date pursuant to
paragraph (3)(a) hereof bears to the total number of Capital
Appreciation Fund B Class shares of the holder on the
Conversion Date (immediately prior to conversion) after
subtracting the shares then maintained in the holder's
separate sub-account, or (ii) be such other number as may be
calculated in such other manner as may be determined by the
Board of Directors and set forth in the prospectus of the
Capital Appreciation Fund B Class, as such prospectus may be
amended from time to time.

(c) The number of shares of the Capital Appreciation
Fund A Class into which a share of the Capital Appreciation
Fund B Class is converted pursuant to paragraphs 3(a) and 3(b)
hereof shall equal the number (including for this purpose
fractions of a share) obtained by dividing the net asset value
per share of the Capital Appreciation Fund B Class for
purposes of sales and redemption thereof on the Conversion
Date by the net asset value per share of the Capital
Appreciation Fund A Class for purposes of sales and redemption
thereof on the Conversion Date.

(d) On the Conversion Date, the shares of the Capital
Appreciation Fund B Class converted into shares of the Capital
Appreciation Fund A Class will no longer be deemed outstanding
and the rights of the holders thereof (except the right to
receive (i) the number of shares of the Capital Appreciation
Fund A Class into which the shares of the Capital Appreciation
Fund B Class have been converted and (ii) declared but unpaid
dividends to the Conversion Date or such other date set forth
in the prospectus of the Capital Appreciation Fund B Class, as
such prospectus may be amended from time to time and (iii) the
right to vote converting shares of the Capital Appreciation
Fund B Class held as of any record date occurring on or before
the Conversion Date and theretofore set with respect to any
meeting held after the Conversion Date) will cease.
Certificates representing shares of the Capital Appreciation
Fund A Class resulting from the conversion need not be issued
until certificates representing shares of the Capital
Appreciation Fund B Class converted, if issued, have been
received by the Corporation or its agent duly endorsed for
transfer.

-6-

<PAGE>

(e) The automatic conversion of the Capital
Appreciation Fund B Class into the Capital Appreciation Fund A
Class, as set forth in paragraphs 3(a) and 3(b) of this
Article FIFTH shall be suspended at any time that the Board of
Directors determines (i) that there is not available a
reasonably satisfactory opinion of counsel to the effect that
(x) the assessment of the higher fee under the Distribution
Plan with respect to the Capital Appreciation Fund B Class
does not result in the Corporation's dividends or
distributions constituting a "preferential dividend" under the
Internal Revenue Code of 1986, as amended, and (y) the
conversion of the Capital Appreciation Fund B Class does not
constitute a taxable event under federal income tax law, or
(ii) any other condition to conversion set forth in the
prospectus of the Capital Appreciation Fund B Class, as such
prospectus may be amended from time to time, is not satisfied.

(f) The automatic conversion of the Capital
Appreciation Fund B Class into Capital Appreciation Fund A
Class, as set forth in paragraphs 3(a) and 3(b) hereof, may
also be suspended by action of the Board of Directors at any
time that the Board of Directors determines such suspension to
be appropriate in order to comply with, or satisfy the
requirements of the Investment Company Act of 1940, as
amended, and in effect from time to time, or any rule,
regulation or order issued thereunder relating to voting by
the holders of the Capital Appreciation Fund B Class on any
Distribution Plan with respect to, as relevant, the Capital
Appreciation Fund A Class and in effect from time to time, and
in connection with, or in lieu of, any such suspension, the
Board of Directors may provide holders of the Capital
Appreciation Fund B Class with alternative conversion or
exchange rights into other classes of stock of the Corporation
in a manner consistent with the law, rule, regulation or order
giving rise to the possible suspension of the conversion
right.

4. The shares of the Capital Appreciation Fund C Class and the
Capital Appreciation Fund (Institutional) Class shall not
automatically convert into shares of the Capital Appreciation
Fund A Class of the Capital Appreciation Fund series of the
Common Stock as do the shares of the Capital Appreciation B
Class of the Capital Appreciation Fund series of the Common
Stock.

SIXTH: The shares of the Capital Appreciation Fund A Class,
the Capital Appreciation Fund B Class, the Capital Appreciation Fund C Class and
the Capital Appreciation Fund

-7-

<PAGE>

(Institutional) Class of the Capital Appreciation Fund series have been
classified by the Board of Directors pursuant to authority contained in the
Articles of Incorporation of the Corporation.

SEVENTH: The Corporation is registered as an open-end
management investment company under the Investment Company Act of 1940, as
amended.

EIGHTH: The total number of shares of Common Stock that the
Corporation has authority to issue has been increased by the Board of Directors
in accordance with Section 2-105(c) of the Maryland General Corporation Law.

NINTH: These Articles Supplementary shall become effective at
5:00 p.m. on November __, 1996.

IN WITNESS WHEREOF, Delaware Group Equity Funds IV, Inc. has
caused these Articles Supplementary to be signed in its name and on its behalf
by its Senior Vice President and attested by its Assistant Secretary on this
____ day of November, 1996.

DELAWARE GROUP EQUITY FUNDS IV, INC.

By:_________________________________
George M. Chamberlain, Jr.
Senior Vice President

ATTEST:

- -------------------------------
Eric E. Miller
Assistant Secretary

-8-

<PAGE>

THE UNDERSIGNED, Senior Vice President of DELAWARE GROUP
EQUITY FUNDS IV, INC., who executed on behalf of the said Corporation the
foregoing Articles Supplementary, of which this instrument is made a part,
hereby acknowledges, in the name of and on behalf of said Corporation, said
Articles Supplementary to be the corporate act of said Corporation and further
certifies that, to the best of his knowledge, information and belief, the
matters and facts set forth therein with respect to the authorization and
approval thereof are true in all material respects, under the penalties of
perjury.

--------------------------------
George M. Chamberlain, Jr.
Senior Vice President

-9-

<PAGE>

DELAWARE GROUP DELCAP FUND, INC.

ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION

DELAWARE GROUP DELCAP FUND, INC., a Maryland corporation
having its principal office in Baltimore, Maryland (the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of Maryland, that:

ONE: The Corporation is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended.

TWO: The first sentence of ARTICLE SECOND of the Articles of
Incorporation, as amended and supplemented, is hereby amended to read as
follows:

SECOND: The name of the corporation is Delaware
Group Equity Funds IV, Inc.

THREE: The Articles of Incorporation of the Corporation, as
amended and supplemented, are further amended by changing the name of the
Concept I series of the Common Stock to the DelCap Fund series of the Common
Stock, and by deleting the old name of such series from the Articles of
Incorporation, as amended and supplemented to date, and inserting in lieu
thereof, the new name of such series as changed hereby.

FOUR: The Articles of Incorporation of the Corporation, as
amended and supplemented, are further amended by changing the name of the DelCap
Fund Class of shares of the DelCap Fund series (formerly known as the Concept I
series) of the Common Stock to the DelCap Fund A Class of shares, and by
deleting the old name of such class from the Articles of Incorporation, as
amended and supplemented to date, and inserting in lieu thereof, the new name of
such class as changed hereby.

The names of the other three classes of the common stock of
the DelCap Fund series of the Common Stock of the Corporation (the DelCap Fund
(Institutional) Class, the DelCap Fund B Class and the DelCap Fund C Class)
shall remain the same.

FIVE: The amendments to the Articles of Incorporation of the
Corporation as set forth above have been duly approved by a majority of the
entire Board of Directors of the Corporation as required by law and are limited
to changes permitted by Section 2-605(a)(4) of the Maryland General

<PAGE>

Corporation Law to be made without action by the stockholders of the
Corporation.

SIX: The amendments to the Articles of Incorporation of the
Corporation as set forth above do not change the preferences, conversion or
other rights, voting powers, restrictions, limitations as to dividends,
qualifications, or terms or conditions of redemption of the shares that are the
subject of the name changes.

SEVEN: The Articles of Amendment shall become effective at
4:00 p.m. on November __, 1996.

IN WITNESS WHEREOF, DELAWARE GROUP DELCAP FUND, INC. has
caused these Articles of Amendment to be signed in its name and on its behalf by
its Senior Vice President and attested by its Assistant Secretary on this ___
day of November, 1996.

DELAWARE GROUP DELCAP FUND, INC.

By:_____________________________________
George M. Chamberlain, Jr.
Senior Vice President

ATTEST:

- ----------------------------
Eric E. Miller
Assistant Secretary

-2-

<PAGE>

THE UNDERSIGNED, Senior Vice President of DELAWARE GROUP
DELCAP FUND, INC., who executed on behalf of said Corporation the foregoing
Articles of Amendment, of which this certificate is made a part, hereby
acknowledges, in the name and on behalf of said Corporation, the foregoing
Articles of Amendment to be the corporate act of said Corporation and further
certifies that, to the best of his knowledge, information and belief, the
matters and facts set forth therein with respect to the approval thereof are
true in all material respects, under the penalties of perjury.

------------------------------
George M. Chamberlain, Jr.
Senior Vice President

-3-

<PAGE>

DELAWARE GROUP DELCAP FUND, INC.
CONCEPT I SERIES
DISTRIBUTION AGREEMENT

Distribution Agreement (the "Agreement") made as of this 3rd
day of April, 1995 by and between DELAWARE GROUP DELCAP FUND, INC., a Maryland
corporation (the "Fund"), for the CONCEPT I SERIES (the "Series") and DELAWARE
DISTRIBUTORS, L.P. (the "Distributor"), a Delaware limited partnership.

WITNESSETH
----------

WHEREAS, the Fund is an investment company regulated by
Federal and State regulatory bodies, and
WHEREAS, the Distributor is engaged in the business of
promoting the distribution of the securities of investment companies and, in
connection therewith and acting solely as agent for such investment companies
and not as principal, advertising, promoting, offering and selling their
securities to the public, and
WHEREAS, the Fund and the Distributor (or its predecessor)
were the parties to a contract under which the Distributor acted as the national
distributor of the Series, which contract was amended and restated as of the 6th
day of September, 1994 and subsequently readopted as of January 3, 1995 (the
"Prior Distribution Agreement"), and
WHEREAS, Delaware Management Holdings, Inc. ("Holdings"), the
indirect parent company of the Distributor, completed on the date of this

-2-

<PAGE>

Agreement a merger transaction with a newly-formed subsidiary of Lincoln
National Corporation, pursuant to which Holdings became a wholly-owned
subsidiary of Lincoln National Corporation, and
WHEREAS, the merger transaction resulted in a change of
control of the Distributor and an automatic termination of the Prior
Distribution Agreement, and
WHEREAS, the Board of Directors of the Fund has determined to
enter into a new agreement with the Distributor as of the date hereof, pursuant
to which the Distributor shall continue to be the national distributor of the
Series' DelCap Fund class (now doing business as DelCap Fund A Class and
hereinafter referred to as the "Class A Shares"), the Series' DelCap Fund B
Class (the "Class B Shares") and the Series' DelCap Fund (Institutional) class
(now doing business as DelCap Fund Institutional Class and hereinafter referred
to as the "Institutional Class Shares"), which classes may do business under
these or such other names as the Board of Directors may designate from time to
time, on the terms and conditions set forth below,
NOW, THEREFORE, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. The Fund hereby engages the Distributor to promote the
distribution of the Series' shares and, in connection therewith and as
agent for the Fund and not as principal, to advertise, promote, offer
and sell the Series' shares to the public.
2. (a) The Distributor agrees to serve as distributor of the Series' shares
and, as agent for the Fund and not as principal, to advertise, promote
and use its best efforts to sell the Series' shares wherever their sale

-2-
<PAGE>

is legal, either through dealers or otherwise, in such places and in
such manner, not inconsistent with the law and the provisions of this
Agreement and the Fund's Registration Statement under the Securities Act
of 1933, including the Prospectuses contained therein and the Statement
of Additional Information contained therein, as may be mutually
determined by the Fund and the Distributor from time to time.
(b) For the Institutional Class Shares, the Distributor will bear all costs
of financing any activity which is primarily intended to result in the
sale of that class of shares, including, but not necessarily limited to,
advertising, compensation of underwriters, dealers and sales personnel,
the printing and mailing of sales literature and distribution of that
class of shares.
(c) For its services as agent for the Class A Shares and Class B Shares, the
Distributor shall be entitled to compensation on each sale or
redemption, as appropriate, of shares of such classes equal to any
front-end or deferred sales charge described in the Prospectus from time
to time and may allow concessions to dealers in such amounts and on such
terms as are therein set forth.
(d) For the Class A Shares and Class B Shares, the Fund shall, in addition,
compensate the Distributor for its services as provided in the

-4-
<PAGE>

Distribution Plan as adopted on behalf of the Class A Shares and Class B
Shares, respectively, pursuant to Rule 12b-1 under the Investment
Company Act of 1940 (the "Plans"), copies of which as presently in force
are attached hereto as, respectively, Exhibit "A" and "B".
3. (a) The Fund agrees to make available for sale by the Fund through the
Distributor all or such part of the authorized but unissued Series'
shares as the Distributor shall require from time to time, and except as
provided in Paragraph 3(b) hereof, the Fund will not sell Series' shares
other than through the efforts of the Distributor.
(b) The Fund reserves the right from time to time (1) to sell and issue
shares other than for cash; (2) to issue shares in exchange for
substantially all of the assets of any corporation or trust, or in
exchange of shares of any corporation or trust; (3) to pay stock
dividends to its shareholders, or to pay dividends in cash or stock at
the option of its stockholders, or to sell stock to existing
stockholders to the extent of dividends payable from time to time in
cash, or to split up or combine its outstanding shares of common stock;

-5-
<PAGE>

(4) to offer shares for cash to its stockholders as a whole, by the use
of transferable rights or otherwise, and to sell and issue shares
pursuant to such offers; and (5) to act as its own distributor in any
jurisdiction in which the Distributor is not registered as a
broker-dealer.
4. The Fund warrants the following:
(a) The Fund is, or will be, a properly registered investment company, and
any and all Series' shares which it will sell through the Distributor
are, or will be, properly registered with the Securities and Exchange
Commission ("SEC").
(b) The provisions of this Agreement do not violate the terms of any
instrument by which the Fund is bound, nor do they violate any law or
regulation of any body having jurisdiction over the Fund or its
property.
5. (a) The Fund will supply to the Distributor a conformed copy of the
Registration Statement, all amendments thereto, all exhibits, and each
Prospectus and Statement of Additional Information.
(b) The Fund will register or qualify the Series' shares for sale in such
states as is deemed desirable.
(c) The Fund, without expense to the Distributor,
(1) will give and continue to give such financial statements and other
information as may be required by the SEC or the proper public
bodies of the states in which the Series' shares may be qualified;

(2) from time to time, will furnish to the Distributor as soon as
reasonably practicable true copies of its periodic reports to
stockholders;

(3) will promptly advise the Distributor in person or by telephone or
telegraph, and promptly confirm such advice in writing, (a) when
any amendment or supplement to the Registration Statement becomes
effective, (b) of any request by the SEC for amendments or
supplements to the Registration Statement or the Prospectuses or

-6-
<PAGE>

for additional information, and (c) of the issuance by the SEC of
any Stop Order suspending the effectiveness of the Registration
Statement, or the initiation of any proceedings for that purpose;

(4) if at any time the SEC shall issue any Stop Order suspending the
effectiveness of the Registration Statement, will make every
reasonable effort to obtain the lifting of such order at the
earliest possible moment;

(5) will from time to time, use its best effort to keep a sufficient
supply of Series' shares authorized, any increases being subject to
the approval of shareholders as may be required;

(6) before filing any further amendment to the Registration Statement
or to any Prospectus, will furnish the Distributor copies of the
proposed amendment and will not, at any time, whether before or
after the effective date of the Registration Statement, file any
amendment to the Registration Statement or supplement to any
Prospectus of which the Distributor shall not previously have been
advised or to which the Distributor shall reasonably object (based
upon the accuracy or completeness thereof) in writing;

(7) will continue to make available to its stockholders (and forward
copies to the Distributor) of such periodic, interim and any other
reports as are now, or as hereafter may be, required by the
provisions of the Investment Company Act of 1940; and

(8) will, for the purpose of computing the offering price of the
Series' shares, advise the Distributor within one hour after the
close of the New York Stock Exchange (or as soon as practicable
thereafter) on each business day upon which the New York Stock
Exchange may be open of the net asset value per share of the
Series' shares of common stock outstanding, determined in
accordance with any applicable provisions of law and the provisions
of the Articles of Incorporation, as amended, of the Fund as of the
close of business on such business day. In the event that prices
are to be calculated more than once daily, the Fund will promptly
advise the Distributor of the time of each calculation and the
price computed at each such time.

-7-
<PAGE>

6. The Distributor agrees to submit to the Fund, prior to its use, the form of
all sales literature proposed to be generally disseminated by or for the
Distributor, all advertisements proposed to be used by the Distributor, all
sales literature or advertisements prepared by or for the Distributor for
such dissemination or for use by others in connection with the sale of the
Series' shares, and the form of dealers' sales contract the Distributor
intends to use in connection with sales of the Series' shares. The
Distributor also agrees that the Distributor will submit such sales
literature and advertisements to the NASD, SEC or other regulatory agency as
from time to time may be appropriate, considering practices then current in
the industry. The Distributor agrees not to use such form of dealers' sales
contract or to use or to permit others to use such sales literature or
advertisements without the written consent of the Fund if any regulatory
agency expresses objection thereto or if the Fund delivers to the
Distributor a written objection thereto.
7. The purchase price of each share sold hereunder shall be the offering price
per share mutually agreed upon by the parties hereto, and as described in
the Fund's Prospectuses, as amended from time to time, determined in
accordance with any applicable provision of law, the provisions of its
Articles of Incorporation and the Rules of Fair Practice of the National
Association of Securities Dealers, Inc.

-8-
<PAGE>

8. The responsibility of the Distributor hereunder shall be limited to the
promotion of sales of Series' shares. The Distributor shall undertake to
promote such sales solely as agent of the Fund, and shall not purchase or
sell such shares as principal. Orders for Series' shares and payment for
such orders shall be directed to the Fund's agent, Delaware Service Company,
Inc. for acceptance on behalf of the Fund. The Distributor is not empowered
to approve orders for sales of Series' shares or accept payment for such
orders. Sales of Series' shares shall be deemed to be made when and where
accepted by Delaware Service Company, Inc. on behalf of the Fund.
9. With respect to the apportionment of costs between the Fund and the
Distributor of activities with which both are concerned, the following will
apply:
(a) The Fund and the Distributor will cooperate in preparing the
Registration Statements, the Prospectuses, the Statement of Additional
Information, and all amendments, supplements and replacements thereto.
The Fund will pay all costs incurred in the preparation of the Fund's
Registration Statement, including typesetting, the costs incurred in
printing and mailing Prospectuses and Annual, Semi-Annual and other
financial reports to its own shareholders and fees and expenses of
counsel and accountants.

-9-

<PAGE>
(b) The Distributor will pay the costs incurred in printing and mailing
copies of Prospectuses to prospective investors.
(c) The Distributor will pay advertising and promotional expenses, including
the costs of literature sent to prospective investors.
(d) The Fund will pay the costs and fees incurred in registering or
qualifying the Series' shares with the various states and with the SEC.
(e) The Distributor will pay the costs of any additional copies of Fund
financial and other reports and other Fund literature supplied to the
Distributor by the Fund for sales promotion purposes.
10. The Distributor may engage in other business, provided such other business
does not interfere with the performance by the Distributor of its
obligations under this Agreement.
11. The Fund agrees to indemnify, defend and hold harmless from the assets of
the Series, the Distributor and each person, if any, who controls the
Distributor within the meaning of Section 15 of the Securities Act of 1933,
from and against any and all losses, damages, or liabilities to which,
jointly or severally, the Distributor or such controlling person may become
subject, insofar as the losses, damages or liabilities arise out of the

-10-
<PAGE>

performance of its duties hereunder except that the Fund shall not be liable
for indemnification of the Distributor or any controlling person thereof for
any liability to the Fund or its security holders to which they would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of their duties under this Agreement.
12. Copies of financial reports, Registration Statements and Prospectuses, as
well as demands, notices, requests, consents, waivers, and other
communications in writing which it may be necessary or desirable for either
party to deliver or furnish to the other will be duly delivered or
furnished, if delivered to such party at its address shown below during
regular business hours, or if sent to that party by registered mail or by
prepaid telegram filed with an office or with an agent of Western Union or
another nationally recognized telegraph service, in all cases within the
time or times herein prescribed, addressed to the recipient at 1818 Market
Street, Philadelphia, Pennsylvania 19103, or at such other address as the
Fund or the Distributor may designate in writing and furnish to the other.
13. This Agreement shall not be assigned, as that term is defined in the
Investment Company Act of 1940, by the Distributor and shall terminate
automatically in the event of its attempted assignment by the Distributor.
This Agreement shall not be assigned by the Fund without the written consent
of the Distributor signed by its duly authorized officers and delivered to
the Fund. Except as specifically provided in the indemnification provision
contained in Paragraph 11 herein, this Agreement and all conditions and

-11-
<PAGE>

provisions hereof are for the sole and exclusive benefit of the parties
hereto and their legal successors and no express or implied provision of
this Agreement is intended or shall be construed to give any person other
than the parties hereto and their legal successors any legal or equitable
right, remedy or claim under or in respect of this Agreement or any
provisions herein contained.
14. (a) This Agreement shall remain in force for a period of two years from the
date hereof and from year to year thereafter, but only so long as such
continuance is specifically approved at least annually by the Board of
Directors or by vote of a majority of the outstanding voting securities
of the Series and only if the terms and the renewal thereof have been
approved by the vote of a majority of the Directors of the Fund who are
not parties hereto or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval.
(b) The Distributor may terminate this Agreement on written notice to the
Fund at any time in case the effectiveness of the Registration Statement
shall be suspended, or in case Stop Order proceedings are initiated by
the SEC in respect of the Registration Statement and such proceedings
are not withdrawn or terminated within thirty days. The Distributor may

-12-
<PAGE>

also terminate this Agreement at any time by giving the Fund written
notice of its intention to terminate the Agreement at the expiration of
three months from the date of delivery of such written notice of
intention to the Fund.
(c) The Fund may terminate this Agreement at any time on at least thirty
days prior written notice to the Distributor (1) if proceedings are
commenced by the Distributor or any of its partners for the
Distributor's liquidation or dissolution or the winding up of the
Distributor's affairs; (2) if a receiver or trustee of the Distributor
or any of its property is appointed and such appointment is not vacated
within thirty days thereafter; (3) if, due to any action by or before
any court or any federal or state commission, regulatory body, or
administrative agency or other governmental body, the Distributor shall
be prevented from selling securities in the United States or because of
any action or conduct on the Distributor's part, sales of the Series'
shares are not qualified for sale. The Fund may also terminate this
Agreement at any time upon prior written notice to the Distributor of
its intention to so terminate at the expiration of three months from the
date of the delivery of such written notice to the Distributor.
15. The validity, interpretation and construction of this Agreement, and of each
part hereof, will be governed by the laws of the Commonwealth of
Pennsylvania.

-13-

<PAGE>

16. In the event any provision of this Agreement is determined to be void or
unenforceable, such determination shall not affect the remainder of the
Agreement, which shall continue to be in force.

DELAWARE DISTRIBUTORS, L.P.

By: DELAWARE DISTRIBUTORS, INC.,
General Partner
Attest:

/s/Richelle S. Maestro By:/s/Keith E. Mitchell
- ----------------------------- -------------------------------
Name: Richelle S. Maestro Name: Keith E. Mitchell
Title: Vice President Title: President and Chief
Assistant Secretary Executive Officer

DELAWARE GROUP DELCAP FUND, INC.
for the CONCEPT I SERIES

Attest:

/s/Eric E. Miller By:/s/Wayne A. Stork
- ------------------------------ ------------------------------------
Name: Eric E. Miller Name: Wayne A. Stork
Title: Vice President/ Title: Chairman and
Assistant Secretary Chief Executive Officer

-14-

<PAGE>

Exhibit A

l2b-1 PLAN
----------

The following Distribution Plan (the "Plan") has been adopted pursuant to
Rule l2b-l under the Investment Company Act of l940 (the "Act") by Delaware
Group DelCap Fund, Inc. (the "Fund"), for the Concept I Series (the "Series") on
behalf of the DelCap Fund class (now doing business as Delcap Fund A Class and
hereinafter referred to as the "Class"), which Fund, Series and Class may do
business under these or such other names as the Board of Directors of the Fund
may designate from time to time. The Plan has been approved by a majority of the
Board of Directors, including a majority of the Directors who are not interested
persons of the Fund and who have no direct or indirect financial interest in the
operation of the Plan or in any agreements related thereto, cast in person at a
meeting called for the purpose of voting on such Plan. Such approval by the
Directors included a determination that in the exercise of reasonable business
judgment and in light of their fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Class and its shareholders. If the
Plan has not yet been approved by a majority of the outstanding voting
securities as required in the Act, the Plan will be presented to the public
shareholders at the next regular annual or special meeting.
The Fund is a corporation organized under the laws of the State of
Maryland, is authorized to issue different series and classes of securities and
is an open-end management investment company registered under the Act. Delaware
Management Company, Inc. ("DMC") serves as the Fund's investment adviser and
manager pursuant to an Investment Management Agreement. Delaware Service

A-1
<PAGE>

Company, Inc. serves as the Fund's shareholder servicing, dividend disbursing
and transfer agent. Delaware Distributors, L.P. (the "Distributor") is the
principal underwriter and national distributor for the Fund's shares, including
shares of the Class, pursuant to the Distribution Agreement between the
Distributor and the Fund on behalf of the Series (the "Distribution Agreement").
The Distributor may enter into agreements with other registered
broker-dealers substantially in the form of the Dealer Agreement approved by the
Fund in the implementation of this Plan and of the Distribution Agreement
between it and the Fund. The Fund may, in addition, enter into arrangements with
persons other than broker-dealers which are not "affiliated persons" or
"interested persons" of the Fund, DMC or the Distributor to provide to the Fund
services in the Fund's marketing of the shares of the Class, such arrangements
to be reflected by Service Agreements.
The Plan provides that:
l. The Fund shall pay a monthly fee not to exceed 0.3% (3/l0
of l%) per annum of the Series' average daily net assets represented by shares
of the Class (the "Maximum Amount") as may be determined by the Fund's Board of
Directors from time to time. Such monthly fee shall be reduced by the aggregate
sums paid by the Fund to persons other than broker-dealers (the "Service
Providers") pursuant to Service Agreements referred to above.

A-2

<PAGE>

2. (a) The Distributor shall use the monies paid to it
pursuant to paragraph l above to furnish, or cause or encourage others to
furnish, services and incentives in connection with the promotion, offering and
sale of Class shares and, where suitable and appropriate, the retention of Class
shares by shareholders.
(b) The Service Providers shall use the monies paid
respectively to them to reimburse themselves for the actual costs they have
incurred in confirming that their customers have received the Prospectus and
Statement of Additional Information, if applicable, and as a fee for (l)
assisting such customers in maintaining proper records with the Fund, (2)
answering questions relating to their respective accounts and (3) aiding in
maintaining the investment of their respective customers in the Class.
3. The Distributor shall report to the Fund at least monthly
on the amount and the use of the monies paid to it under the Plan. The Service
Providers shall inform the Fund monthly and in writing of the amounts each
claims under the Service Agreement and the Plan; both the Distributor and the
Service Providers shall furnish the Board of Directors of the Fund with such
other information as the Board may reasonably request in connection with the
payments made under the Plan and the use thereof by the Distributor and the
Service Providers, respectively, in order to enable the Board to make an
informed determination of the amount of the Fund's payments and whether the Plan
should be continued.
4. The officers of the Fund shall furnish to the Board
of Directors of the Fund, for their review, on a quarterly basis,
a written report of the amounts expended under the Plan and the purposes for
which such expenditures were made.

A-3
<PAGE>

5. This Plan shall take effect at such time as the Distributor
shall notify the Fund in writing of the commencement of the Plan, which time
shall not be before the first annual or special meeting of the public
shareholders at which the Plan is or was approved by the vote of a majority of
the outstanding voting securities as required in the Act (the "Commencement
Date"); thereafter, the Plan shall continue in effect for a period of more than
one year from the Commencement Date only so long as such continuance is
specifically approved at least annually by a vote of the Board of Directors of
the Fund, and of the Directors who are not interested persons of the Fund and
have no direct or indirect financial interest in the operation of the Plan or in
any agreements related to the Plan ("non-interested Directors"), cast in person
at a meeting called for the purpose of voting on such Plan.
6. (a) The Plan may be terminated at any time by vote
of a majority of the non-interested Directors or by vote of a
majority of the outstanding voting securities of the Class.
(b) The Plan may not be amended to increase materially the
amount to be spent for distribution pursuant to paragraph l thereof without
approval by the shareholders of the Class.
7. The Distribution Agreement between the Fund on behalf
of the Series and the Distributor, and the Service Agreements between the

A-4

<PAGE>

Fund on behalf of the Series and the Service Providers, shall specifically have
a copy of this Plan attached to, and its terms and provisions incorporated
respectively by reference in, such agreements.
8. All material amendments to this Plan shall be approved by
the non-interested Directors in the manner described in paragraph 5 above.
9. So long as the Plan is in effect, the selection and
nomination of the Fund's non-interested Directors shall be committed to the
discretion of such non-interested Directors.
10. The definitions contained in Sections 2(a)(3), 2(a)(4),
2(a)(l9) and 2(a)(42) of the Act shall govern the meaning of "affiliated
person," "assignment," "interested person(s)" and "vote of a majority of the
outstanding voting securities," respectively, for the purposes of this Plan.
This Plan shall take effect on the Commencement Date, as
previously defined.

A-5

<PAGE>

Exhibit B

12b-1 Plan
----------

The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Group Delcap Fund, Inc. (the "Fund"), for the Concept I Series (the "Series") on
behalf of the Delcap Fund B Class (the "Class"), which Fund, Series and Class
may do business under these or such other names as the Board of Directors of the
Fund may designate from time to time. The Plan has been approved by a majority
of the Board of Directors, including a majority of the Directors who are not
interested persons of the Fund and who have no direct or indirect financial
interest in the operation of the Plan or in any agreements related thereto, cast
in person at a meeting called for the purpose of voting on such Plan. Such
approval by the Directors included a determination that in the exercise of
reasonable business judgment and in light of their fiduciary duties, there is a
reasonable likelihood that the Plan will benefit the Class and its shareholders.
The Plan has been approved by a vote of the holders of a majority of the
outstanding voting securities of the Class, as defined in the Act.
The Fund is a corporation organized under the laws of the State of
Maryland, is authorized to issue different series and classes of securities and
is an open-end management investment company registered under the Act. Delaware
Management Company, Inc. serves as the Series' investment adviser and manager
pursuant to an Investment Management Agreement. Delaware Service Company, Inc.
serves as the Series' shareholder servicing, dividend disbursing and transfer

B-1
<PAGE>

agent. Delaware Distributors, L.P. (the "Distributor") is the principal
underwriter and national distributor for the Series' shares, including shares of
the Class, pursuant to the Distribution Agreement between the Distributor and
the Fund for the Series ("Distribution Agreement").
The Plan provides that:
1. (a) The Fund shall pay to the Distributor a monthly fee not
to exceed 0.75% (3/4 of 1%) per annum of the Series' average daily net assets
represented by shares of the Class as may be determined by the Fund's Board of
Directors from time to time.
(b) In addition to the amounts described in (a) above, the
Fund shall pay (i) to the Distributor for payment to dealers or others, or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
Series' average daily net assets represented by shares of the Class, as a
service fee pursuant to dealer or servicing agreements, the forms of which have
been approved from time to time by the Fund's Board of Directors.
2. (a) The Distributor shall use the monies paid to it
pursuant to paragraph 1(a) above to assist in the distribution and promotion of
shares of the Class. Payments made to the Distributor under the Plan may be used
for, among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation related to sales and marketing personnel, and holding special
promotions. In addition, such fees may be used to pay for advancing the
commission costs to dealers with respect to the sale of Class shares.

B-2
<PAGE>

(b) The monies to be paid pursuant to paragraph 1(b) above
shall be used to pay dealers or others for, among other things, furnishing
personal services and maintaining shareholder accounts, which services include
confirming that customers have received the Prospectus and Statement of
Additional Information, if applicable; assisting such customers in maintaining
proper records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.
3. The Distributor shall report to the Fund at least monthly
on the amount and the use of the monies paid to it under paragraph 1(a) above.
In addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
any others receiving fees under the Plan shall furnish the Board of Directors of
the Fund with such other information as the Board may reasonably request in
connection with the payments made under the Plan and the use thereof by the
Distributor and others in order to enable the Board to make an informed
determination of the amount of the Fund's payments and whether the Plan should
be continued.
4. The officers of the Fund shall furnish to the Board of
Directors of the Fund, for their review, on a quarterly basis, a written report
of the amounts expended under the Plan and the purposes for which such
expenditures were made.

B-3

<PAGE>

5. This Plan shall take effect at such time as the Distributor
shall notify the Fund of the commencement of the Plan (the "Commencement Date");
thereafter, the Plan shall continue in effect for a period of more than one year
from the Commencement Date only so long as such continuance is specifically
approved at least annually by a vote of the Board of Directors of the Fund, and
of the Directors who are not interested persons of the Fund and have no direct
or indirect financial interest in the operation of the Plan or in any agreements
related to the Plan ("non-interested Directors"), cast in person at a meeting
called for the purpose of voting on such Plan.
6. (a) The Plan may be terminated at any time by vote
of a majority of the non-interested Directors or by vote of a
majority of the outstanding voting securities of the Class.
(b) The Plan may not be amended to increase materially the
amount to be spent for distribution pursuant to paragraph 1 thereof without
approval by the shareholders of the Class.
7. The Distribution Agreement between the Fund on behalf of
the Series and the Distributor, and any dealers or servicing agreements between
the Distributor and brokers or others or between the Fund on behalf of the
Series and others receiving a servicing fee, shall specifically have a copy of
this Plan attached to, and its terms and provisions incorporated respectively by
reference in, such agreements.
B-4
<PAGE>

8. All material amendments to this Plan shall be approved by
the non-interested Directors in the manner described in paragraph 5 above.
9. So long as the Plan is in effect, the selection and
nomination of the Fund's non-interested Directors shall be committed to the
discretion of such non-interested Directors.
10. The definitions contained in Sections 2(a)(3), 2(a)(4),
2(a)(19) and 2(a)(42) of the Act shall govern the meaning of "affiliated
person," "assignment," "interested person(s)" and "vote of a majority of the
outstanding voting securities," respectively, for the purposes of this Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
B-5

<PAGE>

DELAWARE GROUP DELCAP FUND, INC.
CONCEPT I SERIES
AMENDMENT NO. 1 TO DISTRIBUTION AGREEMENT

This Amendment No. 1 to Distribution Agreement (this "Agreement") is
made as of the 29th day of November, 1995, by and between DELAWARE GROUP DELCAP
FUND, INC. (the "Fund"), for the CONCEPT I SERIES and DELAWARE DISTRIBUTORS,
L.P. (the "Distributor").

WITNESSETH

WHEREAS, the Fund, for the Series, and the Distributor are parties to
that certain Distribution Agreement made as of the 3rd day of April, 1995 (the
"Distribution Agreement"); and

WHEREAS, the Board of Directors of the Fund has established the DelCap
Fund C Class (the "Class C Shares") as an additional class of shares of the
Series, and the Fund and the Distributor desire to amend the Distribution
Agreement to provide that the Distributor shall act as the national distributor
of the Class C Shares pursuant thereto;

NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:

1. The Class C Shares are hereby included among the shares to which the
Distribution Agreement relates and the Distributor shall act as distributor for
the Class C Shares pursuant to and in accordance with the Distribution
Agreement, as amended hereby.

2. Hereafter, each reference to "Class A and Class B Shares" in
Sections 2(c) and 2(d) of the Distribution Agreement shall be deemed to include
the Class C Shares, provided that the Distribution Plan adopted pursuant to Rule
12b-1 under the Investment Company Act of 1940 for the Class C Shares and
presently in force is attached hereto as Exhibit "A."

DELAWARE DISTRIBUTORS, L.P.
By: Delaware Distributors, Inc.,
General Partner
ATTEST:

/S/ Eric E. Miller By: /s/Keith E. Mitchell
---------------------------- ----------------------------
Name: Eric E. Miller Name: Keith E. Mitchell
Title: Vice President Title: President and Chief
Assistant Secretary Executive Officer

DELAWARE GROUP DELCAP FUND, INC. ,
for the CONCEPT I SERIES

ATTEST:

/s/ Richelle S. Maestro By: Wayne A. Stork
---------------------------- ----------------------------
Name: Richelle S. Maestro Name: Wayne A. Stork
Title: Vice President Title: Chairman/President and
Assistant Secretary Chief Executive Officer

<PAGE>

EXHIBIT A

DISTRIBUTION PLAN
DELAWARE GROUP DELCAP FUND, INC.
FOR THE CONCEPT I SERIES

DelCap Fund C Class

The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Group DelCap Fund, Inc. (the "Fund"), for the Concept I Series (the "Series") on
behalf of the DelCap Fund C Class (the "Class"), which Fund, Series and Class
may do business under these or such other names as the Board of Directors of the
Fund may designate from time to time. The Plan has been approved by a majority
of the Board of Directors, including a majority of the Directors who are not
interested persons of the Fund and who have no direct or indirect financial
interest in the operation of the Plan or in any agreements related thereto
("non-interested Directors"), cast in person at a meeting called for the purpose
of voting on such Plan. Such approval by the Directors included a determination
that in the exercise of reasonable business judgment and in light of their
fiduciary duties, there is a reasonable likelihood that the Plan will benefit
the Series and shareholders of the Class. The Plan has been approved by a vote
of the holders of a majority of the outstanding voting securities of the Class,
as defined in the Act.

The Fund is a corporation organized under the laws of the State of
Maryland, is authorized to issue different series and classes of securities and
is an open-end management investment company registered under the Act. Delaware
Management Company, Inc. serves as the Series' investment adviser and manager
pursuant to an Investment Management Agreement. Delaware Service Company, Inc.
serves as the Series' shareholder servicing, dividend disbursing and transfer
agent. Delaware Distributors, L.P. (the "Distributor") is the principal
underwriter and national distributor for the Series' shares, including shares of
the Class, pursuant to the Distribution Agreement between the Distributor and
the Fund ("Distribution Agreement").

A-3

<PAGE>

The Plan provides that:

1.(a) The Fund shall pay to the Distributor a monthly fee not to exceed
0.75% (3/4 of 1%) per annum of the Series' average daily net assets represented
by shares of the Class as may be determined by the Fund's Board of Directors
from time to time.

(b) In addition to the amounts described in paragraph 1(a) above, the
Fund shall pay: (i) to the Distributor for payment to dealers or others or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
Series' average daily net assets represented by shares of the Class, as a
service fee pursuant to dealer or servicing agreements.

2.(a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for,
among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation related to sales and marketing personnel, and holding special
promotions. In addition, such fees may be used to pay for advancing the
commission costs to dealers with respect to the sale of Class shares.

A-4

<PAGE>

the payments made under the Plan and the use thereof by the Distributor and
others in order to enable the Board to make an informed determination of the
amount of the Fund's payments and whether the Plan should be continued.

4. The officers of the Fund shall furnish to the Board of Directors of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.

6.(a) The Plan may be terminated at any time by vote of a majority of
the non-interested Directors or by vote of a majority of the outstanding voting
securities of the Class.

(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph 1 thereof without approval by
the shareholders of the Class.

7. All material amendments to this Plan shall be approved by the
non-interested Directors in the manner described in paragraph 5 above.

8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Directors shall be committed to the discretion of such
non-interested Directors.

9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
of the outstanding voting securities," respectively, for the purposes of this
Plan.

This Plan shall take effect on the Commencement Date, as previously
defined.

A-5

CHASE

GLOBAL CUSTODY AGREEMENT

AGREEMENT, effective May 1, 1996, between THE CHASE MANHATTAN BANK, N.A.
(the "Bank") and those registered investment companies listed on Schedule A
hereto (each a Customer ) on behalf of certain of their respective series,
as listed on Schedule A (individually and collectively the Series ).

1. Customer Accounts.

The Bank agrees to establish and maintain the following accounts
("Accounts"):

(a) A custody account in the name of the Customer on behalf of each
Series ("Custody Account") for any and all stocks, shares, bonds, debentures,
notes, mortgages or other obligations for the payment of money, bullion, coin
and any certificates, receipts, warrants or other instruments representing
rights to receive, purchase or subscribe for the same or evidencing or
representing any other rights or interests therein and other similar property
whether certificated or uncertificated as may be received by the Bank or its
Subcustodian (as defined in Section 3) for the account of the Customer
("Securities"); and

(b) A deposit account in the name of the Customer on behalf of each
Series ("Deposit Account") for any and all cash in any currency received by
the Bank or its Subcustodian for the account of the Customer, which cash
shall not be subject to withdrawal by draft or check.

The Customer warrants its authority to: 1) deposit the cash and
Securities ("Assets") received in the Accounts and 2) give Instructions (as
defined in Section 11) concerning the Accounts. Such Instructions shall
specifically indicate to which Series such Assets belong or, if such Assets
belong to more than one Series, shall allocate such Assets to the appropriate
Series. The Bank may deliver securities of the same class in place of those
deposited in the Custody Account.

Upon written agreement between the Bank and the Customer, additional
Accounts may be established and separately accounted for as additional
Accounts under the terms of this Agreement.

2. Maintenance of Securities and Cash at Bank and Subcustodian Locations.

Unless Instructions specifically require another location acceptable to
the Bank:

(a) Securities will be held in the country or other jurisdiction in
which the principal trading market for such Securities is located, where such
Securities are to be presented for payment or where such Securities are
acquired; and

(b) Cash will be credited to an account in a country or other
jurisdiction in which such cash may be legally deposited or is the legal
currency for the payment of public or private debts.

To the extent available and permissible under applicable law and
regulation, Cash held pursuant to Instructions shall be held in interest
bearing accounts. If interest bearing accounts are not available, such cash
may be held in non-interest bearing accounts. The Bank is authorized to
maintain cash balances on deposit for the Customer with itself or one of its
affiliates. Interest bearing accounts shall bear interest at such reasonable
rates of interest as may from time to time be paid on such accounts by the
Bank or its affiliates.

(iii) For each Series that is exclusively a domestic Series, the following
additional provisions shall apply:

(x) In the event that during a given calendar month a Series has maintained
an average daily cash balance greater than zero, the Bank shall provide an
earnings credit against custody fees otherwise owing hereunder by such Series
during such calendar month in an amount equal to the product of (A) 75% of
the 90 day U.S. government Treasury bill rate as quoted in the Wall Street
Journal for the last Business Day (being a day on which the Bank is open
for the transaction of all its ordinary business) of such calendar month, (B)
the average daily cash balance for such month, and (C) the number of days in
such calendar month divided by 365.

(y) In the event that during a given calendar month a Series has maintained
an average daily cash balance less than or equal to zero, the Bank shall be
paid interest on such amount by such Series in an amount equal to the product
of (A) the Overnight Fed Funds Rate (as defined below) plus 25 basis points
for the last Business Day of such calendar month, (B) the average daily cash
balance for such month, and (C) the number of days in such calendar month
divided by 365.

(z) For purposes of (y) above, the term Overnight Fed Funds Rate shall mean
the weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds brokers,
as published by the Federal Reserve Bank of New York (with the rate for the
last Business Day of a given calendar month being the rate so published on
the Business Day immediately following such Day), or, if such rate is note so
published, the average quotations, for the last Business Day of a given
calendar month, of such transactions received by the Bank from three Federal
funds brokers of recognized standing selected by the Bank.

If the Customer wishes to have any of its Assets held in the custody of
an institution other than the established Subcustodians as defined in Section
3 (or their securities depositories), such arrangement must be authorized by
a written agreement, signed by the Bank and the Customer.

3. Subcustodians and Securities Depositories.

The Bank may act under this Agreement through the subcustodians listed
in Schedule B of this Agreement with which the Bank has entered into
subcustodial agreements ("Subcustodians"). The Customer authorizes the Bank
to hold Assets in the Accounts in accounts which the Bank has established
with one or more of its branches or Subcustodians. The Bank and
Subcustodians are authorized to hold any of the Securities in their account
with any securities depository in which they participate.

The Bank reserves the right to add new, replace or remove Subcustodians.
The Customer will be given reasonable notice by the Bank of any amendment to
Schedule B. Upon request by the Customer, the Bank will identify the name,
address and principal place of business of any Subcustodian of the Customer's
Assets and the name and address of the governmental agency or other
regulatory authority that supervises or regulates such Subcustodian.

Upon receipt of Instructions, the Bank shall cease using any
Subcustodian with respect to the customer, and arrange for delivery of
Securities held with such Subcustodian to another entity as designated by the
Customer; provided that, the Bank shall have no responsibility for the
performance of such other entity.

4. Use of Subcustodian.

(a) The Bank will identify the Assets on its books as belonging to the
Customer.

(b) A Subcustodian will hold such Assets together with assets belonging
to other customers of the Bank in accounts identified on such Subcustodian's
books as special custody accounts for the exclusive benefit of customers of
the Bank.

(c) Any Assets in the Accounts held by a Subcustodian will be subject
only to the instructions of the Bank or its agent. Any Securities held in a
securities depository for the account of a Subcustodian will be subject only
to the instructions of such Subcustodian.

(d) Any agreement the Bank enters into with a Subcustodian for holding
its customer's assets shall provide that: (i) such assets will not be subject
to any right, charge, security interest, lien or claim of any kind in favor
of such Subcustodian except for safe custody or administration, (ii) the
beneficial ownership of such assets will be freely transferable without the
payment of money or value other than for safe custody or administration;
(iii) adequate records will be maintained identifying the assets held
pursuant to such agreement as belonging to the customers of the Bank; (iv)
subject to applicable law, Subcustodian shall permit independent public
accountants for Bank and customers of the Bank reasonable access to
Subcustodian s books and records as they pertain to the subcustody account in
connection with such accountants' examination of the books and records of
such account; and (v) the Bank will receive periodic reports with respect to
the safekeeping of assets in the subcustody account, including advices and/or
notifications of any transfers to or from such subcustody account. The
foregoing shall not apply to the extent of any special agreement or
arrangement made by the Customer with any particular Subcustodian.

(e) Upon request of the Customer, the Bank shall deliver to the Customer
annually a report stating: (i) the identity of each Subcustodian then acting
on behalf of the Bank and the name and address of the governmental agency or
other regulatory authority that supervises or regulates such Subcustodian;
(ii) the countries in which each Subcustodian is located; and (iii) as long
as Securities and Exchange Commission ("SEC") Rule 17f-5 under the Investment
Company Act of 1940, as amended ("1940 Act"), requires the Customer s Board
of Directors/Trustees directly to approve its foreign custody arrangements,
such other information relating to such Subcustodians as may reasonably be
requested by the Customer to ensure compliance with Rule 17f-5. As long as
Rule 17f-5 requires the Customer s Board of Directors/Trustees directly to
approve its foreign custody arrangements, the Bank shall also furnish
annually to the Customer information concerning such Subcustodians similar in
kind and scope as that furnished to the Customer in connection with the
initial approval hereof. The Bank shall timely advise the Customer of any
material adverse change in the facts or circumstances upon which such
information is based where such changes would affect the eligibility of the
Subcustodian under Rule 17f-5 as soon as practicable after it becomes aware
of any such material adverse change in the normal course of its custodial
activities.

5. Deposit Account Transactions

(a) The Bank or its Subcustodians will make payments from the Deposit
Account upon receipt of Instructions which include all information required
by the Bank.

(b) In the event that any payment to be made under this Section 5
exceeds the funds available in the Deposit Account, the Bank, in its
discretion, may advance the Customer such excess amount which shall be deemed
a loan payable on demand, bearing interest at the rate customarily charged by
the Bank on similar loans.

(c) If the Bank credits the Deposit Account on a payable date, or at
any time prior to actual collection and reconciliation to the Deposit
Account, with interest, dividends, redemptions or any other amount due, the
Customer will promptly return any such amount upon oral or written
notification: (i) that such amount has not been received in the ordinary
course of business or (ii) that such amount was incorrectly credited. If the
Customer does not promptly return any amount upon such notification, the Bank
shall be entitled, upon oral or written notification to the Customer, to
reverse such credit by debiting the Deposit Account for the amount previously
credited. The Bank or its Subcustodian shall have no duty or obligation to
institute legal proceedings, file a claim or a proof of claim in any
insolvency proceeding or take any other action with respect to the collection
of such amount, but may act for the Customer upon Instructions after
consultation with the Customer.

6. Custody Account Transactions.

(a) Securities will be transferred, exchanged or delivered by the Bank
or its Subcustodian upon receipt by the Bank of Instructions which include
all information required by the Bank. Settlement and payment for Securities
received for, and delivery of Securities out of, the Custody Account may be
made in accordance with the customary or established securities trading or
securities processing practices and procedures in the jurisdiction or market
in which the transaction occurs, including, without limitation, delivery of
Securities to a purchaser, dealer or their agents against a receipt with the
expectation of receiving later payment and free delivery. Delivery of
Securities out of the Custody Account may also be made in any manner
specifically required by Instructions acceptable to the Bank.

(b) The Bank shall credit or debit the Accounts on a contractual
settlement date with cash or Securities with respect to any sale, exchange or
purchase of Securities in those countries set forth in Appendix A hereto;
provided that, the Bank may amend Appendix A from time to time in its sole
discretion and shall advise the Customer of such amendments. Otherwise,
transactions will be credited or debited to the Accounts on the date cash or
Securities are actually received by the Bank and reconciled to the Account.

(i) The Bank may reverse credits or debits made to the Accounts in its
discretion if the related transaction fails to settle within a reasonable
period, determined by the Bank in its discretion, after the contractual
settlement date for the related transaction; provided that, the Bank shall
give Customer prior notification of any such reversal. Where the foregoing
notification is oral, the Bank shall promptly provide written confirmation of
the same (which confirmation may be electronic).

(ii) If any Securities delivered pursuant to this Section 6 are returned
by the recipient thereof, the Bank may reverse the credits and debits of the
particular transaction at any time.

7. Actions of the Bank.

The Bank shall follow Instructions received regarding assets held in the
Accounts. However, until it receives Instructions to the contrary, the Bank
will:

(a) Present for payment any Securities which are called, redeemed or
retired or otherwise become payable and all coupons and other income items
which call for payment upon presentation, to the extent that the Bank or
Subcustodian is actually aware of such opportunities.

(b) Execute in the name of the Customer such ownership and other
certificates as may be required to obtain payments in respect of Securities.

(d) Appoint brokers and agents for any transaction involving the
Securities, including, without limitation, affiliates of the Bank or any
Subcustodian, subject to applicable SEC rules and regulations under the Act.

(e) Issue statements to the Customer, at times mutually agreed upon,
identifying the Assets in the Accounts.

The Bank will send the Customer an advice or notification of any
transfers of Assets to or from the Accounts. Such statements, advices or
notifications shall indicate the identity of the entity having custody of the
Assets. Unless the Customer advises the Bank orally and then promptly sends
the Bank a written exception or objection to any Bank statement within 180
days of receipt, the Customer shall be deemed to have approved such
statement.

All collections of funds or other property paid or distributed in
respect of Securities in the Custody Account shall be made at the risk of the
Customer. Subject to the standard of care in Section 12 hereof, the Bank shall
have no liability for any loss occasioned by delay in the actual receipt of
notice by the Bank or by its Subcustodians of any payment, redemption or other
transaction regarding Securities in the Custody Account in respect of which
the Bank has agreed to take any action under this Agreement.

8. Corporate Actions; Proxies; Tax Reclaims.

a. Corporate Actions. Whenever the Bank receives information
concerning the Securities which requires discretionary action by the
beneficial owner of the Securities (other than a proxy), such as subscription
rights, bonus issues, stock repurchase plans and rights offerings, or legal
notices or other material intended to be transmitted to securities holders
("Corporate Actions"), the Bank will give the Customer written notice (which
may be electronic) of such Corporate Actions to the extent that the Bank's
central corporate actions department has actual knowledge of a Corporate
Action in time to notify its customers.

When a rights entitlement or a fractional interest resulting from a
rights issue, stock dividend, stock split or similar Corporate Action is
received which bears an expiration date, the Bank will endeavor to obtain
Instructions from the Customer or its Authorized Person (as defined in Section
10 hereof), but if Instructions are not received in time for the Bank to take
timely action, or actual notice of such Corporate Action was received too
late to seek Instructions, the Bank is authorized to sell such rights
entitlement or fractional interest and to credit the Deposit Account with the
proceeds or take any other action it deems, in good faith, to be appropriate
in which case it shall be held harmless for any such action.

b. Proxy Voting. With respect to domestic U.S. and Canadian Securities
(the latter if held in DTC), the Bank will send to the Customer or the
Authorized Person (as defined in Section 10) for a Custody Account, such proxies
(signed in blank, if issued in the name of the Bank's nominee or the nominee
of a central depository) and communications with respect to Securities in the
Custody Account as call for voting or relate to legal proceedings within a
reasonable time after sufficient copies are received by the Bank for
forwarding to its customers. In addition, the Bank will follow coupon
payments, redemptions, exchanges or similar matters with respect to
Securities in the Custody Account and advise the Customer or the Authorized
Person for such Account of rights issued, tender offers or any other
discretionary rights with respect to such Securities, in each case, of which
the Bank has received notice from the issuer of the Securities, or as to
which notice is published in publications routinely utilized by the Bank for
this purpose.

With respect to Securities other than the foregoing, proxy voting
services shall be provided in accordance with separate proxy voting agreement
annexed hereto a Appendix B.

The foregoing proxy voting services may be provided by Bank, in whole or
in part, by one or more third parties appointed by the Bank (which may be
affiliates of the Bank), provided that the Bank shall be liable for the
performance of any such third parties to the same extent as the Bank would
have been if it performed such services itself..

c. Tax Reclaims. (i) Subject to the provisions hereof, the Bank will
apply for a reduction of withholding tax and any refund of any tax paid or
tax credits which apply in each applicable market in respect of income
payments on Securities for the benefit of the Customer which the Bank
believes may be available to such Customer. Where such reports are available,
the Bank shall periodically report to Customer concerning the making of
applications for a reduction of withholding tax and refund of any tax paid or
tax credits which apply in each applicable market in respect of income
payments on Securities for the benefit of the Customer.

(ii) The provision of tax reclaim services by the Bank is conditional
upon the Bank receiving from the beneficial owner of Securities (A) a
declaration of its identity and place of residence and (B) certain other
documentation (pro forma copies of which are available from the Bank). The
Bank shall use reasonable means to advise the Customer of the declarations,
documentation and information which the Customer is to provide to the Bank in
order for the Bank to provide the tax reclaim services described herein. The
Customer acknowledges that, if the Bank does not receive such declarations,
documentation and information, additional United Kingdom taxation will be
deducted from all income received in respect of Securities issued outside the
United Kingdom and that U.S. non-resident alien tax or U.S. backup
withholding tax will be deducted from U.S. source income. The Customer shall
provide to the Bank such documentation and information as it may require in
connection with taxation, and warrants that, when given, this information
shall be true and correct in every respect, not misleading in any way, and
contain all material information. The Customer undertakes to notify the Bank
immediately if any such information requires updating or amendment.

(iii) Subject to subsection (vii) hereof, the Bank shall not be liable
to the Customer or any third party for any tax, fines or penalties payable by
the Bank or the Customer, and shall be indemnified accordingly, whether these
result from the inaccurate completion of documents by the Customer or any
third party, or as a result of the provision to the Bank or any third party
of inaccurate or misleading information or the withholding of material
information by the Customer or any other third party, or as a result of any
delay of any revenue authority or any other matter beyond the control of the
Bank.

(iv) The Customer confirms that the Bank is authorized to deduct from
any cash received or credited to the Cash Account any taxes or levies
required by any revenue or governmental authority for whatever reason in
respect of the Securities or Cash Accounts.

(v) The Bank shall perform tax reclaim services only with respect to
taxation levied by the revenue authorities of the countries notified to the
Customer from time to time and the Bank may, by notification in writing, at
its absolute discretion, supplement or amend the markets in which the tax
reclaim services are offered. Other than as expressly provided in this sub-
clause, the Bank shall have no responsibility with regard to the Customer's
tax position or status in any jurisdiction. Except as provided in Section
8(c)(ii) and pursuant to Instructions, the Bank shall take no action in the
servicing of the Customer s Securities which, in and of itself, creates a
taxable nexus for the Customer in any jurisdiction other than with respect to
interest, dividends and capital gains that may otherwise be subject to tax by
such jurisdiction with respect to a foreign investor not otherwise engaged in
a trade or business in such jurisdiction in a given taxable year. Bank shall
not be liable for any tax liability caused, directly or indirectly, by
Customer's actions or status in any jurisdiction.

(vi) In connection with obtaining tax relief, the Customer confirms
that the Bank is authorized to disclose any information requested by any
revenue authority or any governmental body in relation to the Customer or the
Securities and/or Cash held for the Customer. This provision does not
authorize any other voluntary disclosure to any revenue authority or any
governmental body without the prior written consent of Customer.

(vii) Tax reclaim services may be provided by the Bank or, in whole or
in part, by one or more third parties appointed by the Bank (which may be
affiliates of the Bank); provided that the Bank shall be liable for the
performance of any such third party to the same extent as the Bank would have
been if it performed such services itself.

9. Nominees.

Securities which are ordinarily held in registered form may be
registered in a nominee name of the Bank, Subcustodian or securities
depository, as the case may be. The Bank may without notice to the Customer
cause any such Securities to cease to be registered in the name of any such
nominee and to be registered in the name of the Customer. In the event that
any Securities registered in a nominee name are called for partial redemption
by the issuer, the Bank may allot the called portion to the respective
beneficial holders of such class of security in any manner the Bank deems to
be fair and equitable. The Customer agrees to hold the Bank, Subcustodians,
and their respective nominees harmless from any liability arising directly or
indirectly from their status as a mere record holder of Securities in the
Custody Account.

10. Authorized Persons.

As used in this Agreement, the term "Authorized Person" means employees
or agents including investment managers as have been designated by written
notice from the Customer or its designated agent to act on behalf of the
Customer under this Agreement. Such persons shall continue to be Authorized
Persons until such time as the Bank receives Instructions from the Customer
or its designated agent that any such employee or agent is no longer an
Authorized Person.

11. Instructions.

The term "Instructions" means instructions of any Authorized Person
received by the Bank, via telephone, telex, TWX, facsimile transmission, bank
wire or other teleprocess or electronic instruction or trade information
system acceptable to the Bank which the Bank reasonably believes in good
faith to have been given by Authorized Persons or which are transmitted with
proper testing or authentication pursuant to terms and conditions which the
Bank may specify. Unless otherwise expressly provided, all Instructions
shall continue in full force and effect until canceled or superseded. For
purposes hereof, reasonableness shall mean compliance with applicable
procedures.

Any Instructions delivered to the Bank by telephone (including cash
transfer instructions as described below) shall promptly thereafter be
confirmed in writing by any two Authorized Persons (which confirmation may
bear the facsimile signature of such Persons), but the Customer will hold the
Bank harmless for the failure of such Authorized Persons to send such
confirmation in writing, the failure of such confirmation to conform to the
telephone instructions received or the Bank's failure to produce such
confirmation at any subsequent time; provided that, where the Bank receives
a telephone Instruction from an Authorized Person requiring the transfer of
cash, prior to executing such Instruction the Bank will, to confirm such
Instruction, call back any one of the individuals on a list of persons
authorized to confirm such oral transfer Instructions (which Person shall be
a person other than the initiator of the transfer Instruction) and the Bank
shall not execute the Instruction until it has received such confirmation.
Either party may electronically record any Instructions given by telephone,
and any other telephone discussions with respect to the Custody Account. The
Customer shall be responsible for safeguarding any testkeys, identification
codes or other security devices which the Bank shall make available to the
Customer or its Authorized Persons.

12. Standard of Care; Liabilities.

(a) The Bank shall be responsible for the performance of only such
duties as are set forth in this Agreement or expressly contained in
Instructions which are consistent with the provisions of this Agreement as
follows:

(i) The Bank will use reasonable care with respect to its obligations
under this Agreement and the safekeeping of Assets. The Bank shall be liable
to the Customer for any loss which shall occur as the result of the failure
of a Subcustodian to exercise reasonable care with respect to the safekeeping
of such Assets to the same extent that the Bank would be liable to the
Customer if the Bank were holding such Assets in New York. In the event that
Securities are lost by reason of the failure of the Bank or its Subcustodian
to use reasonable care, the Bank shall be liable to the Customer based on the
market value of the property which is the subject of the loss on the date it
is replaced by the Bank and without reference to any special conditions or
circumstances, it being understood that for purposes of measuring damages
hereunder, the value of Securities which are sold by the Customer prior to
the replacement thereof shall be equal to the sale price thereof less the
expenses of such sale incurred by the Customer. The Bank shall act with
reasonable promptness in making such replacements. In no event shall the
Bank be liable for special, indirect or consequential loss or damage of any
kind whatsoever (including but not limited to lost profits), even if the Bank
has been advised of the likelihood of such loss or damage and regardless of
the form of action. Subject to the Bank's obligations pursuant to Section 4(e)
hereof, the Bank will not be responsible for the insolvency of any
Subcustodian which is not a branch or affiliate of Bank.

(ii) The Bank will not be responsible for any act, omission, default or
the solvency of any broker or agent which it or a Subcustodian appoints
unless such appointment was made negligently or in bad faith.

(iii) (a) The Bank shall be indemnified by, and without liability to
the Customer for any action taken or omitted by the Bank whether pursuant to
Instructions or otherwise pursuant to this Agreement if such act or omission
was in good faith, without negligence. In performing its obligations under
this Agreement, the Bank may rely on the genuineness of any Customer document
which it reasonably believes in good faith to have been validly executed.
(b) The Bank shall hold Customer harmless from, and shall indemnify Customer
for, any loss, liability, claim or expense incurred by Customer (including,
but not limited to, Customer's reasonable legal fees) to the extent that such
loss, liability, claim or expense arises from the negligence or willful mis-
conduct on the part of the Bank or a Subcustodian; provided that, in no event
shall the Bank be liable for special, indirect or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits),
even if the Bank has been advised of the likelihood of such loss or damage
and regardless of the form of action. Subject to the Bank's obligations
pursuant to Section 4(e) hereof, the Bank will not be responsible for the
insolvency of any Subcustodian which is not a branch or affiliate of Bank.

(iv) The Customer agrees to pay for and hold the Bank harmless from any
liability or loss resulting from the imposition or assessment of any taxes or
other governmental charges, and any related expenses with respect to income
from or Assets in the Accounts.

(v) The Bank shall be entitled to rely, and may act, upon the advice of
counsel (who may be counsel for the Customer) on all matters and shall be
without liability for any action reasonably taken or omitted pursuant to such
advice.

(vi) The Bank need not maintain any insurance for the benefit of the
Customer.

(vii) Without limiting the foregoing, the Bank shall not be liable
for any loss which results from: 1) the general risk of investing, or 2)
investing or holding Assets in a particular country including, but not
limited to, losses resulting from nationalization, expropriation or other
governmental actions; regulation of the banking or securities industry;
currency restrictions, devaluations or fluctuations; and market conditions
which prevent the orderly execution of securities transactions or affect the
value of Assets.

(viii) Neither party shall be liable to the other for any loss due to
forces beyond their control including, but not limited to strikes or work
stoppages, acts of war or terrorism, insurrection, revolution, nuclear
fusion, fission or radiation, or acts of God.

(b) Consistent with and without limiting the first paragraph of this
Section 12, it is specifically acknowledged that the Bank shall have no duty
or responsibility to:

(i) question Instructions or make any suggestions to the Customer or an
Authorized Person regarding such Instructions;

(ii) supervise or make recommendations with respect to investments or
the retention of Securities;

(iii) advise the Customer or an Authorized Person regarding any
default in the payment of principal or income of any security other than a
Security.

(iv) except as may be otherwise provided in any securities lending
agreement between the Customer and the Bank, evaluate or report to the
Customer or an Authorized Person regarding the financial condition of any
broker, agent or other party to which Securities are delivered or payments
are made pursuant to this Agreement;

(v) except for trades settled at DTC where the broker provides to the
Bank the trade confirmation and the Customer provides for the Bank to receive
the trade instruction, review or reconcile trade confirmations received from
brokers. The Customer or its Authorized Persons (as defined in Section 10)
issuing Instructions shall bear any responsibility to review such
confirmations against Instructions issued to and statements issued by the
Bank.

(c) The Customer authorizes the Bank to act, hereunder, in its capacity
as a custodian notwithstanding that the Bank or any of its divisions or
affiliates may have a material interest in a transaction, or circumstances
are such that the Bank may have a potential conflict of duty or interest
including the fact that the Bank or any of its affiliates may provide
brokerage services to other customers, act as financial advisor to the issuer
of Securities, act as a lender to the issuer of Securities, act in the same
transaction as agent for more than one customer, have a material interest in
the issue of Securities, or earn profits from any of the activities listed
herein.

13. Fees and Expenses.

The Customer agrees to pay the Bank for its services under this
Agreement such amount as may be agreed upon in writing ("Fee Schedule"),
together with the Bank's reasonable out-of-pocket or incidental expenses (as
further defined in the Fee Schedule), including, but not limited to, legal
fees. The Bank shall have a lien on and is authorized to charge any Accounts
of the Customer for any amount owing to the Bank under any provision of this
Agreement.

14. Miscellaneous.

(a) Foreign Exchange Transactions. To facilitate the administration of
the Customer's trading and investment activity, the Bank is authorized to
enter into spot or forward foreign exchange contracts with the Customer or an
Authorized Person for the Customer and may also provide foreign exchange
through its subsidiaries, affiliates or Subcustodians. Instructions,
including standing instructions, may be issued with respect to such contracts
but the Bank may establish rules or limitations concerning any foreign
exchange facility made available. In all cases where the Bank, its
subsidiaries, affiliates or Subcustodians enter into a foreign exchange
contract related to Accounts, the terms and conditions of the then current
foreign exchange contract of the Bank, its subsidiary, affiliate or
Subcustodian and, to the extent not inconsistent, this Agreement shall apply
to such transaction.

(b) Certification of Residency, etc. The Customer certifies that it is
a resident of the United States and agrees to notify the Bank of any changes
in residency. The Bank may rely upon this certification or the certification
of such other facts as may be required to administer the Bank's obligations
under this Agreement. The Customer will indemnify the Bank against all
losses, liability, claims or demands arising directly or indirectly from any
such certifications.

(c) Access to Records. Applicable accounts, books and records of the
Bank shall be open to inspection and audit at all reasonable times during
normal business hours upon reasonable advance notice by Customer s
independent public accountants and by employees of Customer designated to the
Bank. All such materials shall, to the extent applicable, be maintained and
preserved in conformity with the Act and the rules and regulations
thereunder, including without limitation, SEC Rules 31a-1 and 31a-2. Subject
to restrictions under applicable law, the Bank shall also obtain an
undertaking to permit the Customer's independent public accountants
reasonable access to the records of any Subcustodian which has physical
possession of any Assets as may be required in connection with the
examination of the Customer's books and records.

(d) Governing Law; Successors and Assigns. This Agreement shall be
governed by the laws of the State of New York and shall not be assignable by
either party, but shall bind the successors in interest of the Customer and
the Bank.

(e) Entire Agreement; Applicable Riders. Customer represents that the
Assets deposited in the Accounts are Mutual Fund assets subject to certain
Securities and Exchange Commission ("SEC") rules and regulations.

This Agreement consists exclusively of this document together with
Schedules A and B, Appendices 1 and 2, Exhibits I - _______ and the following
Rider(s) [Check applicable rider(s)]:

X MUTUAL FUND
----

X SPECIAL TERMS AND CONDITIONS
----

There are no other provisions of this Agreement, and this Agreement
supersedes any other agreements, whether written or oral, between the
parties. Any amendment to this Agreement must be in writing, executed by
both parties.

(f) Severability. In the event that one or more provisions of this
Agreement are held invalid, illegal or unenforceable in any respect on the
basis of any particular circumstances or in any jurisdiction, the validity,
legality and enforceability of such provision or provisions under other
circumstances or in other jurisdictions and of the remaining provisions will
not in any way be affected or impaired.

(g) Waiver. Except as otherwise provided in this Agreement, no failure
or delay on the part of either party in exercising any power or right under
this Agreement operates as a waiver, nor does any single or partial exercise
of any power or right preclude any other or further exercise, or the exercise
of any other power or right. No waiver by a party of any provision of this
Agreement, or waiver of any breach or default, is effective unless in writing
and signed by the party against whom the waiver is to be enforced.

(h) Notices. All notices under this Agreement shall be effective when
actually received. Any notices or other communications which may be required
under this Agreement are to be sent to the parties at the following addresses
or such other addresses as may subsequently be given to the other party in
writing:

Bank: The Chase Manhattan Bank, N.A.
4 Chase MetroTech Center
Brooklyn, NY 11245
Attention: Global Custody Division

or telex:
-------------------------------------

Customer: Delaware Group of Funds
1818 Market St.
Philadelphia, PA 19103
att: Messrs. Bishof and O Conner
or telex:
--------------------------------------

(i) Termination. This Agreement may be terminated by the Customer or
the Bank by giving sixty (60) days written notice to the other, provided that
such notice to the Bank shall specify the names of the persons to whom the
Bank shall deliver the Assets in the Accounts. If notice of termination is
given by the Bank, the Customer shall, within sixty (60) days following
receipt of the notice, deliver to the Bank Instructions specifying the names
of the persons to whom the Bank shall deliver the Assets. In either case the
Bank will deliver the Assets to the persons so specified, after deducting any
amounts which the Bank determines in good faith to be owed to it under
Section 13. If within sixty (60) days following receipt of a notice of
termination by the Bank, the Bank does not receive Instructions from the
Customer specifying the names of the persons to whom the Bank shall deliver
the Assets, the Bank, at its election, may deliver the Assets to a bank or
trust company doing business in the State of New York to be held and disposed
of pursuant to the provisions of this Agreement, or to Authorized Persons, or
may continue to hold the Assets until Instructions are provided to the Bank;
provided that, where the Bank is the terminating party and the Bank had not
notified the Customer that termination was for breach of this Agreement by
the Customer, such 60 day period shall be extended for an additional period
as requested by Customer of up to 120 days.

Termination as to One or More Series. This Agreement may be terminated
as to one or more Series (but less than all the Series) by delivery of an
amended Schedule A deleting such Series, in which case termination as to the
deleted Series shall take effect sixty (60) days after the date of such
delivery. The execution and delivery of an amended Schedule A which deletes
one or more Series, shall constitute a termination hereof only with respect
to such deleted Series, shall be governed by the preceding provisions of
Section 14 as to the identification of a successor custodian and the delivery
of the Assets of the Series so deleted to such successor custodian, and shall
not affect the obligations of the Bank and the Customer hereunder with
respect to the other Series set forth in Schedule A, as amended from time to
time.

(j) Several Obligations of the Series. With respect to any obligations
of the Customer on behalf of the Series and their related Accounts arising
hereunder, the Custodian shall look for payment or satisfaction of any such
obligation solely to the assets and property of the Series and such Accounts
to which such obligation relates as though the Customer had separately
contracted with the Custodian by separate written instrument with respect to
each Series and its Accounts.

CUSTOMER

By: /s/ Michael P. Bishof
---------------------
Title Vice President and Treasurer

THE CHASE MANHATTAN BANK, N.A.

By: /s/ Rosemary M. Stidmon
-----------------------
Title Vice President

STATE OF Pennsylvania)
: ss.
COUNTY OF Philadelphia)

On this 9th day of July, 1996, before me personally came Michael P. Bishof,
to me known, who being by me duly sworn, did depose and say that he resides
in Blue Bell, PA at 110 Spyglass Drive; that he is Vice President/Treasurer
of Delaware Group of Funds, the entity described in and which executed the
foregoing instrument; that he knows the seal of said entity, that the seal
affixed to said instrument is such seal, that it was so affixed by order of
said entity, and that he signed his name thereto by like order.

/s/ Maritza H. Cruzado
-----------------------
Maritza H. Cruzado
Notary

Sworn to before me this 9th
day of July, 1996.

STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK )

On this 24th day of May, 1996, before me personally came Rosemary
Stidmon, to me known, who being by me duly sworn, did depose and say that she
resides in New Providence, NJ at 31 Sagamore Drive; that she is a Vice
President of THE CHASE MANHATTAN BANK, (National Association), the
corporation described in and which executed the foregoing instrument; that
she knows the seal of said corporation, that the seal affixed to said
instrument is such corporate seal, that it was so affixed by order of the
Board of Directors of said corporation, and that she signed her name thereto
by like order.

Sworn to before me this 24th
day of May, 1996.

/s/ Laiyee Ng
- -------------
Laiyee Ng
Notary

Schedule A

Delaware Pooled Trust, Inc. - Global Fixed Income Portfolio
Delaware Pooled Trust, Inc. - International Equity Portfolio
Delaware Pooled Trust, Inc. - Labor Select International Equity Portfolio
Delaware Pooled Trust, Inc. - Real Estate Investment Trust Portfolio
Delaware Pooled Trust, Inc. - High Yield Portfolio
Delaware Pooled Trust, Inc. - International Fixed Income Portfolio
Delaware Pooled Trust, Inc. - Defensive Equity Utility Portfolio
Delaware Group Global & International Funds, Inc. - International Equity Fund
Delaware Group Global & International Funds, Inc. - Global Assets Fund
Delaware Group Global & International Funds, Inc. - Global Bond Fund
Delaware Group Global & International Funds, Inc. - Emerging Markets Fund
Delaware Group Premium Fund, Inc. - International Equity Series
Delaware Group Premium Fund, Inc. - Equity Income Series
Delaware Group Premium Fund, Inc. - High Yield Series
Delaware Group Premium Fund, Inc. - Capital Reserves Series
Delaware Group Premium Fund, Inc. - Money Market Series
Delaware Group Premium Fund, Inc. - Growth Series
Delaware Group Premium Fund, Inc. - Multiple Strategy Series
Delaware Group Premium Fund, Inc. - Value Series
Delaware Group Premium Fund, Inc. - Emerging Growth Series
Delaware Group Premium Fund, Inc. - Global Bond Series
Delaware Group Delchester High-Yield Bond Fund, Inc.
Delaware Group Delaware Fund, Inc. - Delaware Fund
Delaware Group Delaware Fund, Inc. - Devon Fund
Delaware Group Value Fund, Inc.
Delaware Group DelCap Fund, Inc.
Delaware Group Dividend & Income Fund, Inc.
Delaware Group Advisor Funds, Inc. - Enterprise Fund
Delaware Group Advisor Funds, Inc. - U.S. Growth Fund
Delaware Group Advisor Funds, Inc. - World Growth Fund
Delaware Group Advisor Funds, Inc. - New Pacific Fund
Delaware Group Advisor Funds, Inc. - Federal Bond Fund
Delaware Group Advisor Funds, Inc. - Corporate Income Fund

March, 1996 Schedule B

SUB-CUSTODIANS EMPLOYED BY

THE CHASE MANHATTAN BANK, N.A. LONDON, GLOBAL CUSTODY
<TABLE>
<CAPTION>
<S> <C> <C>
COUNTRY SUB-CUSTODIAN CORRESPONDENT BANK

ARGENTINA The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Arenales 707, 5th Floor Buenos Aires
De Mayo 130/140
1061Buenos Aires
ARGENTINA

AUSTRALIA The Chase Manhattan Bank The Chase Manhattan Bank
Australia Limited Australia Limited
36th Floor Sydney
World Trade Centre
Jamison Street
Sydney
New South Wales 2000
AUSTRALIA

AUSTRIA Creditanstalt - Bankverein Credit Lyonnais
Schottengasse 6 Vienna
A - 1011, Vienna
AUSTRIA

BANGLADESH Standard Chartered Bank Standard Chartered Bank
18-20 Motijheel C.A. Dhaka
Box 536,
Dhaka-1000
BANGLADESH

BELGIUM Generale Bank Credit Lyonnais Bank
3 Montagne Du Parc Brussels
1000 Bruxelles
BELGIUM

BOTSWANA Barclays Bank of Botswana Limited Barclays Bank of Botswana
Barclays House Gaborone
Khama Crescent
Gaborone
BOTSWANA

BRAZIL Banco Chase Manhattan, S.A. Banco Chase Manhattan S.A.
Chase Manhattan Center Sao Paulo
Rua Verbo Divino, 1400
Sao Paulo, SP 04719-002
BRAZIL

CANADA The Royal Bank of Canada Royal Bank of Canada
Royal Bank Plaza Toronto
Toronto
Ontario M5J 2J5
CANADA

Canada Trust Royal Bank of Canada
Canada Trust Tower Toronto
BCE Place
161 Bay at Front
Toronto
Ontario M5J 2T2
CANADA

CHILE The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Agustinas 1235 Santiago
Casilla 9192
Santiago
CHILE

COLOMBIA Cititrust Colombia S.A. Cititrust Colombia S.A.
Sociedad Fiduciaria Sociedad Fiduciaria
Carrera 9a No 99-02 Santafe de Bogota
Santafe de Bogota, DC
COLOMBIA

CZECH REPUBLIC
Ceskoslovenska Obchodni Banka, A.S. Komercni Banka, A.S.,
Na Prikope 14 Praha
115 20 Praha 1
CZECH REPUBLIC

DENMARK Den Danske Bank Den Danske Bank
2 Holmens Kanala DK 1091 Copenhagen
Copenhagen
DENMARK

EGYPT National Bank of Egypt National Bank of Egypt
24 Sherif Street Cairo
Cairo
EGYPT

EUROBONDS Cedel S.A. ECU:Lloyds Bank PLC
67 Boulevard Grande Duchesse Charlotte International Banking Division
LUXEMBOURG London
A/c The Chase Manhattan Bank, N.A. For all other currencies: see
London relevant country
A/c No. 17817

EURO CDS First Chicago Clearing Centre ECU:Lloyds Bank PLC
27 Leadenhall Street Banking Division London
London EC3A 1AA For all other currencies: see
UNITED KINGDOM relevant country

FINLAND Merita Bank KOP Merita Bank KOP
Aleksis Kiven 3-5 Helsinki
00500 Helsinki
FINLAND

FRANCE Banque Paribas Societe Generale
Ref 256 Paris
BP 141
3, Rue D'Antin
75078 Paris
Cedex 02
FRANCE

GERMANY Chase Bank A.G. Chase Bank A.G.
Alexanderstrasse 59 Frankfurt
Postfach 90 01 09
60441 Frankfurt/Main
GERMANY

GHANA Barclays Bank of Ghana Barclays Bank
Barclays House Accra
High Street
Accra
GHANA

GREECE Barclays Bank Plc National Bank of Greece S.A.
1 Kolokotroni Street Athens
10562 Athens A/c Chase Manhattan Bank, N.A.,
GREECE London
A/c No. 040/7/921578-68

HONG KONG The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
40/F One Exchange Square Hong Kong
8, Connaught Place
Central, Hong Kong
HONG KONG

HUNGARY Citibank Budapest Rt. Citibank Budapest Rt.
Vaci Utca 19-21 Budapest
1052 Budapest V
HUNGARY

INDIA The Hongkong and Shanghai The Hongkong and Shanghai
Banking Corporation Limited Banking Corporation Limited
52/60 Mahatma Gandhi Road Bombay
Bombay 400 001
INDIA

Deutsche Bank AG, Bombay Branch Deutsche Bank
Securities & Custody Services Bombay
Kodak House
222 D.N. Road, Fort
Bombay 400 001
INDIA

INDONESIA The Hongkong and Shanghai The Chase Manhattan Bank, N.A.
Banking Corporation Limited Jakarta
World Trade Center
J1. Jend Sudirman Kav. 29-31
Jakarta 10023
INDONESIA

IRELAND Bank of Ireland Allied Irish Bank
International Financial Services Centre Dublin
1 Harbourmaster Place
Dublin 1
IRELAND

ISRAEL Bank Leumi Le-Israel B.M. Bank Leumi Le-Israel B.M.
19 Herzl Street Tel Aviv
61000 Tel Aviv
ISRAEL

ITALY The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Piazza Meda 1 Milan
20121 Milan
ITALY

JAPAN The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
1-3 Marunouchi 1-Chome Tokyo
Chiyoda-Ku
Tokyo 100
JAPAN

JORDAN Arab Bank Limited Arab Bank Limited
P O Box 950544-5 Amman
Amman
Shmeisani
JORDAN

KENYA Barclays Bank of Kenya Barclays Bank of Kenya
Third Floor Nairobi
Queensway House
Nairobi
Kenya

LUXEMBOURG
Banque Generale du Luxembourg S.A. Banque Generale du Luxembourg
50 Avenue J.F. Kennedy S.A.
L-2951 LUXEMBOURG Luxembourg

MALAYSIA The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Pernas International Kuala Lumpur
Jalan Sultan Ismail
50250, Kuala Lumpur
MALAYSIA

MAURITIUS Hongkong and Shanghai Banking The Hongkong and Shanghai Banking
Corporation Ltd Corporation Ltd.
Curepipe Road Curepipe
Curepipe
MAURITIUS

MEXICO The Chase Manhattan Bank, S.A. No correspondent Bank
(Equities)Montes Urales no. 470, 4th Floor
Col. Lomas de Chapultepec
11000 Mexico D.F.

(Government Banco Nacional de Mexico, No correspondent Bank
Bonds) Avenida Juarez No. 104 - 11 Piso
06040 Mexico D.F.
MEXICO

MOROCCO Banque Commerciale du Maroc Banque Commerciale du Maroc
2 Boulevard Moulay Youssef Casablanca
Casablanca 20000
MOROCCO

NETHERLANDS
ABN AMRO N.V. Generale Bank
Securities Centre Nederland N.V.
P O Box 3200 Rotterdam
4800 De Breda
NETHERLANDS

NEW ZEALAND
National Nominees Limited National Bank of New Zealand
Level 2 BNZ Tower Wellington
125 Queen Street
Auckland
NEW ZEALAND

NORWAY Den Norske Bank Den Norske Bank
Kirkegaten 21 Oslo
Oslo 1
NORWAY

PAKISTAN Citibank N.A. Citibank N.A.
I.I. Chundrigar Road Karachi
AWT Plaza
Karachi
PAKISTAN

Deutsche Bank Deutsche Bank
Unitowers Karachi
I.I. Chundrigar Road
Karachi
PAKISTAN

PERU Citibank, N.A. Citibank N.A.
Camino Real 457 Lima
CC Torre Real - 5th Floor
San Isidro, Lima 27
PERU

PHILIPPINES
The Hongkong and Shanghai The Hongkong and Shanghai
Banking Corporation Limited Banking Corporation Limited
Hong Kong Bank Centre 3/F Manila
San Miguel Avenue
Ortigas Commercial Centre
Pasig Metro Manila
PHILIPPINES

POLAND Bank Polska Kasa Opieki S.A. Bank Polska Kasa Opieki S.A.
Curtis Plaza Warsaw
Woloska 18
02-675 Warsaw
POLAND
For Mutual Funds:
Bank Handlowy W. Warsawie. S.A. Bank Polska Kasa Opieki S.A.
Custody Dept. Warsaw
Capital Markets Centre
Ul, Nowy Swiat 6/12
00-920 Warsaw
POLAND

PORTUGAL Banco Espirito Santo & Comercial Banco Nacional Ultra Marino
de Lisboa Lisbon
Servico de Gestaode Titulos
R. Mouzinho da Silveira, 36 r/c
1200 Lisbon
PORTUGAL

SHANGHAI The Hongkong and Shanghai Citibank
(CHINA) Banking Corporation Limited New York
Shanghai Branch
Corporate Banking Centre
Unit 504, 5/F Shanghai Centre
1376 Nanjing Xi Lu
Shanghai
THE PEOPLE'S REPUBLIC OF CHINA

SHENZHEN The Hongkong and Shanghai The Chase Manhattan Bank, N.A.
(CHINA) Banking Corporation Limited Hong Kong
1st Floor
Central Plaza Hotel
No.1 Chun Feng Lu
Shenzhen
THE PEOPLE'S REPUBLIC OF CHINA

SINGAPORE The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Shell Tower Singapore
50 Raffles Place
Singapore 0104
SINGAPORE

SLOVAK REPUBLIC
Ceskoslovenska Obchodni Banka, A.S. Ceskoslovenska Obchodni Banka
Michalska 18 Slovak Republic
815 63 Bratislava
SLOVAK REPUBLIC

SOUTH AFRICA
Standard Bank of South Africa Standard Bank of South Africa
Standard Bank Chambers South Africa
46 Marshall Street
Johannesburg 2001
SOUTH AFRICA

SOUTH KOREA
The Hongkong & Shanghai The Hongkong & Shanghai
Banking Corporation Limited Banking Corporation Limited
6/F Kyobo Building Seoul
#1 Chongro, 1-ka Chongro-Ku,
Seoul
SOUTH KOREA

SPAIN The Chase Manhattan Bank, N.A. Banco Bilbao Vizcaya,
Calle Peonias 2 Madrid
7th Floor
La Piovera
28042 Madrid
SPAIN

SRI LANKA The Hongkong & Shanghai The Hongkong & Shangai
Banking Corporation Limited Banking Corporation Limited
Unit #02-02 West Block, Colombo
World Trade Center
Colombo 1,
SRI LANKA

SWEDEN Skandinaviska Enskilda Banken Svenska Handelsbanken
Kungstradgardsgatan 8 Stockholm
Stockholm S-106 40
SWEDEN

SWITZERLAND
Union Bank of Switzerland Union Bank of Switzerland
45 Bahnhofstrasse Zurich
8021 Zurich
SWITZERLAND

TAIWAN The Chase Manhattan Bank, N.A. No correspondent Bank
115 Min Sheng East Road - Sec 3,
9th Floor
Taipei
TAIWAN
Republic of China

THAILAND The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Bubhajit Building Bangkok
20 North Sathorn Road
Silom, Bangrak
Bangkok 10500
THAILAND

TUNISIA Banque Internationale Arabe de Tunisie Banque Internationale Arabe de
70-72 Avenue Habib Bourguiba Tunisie, Tunisia
P.O. Box 520
1080 Tunis Cedex
Tunisia

TURKEY The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Emirhan Cad. No: 145 Istanbul
Atakule, A Blok Kat:11
80700-Dikilitas/Besiktas
Istanbul
Turkey

U.K. The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Woolgate House London
Coleman Street
London EC2P 2HD
UNITED KINGDOM

URUGUAY The First National Bank of Boston The First National Bank of Boston
Zabala 1463 Montevideo
Montevideo
URUGUAY

U.S.A. The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
1 Chase Manhattan Plaza New York
New York
NY 10081
U.S.A.

VENEZUELA Citibank N.A. Citibank N.A.
Carmelitas a Altagracia Caracas
Edificio Citibank
Caracas 1010
VENEZUELA

ZAMBIA Barclays Bank of Zambia Barclays Bank of Zambia
Kafue House Lusaka
Cairo Road
P.O.Box 31936
Lusaka
ZAMBIA

ZIMBABWE Barclays Bank of Zimbabwe Barclays Bank of Zimbabwe
Ground Floor Harare
Tanganyika House
Corner of 3rd Street & Union Avenue
Harare
ZIMBABWE
</TABLE>

<PAGE>

SECURITIES LENDING AGREEMENT ("Lending Agreement"), dated as of
, 1996 between ("Lender"), having its principal
place of business at , and The Chase
Manhattan Bank, N.A. ("Chase"), having its principal place of business at One
Chase Manhattan Plaza, New York, New York 10081.

It is hereby agreed as follows:

Section 1 - Definitions

Unless the context clearly requires otherwise, the following words
shall have the meanings set forth below when used herein:

a. "Account" shall mean the securities account established and
maintained by Chase on behalf of Lender pursuant to, as the case may be, a
separate custody agreement or a separate directed trust agreement ("Agreement")
between Chase and Lender, which Agreement provides, inter alia, for the
safekeeping of Securities received by Chase from time to time on behalf of
Lender.

b. "Agreement" shall have the meaning assigned thereto in Section 1(a)
hereof.

c. "Authorized Investment" shall mean any type of instrument, security,
participation or other property in which Cash Collateral may be invested or
reinvested, as described in Section 5(f) hereof and Appendix 4 hereto (and as
such Appendix may be amended from time to time by written agreement of the
parties).

d. "Authorized Person" shall mean, except to the extent that Chase is
advised to the contrary by Proper Instruction, any person who is authorized to
give instructions to Chase pursuant to the Agreement and any mandates given to
Chase in connection with such Agreement. An Authorized Person shall continue to
be so until such time as Chase receives Proper Instructions that nay such person
is no longer an Authorized Person.

e. "Borrower" shall mean an entity listed on Appendix 1 hereto, other
than an entity which Chase shall have been instructed to delete from list
pursuant to Written Instructions and as such Appendix may be amended in
accordance with Section 4(b) hereof.

f. "Business Day" shall have the meaning assigned thereto in the
applicable MSLA.

g. "Buy-in" shall have the meaning assigned thereto in Section 7(c)
hereof.

<PAGE>

h. "Cash Collateral" shall mean fed funds, New York Clearing House
Association funds and such non-U.S. currencies as may be pledged by a Borrower
in connection with a particular Loan.

i. "Collateral" shall have the meaning assigned thereto in the
applicable MSLA, together with Cash Collateral.

j. "Collateral Account" shall mean, as the case may be, an account
maintained by Chase with itself, with any Depository or with any Triparty
Institution and designated as a Collateral Account for the purpose of holding
any one or more of Collateral, Authorized Investments, and Proceeds in
connection with Loans hereunder.

k. "Collateral Amount" shall have the meaning assigned thereto in
Section 5(c) hereof.

l. "Collateral Criterion" shall have the meaning assigned thereto in
Section 5(c) hereof.

m. "Depository" shall mean: (1) the Depository Trust Company, the
Participants' Trust Company and any other securities depository or clearing
agency (and each of their respective successors and nominees) registered with
the U.S. Securities and Exchange Commission or registered with or regulated by
the applicable foreign equivalent thereof or otherwise able to act as a
securities depository or clearing agency, (ii) any transnational depository,
(iii) the Federal Reserve book-entry system for the receiving and delivering of
U.S. Government Securities, and (iv) any other national system for the receiving
and delivering of that country's government securities.

n. "Difference" shall have the meaning assigned thereto in Section 7(c)
hereof.

o. "Distributions" shall have the meaning assigned thereto in Section
3(b)(v) hereof.

p. "Dollars" shall have the meaning assigned thereto in Section 7(b)
hereof.

q. "Due Date" shall have the meaning assigned thereto in Section 7(b)
hereof.

r. "Insolvency Event" shall have the meaning assigned thereto in
Section 7(b) hereof.

s. "Letter of Credit" shall have the meaning assigned thereto in the
applicable MSLA and be issued by a bank listed on Appendix 2 hereto (as such
list may be amended by Chase from time to time on notice to Lender), other than
a bank deleted from such list pursuant to Written Instruction.

<PAGE>

t. "Loan" shall mean a loan of Securities hereunder and under the
applicable MSLA.

u. "Loan Fee" shall mean the amount payable by a Borrower to Chase
pursuant to the applicable MSLA in connection with Loans collateralized other
than by Cash Collateral.

v. "Market Value" shall have the meaning assigned thereto in the
applicable MSLA.

w. "MSLA" shall mean a master securities lending agreement between
Chase and a Borrower, pursuant to which Chase as agent lends securities on
behalf of its customers (including Lender) from time to time. A copy of Chase's
standard form of MSLA, including the international addendum thereto, is annexed
as Appendix 3.

x. "Net Assets" shall have the meaning assigned thereto in Section 8
hereof.

y. "Net Realized Income" shall have the meaning thereto in Section 8
hereof.

z. "Oral Instructions" shall have the meaning assigned thereto in
Section 10 hereof.

aa. "Proceeds" shall mean interest, dividends and other payments and
Distributions received by Chase in connection with Authorized Investments.

bb. "Proper Instructions" shall mean Oral Instructions and Written
Instructions.

cc. "Rebate" shall mean the amount payable by Chase on behalf of Lender
to a Borrower in connection with Loans collateralized by Cash Collateral.

dd. "Return Date" shall have the meaning assigned thereto in Section
7(c) hereof.

ee. "Securities" shall mean government securities (including U.S.
Government Securities), equity securities, bonds, debentures, other corporate
debt securities, notes, mortgages or other obligations, and any certificates,
warrants or other instruments representing rights to receive, purchase, or
subscribe for the same, or evidencing or representing any other rights or
interests therein and held pursuant to the Agreement.

ff. "Term Loan" shall have the meaning assigned thereto in Section 5(i)
hereof.

<PAGE>

gg. "Triparty Institution" shall mean a financial institution with
which Chase shall have previously entered a triparty agreement among itself,
such Triparty Institution and a particular Borrower providing, among other
things, for the holding of Collateral in a Collateral Account at such Triparty
Institution in Chase's name on behalf of Chase's lending customers and for the
substitution of Collateral; provided, however, that any substituted Collateral
shall meet the then standards for acceptable Collateral set by Chase.

hh. "U.S. Government Security" shall mean book-entry securities issued
by the U.S. Treasury defined in Subpart 0 of Treasury Department Circular No.
300 and any successor provisions) and any other securities issued or fully
guaranteed by the United States government or any agency, instrumentality or
establishment of the U.S. government, including, without limitation, securities
commonly known as "Ginnie Maes," Sally Maes," "Fannie Maes" and "Freddie Maes".

ii. "Written Instructions" shall have the meaning assigned thereto in
Section 10 hereof.

Section 2 - Appointment, Authority

(a) Appointment. Lender hereby appoints Chase as its agent to lend
Securities in the Account on Lender's behalf on a fully disclosed basis to
Borrowers from time to time in accordance with the terms hereof and on such
terms and conditions and at such times as Chase shall determine and Chase may
exercise all rights and powers provided under any MSLA as may be incidental
thereto, and Chase hereby accepts appointment as such agent and agrees to so
act.

(b) Authority. Lender hereby authorizes and empowers Chase to execute
in Lender's name on its behalf and at its risk all agreements and documents as
may be necessary to carry out any of the powers herein granted to Chase. Lender
grants Chase the authority set forth herein notwithstanding its awareness that
Chase, in its individual capacity or acting in a fiduciary capacity for other
accounts, may have transactions with the same institutions to which Chase may be
lending Securities hereunder, which transactions may give rise to actual or
potential conflict of interest situations. Chase shall not be bound to: (i)
account to Lender for any sum received or profit made by Chase for its own
account or the account of any other person or (ii) disclose or refuse to
disclose any information or take any other action if the same would or might in
Chase's judgment, made in good faith, constitute a breach of any law or
regulation or be otherwise actionable with respect to Chase; provided that, in
circumstances mentioned in (ii) above, Chase shall promptly inform Lender of the
relevant facts (except where doing so would, or might in Chase's judgment, made
in good faith, constitute a breach of any law or regulation or be otherwise
actionable as aforesaid).

<PAGE>

Section 3 - Representation and Warranties

(a) Representations of each party. Each party hereto represents and
warrants to the other that: (i) it has the power to execute and deliver this
Lending Agreement, to enter into the transactions contemplated hereby, and to
perform its obligations hereunder; (ii) it has taken all necessary action to
authorize such execution, delivery, and performance; (iii) this Lending
Agreement constitutes a legal, valid, and binding obligation enforceable against
it; and (iv) the execution, delivery, and performance by it of this Lending
Agreement shall at all times comply with all applicable laws and regulations.

(b) Representations of Lender. Lender represents and warrants to Chase
that: (i) this Lending Agreement is, and each Loan shall be, legally and validly
entered into, and does not and shall not violate any statute, regulation, rule,
order or judgment binding on Lender, or any provision of Lender's charter or
by-laws, or any agreement binding on Lender or affecting its property, and is
enforceable against Lender in accordance with its terms, except as enforcement
may be limited by bankruptcy, insolvency or similar laws, or by equitable
principles relating to or limiting creditors' rights generally; (ii) the person
executing this Lending Agreement and all Authorized Persons acting on behalf of
Lender has and have been duly and properly authorized to do so; (iii) it is
lending Securities as principal and shall not transfer, assign or encumber its
interest in, or rights with respect to, any Securities available for Loan
hereunder; (iv) it is the beneficial owner of all Securities or otherwise has
the right to lend Securities; and (v) it is entitled to receive all interest,
dividends and other distributions ("Distributions") made by the issuer with
respect thereto. Lender shall promptly identify to Chase by notice, which notice
may be oral, any Securities that are no longer subject to the representations
contained in (b).

Section 4 - Borrowers

(a) MSLA. Lender hereby acknowledges receipt of the form of MSLA and
authorizes Chase to lend Securities in the Account to Borrowers thereunder
pursuant to an agreement substantially in the form thereof.

(b) Borrowers. Securities may be lent to any Borrower selected by Chase
in Chase's sole discretion, in accordance with the terms hereof. In that
connection, Appendix 1 may be amended from time to time by Chase on notice to
Lender.

<PAGE>

Section 5 - Loans

(a) Securities to be lent, Lending opportunities, Loan initiation. All
Securities of Lender held by Chase that are issued, settled or traded in the
markets that have been approved by Chase from time to time for purposes of
Chase's discretionary securities lending program shall be subject to the terms
hereof. Chase shall seek to assure that Lender receives a fair allocation of
lending opportunities vis-a-vis other lenders, taking into account the demand
for and availability of Securities, types of Collateral, eligibility of
Borrowers, limitations on investments of Cash Collateral, tax treatment, and
similar commercial factors. From time to time, Chase may lend to Borrowers
Securities held in the Account (except Securities that are no longer subject to
the representations set forth in Section 3) and shall deliver such Securities
against receipt of Collateral in accordance with the applicable MSLA. Chase
shall have the right to decline to make any Loans to any Borrower and to
discontinue lending to any Borrower in its sole discretion and without notice to
Lender.

(b) Receipt of Collateral, Collateral substitution. For each Loan,
Chase shall receive and hold Letters of Credit received as Collateral and Chase
or a Triparty Institution shall receive and hold all other Collateral required
by the applicable MSLA in a Collateral Account, and Chase is hereby authorized
and directed, without obtaining any further approval from Lender, to invest and
reinvest all or substantially all Cash Collateral. Chase shall credit, or where
applicable shall have a Triparty Institution credit, all Collateral, Authorized
Investments and Proceeds to a Collateral Account and Chase shall not mark its
books and records to identify Lender's interest therein, it being understood,
however, that all monies credited to a Collateral Account may for purposes of
investment be commingled with cash collateral held for other lenders of
securities on whose behalf Chase may act. Chase may, in its sole discretion,
liquidate any Authorized Investment and credit the net proceeds in a Collateral
Account. Chase shall accept substitutions of Collateral in accordance with the
applicable MSLA and shall credit, or where applicable shall have a Triparty
Institution credit, all such substitutions to a Collateral Account.

(c) Mark to market procedures. (i) Chase shall require initial
Collateral for a Loan in an amount determined by applying the then applicable
"Collateral Criterion" (as defined below) to the Market Value of the Security
that is the subject of the Loan. The Collateral Criterion with respect to a
given Security shall be an amount equal to the then applicable percentage
(currently 102% for securities issued in the U.S. and 105% for securities issued
outside of the U.S.) of the Market Value of the Security (plus accrued interest,
if any, with respect to debt securities) which is the subject of a Loan as
determined as of the close of trading on the preceding Business Day. (ii) Each
Business Day Chase shall determine if the Market Value of all Collateral
received by Chase from a given Borrower in connection with all loans to such
Borrower from all lenders is at least equal to the aggregate amount ("Collateral
Amount") determined by applying the applicable Collateral Criterion to each
security on loan to such Borrower from all lenders. (iii) In accordance with
general market practice, the Market Value of certain securities (including,
without limitation, U.S. Government Securities) whether on Loan or received as
Collateral, may be determined on a same day basis by reference to recognized
pricing services.
<PAGE>

(d) Demand for additional Collateral. If the determination made in
Section 5(c)(ii) above demonstrates that the Market Value of all Collateral
received from a given Borrower is not at least equal to the Collateral Amount,
Chase shall demand additional Collateral from such Borrower in accordance with
the applicable MSLA so as to meet the Collateral Amount by making specific
Loans; provided that, Chase may from time to time establish de minimis
guidelines pursuant to which a mark would not be made even where the aggregate
Collateral Amount has not been met.

(e) Changes in procedures applicable to Collateral. The Collateral
procedures set forth in Sections 5(b)-(d) above reflect Chase's current practice
and may be changed by Chase from time to time based on general market conditions
(including volatility of Securities on Loan and of securities Collateral), the
Market Value of Securities on Loan to a given Borrower, and in accordance with
general market practice and regulatory requirements. Chase shall notify Lender
of material revisions to the foregoing procedures.

(f) Investment of Cash Collateral. (i) Chase is hereby authorized to
invest and reinvest cash Collateral in accordance with the investment guidelines
(and the interpretations, procedures and definitions included therewith) annexed
hereto as Appendix 4. (ii) Authorized Investments are made for the account of,
and at the sole risk of, Lender. In that connection, Lender shall pay to Chase
on demand in cash an amount equal to any deficiency in the amount of Collateral
available for return to a Borrower pursuant to an applicable MSLA.

(g) Lender's rights with respect to Securities on Loan; Distribution
and voting rights. (i) An amount equal to the amount of all Distributions paid
with respect to Securities on Loan that Lender would have received had such
Securities not been on Loan shall be credited to Lender's account on the date
such Distributions are delivered by Borrower to Chase. Any non-cash Distribution
on Securities on Loan which is in the nature of a stock split or a stock
dividend, shall be added to the Loan (and shall be considered to constitute
Securities on Loan) as of the date such non-cash Distribution is received by the
Borrower and shall be subject to the provisions of this Lending Agreement;
provided that the Lender may, by giving chase ten (10) Business Days' notice
prior to the date of such non-cash Distribution (or such different amount of
time as Chase may from time to time require on advice to Lender), direct Chase
to request that the Borrower deliver such non-cash Distribution to Chase
pursuant to the applicable MSLA, in which case Chase shall credit such non-cash
Distribution to Lender's account on the date it is delivered to Chase. Without
regard to the reference to "delivered" in the foregoing, the "AutoCredit"
provisions of the Agreement shall apply where a Borrower fails to make a
Distribution payment to Chase, the effect of which would be for Chase to credit
Lender's account with Distributions on the payable date. (ii) During the term of
any Loan, Chase will permit the Securities on Loan to be transferred into the
name of and be voted by the Borrower or others. Lender shall not be entitled to
participate in any dividend reinvestment program or to vote proxies with respect
to Securities that are eligible for Loan (whether or not actually on Loan) as of
the applicable record date for such Securities.
<PAGE>

(h) Advances, overdrafts and indebtedness, Security Interest. Chase
may, in its sole discretion, advance funds on behalf of Lender in order to pay
to Borrowers any Rebates or to return to Borrowers Cash Collateral to which they
are entitled pursuant to the applicable MSLA. Lender shall repay Chase on demand
the amount of any advance or any other amount owned by Lender hereunder plus
accrued interest at a rate per annum not to exceed the rate customarily charged
by Chase for such loans at the time such loan is made and shall otherwise be on
such terms and conditions as Chase customarily makes such loans available. In
order to secure repayment of any advance or other indebtedness of Lender to
Chase arising hereunder, Chase shall have a continuing lien and security
interest in and to all assets now or hereafter held in the Account and any
Collateral Account (to which Lender is entitled hereunder) and any other
property at any time held by it for the benefit of Lender or in which Lender may
have an interest which is then in Chase's possession or control or in the
possession or control of any third party acting on Chase's behalf. In this
regard, Chase shall be entitled to all the rights and remedies of a pledgee
under common law and a secured party under the New York Uniform Commercial Code
and/or any other applicable laws and/or regulations as then in effect.

(i) Termination of a Loan. (i) Loans shall generally be terminable on
demand. With the prior approval of Lender, however, Loans may be made on the
basis of a reasonably anticipated termination date ("Term Loan") and without
providing for the right of substitution of equivalent Securities. Termination of
a Term Loan prior to its anticipated termination date by either Lender or
Borrower may result in the terminating party having to pay non-terminating party
damages based on the cost of obtaining a replacement loan. (ii) Chase shall
terminate any Loan of Securities to a Borrower as soon as practicable after (a)
receipt by Chase of a notice of termination of the respective MSLA; (b) receipt
by Chase of Written Instructions directing it to terminate a Loan; (c) receipt
by Chase of Written Instructions instructing it to delete from Appendix 2 the
Borrower to whom such Loans was made; (d) receipt by Chase of Written
Instructions advising that the Security subject to a Loan is no longer subject
to the representation contained in Section 3 hereof; (e) receipt by Chase of
notice advising that an Event of Default (as defined in the applicable MSLA) has
occurred and is continuing beyond any applicable grace period; (f) whenever
Chase, in its sole discretion, elects to terminate such Loan other than a Term
Loan; or (g) termination of this Lending Agreement. (iii) If Securities which
are the subject of a Loan being terminated are to be sold by Lender, Written
Instructions shall in no event be given to Chase later than the trade date
established by Lender for such sale or such earlier date of which Chase may
advise Lender from time to time with respect to particular markets. Chase shall
not be liable for any failure of a Borrower to return Securities on Loans in a
time fashion.

(j) Recordkeeping and Reports. Chase shall establish and maintain such
records as are reasonably necessary to account for Loans that are made and the
income derived therefrom. Chase shall provide Lender with a monthly statement
describing the Loans made during the preceding month, and the income derived
from Loans, during the period covered by such statement. A party shall comply
with the reasonable requests of the other party for information necessary to the
requester's performance of its duties hereunder.

<PAGE>

Section 6 - Default by Borrower

(1) Chase may assume (unless it has actual knowledge to the contrary)
that any representations made by a Borrower in connection with any Loan are
true, that no event which is or may become an Event of Default (as defined in
the applicable MSLA) has occurred and that a Borrower has complied with its
obligations under the applicable MSLA. Subject to Sections 7(b)-(d), Chase shall
have no responsibility for the accuracy or completeness of any information
supplied, or for any breach of any obligation, by any Borrower under or in
connection with any MSLA or Loan. Chase shall not be liable as a result of
taking or omitting to take any action provided that Chase shall have carried out
its responsibilities hereunder in good faith. (ii) If any Borrower with respect
to any Loan affected pursuant hereto and pursuant to the applicable MSLA fails
to return any loaned Securities when due thereunder for reasons other than
relating to the solvency of the Borrower, Chase shall then take whatever action
its deems appropriate in accordance with general market practice and Chase's
reasonable judgment, including, but no necessarily limited to, claiming
compensation from such Borrower on behalf of Lender in the event a trade
executed by Lender fails on account of such Borrower's failure timely to have
returned Securities on Loan or, where Chase deems it necessary, such other
action as may be permitted by the applicable MSLA, including collecting any
applicable MSLA fails to return any Securities on Loan when due thereunder for
reasons relating to the solvency of the Borrower, Chase shall take such action
as its deems appropriate in accordance with Chase's reasonable judgment under
the applicable MSLA.

Section 7 - Standard of Care, Liabilities, Indemnification

(a) Standard of care, Liabilities. Except as provided in paragraphs (b)
and (c) hereof, Chase shall be liable for any costs, expenses, damages,
liabilities or claims (including attorneys' and accountants' fees) incurred by
Lender, except those costs, expenses, damages, liabilities and claims arising
out of the negligence, bad faith or willful misconduct of Chase. Chase shall
have no obligation hereunder for: (i) costs, expenses, damages, liabilities or
claims (including attorneys' and accountants' fees), which are sustained or
incurred by Lender by reason of any action or inaction by any pricing service,
any Depository or a Triparty Institution or their respective successors or
nominees; and (ii) any failure to perform any obligation due to any matters
beyond the control of Chase. In no event shall Chase be liable for indirect or
consequential damages or lost profits or loss of business, arising hereunder or
in connection herewith, even if previously informed of the possibility of such
damages and regardless of the form of action.

<PAGE>

misconduct of Chase. The foregoing indemnity shall be a continuing obligation of
the Lender, its successors and assigns, notwithstanding the termination of any
Loans hereunder or of this Lending Agreement. Chase may charge any amounts to
which it is entitled hereunder against the Account, and Lender shall be entitled
to an accounting of all amounts so charged. Actions taken or omitted in reliance
upon Proper Instructions, or upon any information, order, indenture, stock
certificate, power of attorney, assignment, affidavit or other instrument
reasonably believed by Chase, in good faith, to be genuine or bearing the
signature of a person or persons believed, in good faith, to be authorized to
sign, countersign or execute the same, shall be conclusively presumed to have
been taken or omitted in good faith.

(b) Indemnification of Lender in respect to Distributions. If the
Borrower in respect of any Loan effected pursuant hereto and pursuant to the
applicable MSLA fails, as a result of its bankruptcy, insolvency,
reorganization, liquidation, receivership or similar event (each an "Insolvency
Event"), to remit to Chase for Lender's account any Distributions on or with
respect to Securities on Loan when due (the "Due Date") in accordance with such
MSLA and such Due Date occurs at least one day prior to an Insolvency Event then
Chase shall at its expense (subject to paragraph (d) hereof) and within one (1)
Business Day of the Due Date, undertake the following: (i) with respect to
Distributions in the form of cash, Chase shall credit Lender's account with the
full amount of such Distributions and (ii) with respect to Distributions in the
form of securities, Chase shall, at its option, either purchase replacement
securities (of an equal amount of the same issue, class, type or series as the
Distributions) on the principal market in which such securities are traded or
credit Lender's account with the market value in United States dollars
("Dollars") of such Distributions on the Due Date as determined by Chase in good
faith. Market value shall be determined by Chase in accordance with the
applicable MSLA, including the computation of Dollar equivalents where
Securities on Loan and/or Collateral (and Proceeds) are denominated in a
currency other than Dollars.

(c) Indemnification of Lender in respect of Securities. If the Borrower
in respect of any Loan effected pursuant hereto and pursuant to the applicable
MSLA fails to return any Securities on Loan to Chase for Lender's account when
due thereunder (the "Return Date") which is the date of default, then Chase
shall, at its expense (subject to paragraph (d) hereof) and within one (1)
Business Day of the Return Date, credit Lender's account in Dollars with the
difference ("Difference") (where a positive number), if any, between (x) the
market value of such lent Securities on the Return Date (including, in the case
of debt Securities, accrued but unpaid interest), and (y) in the case of Loans
collateralized by (i) Cash Collateral, the greater of (A) the Market Value of
the Cash Collateral on the date of initial pledge as adjusted for any subsequent
marks-to-market through the Return Date and (B) the Market Value of Cash
Collateral investments on the Return Date, (ii) non-Cash Collateral comprising
securities Collateral, the greater of the Market Value of such Collateral on the
(A) Business Day immediately preceding the Return Date and (B) Return Date, or
(iii) non-Cash Collateral comprising Letter of Credit Collateral, the Market
Value of the Letter of Credit Collateral on the date of initial pledge as
adjusted for any subsequent marks-to-market through the Return Date. Market
Value shall be determined by Chase in accordance with the applicable MSLA,
including the computation of Dollar equivalents where Securities on Loan and/or
Collateral (and Proceeds) are denominated in a currency other than Dollars.
Where Cash Collateral and non-Cash Collateral have each been allocated to a Loan
<PAGE>

as of the Return Date, the Difference payable by Chase shall be computed in
accordance with the foregoing as if there had been two Loans in effect on the
Return Date, one collateralized by Cash Collateral and the other collateralized
by non-Cash Collateral. In lieu of paying Lender the Difference, Chase may, at
its sole option and expense, purchase for Lender's account ("Buy-in")
replacement securities of the same issue, type, class, and series as that of the
Securities on Loan.

(d) Subrogation. If Chase makes a payment or a purchase pursuant to
Section 7(b) or effects a Buy-in pursuant to Section 7(c), or if Chase effects a
Difference payment pursuant to Section 7(c) on account of a failure to return
Securities on Loan not arising from an Insolvency Event, Chase shall, to the
extent of such payment, purchase, Difference payment or Buy-in, be subrogated
to, and Lender shall assign and be deemed to have assigned to Chase, all of its
rights in, to and against the Borrower (and any guarantor thereof) in respect of
such Loan, any Collateral pledged by the Borrower in respect of such Loan, and
all proceeds of such Collateral. In the event that Lender receives or is
credited with any payment, benefit or value from or on behalf of the Borrower in
respect of rights to which Chase is subrogated as provided herein, Lender shall
promptly remit or pay to Chase the same (or its Dollar equivalent) but only to
the extent that Lender has been paid all amounts owed to it by Borrower.

Section 8 - Chase Compensation

(a) In connection with each Loan hereunder, Lender shall pay to Chase a
fee equal to ___% of (i) earnings (less any Rebate paid by Chase to a Borrower)
derived from Authorized Investments in connection with Loans collateralized by
cash, and (ii) any Securities Loan Fee paid or payable by the Borrower on Loans
not collateralized by cash. (b) The fee payable to Chase for services performed
pursuant to Section 5(f) hereof shall be equal to one tenth of the one percent
(0.1%) of the Fund's average daily Assets (with "Fund" being as defined in
Appendix 4 hereto). All securities in the Fund shall be valued based on their
amortized cost. Fees shall be accrued and charged daily against the Fund's yield
or assets, as appropriate, and shall be payable monthly in arrears on the first
business day of the month following the month in which earned. (c) Chase is
authorized, on a monthly basis, to charge all the foregoing fees (together with
reasonable expenses incurred by Chase hereunder) and any other amounts owed by
Lender hereunder against the Account and/or a Collateral Account.

Section 9 - Taxes

Lender shall be responsible for all filings, tax returns and reports on
any Loans undertaken by Chase on Lender's behalf which are to be made to any
authority whether governmental or otherwise and for the payment of all unpaid
calls, taxes (including, without limitations, any value added tax), imposts,
levies or duties due on any principal or interest, or any other liability or
payments arising out of or in connection with any Securities or any Collateral,
and in so far as Chase is under obligation (whether of a governmental nature or
otherwise) to pay the same on Lender's behalf Chase may do so out of any monies
or assets held by it pursuant to the terms of the Agreement or hereunder.

<PAGE>

Section 10 - Instructions

(a)(i) Written Instructions. "Written Instructions" shall mean written
communications actually received by Chase from an Authorized Person or from a
person reasonably believed by Chase to be an Authorized Person by letter,
memorandum, telegram, cable, telex, telecopy facsimile, computer, video (CRT)
terminal or other on-line system, or any other method reasonably acceptable to
Chase and whereby Chase is able to verify with a reasonable degree of certainty
the identity of the sender of such communications or with communications are
transmitted with proper testing or authentication pursuant to terms and
conditions which Chase may specify. (ii) Oral Instructions. "Oral Instructions"
shall mean oral communications actually received by Chase from an Authorized
Person or from a person reasonably believed by Chase to be an Authorized Person.
Oral Instructions shall promptly thereafter be confirmed in writing by an
Authorized Person (which confirmation may bear the facsimile signature of such
Person), but Lender will hold Chase harmless for the failure of an Authorized
Person to send such confirmation in writing, the failure of such confirmation to
conform to the Oral Instructions received, or Chase's failure to produce such
confirmation at any subsequent time. Lender shall be responsible for
safeguarding any testkeys, identification codes or other security devices which
Chase may make available to Lender or its Authorized Persons.

(b) Unless otherwise expressly provided, all Proper Instructions shall
continue in full force and effect until canceled or superseded.

Section 11 - Pricing Services

Chase may use any pricing service referred to in an applicable MSLA and
any other recognized pricing service (including itself and any of its
affiliates) in order to perform its valuation responsibilities with respect to
Securities, Collateral and Authorized Investments, and Lender shall hold Chase
harmless from and against any loss or damage suffered or incurred as a result of
errors or omissions of any such pricing service.

Section 12 - Termination

This Lending Agreement may be terminated at any time by either party
upon delivery to the other party of notice specifying the date of such
termination, which shall be not less than 30 days after the date of receipt of
such notice. Notwithstanding any such notice, this Lending Agreement shall
continue in full force and effect with respect to all Loans outstanding on the
termination date, which Loans shall, however, be terminated as soon as
reasonably practicable.

Section 13 - Miscellaneous

(a) Legal proceedings. Chase may refrain from bringing any legal action
or proceeding arising out of or in connection with any Loan until it shall have
received such security as it may require for all costs, expenses (including
legal fees) and liabilities which it will or may expend or incur in relation
thereto.
<PAGE>

(b) Integration, Lending Agreement to Govern. This Lending Agreement
and the Agreement contain the complete agreement of the parties with respect to
the subject matter hereof and supersede and replace any previously made
proposals, representations, warranties or agreements with respect thereto by the
parties. In the event of any conflict between this Lending Agreement, and the
Agreement, this Lending Agreement shall govern.

(c) Notice. Unless expressly provided herein to the contrary, notices
hereunder shall be in writing, and delivered by telecopier, overnight express
mail, first-class postage prepaid, delivered personally or by receipt courier
service. All such notices which are mailed shall be deemed delivered upon
receipt. Notices shall be addresses as follows (or to such other address as a
party may from time to time designate on notice duly given in accordance with
this paragraph): notices to Chase shall be addressed to it at 2 Chase Manhattan
Plaza, 19th Floor, New York, New York 10081, Attention: Securities Lending
Division; notices to be given to Lender shall be addressed to it at its offices
at
Attention: .

(d) Amendments, Waiver. This Lending Agreement may be modified only by
a written amendment signed by both parties, and no waiver of any provisions
hereof shall be effective unless expressed in a writing signed by the party to
be charged.

(e) Government Law, Consent to Jurisdiction, Waiver of Immunity. This
Lending Agreement shall be construed in accordance with laws of the State of New
York, without regard to the conflict of laws principles thereof. Chase and
Lender each hereby consents to the jurisdiction of a state or federal court
situated in New York City, New York in connection with any dispute arising
hereunder and Lender hereby waives any claim of forum non conveniens to the
extent that it may lawfully do so. To the extent that in any jurisdiction Lender
may now or hereafter be entitled to claim, for itself or its assets, immunity
from suit, execution, attachment (before or after judgment) or other legal
process, Lender irrevocably shall not claim, and it hereby waives, such
immunity.
<PAGE>

(f) Counterparts, Headings. This Lending Agreement may be executed in
several counterparts, each one of which shall constitute an original, and all
collectively shall constitute but one instrument. The headings of the sections
hereof are included for convenience of reference only and do not form part of
this Lending Agreement.

(g) Severability. Any provisions of this Lending Agreement which may be
determined by competent authority to be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition, or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceably in any jurisdiction
shall not invalidate or render unenforceable such provisions in any other
jurisdiction.

IN WITNESS WHEREOF, the parties have executed this Lending Agreement as
of the date first above-written.

[Insert name of LENDER] THE CHASE MANHATTAN BANK, N.A.

By: By:

Title: Title:

<PAGE>

CHASE PROPOSED AGREEMENT

GLOBAL CUSTODY AGREEMENT

AGREEMENT, effective May 1, 1996, between THE CHASE MANHATTAN BANK,
N.A. (the "Bank") and those registered investment companies listed on Schedule A
hereto (each a "Customer") on behalf of certain of their respective series, as
listed on Schedule A (individually and collectively the "Series").

1. Customer Accounts.

The Bank agrees to establish and maintain the following accounts
("Accounts"):

(b) A deposit account in the name of the Customer on behalf of each
Series ("Deposit Account") for any and all cash in any currency received by the
Bank or its Subcustodian for the account of the Customer, which cash shall not
be subject to withdrawal by draft or check.

Upon written agreement between the Bank and the Customer, additional
Accounts may be established and separately accounted for as additional Accounts
under the terms of this Agreement.

2. Maintenance of Securities and Cash at Bank and Subcustodian
Locations.

Unless Instructions specifically require another location acceptable to
the Bank:

(a) Securities will be held in the country or other

<PAGE>

jurisdiction in which the principal trading market for such Securities is
located, where such Securities are to be presented for payment or where such
Securities are acquired; and

(b) Cash will be credited to an account in a country or other
jurisdiction in which such cash may be legally deposited or is the legal
currency for the payment of public or private debts.

To the extent available and permissible under applicable law and
regulation, Cash held pursuant to Instructions shall be held in interest bearing
accounts. If interest bearing accounts are not available, such cash may be held
in non-interest bearing accounts. The Bank is authorized to maintain cash
balances on deposit for the Customer with itself or one of its affiliates.
Interest bearing accounts shall bear interest at such reasonable rates of
interest as may from time to time be paid on such accounts by the Bank or its
affiliates.

(iii) For each Series that is exclusively a domestic Series, the following
additional provisions shall apply:

(x) In the event that during a given calendar month a Series has maintained an
average daily cash balance greater than zero, the Bank shall provide an earnings
credit against custody fees otherwise owing hereunder by such Series during such
calendar month in an amount equal to the product of (A) 75% of the 90 day U.S.
government Treasury bill rate as quoted in the Wall Street Journal for the last
"Business Day" (being a day on which the Bank is open for the transaction of all
its ordinary business) of such calendar month, (B) the average daily cash
balance for such month, and (C) the number of days in such calendar month
divided by 365.

(y) In the event that during a given calendar month a Series has maintained an
average daily cash balance less than or equal to zero, the Bank shall be paid
interest on such amount by such Series in an amount equal to the product of (A)
the "Overnight Fed Funds Rate" (as defined below) plus 25 basis points for the
last Business Day of such calendar month, (B) the average daily cash balance for
such month, and (C) the number of days in such calendar month divided by 365.

(z) For purposes of (y) above, the term "Overnight Fed Funds Rate" shall mean
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published by the Federal Reserve Bank of New York (with the rate for the last
Business Day of a given calendar month being the rate so published on the
Business Day immediately following such Day), or, if such rate is note so
published, the average quotations, for the last Business Day of a given calendar
month, of such transactions received by the Bank from three Federal funds
brokers of recognized standing selected by the Bank.

If the Customer wishes to have any of its Assets held in the

<PAGE>

custody of an institution other than the established Subcustodians as defined in
Section 3 (or their securities depositories), such arrangement must be
authorized by a written agreement, signed by the Bank and the Customer.

3. Subcustodians and Securities Depositories.

The Bank may act under this Agreement through the subcustodians listed
in Schedule B of this Agreement with which the Bank has entered into
subcustodial agreements ("Subcustodians"). The Customer authorizes the Bank to
hold Assets in the Accounts in accounts which the Bank has established with one
or more of its branches or Subcustodians. The Bank and Subcustodians are
authorized to hold any of the Securities in their account with any securities
depository in which they participate.

The Bank reserves the right to add new, replace or remove
Subcustodians. The Customer will be given reasonable notice by the Bank of any
amendment to Schedule B. Upon request by the Customer, the Bank will identify
the name, address and principal place of business of any Subcustodian of the
Customer's Assets and the name and address of the governmental agency or other
regulatory authority that supervises or regulates such Subcustodian.

4. Use of Subcustodian.

(a) The Bank will identify the Assets on its books as belonging to the
Customer.

<PAGE>

money or value other than for safe custody or administration; (iii) adequate
records will be maintained identifying the assets held pursuant to such
agreement as belonging to the customers of the Bank; (iv) subject to applicable
law, Subcustodian shall permit independent public accountants for Bank and
customers of the Bank reasonable access to Subcustodian's books and records as
they pertain to the subcustody account in connection with such accountants'
examination of the books and records of such account; and (v) the Bank will
receive periodic reports with respect to the safekeeping of assets in the
subcustody account, including advices and/or notifications of any transfers to
or from such subcustody account. The foregoing shall not apply to the extent of
any special agreement or arrangement made by the Customer with any particular
Subcustodian.

(e) Upon request of the Customer, the Bank shall deliver to the
Customer annually a report stating: (i) the identity of each Subcustodian then
acting on behalf of the Bank and the name and address of the governmental agency
or other regulatory authority that supervises or regulates such Subcustodian;
(ii) the countries in which each Subcustodian is located; and (iii) as long as
Securities and Exchange Commission ("SEC") Rule 17f-5 under the Investment
Company Act of 1940, as amended ("1940 Act"), requires the Customer's Board of
Directors/Trustees directly to approve its foreign custody arrangements, such
other information relating to such Subcustodians as may reasonably be requested
by the Customer to ensure compliance with Rule 17f-5. As long as Rule 17f-5
requires the Customer's Board of Directors/Trustees directly to approve its
foreign custody arrangements, the Bank shall also furnish annually to the
Customer information concerning such Subcustodians similar in kind and scope as
that furnished to the Customer in connection with the initial approval hereof.
The Bank shall timely advise the Customer of any material adverse change in the
facts or circumstances upon which such information is based where such changes
would affect the eligibility of the Subcustodian under Rule 17f-5 as soon as
practicable after it becomes aware of any such material adverse change in the
normal course of its custodial activities.

5. Deposit Account Transactions

(a) The Bank or its Subcustodians will make payments from the Deposit
Account upon receipt of Instructions which include all information required by
the Bank.

(b) In the event that any payment to be made under this Section 5
exceeds the funds available in the Deposit Account, the Bank, in its discretion,
may advance the Customer such excess amount which shall be deemed a loan payable
on demand, bearing interest at the rate customarily charged by the Bank on
similar loans.

(c) If the Bank credits the Deposit Account on a payable date, or at
any time prior to actual collection and reconciliation

<PAGE>

to the Deposit Account, with interest, dividends, redemptions or any other
amount due, the Customer will promptly return any such amount upon oral or
written notification: (i) that such amount has not been received in the ordinary
course of business or (ii) that such amount was incorrectly credited. If the
Customer does not promptly return any amount upon such notification, the Bank
shall be entitled, upon oral or written notification to the Customer, to reverse
such credit by debiting the Deposit Account for the amount previously credited.
The Bank or its Subcustodian shall have no duty or obligation to institute legal
proceedings, file a claim or a proof of claim in any insolvency proceeding or
take any other action with respect to the collection of such amount, but may act
for the Customer upon Instructions after consultation with the Customer.

6. Custody Account Transactions.

(a) Securities will be transferred, exchanged or delivered by the Bank
or its Subcustodian upon receipt by the Bank of Instructions which include all
information required by the Bank. Settlement and payment for Securities received
for, and delivery of Securities out of, the Custody Account may be made in
accordance with the customary or established securities trading or securities
processing practices and procedures in the jurisdiction or market in which the
transaction occurs, including, without limitation, delivery of Securities to a
purchaser, dealer or their agents against a receipt with the expectation of
receiving later payment and free delivery. Delivery of Securities out of the
Custody Account may also be made in any manner specifically required by
Instructions acceptable to the Bank.

(i) The Bank may reverse credits or debits made to the Accounts in its
discretion if the related transaction fails to settle within a reasonable
period, determined by the Bank in its discretion, after the contractual
settlement date for the related transaction; provided that, the Bank shall give
Customer prior notification of any such reversal. Where the foregoing
notification is oral, the Bank shall promptly provide written confirmation of
the same (which confirmation may be electronic).

(ii) If any Securities delivered pursuant to this Section 6 are
returned by the recipient thereof, the Bank may reverse the credits and debits
of the particular transaction at any time.

<PAGE>

7. Actions of the Bank.

The Bank shall follow Instructions received regarding assets held in
the Accounts. However, until it receives Instructions to the contrary, the Bank
will:

(a) Present for payment any Securities which are called, redeemed or
retired or otherwise become payable and all coupons and other income items which
call for payment upon presentation, to the extent that the Bank or Subcustodian
is actually aware of such opportunities.

(b) Execute in the name of the Customer such ownership and other
certificates as may be required to obtain payments in respect of Securities.

(e) Issue statements to the Customer, at times mutually agreed upon,
identifying the Assets in the Accounts.

The Bank will send the Customer an advice or notification of any
transfers of Assets to or from the Accounts. Such statements, advices or
notifications shall indicate the identity of the entity having custody of the
Assets. Unless the Customer advises the Bank orally and then promptly sends the
Bank a written exception or objection to any Bank statement within 180 days of
receipt, the Customer shall be deemed to have approved such statement.

All collections of funds or other property paid or distributed in
respect of Securities in the Custody Account shall be made at the risk of the
Customer. Subject to the standard of care in Section 12 hereof, the Bank shall
have no liability for any loss occasioned by delay in the actual receipt of
notice by the Bank or by its Subcustodians of any payment, redemption or other
transaction regarding Securities in the Custody Account in respect of which the
Bank has agreed to take any action under this Agreement.

8. Corporate Actions; Proxies; Tax Reclaims.

<PAGE>

transmitted to securities holders ("Corporate Actions"), the Bank will give the
Customer written notice (which may be electronic) of such Corporate Actions to
the extent that the Bank's central corporate actions department has actual
knowledge of a Corporate Action in time to notify its customers.

When a rights entitlement or a fractional interest resulting from a
rights issue, stock dividend, stock split or similar Corporate Action is
received which bears an expiration date, the Bank will endeavor to obtain
Instructions from the Customer or its Authorized Person (as defined in ss.10
hereof), but if Instructions are not received in time for the Bank to take
timely action, or actual notice of such Corporate Action was received too late
to seek Instructions, the Bank is authorized to sell such rights entitlement or
fractional interest and to credit the Deposit Account with the proceeds or take
any other action it deems, in good faith, to be appropriate in which case it
shall be held harmless for any such action.

b. Proxy Voting. With respect to domestic U.S. and Canadian Securities
(the latter if held in DTC), the Bank will send to the Customer or the
Authorized Person (as defined in Section 10) for a Custody Account, such proxies
(signed in blank, if issued in the name of the Bank's nominee or the nominee of
a central depository) and communications with respect to Securities in the
Custody Account as call for voting or relate to legal proceedings within a
reasonable time after sufficient copies are received by the Bank for forwarding
to its customers. In addition, the Bank will follow coupon payments,
redemptions, exchanges or similar matters with respect to Securities in the
Custody Account and advise the Customer or the Authorized Person for such
Account of rights issued, tender offers or any other discretionary rights with
respect to such Securities, in each case, of which the Bank has received notice
from the issuer of the Securities, or as to which notice is published in
publications routinely utilized by the Bank for this purpose.

With respect to Securities other than the foregoing, proxy voting
services shall be provided in accordance with separate proxy voting agreement
annexed hereto a Appendix B.

The foregoing proxy voting services may be provided by Bank, in whole
or in part, by one or more third parties appointed by the Bank (which may be
affiliates of the Bank), provided that the Bank shall be liable for the
performance of any such third parties to the same extent as the Bank would have
been if it performed such services itself.

<PAGE>

periodically report to Customer concerning the making of applications for a
reduction of withholding tax and refund of any tax paid or tax credits which
apply in each applicable market in respect of income payments on Securities for
the benefit of the Customer.

(ii) The provision of tax reclaim services by the Bank is conditional
upon the Bank receiving from the beneficial owner of Securities (A) a
declaration of its identity and place of residence and (B) certain other
documentation (pro forma copies of which are available from the Bank). The Bank
shall use reasonable means to advise the Customer of the declarations,
documentation and information which the Customer is to provide to the Bank in
order for the Bank to provide the tax reclaim services described herein. The
Customer acknowledges that, if the Bank does not receive such declarations,
documentation and information, additional United Kingdom taxation will be
deducted from all income received in respect of Securities issued outside the
United Kingdom and that U.S. non-resident alien tax or U.S. backup withholding
tax will be deducted from U.S. source income. The Customer shall provide to the
Bank such documentation and information as it may require in connection with
taxation, and warrants that, when given, this information shall be true and
correct in every respect, not misleading in any way, and contain all material
information. The Customer undertakes to notify the Bank immediately if any such
information requires updating or amendment.

(iii) Subject to subsection (vii) hereof, the Bank shall not be liable
to the Customer or any third party for any tax, fines or penalties payable by
the Bank or the Customer, and shall be indemnified accordingly, whether these
result from the inaccurate completion of documents by the Customer or any third
party, or as a result of the provision to the Bank or any third party of
inaccurate or misleading information or the withholding of material information
by the Customer or any other third party, or as a result of any delay of any
revenue authority or any other matter beyond the control of the Bank.

(iv) The Customer confirms that the Bank is authorized to deduct from
any cash received or credited to the Cash Account any taxes or levies required
by any revenue or governmental authority for whatever reason in respect of the
Securities or Cash Accounts.

<PAGE>

jurisdiction other than with respect to interest, dividends and capital gains
that may otherwise be subject to tax by such jurisdiction with respect to a
foreign investor not otherwise engaged in a trade or business in such
jurisdiction in a given taxable year. Bank shall not be liable for any tax
liability caused, directly or indirectly, by Customer's actions or status in any
jurisdiction.

(vi) In connection with obtaining tax relief, the Customer confirms
that the Bank is authorized to disclose any information requested by any revenue
authority or any governmental body in relation to the Customer or the Securities
and/or Cash held for the Customer. This provision does not authorize any other
voluntary disclosure to any revenue authority or any governmental body without
the prior written consent of Customer.

9. Nominees.

Securities which are ordinarily held in registered form may be
registered in a nominee name of the Bank, Subcustodian or securities depository,
as the case may be. The Bank may without notice to the Customer cause any such
Securities to cease to be registered in the name of any such nominee and to be
registered in the name of the Customer. In the event that any Securities
registered in a nominee name are called for partial redemption by the issuer,
the Bank may allot the called portion to the respective beneficial holders of
such class of security in any manner the Bank deems to be fair and equitable.
The Customer agrees to hold the Bank, Subcustodians, and their respective
nominees harmless from any liability arising directly or indirectly from their
status as a mere record holder of Securities in the Custody Account.

10. Authorized Persons.

As used in this Agreement, the term "Authorized Person" means employees
or agents including investment managers as have been designated by written
notice from the Customer or its designated agent to act on behalf of the
Customer under this Agreement. Such persons shall continue to be Authorized
Persons until such time as the Bank receives Instructions from the Customer or
its designated agent that any such employee or agent is no longer an Authorized
Person.

11. Instructions.

<PAGE>

The term "Instructions" means instructions of any Authorized Person
received by the Bank, via telephone, telex, TWX, facsimile transmission, bank
wire or other teleprocess or electronic instruction or trade information system
acceptable to the Bank which the Bank reasonably believes in good faith to have
been given by Authorized Persons or which are transmitted with proper testing or
authentication pursuant to terms and conditions which the Bank may specify.
Unless otherwise expressly provided, all Instructions shall continue in full
force and effect until canceled or superseded. For purposes hereof,
reasonableness shall mean compliance with applicable procedures.

Any Instructions delivered to the Bank by telephone (including cash
transfer instructions as described below) shall promptly thereafter be confirmed
in writing by any two Authorized Persons (which confirmation may bear the
facsimile signature of such Persons), but the Customer will hold the Bank
harmless for the failure of such Authorized Persons to send such confirmation in
writing, the failure of such confirmation to conform to the telephone
instructions received or the Bank's failure to produce such confirmation at any
subsequent time; provided that, where the Bank receives a telephone Instruction
from an Authorized Person requiring the transfer of cash, prior to executing
such Instruction the Bank will, to confirm such Instruction, call back any one
of the individuals on a list of persons authorized to confirm such oral transfer
Instructions (which Person shall be a person other than the initiator of the
transfer Instruction) and the Bank shall not execute the Instruction until it
has received such confirmation. Either party may electronically record any
Instructions given by telephone, and any other telephone discussions with
respect to the Custody Account. The Customer shall be responsible for
safeguarding any testkeys, identification codes or other security devices which
the Bank shall make available to the Customer or its Authorized Persons.

12. Standard of Care; Liabilities.

(a) The Bank shall be responsible for the performance of only such
duties as are set forth in this Agreement or expressly contained in Instructions
which are consistent with the provisions of this Agreement as follows:

<PAGE>

and without reference to any special conditions or circumstances, it being
understood that for purposes of measuring damages hereunder, the value of
Securities which are sold by the Customer prior to the replacement thereof shall
be equal to the sale price thereof less the expenses of such sale incurred by
the Customer. The Bank shall act with reasonable promptness in making such
replacements. In no event shall the Bank be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Bank has been advised of the likelihood of such
loss or damage and regardless of the form of action. Subject to the Bank's
obligations pursuant to ss.4(e) hereof, the Bank will not be responsible for the
insolvency of any Subcustodian which is not a branch or affiliate of Bank.

(ii) The Bank will not be responsible for any act, omission, default or
the solvency of any broker or agent which it or a Subcustodian appoints unless
such appointment was made negligently or in bad faith.

(iii) (a) The Bank shall be indemnified by, and without liability to
the Customer for any action taken or omitted by the Bank whether pursuant to
Instructions or otherwise pursuant to this Agreement if such act or omission was
in good faith, without negligence. In performing its obligations under this
Agreement, the Bank may rely on the genuineness of any Customer document which
it reasonably believes in good faith to have been validly executed. (b) The Bank
shall hold Customer harmless from, and shall indemnify Customer for, any loss,
liability, claim or expense incurred by Customer (including, but not limited to,
Customer's reasonable legal fees) to the extent that such loss, liability, claim
or expense arises from the negligence or willful misconduct on the part of the
Bank or a Subcustodian; provided that, in no event shall the Bank be liable for
special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Bank has been advised
of the likelihood of such loss or damage and regardless of the form of action.
Subject to the Bank's obligations pursuant to ss.4(e) hereof, the Bank will not
be responsible for the insolvency of any Subcustodian which is not a branch or
affiliate of Bank.

(vi) The Bank need not maintain any insurance for the benefit of the
Customer.

<PAGE>

(vii) Without limiting the foregoing, the Bank shall not be liable for
any loss which results from: 1) the general risk of investing, or 2) investing
or holding Assets in a particular country including, but not limited to, losses
resulting from nationalization, expropriation or other governmental actions;
regulation of the banking or securities industry; currency restrictions,
devaluations or fluctuations; and market conditions which prevent the orderly
execution of securities transactions or affect the value of Assets.

(b) Consistent with and without limiting the first paragraph of this
Section 12, it is specifically acknowledged that the Bank shall have no duty or
responsibility to:

(i) question Instructions or make any suggestions to the Customer or an
Authorized Person regarding such Instructions;

(ii) supervise or make recommendations with respect to investments or
the retention of Securities;

(iii) advise the Customer or an Authorized Person regarding any default
in the payment of principal or income of any security other than a Security.

(iv) except as may be otherwise provided in any securities lending
agreement between the Customer and the Bank, evaluate or report to the Customer
or an Authorized Person regarding the financial condition of any broker, agent
or other party to which Securities are delivered or payments are made pursuant
to this Agreement;

(v) except for trades settled at DTC where the broker provides to the
Bank the trade confirmation and the Customer provides for the Bank to receive
the trade instruction, review or reconcile trade confirmations received from
brokers. The Customer or its Authorized Persons (as defined in Section 10)
issuing Instructions shall bear any responsibility to review such confirmations
against Instructions issued to and statements issued by the Bank.

(c) The Customer authorizes the Bank to act, hereunder, in its capacity
as a custodian notwithstanding that the Bank or any of its divisions or
affiliates may have a material interest in a transaction, or circumstances are
such that the Bank may have a potential conflict of duty or interest including
the fact that the Bank or any of its affiliates may provide brokerage services
to other customers, act as financial advisor to the issuer of Securities, act as
a lender to the issuer of Securities, act in the

<PAGE>

same transaction as agent for more than one customer, have a material interest
in the issue of Securities, or earn profits from any of the activities listed
herein.

13. Fees and Expenses.

The Customer agrees to pay the Bank for its services under this
Agreement such amount as may be agreed upon in writing ("Fee Schedule"),
together with the Bank's reasonable out-of-pocket or incidental expenses (as
further defined in the Fee Schedule), including, but not limited to, legal fees.
The Bank shall have a lien on and is authorized to charge any Accounts of the
Customer for any amount owing to the Bank under any provision of this Agreement.

14. Miscellaneous.

(a) Foreign Exchange Transactions. To facilitate the administration of
the Customer's trading and investment activity, the Bank is authorized to enter
into spot or forward foreign exchange contracts with the Customer or an
Authorized Person for the Customer and may also provide foreign exchange through
its subsidiaries, affiliates or Subcustodians. Instructions, including standing
instructions, may be issued with respect to such contracts but the Bank may
establish rules or limitations concerning any foreign exchange facility made
available. In all cases where the Bank, its subsidiaries, affiliates or
Subcustodians enter into a foreign exchange contract related to Accounts, the
terms and conditions of the then current foreign exchange contract of the Bank,
its subsidiary, affiliate or Subcustodian and, to the extent not inconsistent,
this Agreement shall apply to such transaction.

(b) Certification of Residency, etc. The Customer certifies that it is
a resident of the United States and agrees to notify the Bank of any changes in
residency. The Bank may rely upon this certification or the certification of
such other facts as may be required to administer the Bank's obligations under
this Agreement. The Customer will indemnify the Bank against all losses,
liability, claims or demands arising directly or indirectly from any such
certifications.

(c) Access to Records. Applicable accounts, books and records of the
Bank shall be open to inspection and audit at all reasonable times during normal
business hours upon reasonable advance notice by Customer's independent public
accountants and by employees of Customer designated to the Bank. All such
materials shall, to the extent applicable, be maintained and preserved in
conformity with the Act and the rules and regulations thereunder, including
without limitation, SEC Rules 31a-1 and 31a-2. Subject to restrictions under
applicable law, the Bank shall also obtain an undertaking to permit the
Customer's independent public accountants reasonable access to the records of
any Subcustodian which has

<PAGE>

physical possession of any Assets as may be required in connection with the
examination of the Customer's books and records.

This Agreement consists exclusively of this document together with
Schedules A and B, Appendices 1 and 2, Exhibits I - _______ and the following
Rider(s) [Check applicable rider(s)]:

X MUTUAL FUND
-----

X SPECIAL TERMS AND CONDITIONS
-----

There are no other provisions of this Agreement, and this Agreement
supersedes any other agreements, whether written or oral, between the parties.
Any amendment to this Agreement must be in writing, executed by both parties.

(f) Severability. In the event that one or more provisions of this
Agreement are held invalid, illegal or unenforceable in any respect on the basis
of any particular circumstances or in any jurisdiction, the validity, legality
and enforceability of such provision or provisions under other circumstances or
in other jurisdictions and of the remaining provisions will not in any way be
affected or impaired.

(g) Waiver. Except as otherwise provided in this Agreement, no failure
or delay on the part of either party in exercising any power or right under this
Agreement operates as a waiver, nor does any single or partial exercise of any
power or right preclude any other or further exercise, or the exercise of any
other power or right. No waiver by a party of any provision of this Agreement,
or waiver of any breach or default, is effective unless in writing and signed by
the party against whom the waiver is to be enforced.

(h) Notices. All notices under this Agreement shall be effective when
actually received. Any notices or other communications which may be required
under this Agreement are to be sent to the parties at the following addresses or
such other addresses as may subsequently be given to the other party in writing:

<PAGE>

Bank: The Chase Manhattan Bank, N.A.
4 Chase MetroTech Center
Brooklyn, NY 11245
Attention: Global Custody Division

or telex:
-------------------------------------

Customer: Delaware Group of Funds
1818 Market St.
Philadelphia, PA 19103
att: Messrs. Bishof and O'Conner
or telex:
--------------------------------------

(i) Termination. This Agreement may be terminated by the Customer or
the Bank by giving sixty (60) days written notice to the other, provided that
such notice to the Bank shall specify the names of the persons to whom the Bank
shall deliver the Assets in the Accounts. If notice of termination is given by
the Bank, the Customer shall, within sixty (60) days following receipt of the
notice, deliver to the Bank Instructions specifying the names of the persons to
whom the Bank shall deliver the Assets. In either case the Bank will deliver the
Assets to the persons so specified, after deducting any amounts which the Bank
determines in good faith to be owed to it under Section 13. If within sixty (60)
days following receipt of a notice of termination by the Bank, the Bank does not
receive Instructions from the Customer specifying the names of the persons to
whom the Bank shall deliver the Assets, the Bank, at its election, may deliver
the Assets to a bank or trust company doing business in the State of New York to
be held and disposed of pursuant to the provisions of this Agreement, or to
Authorized Persons, or may continue to hold the Assets until Instructions are
provided to the Bank; provided that, where the Bank is the terminating party and
the Bank had not notified the Customer that termination was for breach of this
Agreement by the Customer, such 60 day period shall be extended for an
additional period as requested by Customer of up to 120 days.

Termination as to One or More Series. This Agreement may be terminated
as to one or more Series (but less than all the Series) by delivery of an
amended Schedule A deleting such Series, in which case termination as to the
deleted Series shall take effect sixty (60) days after the date of such
delivery. The execution and delivery of an amended Schedule A which deletes one
or more Series, shall constitute a termination hereof only with respect to such
deleted Series, shall be governed by the preceding provisions of Section 14 as
to the identification of a successor custodian and the delivery of the Assets of
the Series so deleted to such successor custodian, and shall not affect the
obligations of the Bank and the Customer hereunder with respect to the other
Series set forth in Schedule A, as amended from time to time.

<PAGE>

(j) Several Obligations of the Series. With respect to any obligations
of the Customer on behalf of the Series and their related Accounts arising
hereunder, the Custodian shall look for payment or satisfaction of any such
obligation solely to the assets and property of the Series and such Accounts to
which such obligation relates as though the Customer had separately contracted
with the Custodian by separate written instrument with respect to each Series
and its Accounts.

CUSTOMER

By:
---------------------
Title Vice President and Treasurer

THE CHASE MANHATTAN BANK, N.A.

By:
-----------------------
Title Vice President

STATE OF )
: ss.
COUNTY OF )

On this day of , , before me personally came
, to me known, who being by me duly sworn, did depose and say
that he/she resides in New Providence, NJ at 31 Sagamore Drive; that he/she is
Vice President of THE CHASE MANHATTAN BANK, the entity described in and which
executed the foregoing instrument; that she knows the seal of said entity, that
the seal affixed to said instrument is such seal, that it was so affixed by
order of said entity, and that she signed his/her name thereto by like order.

Sworn to before me this
day of .

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

Notary

STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK )

<PAGE>

On this day of
,19 , before me personally came , to me
known, who being by me duly sworn, did depose and say that he/she resides in
at
; that he/she is
a Vice President of THE CHASE MANHATTAN BANK, (National Association), the
corporation described in and which executed the foregoing instrument; that
he/she knows the seal of said corporation, that the seal affixed to said
instrument is such corporate seal, that it was so affixed by order of the Board
of Directors of said corporation, and that he/she signed his/her name thereto by
like order.

Sworn to before me this __________________________ day of ________, 19__.

- --------------------------------------------------
Notary

Schedule A

<PAGE>

Delaware Group Premium Fund, Inc. - High Yield Series
Delaware Group Premium Fund, Inc. - Capital Reserves Series
Delaware Group Premium Fund, Inc. - Money Market Series
Delaware Group Premium Fund, Inc. - Growth Series
Delaware Group Premium Fund, Inc. - Multiple Strategy Series
Delaware Group Premium Fund, Inc. - Value Series
Delaware Group Premium Fund, Inc. - Emerging Growth Series
Delaware Group Premium Fund, Inc. - Global Bond Series
Delaware Group Income Funds, Inc. - Delchester Fund
Delaware Group Income Funds, Inc. - High-Yield Opportunitites Fund
Delaware Group Delaware Fund, Inc. - Delaware Fund
Delaware Group Delaware Fund, Inc. - Devon Fund
Delaware Group Value Fund, Inc.
Delaware Group DelCap Fund, Inc.
Delaware Group Dividend & Income Fund, Inc.
Delaware Group Advisor Funds, Inc. - Enterprise Fund
Delaware Group Advisor Funds, Inc. - U.S. Growth Fund
Delaware Group Advisor Funds, Inc. - World Growth Fund
Delaware Group Advisor Funds, Inc. - New Pacific Fund
Delaware Group Advisor Funds, Inc. - Federal Bond Fund
Delaware Group Advisor Funds, Inc. - Corporate Income Fund

<PAGE>

March, 1996 Schedule B

SUB-CUSTODIANS EMPLOYED BY

THE CHASE MANHATTAN BANK, N.A. LONDON, GLOBAL CUSTODY
<TABLE>
<CAPTION>
<S> <C> <C>
COUNTRY SUB-CUSTODIAN CORRESPONDENT BANK

ARGENTINA The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Arenales 707, 5th Floor Buenos Aires
De Mayo 130/140
1061Buenos Aires
ARGENTINA

AUSTRALIA The Chase Manhattan Bank The Chase Manhattan Bank
Australia Limited Australia Limited
36th Floor Sydney
World Trade Centre
Jamison Street
Sydney
New South Wales 2000
AUSTRALIA

AUSTRIA Creditanstalt - Bankverein Credit Lyonnais
Schottengasse 6 Vienna
A - 1011, Vienna
AUSTRIA

BANGLADESH Standard Chartered Bank Standard Chartered Bank
18-20 Motijheel C.A. Dhaka
Box 536,
Dhaka-1000
BANGLADESH

BELGIUM Generale Bank Credit Lyonnais Bank
3 Montagne Du Parc Brussels
1000 Bruxelles
BELGIUM

BOTSWANA Barclays Bank of Botswana Limited Barclays Bank of Botswana
Barclays House Gaborone
Khama Crescent
Gaborone
BOTSWANA

<PAGE>

BRAZIL Banco Chase Manhattan, S.A. Banco Chase Manhattan S.A.
Chase Manhattan Center Sao Paulo
Rua Verbo Divino, 1400
Sao Paulo, SP 04719-002
BRAZIL

CANADA The Royal Bank of Canada Royal Bank of Canada
Royal Bank Plaza Toronto
Toronto
Ontario M5J 2J5
CANADA

Canada Trust Royal Bank of Canada
Canada Trust Tower Toronto
BCE Place
161 Bay at Front
Toronto
Ontario M5J 2T2
CANADA

CHILE The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Agustinas 1235 Santiago
Casilla 9192
Santiago
CHILE

COLOMBIA Cititrust Colombia S.A. Cititrust Colombia S.A.
Sociedad Fiduciaria Sociedad Fiduciaria
Carrera 9a No 99-02 Santafe de Bogota
Santafe de Bogota, DC
COLOMBIA

CZECH REPUBLIC Ceskoslovenska Obchodni Banka, A.S. Komercni Banka, A.S.,
Na Prikope 14 Praha
115 20 Praha 1
CZECH REPUBLIC